<SUBMISSION>
<ACCESSION-NUMBER>0000891618-02-001569
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>62
<PERIOD>20011231
<FILING-DATE>20020329
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CORP
<CIK>0000916457
<ASSIGNED-SIC>4911
<IRS-NUMBER>770212977
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>001-12079
<FILM-NUMBER>02595115
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
<PHONE>4089955115
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 W SAN FERNANDO
<STREET2>SUITE 500
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>f80168e10-k.htm
<DESCRIPTION>FORM 10-K FOR THE PERIOD ENDING 12/31/2001
<TEXT>
<HTML>
<HEAD>
<TITLE>Calpine Corporation, Form 10-K, 12/31/2001</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

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</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
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<P align="center">
<B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

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<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="5">Form 10-K</FONT></B>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

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	<TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Mark One)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2"><FONT face="wingdings">&#254;</FONT>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<B><FONT size="2">ANNUAL REPORT PURSUANT TO SECTION&nbsp;13 OR
	15(d)<BR>
	OF THE SECURITIES EXCHANGE ACT OF&nbsp;1934</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<B><FONT size="2">For the fiscal year ended December&nbsp;31,
	2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<B><FONT size="2">OR</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<B><FONT size="2">TRANSITION REPORT PURSUANT TO SECTION&nbsp;13
	OR&nbsp;15(d)<BR>
	OF THE SECURITIES EXCHANGE ACT OF&nbsp;1934</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<B><FONT size="2">For the transition period
	from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Commission file number 1-12079</FONT></B>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="6">Calpine Corporation</FONT></B>

<DIV align="center">
<I><FONT size="2">(A Delaware Corporation)</FONT></I>
</DIV>

<P align="center">
<B><FONT size="2">I.R.S. Employer Identification
No.&nbsp;77-0212977</FONT></B>

<P align="center">
<B><FONT size="2">50 West San Fernando Street</FONT></B>

<DIV align="center">
<B><FONT size="2">San Jose, California 95113</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Telephone: (408)&nbsp;995-5115</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(b) of the Act:</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Calpine Corporation Common Stock, $.001 Par
Value Registered on the New&nbsp;York Stock Exchange</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(g) of the Act: None</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark whether the registrant
(1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or&nbsp;15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or for such shorter
period that the registrant was required to file such reports),
and (2)&nbsp;has been subject to such filing requirements for
the past
90&nbsp;days.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark if disclosure of
delinquent filers pursuant to Item&nbsp;405 of
Regulation&nbsp;S-K is not contained herein, and will not be
contained, to the best of registrant&#146;s knowledge, in
definitive proxy or information statements incorporated by
reference in Part&nbsp;III of this Form&nbsp;10-K or any
amendment to this
Form&nbsp;10-K.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Aggregate market value of the voting stock held
by non-affiliates of the registrant as of March&nbsp;26, 2002:
$3.7&nbsp;billion. Common stock outstanding as of March&nbsp;26,
2002: 307,602,191 shares.
</FONT>

<P align="center">
<B><FONT size="2">DOCUMENTS INCORPORATED BY REFERENCE.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Portions of the documents listed below have been
incorporated by reference into the indicated parts of this
report, as specified in the responses to the item numbers
involved.
</FONT>

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	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Designated portions of the Proxy Statement
	relating to&nbsp;the 2002 Annual Meeting of&nbsp;Shareholders
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Part&nbsp;III (Items&nbsp;10, 11, 12 and&nbsp;13)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

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<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

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<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PART I</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item 1. Business</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item 2. Properties</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item 3. Legal Proceedings</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Item 4. Submission of Matters to a Vote of Security Holders</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item 5. Market for Registrant&#146;s Common Equity and Related Stockholder Matters</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item 7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item 7a. Quantitative and Qualitative Disclosure About Market Risk</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item 8. Financial Statements and Supplementary Data</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">Item 10. Directors and Executive Officers of the Registrant</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">Item 11. Executive Compensation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Item 12. Security Ownership of Certain Beneficial Owners and Management</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">Item 13. Certain Relationships and Related Transactions</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">PART IV</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">CALPINE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">CALPINE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">CALPINE CORPORATION AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2001, 2000, and 1999</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#027">SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)</A></TD></TR>
<TR><TD colspan="9"><A HREF="#028">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex3-1_8.txt">EXHIBIT 3.1.8</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_1.txt">EXHIBIT 4.22.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_2.txt">EXHIBIT 4.22.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_3.txt">EXHIBIT 4.22.3</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_4.txt">EXHIBIT 4.22.4</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_5.txt">EXHIBIT 4.22.5</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_6.txt">EXHIBIT 4.22.6</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_7.txt">EXHIBIT 4.22.7</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_8.txt">EXHIBIT 4.22.8</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_9.txt">EXHIBIT 4.22.9</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_10.txt">EXHIBIT 4.22.10</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_11.txt">EXHIBIT 4.22.11</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_12.txt">EXHIBIT 4.22.12</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_13.txt">EXHIBIT 4.22.13</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_14.txt">EXHIBIT 4.22.14</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_15.txt">EXHIBIT 4.22.15</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_16.txt">EXHIBIT 4.22.16</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_17.txt">EXHIBIT 4.22.17</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_18.txt">EXHIBIT 4.22.18</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_19.txt">EXHIBIT 4.22.19</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_20.txt">EXHIBIT 4.22.20</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_21.txt">EXHIBIT 4.22.21</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_22.txt">EXHIBIT 4.22.22</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_23.txt">EXHIBIT 4.22.23</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_24.txt">EXHIBIT 4.22.24</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_25.txt">EXHIBIT 4.22.25</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_26.txt">EXHIBIT 4.22.26</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_27.txt">EXHIBIT 4.22.27</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_28.txt">EXHIBIT 4.22.28</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_29.txt">EXHIBIT 4.22.29</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_30.txt">EXHIBIT 4.22.30</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_31.txt">EXHIBIT 4.22.31</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_32.txt">EXHIBIT 4.22.32</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_33.txt">EXHIBIT 4.22.33</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_34.txt">EXHIBIT 4.22.34</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_35.txt">EXHIBIT 4.22.35</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_36.txt">EXHIBIT 4.22.36</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_37.txt">EXHIBIT 4.22.37</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex4-22_38.txt">EXHIBIT 4.22.38</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_4.txt">EXHIBIT 10.2.4</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_5.txt">EXHIBIT 10.2.5</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_6.txt">EXHIBIT 10.2.6</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_7.txt">EXHIBIT 10.2.7</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_8.txt">EXHIBIT 10.2.8</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_9.txt">EXHIBIT 10.2.9</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-2_10.txt">Exhibit 10.2.10</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-3_4.txt">Exhibit 10.3.4</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-3_5.txt">Exhibit 10.3.5</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-3_6.txt">Exhibit 10.3.6</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-3_7.txt">Exhibit 10.3.7</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex10-4_2.txt">Exhibit 10.4.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex12-1.txt">EXHIBIT 12.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex16-1.txt">EXHIBIT 16.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex21-1.txt">EXHIBIT 21.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex23-1.txt">EXHIBIT 23.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex23-2.txt">EXHIBIT 23.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex23-3.txt">EXHIBIT 23.3</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex23-4.txt">EXHIBIT 23.4</A></TD></TR>
<TR><TD colspan="9"><A HREF="f80168ex99-1.txt">EXHIBIT 99.1</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">FORM 10-K</FONT></B>

<DIV align="center">
<B><FONT size="2">ANNUAL REPORT</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">For the Year Ended December&nbsp;31,
2001</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="5" align="center" valign="top">
	<B><FONT size="2">PART&nbsp;I</FONT></B></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;1.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Business
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;2.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Properties
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">24
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;3.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Legal Proceedings
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">28
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;4.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Submission of Matters to a Vote of
	Security&nbsp;Holders
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">29
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5" align="center" valign="top">
	<B><FONT size="2">PART&nbsp;II</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;5.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Market for Registrant&#146;s Common Equity and
	Related Stockholder&nbsp;Matters
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">29
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;6.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Selected Financial Data
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">31
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;7.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Management&#146;s Discussion and Analysis of
	Financial Condition and Results of&nbsp;Operation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">31
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;7a.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Quantitative and Qualitative Disclosures About
	Market&nbsp;Risk
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">31
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;8.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Financial Statements and Supplementary&nbsp;Data
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">31
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;9.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Changes in and Disagreements With Accountants on
	Accounting and Financial&nbsp;Disclosure
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">31
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="5" align="center" valign="top">
	<B><FONT size="2">PART&nbsp;III</FONT></B></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;10.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Directors and Executive Officers of
	the&nbsp;Registrant
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">32
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;11.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive Compensation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">32
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;12.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Security Ownership of Certain Beneficial Owners
	and&nbsp;Management
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">32
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;13.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certain Relationships and Related Transactions
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">32
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5" align="center" valign="top">
	<B><FONT size="2">PART&nbsp;IV</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp;14.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Exhibits, Financial Statement Schedules, and
	Reports on Form&nbsp;8-K
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">32
	</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Signatures
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">42
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Index to Consolidated Financial Statements and
	Other&nbsp;Information
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">F-1
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART I" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">PART I</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Item 1. Business" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left">
<B><FONT size="2">Item&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business</I></FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">In addition to historical information, this
report contains forward-looking statements. Such statements
include those concerning Calpine Corporation&#146;s (&#147;the
Company&#146;s&#148;) expected financial performance and its
strategic and operational plans, as well as all assumptions,
expectations, predictions, intentions or beliefs about future
events. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
a number of risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements
such as, but not limited to, (i)&nbsp;unseasonable weather
patterns that reduce demand for power and natural gas,
(ii)&nbsp;systemic economic slowdowns, which can adversely
affect consumption of power by businesses and consumers,
(iii)&nbsp;the timing and extent of deregulation of energy
markets and the rules and regulations adopted on a transitional
basis with respect thereto, (iv)&nbsp;the timing and extent of
changes in commodity prices for energy, particularly natural gas
and electricity, (v)&nbsp;commercial operations of new plants
that may be delayed or prevented because of various development
and construction risks, such as a failure to obtain financing
and the necessary permits to operate or the failure of
third-party contractors to perform their contractual
obligations, (vi)&nbsp;cost estimates are preliminary and actual
costs may be higher than estimated, (vii)&nbsp;a
competitor&#146;s development of a lower-cost gas-fired power
plant, (viii)&nbsp;risks associated with marketing and selling
power from power plants in the newly-competitive energy market,
or (ix)&nbsp;the successful exploitation of an oil or gas
resource that ultimately depends upon the geology of the
resource, the total amount and cost to develop recoverable
reserves, and operational factors relating to the extraction of
natural gas. All information set forth in this filing is as of
March&nbsp;29, 2002, and Calpine undertakes no duty to update
this information. Readers should carefully review the &#147;Risk
Factors&#148; section of this document as well as in other
documents filed with the Securities and Exchange Commission,
including, but not limited to, the Quarterly Reports on
Form&nbsp;10-Q to be filed by the Company in fiscal
year&nbsp;2002.</FONT></I>

<P align="center">
<B><FONT size="2">OVERVIEW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine is a leading independent power company
engaged in the development, acquisition, ownership and operation
of power generation facilities and the sale of electricity
predominantly in the United States, but also in Canada and the
United Kingdom. Calpine also is the world&#146;s largest
producer of renewable geothermal energy, and we own 1.3 trillion
cubic feet equivalent of proved natural gas reserves in Canada
and the United States. We have experienced significant growth in
all aspects of our business over the last five years. Currently,
we own interests in 64 power plants having a net capacity of
12,090 megawatts. We also have 24 gas-fired projects under
construction having a net capacity of 14,142 megawatts and have
34 projects in advanced development with a net capacity of
15,100 megawatts. Construction of these advanced development
projects will proceed if and when market fundamentals are sound,
our return on investment criteria are expected to be met, and
financing is available on attractive terms. The completion of
the projects currently under construction would give us
interests in 86 power plants located in 21 states, 3 Canadian
provinces and the United Kingdom, having a net capacity of
26,232 megawatts. Of this total generating capacity, 97% will be
attributable to gas-fired facilities and 3% will be attributable
to geothermal facilities. As a result of our expansion program,
our net income, fully diluted earnings per share and assets have
grown significantly from 1997 to 2001, as shown in the table
below, although we do not anticipate our growth to continue at
these rates in view of our revised construction and advanced
development activities described within this document.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Compound Annual</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Growth&nbsp;Rate</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(Dollars in millions, except</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">per share&nbsp;amounts)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fully diluted earnings per share(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fully diluted earnings per share from recurring
	operations(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.92</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,643.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,309.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">2
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">before extraordinary items
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">before deduction of merger expense in connection
	with the Encal Energy Ltd. pooling-of-interests transaction, and
	before extraordinary items and cumulative effect of a change in
	accounting principle.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the last few years we have built our wholly
owned subsidiary Calpine Energy Services (&#147;CES&#148;) into
an effective power and gas marketing, risk management and asset
optimization organization. We continue to exploit our world
class development capabilities as we add power facilities in
most of the major markets where natural gas is the fuel &#147;on
the margin&#148;, meaning that incremental demand is generally
met by gas-fired plants. We are also developing the system
operations management teams and information technology
capabilities to enhance the economic performance of our systems
of assets in our major markets and to provide load-following and
other ancillary services to our customers. These operational
optimization systems, combined with the marketing and risk
management capabilities of CES, enable us to add value to
traditional commodity products in a way that not all competitors
can&nbsp;match.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have acquired gas reserves (1.3&nbsp;trillion
cubic feet equivalent of proved reserves on hand at
December&nbsp;31, 2001) and a seasoned oil and gas production
and management team to give us a broader range of fuel sourcing
options. Our construction organization has assembled what we
believe to be the best-in-industry team of construction
management professionals to ensure that our projects are built
using our standard Calpine design specifications at the lowest
feasible cost consistent with our exacting operational
standards. We have established strategic alliances with the best
equipment manufacturers in the world for gas turbine generators,
steam turbine generators and heat recovery steam generators.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With a vision of enhancing the performance of our
modern portfolio of gas-fired power plants and lowering our
maintenance costs, we have readied our wholly owned subsidiary
Power Systems Manufacturing to design and manufacture certain
combustion system and turbine blade&nbsp;parts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As we build the nation&#146;s most modern and
efficient portfolio of gas-fired generation assets and establish
the low-cost position, we believe Calpine has uniquely
positioned itself to compete in the deregulated marketplace of
the future. The ultimate goal and sustaining principle of
deregulation is to lower the price of power to consumers while
not sacrificing reliability. While we expect power prices to
rise and fall over time as a function of economic activity,
weather patterns and supply and demand relationships, we take a
long-term view of the market and have the discipline to stay the
course and realize the benefits of our investments. We believe
that our vertically integrated low-cost approach to power
generation gives us a competitive advantage within
our&nbsp;industry.
</FONT>

<P align="center">
<B><FONT size="2">THE MARKET</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The electric power industry represents one of the
largest industries in the United States and impacts nearly every
aspect of our economy, with an estimated end-user market of over
$240&nbsp;billion of electricity sales in 2001. The power
generation industry historically has been largely characterized
by electric utility monopolies producing electricity from old,
inefficient, high-cost generating facilities selling to a
captive customer base. Industry trends and regulatory
initiatives have transformed the existing market into a more
competitive market where end-users in certain power markets may
purchase electricity from a variety of suppliers, including
independent power producers, power marketers, regulated public
utilities and&nbsp;others.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The North American Electric Reliability Council
(&#147;NERC&#148;) estimates that in the United States, peak
summer electric demand in 2001 totaled approximately 709,000
megawatts (&#147;MW&#148;), while summer generating capacity in
2001 totaled approximately 793,000&nbsp;MW, creating a reserve
margin of 84,000&nbsp;MW, or 11.8% of peak summer demand.
Reserve margins are generally targeted to be 15-20% to provide
for load forecasting errors, scheduled and unscheduled plant
outages and local area grid protection. NERC forecasts average
annual growth of 1.95% from 2001 to 2010 in the United States in
peak summer demand. We believe this growth rate to be
conservative and that a 2.5% annual growth rate is more
realistic based on actual compounded annual growth rates
reported by NERC and based on other analysts. Summer generating
capacity fuel sources in the United States are estimated to be
comprised of coal (38.0%); nuclear (12.3%);
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<DIV align="left">
<FONT size="2">hydro (9.7%); gas (17.2%); oil (5.5%); dual fuel
(12.4%); and other (4.9%). At the end of 2001, Calpine&#146;s
9,860&nbsp;MW of net operating generating capacity in the United
States consisted of 9,010&nbsp;MW gas-fired and 850&nbsp;MW
geothermal and represented approximately 1.2% of total estimated
summer generating capacity in the United States, 6.6% of the
136,000&nbsp;MW estimated total gas-fired summer generating
capacity and 47.2% of the 1,800&nbsp;MW estimated total
geothermal summer generating capacity in the United States.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NERC similarly estimates that in Canada, peak
winter electric demand in 2001 totaled approximately
87,000&nbsp;MW, while winter generating capacity in 2001 totaled
approximately 100,000&nbsp;MW, creating a reserve margin of
13,000&nbsp;MW, or 14.9% of peak winter demand. NERC forecasts
average annual growth of 1.39% in Canada from 2001 to 2010 in
peak winter demand. Winter generating capacity fuel sources in
Canada are estimated to be comprised of coal (19.0%); nuclear
(15.0%); hydro (53.1%); gas (5.7%); oil (5.4%); and
other&nbsp;(1.8%).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There is a significant need for additional power
generating capacity throughout the United States, both to
satisfy increasing demand, as well as to replace old and
inefficient generating facilities. We estimate that as much as
20%, or approximately 160,000&nbsp;MW, of U.S.&nbsp;summer
generating capacity is vulnerable to environmental or economic
replacement by new state-of-the-art facilities. Due to
environmental and economic considerations, we believe this new
capacity will be provided predominantly by gas-fired facilities.
We believe that these market trends will create substantial
opportunities for efficient, low-cost power producers that can
produce and sell energy to customers at competitive rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business model assumes that between 2002 and
2006 approximately 155,000&nbsp;MW of new generating capacity
additions will need to occur in the United States based on a
2.5% annual growth rate in peak summer demand, 20,000&nbsp;MW of
retirements due to environmental and economic obsolescence, and
a 15.5% reserve margin at the end of 2006. We expect to provide
a significant portion of the new generating capacity subject to
the availability of capital on attractive terms. In the
near-term we believe commodity prices will be low, but our
long-term view remains optimistic.
</FONT>

<P align="center">
<B><FONT size="2">STRATEGY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our corporate vision is to repower America and,
in so doing, to become the nation&#146;s largest and most
profitable power producer. We will concentrate on markets in
North America, primarily in the United States, and, to a lesser
extent, on select Western European markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our timeline to achieve this position and our
other strategic objectives is flexible. Construction of our
advanced development projects will proceed if and when market
fundamentals are sound, our return on investment criteria are
expected to be met, and financing is available on attractive
terms. Our plans to grow our asset base rely primarily on our
internal development and construction program and to a lesser
extent on attractive acquisitions. The key elements of our
growth plan are as follows:
</FONT>
<P>

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	<TD width="1%"></TD>
	<TD width="96%"></TD>
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<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Development of new and expansion of existing
	power plants.</FONT></I><FONT size="2"> We are actively pursuing
	the development of new and expansion of both baseload and
	peaking capacity at our existing highly efficient, low-cost,
	gas-fired power plants that replace old and inefficient
	generating facilities and meet the demand for new generation.
	Our strategy is to develop power plants in strategic geographic
	locations that enable us to leverage existing power generation
	assets and operate the power plants as integrated electric
	generation systems. This allows us to achieve significant
	operating synergies and efficiencies in fuel procurement, power
	marketing, and operations and maintenance. The new plants we
	will bring on line will be predominantly natural gas-fired
	facilities, both combined-cycle base load plants and
	simple-cycle peakers, using state of the art, highly efficient
	and environmentally friendly gas turbine generator technology.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Acquisition of power
	plants.</FONT></I><FONT size="2"> Our strategy is to acquire
	power generating facilities that meet our stringent acquisition
	criteria and provide significant potential for revenue, cash
	flow and earnings growth, and that provide the opportunity to
	enhance the operating efficiencies of the plants. We have
	significantly expanded and diversified our project portfolio
	through numerous acquisitions of power generation facilities
	to&nbsp;date.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">4
</FONT>

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	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Enhancement of existing power projects&#146;
	performance and efficiency.</FONT></I><FONT size="2"> We
	continually seek to maximize the power generation potential of
	our operating assets and to minimize our operating and
	maintenance expenses and fuel costs. This will become even more
	significant as our portfolio of power generation facilities
	expands to 86 power plants with a net capacity of 26,232
	megawatts after completion of our new projects currently under
	construction. We focus on operating our plants as an integrated
	system of power generation, which enables us to minimize costs
	and maximize operating efficiencies. We believe that achieving
	and maintaining a low cost of production will be increasingly
	important to compete effectively in the power generation
	industry.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our strategy is to become the most profitable
generator by (1)&nbsp;achieving the low-cost position in the
industry by applying our fully integrated areas of expertise to
the cost-effective development, construction, financing,
fueling, and operation of the most modern and efficient power
generation facilities and by achieving economies of scale in
general and administrative support costs, and (2)&nbsp;enhancing
the value of the power we generate in the marketplace
(a)&nbsp;by operating our plants as a system, (b)&nbsp;by
geographic deployment of marketing specialists to sell directly
to load-serving entities and, to the extent allowable, to
industrial customers, in each of the markets in which we
participate, (c)&nbsp;by offering load-following and other
ancillary services to our customers, and (d)&nbsp;by providing
effective marketing, risk management and asset optimization
activities through our CES organization. This approach uses our
expertise in design, engineering, procurement, finance,
construction management, fuel and resource acquisition,
operations and power marketing, which we believe provides us
with a competitive advantage. Although not a core aspect of our
business, we may enter into contracts for the sale or purchase
of power or gas in markets where we presently do not have
generation assets to establish relationships with customers and
gain market experience where we expect to have generation assets
in the future. We are also evaluating various relationships with
potential partners to strengthen our ability to conduct risk
management activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our financing strategy is to achieve an
investment grade credit and bond rating from the major rating
agencies within the next few years. We intend to focus on
various debt and sale-leaseback financings for our operating
plants with a goal of retaining maximum system operating
flexibility. The availability of capital at attractive terms
will be a key requirement to enable us to meet our strategic
objectives. Our risk management strategy, over time, is to hedge
approximately two-thirds of our spark spread exposure in
symmetry with our target debt-to-capitalization ratio. Spark
spread is the margin between the value of the electricity sold
and the cost of fuel to generate that electricity. Our fuel
strategy is to produce from our own reserves about 25% of our
fuel consumption needs as a natural hedge against gas price
volatility, while providing a secure and reliable source of fuel
and lowering our fuel costs over&nbsp;time.
</FONT>

<P align="center">
<B><FONT size="2">COMPETITION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The power generation industry is characterized by
intense competition, and we encounter competition from
utilities, industrial companies and other independent power
producers in the development, acquisition and operation of power
generation facilities. In recent years, there has been
increasing competition in an effort to obtain power sales
agreements, and this competition has contributed to a reduction
in electricity prices in certain markets. In addition, many
states are implementing or considering regulatory initiatives
designed to increase competition in the domestic power
generation industry and increase access to electric
utilities&#146; transmission and distribution systems for
independent power producers and electricity consumers. This
changing environment will help create opportunities to compete
for new customers and profits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that although the domestic power
industry is undergoing consolidation and that, although
acquisition opportunities are available, we are likely to
confront significant competition for attractive acquisition
opportunities. We may also be constrained in pursuing these
alternatives by our access to capital at reasonable rates. This
competition has put pressure on electric utilities to lower
their costs, including the cost of purchased electricity, and
increasing competition in the supply of electricity in the
future will increase this pressure. See
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Recent
Developments&nbsp;&#151; California Power Market.&#148;
Achieving and maintaining a low cost of production, including
managing fuel costs, will be increasingly important to compete
</FONT>

<P align="center"><FONT size="2">5
</FONT>

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<DIV align="left">
<FONT size="2">effectively in the power generation industry. We
believe that our vertically integrated low cost approach to
power generation gives us a competitive advantage within our
industry.
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">RECENT DEVELOPMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Construction
Program</FONT></I><FONT size="2">&nbsp;&#151; Following a
comprehensive review of our power plant development program, we
announced in January 2002 the adoption of a revised capital
expenditure program, contemplating the completion during 2002
and 2003 of 27&nbsp;power projects (representing 15,200&nbsp;MW)
currently under construction. Three of these projects have
subsequently achieved full or partial commercial operations, the
Magic Valley Generating Station, the Gilroy Peaking Energy
Center and the Aries Power Project. Construction of an
additional 34&nbsp;advanced-stage development projects
(representing 15,100&nbsp;MW) will be placed on &#147;hot
standby&#148; following completion of advanced development
activities pending further review, reducing previously
forecasted 2002 capital spending by as much as $2&nbsp;billion.
Construction of these advanced stage development projects is
expected to proceed when there is marked need for additional
generating resources at prices that will allow us to meet our
established investment criteria, and when capital is available
to us on attractive terms. Moreover, our entire construction
program is flexible and subject to continuing review and
revision based upon such criteria.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2002, we announced a new
turbine program that reduces previously forecasted capital
spending by approximately $1.2&nbsp;billion in 2002 and
$1.8&nbsp;billion in 2003. The revision includes adjusted timing
of turbine delivery and related payment schedules and also
cancellation orders. As a result of the cancellation, we will
record a pre-tax charge of $161&nbsp;million in the first
quarter of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Financing</FONT></I><FONT size="2">&nbsp;&#151;
On December&nbsp;26, 2001, we completed an offering of
$1&nbsp;billion in aggregate principal amount of 4% Convertible
Senior Notes Due 2006 (&#147;Convertible Senior Notes&#148;)
issued directly by Calpine. On each of December&nbsp;31, 2001,
and January&nbsp;3, 2002, we sold an additional
$100&nbsp;million in aggregate principal amount of these
Convertible Senior Notes, pursuant to partial exercises of a
$200&nbsp;million option to purchase additional Convertible
Senior Notes granted to the initial purchaser. As a result of
these additional closings, the initial purchaser&#146;s option
was exercised in full and an aggregate principal amount of
$1.2&nbsp;billion of Convertible Senior Notes was issued by
Calpine. Proceeds from these offerings will be used to retire
our Zero-Coupon Convertible Debentures Due April&nbsp;30, 2021,
(&#147;Zero Coupons&#148;), either in open-market purchases,
negotiated transactions or upon exercise by holders of a put
option in April 2002, and for general corporate purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From December 2001 through February 2002 we
repurchased $314.5&nbsp;million in aggregate principal amount of
our Zero Coupons in open-market purchases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2002 we closed a new $1.6&nbsp;billion
secured credit facility. The $1.6&nbsp;billion includes a new
$1.0&nbsp;billion revolving credit facility expiring on
May&nbsp;24, 2003, and a new two-year $600&nbsp;million loan
that will be available upon satisfaction of certain conditions.
We also amended our existing $400&nbsp;million revolving credit
facility. The security for these facilities includes
Calpine&#146;s interests in its natural gas properties, the
Saltend power plant in the U.K. and Calpine&#146;s equity
investment in nine U.S.&nbsp;power plants. The proceeds of the
borrowings will be used to finance Calpine&#146;s capital
expenditures and, subject to limits in Calpine&#146;s existing
bond indentures, for other general corporate purposes. The lead
banks in the new credit facility are The Bank of Nova Scotia,
Citibank, Bank of America, Bayerische Landesbank Girozentrale,
Credit Suisse First Boston, Deutsche Bank, The Toronto-Dominion
Bank and ING&nbsp;Barings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Enron bankruptcy has created significant
financial uncertainty in the power generation sector. On
December&nbsp;14, 2001, Moody&#146;s Investors Service
(&#147;Moody&#146;s&#148;) downgraded our long-term debt from
Baa3 (its lowest investment grade rating) to Ba1 (its highest
non-investment grade rating) after reviewing our near-term cash
flow, liquidity sources and financial flexibility. We remain on
credit watch with negative implications at Moody&#146;s. In
addition, on December&nbsp;19, 2001, Fitch, Inc.
(&#147;Fitch&#148;) downgraded our long-term debt from BBB- (its
lowest investment grade rating) to BB+ (its highest
non-investment grade rating). On March&nbsp;12, 2002, Fitch
further downgraded our senior unsecured debt to&nbsp;BB. On
March&nbsp;25, 2002, Standard &#38; Poor&#146;s downgraded our
corporate credit rating from BB+ to BB and our senior unsecured
debt from BB+
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">to&nbsp;B+. Many other issuers in the power
generation sector have also been downgraded by one or more of
the ratings agencies during this period. As described above, we
have raised funds in both the capital market and the bank credit
market during this period of uncertainty, and we continue to
believe that Calpine has adequate liquidity and access to
capital to support its&nbsp;needs.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Enron
Bankruptcy</FONT></I><FONT size="2">&nbsp;&#151; On
December&nbsp;2, 2001, Enron Corp. (&#147;Enron&#148;), a
significant customer accounting for 22% of our 2001 revenue,
filed for reorganization under Chapter&nbsp;11 of the United
States Bankruptcy Code. As previously reported, we had entered
into a master netting agreement with Enron on November&nbsp;14,
2001, and had decreased our trading activity with Enron for
several months prior to its bankruptcy filing. Based on legal
analysis of our netting arrangements, we believe that we have no
net collection exposure to&nbsp;Enron. See Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operation&nbsp;&#151; Liquidity and Capital Resources for a
further discussion of the Enron bankruptcy and netting agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">California Long-Term Supply
Contracts</FONT></I><FONT size="2">&nbsp;&#151; On December 11,
2001, Calpine announced that it was meeting with officials from
the State of California at their request to discuss whether, and
if so how, the long-term contracts with DWR could be modified.
No definitive modifications have been agreed to and the
discussions have been ongoing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, we currently have a dispute with DWR
concerning payment of the capacity payment on the 495-megawatt
peaking contract dated February&nbsp;28, 2001. The contract
provides that CES may earn a capacity payment by committing to
supply electricity to DWR from a source other than the peaker
units designated in the contract either through substitution of
those designated units or by providing replacement energy. DWR
has made certain assertions challenging CES&#146; right to
substitute units or provide replacement energy and has withheld
capacity payments in the amount of $9.5 million since December
2001. The resolution of this dispute is part of the ongoing
discussions regarding modifications to the contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;25, 2002, both the California
Public Utilities Commission (&#147;CPUC&#148;) and the
California Electric Oversight Board filed complaints under
Section&nbsp;206 of the Federal Power Act with the Federal
Energy Regulatory Commission (&#147;FERC&#148;) (EL02-60-000 and
EL02-62-000, respectively) alleging that the prices and terms of
the long-term contracts with the California Department of Water
Resources (&#147;DWR&#148;) are unjust and unreasonable and
counter to the public interest. Calpine is a respondent and the
four long-term contracts entered into by Calpine are subject to
the complaint. The FERC has noticed this proceeding and
responsive filings are due from the respondents on or before
March&nbsp;22, 2002. Calpine believes that the complaints are
without merit and intends to defend its position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2002, in accordance with the
state legislation that authorized DWR to enter into the
long-term power contracts, the CPUC issued a Rate Agreement,
which dedicates a portion of the retail rate paid by electricity
customers of the California investor-owned utilities to a fund
to pay holders of bonds to be issued by DWR and to a fund to pay
electricity suppliers such as Calpine. The proceeds from those
bonds will be used in part to fund the Electric Power Fund
established by the state legislation authorizing DWR to enter
into long-term power contracts with the power suppliers whose
recourse in the event of a default by DWR is to the Electric
Power Fund. Proceeds from the bonds will also be used to repay
the state of California General Fund. The bonds have not been
issued, but representatives of the State have indicated that the
bonds should be issued in the near&nbsp;future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">FERC Investigation into California Wholesale
Markets</FONT></I><FONT size="2">&nbsp;&#151; On
February&nbsp;13, 2002, FERC initiated an investigation of
potential manipulation of electric and natural gas prices in the
western United States. This investigation was initiated as a
result of allegations that Enron and others, through their
affiliates, used its market position to distort electric and
natural gas markets in the West. The scope of the investigation
is to consider whether, as a result of any manipulation in the
short-term markets for electric energy or natural gas or other
undue influence on the wholesale markets by any party since
January&nbsp;1, 2000, the rates of the long-term contracts
subsequently entered into in the West are potentially unjust and
unreasonable. FERC has stated that it may use the information
gathered in connection with the investigation to determine how
to proceed on any existing or future complaint brought under
Section&nbsp;206 of the Federal Power Act involving long-term
power contracts entered into in the West since January&nbsp;1,
2000, or to initiate a Federal Power Act Section&nbsp;206 or
Natural Gas Act Section&nbsp;5 proceeding on its
own&nbsp;initiative.
</FONT>

<P align="center"><FONT size="2">7
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Securities Class Action
Lawsuits.</FONT></I><FONT size="2"> Over the past several weeks,
five shareholder lawsuits have been filed against Calpine and
certain of its officers in the United States District Court,
Northern District of California. The action captioned <I>Weisz
vs. Calpine Corp., et&nbsp;al.</I>, filed March&nbsp;11, 2002,
is a purported class action on behalf of purchasers of Calpine
stock between March&nbsp;15, 2001 and December&nbsp;13, 2001.
The four other actions, captioned <I>Local&nbsp;144 Nursing Home
Pension Fund vs. Calpine Corp., Lukowski vs. Calpine Corp., Hart
vs. Calpine Corp., </I>and <I>Atchison vs. Calpine Corp.</I>,
were filed between March&nbsp;18, 2002 and March&nbsp;26, 2002.
The complaints in these four actions are virtually identical,
and each was filed by the same law firm, in conjunction with
other law firms as co-counsel. All four lawsuits are purported
class actions on behalf of purchasers of Calpine&#146;s
securities between January&nbsp;5, 2001 and December&nbsp;13,
2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The complaints in these five actions allege that,
during the purported class periods, defendants Calpine and
certain senior executives issued false and misleading statements
about Calpine&#146;s financial condition in violation of
Sections&nbsp;10(b) and 20(a) of the Securities Exchange Act of
1934, as well as Rule&nbsp;10b-5. These actions seek an
unspecified amount of damages, in addition to other forms of
relief. We expect that these actions, as well as any related
actions that may be filed in the future, will be consolidated by
the court into a single securities class action. We consider the
lawsuits to be without merit, and we intend to defend vigorously
against these allegations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Public Utilities Commission of the State of
California v. Sellers of Long Term Contracts to the California
Department of Water Resources; California Electricity Oversight
Board v. Sellers of Long Term Contracts to the California
Department of Water Resources.</FONT></I><FONT size="2"> In
February 2002, both the California Public Utilities Commission
and the California Electric Oversight Board filed complaints
under Section&nbsp;206 of the Federal Power Act with the Federal
Energy Regulatory Commission (FERC) (EL02-60-000 and
EL02-62-000, respectively) alleging that the prices and terms of
the long-term contracts with the California Department of Water
Resources (DWR) are unjust and unreasonable and counter to the
public interest. Calpine Energy Services, L.P.&nbsp;(CES) is a
respondent and the four long-term contracts entered into between
CES and DWR are subject to the complaint. <I>(see, Risk
Factors&nbsp;&#151; California Long-Term Supply Agreements)</I>
The FERC has noticed this proceeding and responsive pleadings
were due from the respondents on or before March&nbsp;22, 2002.
Calpine believes that the complaints are without merit and
intends to defend its position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Litigation</FONT></I><FONT size="2">&nbsp;&#151;
On March&nbsp;5, 2002, Calpine sued Automated Credit Exchange
(&#147;ACE&#148;) in the Superior Court of the State of
California for the County of Alameda, for negligence and breach
of contract to recover reclaim trading credits, a form of
emission reduction credits that should have been held in
Calpine&#146;s account with U.S. Trust Company (US Trust). ACE
is a broker in emission reduction credits based in Pasadena,
California. Calpine had paid ACE for Nitrogen oxide (NOx)
coastal credits that were to be purchased by ACE and held by US
Trust. The credits were to be held by US Trust pursuant to a
Credit Holding Agreement, which provided, among other things,
that US Trust was to hold the credits until receiving
instructions from ACE to disburse the Credits. ACE had agreed
that (i)&nbsp;upon prior written instruction from Calpine, to
instruct US Trust to take such actions as may be directed by
Calpine to disburse the credits held in escrow pursuant to the
Credit Holding Agreement and (ii)&nbsp;not to take any action,
or otherwise instruct US Trust to take any action, concerning
the credits held in escrow pursuant to the Credit Holding
Agreement without prior written instruction from Calpine.
</FONT>

<P align="center">
<B><FONT size="2">DESCRIPTION OF FACILITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At March&nbsp;20, 2002, Calpine had interests in
64&nbsp;power generation facilities representing
12,090&nbsp;megawatts of net capacity. Of these
64&nbsp;projects, 45&nbsp;are gas-fired power plants with a net
capacity of 11,240 megawatts, and 19&nbsp;are geothermal power
generation facilities with a net capacity of 850&nbsp;megawatts.
We also have 22&nbsp;gas-fired projects and 2&nbsp;project
expansions currently under construction with a net capacity of
14,142&nbsp;megawatts, and have 34&nbsp;projects in advanced
development with a net capacity of 15,100&nbsp;megawatts.
Construction of these advanced development projects will proceed
if and when market fundamentals are sound, our return on
investment criteria are expected to be met, and financing is
available on attractive terms. Each of the power generation
facilities currently in operation produces electricity for sale
to a utility, other third-party end user,
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<DIV align="left">
<FONT size="2">or to an intermediary such as a trading company.
Thermal energy produced by the gas-fired cogeneration facilities
is sold to governmental and industrial&nbsp;users.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The gas-fired and geothermal power generation
projects in which we have an interest produce electricity and
thermal energy that are sold pursuant to long-term power sales
agreements or into the spot market. Revenue from a power sales
agreement usually consists of two components: energy payments
and capacity payments. Energy payments are based on a power
plant&#146;s net electrical output, and payment rates are
typically either at fixed rates or indexed to fuel costs.
Capacity payments are based on a power plant&#146;s net
electrical output and/or its available capacity. Energy payments
are earned for each kilowatt-hour of energy delivered, while
capacity payments, under certain circumstances, are earned
whether or not any electricity is scheduled by the customer
and&nbsp;delivered.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of our projects under
construction, we will provide operating and maintenance services
for 82&nbsp;of the 86&nbsp;power plants in which we have an
interest. Such services include the operation of power plants,
geothermal steam fields, wells and well pumps, gas fields,
gathering systems and gas pipelines. We also supervise
maintenance, materials purchasing and inventory control, manage
cash flow, train staff and prepare operating and maintenance
manuals for each power generation facility that we operate. As a
facility develops an operating history, we analyze its operation
and may modify or upgrade equipment or adjust operating
procedures or maintenance measures to enhance the
facility&#146;s reliability or profitability. These services are
sometimes performed for third parties under the terms of an
operating and maintenance agreement pursuant to which we are
generally reimbursed for certain costs, paid an annual operating
fee and may also be paid an incentive fee based on the
performance of the facility. The fees payable to us may be
subordinated to any lease payments or debt service obligations
of financing for the&nbsp;project.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to provide fuel for the gas-fired power
generation facilities in which we have an interest, natural gas
reserves are acquired or natural gas is purchased from third
parties under supply agreements. We attempt to manage a
gas-fired power facility&#146;s fuel supply so that we protect
the plant&#146;s spark spread&nbsp;&#151; the margin between the
value of the electricity sold and the cost of fuel to generate
that electricity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently hold interests in geothermal
leaseholds in Lake and Sonoma Counties in northern California
(&#147;The Geysers&#148;) that produce steam that is supplied to
geothermal power generation facilities owned by us for use in
producing electricity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain power generation facilities in which we
have an interest have been financed primarily with project
financing that is structured to be serviced out of the cash
flows derived from the sale of electricity and thermal energy
produced by such facilities and provides that the obligations to
pay interest and principal on the loans are secured almost
solely by the capital stock or partnership interests, physical
assets, contracts and/or cash flow attributable to the entities
that own the facilities. The lenders under non-recourse project
financing generally have no recourse for repayment against us or
any of our assets or the assets of any other entity other than
foreclosure on pledges of stock or partnership interests and the
assets attributable to the entities that own the facilities.
Increasingly, our plan has been to refinance project-specific
construction financing with long-term capital market financing
after construction projects enter commercial operation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Substantially all of the power generation
facilities in which we have an interest are located on sites
which we own or are leased on a long-term basis. See
&#147;Item&nbsp;2. Properties.&#148;
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is certain information regarding
our operating power plants and plants under construction as of
March&nbsp;20, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">Megawatts</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Plants</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">In operation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Geothermal power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gas-fired power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,653</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,038</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Under construction
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">New facilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,223</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Expansion projects (two)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">553</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">553</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,936</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,232</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Operating Power Plants</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Country,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">US State</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">or Can.</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Generation</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="left" nowrap><B><FONT size="1">Power Plant</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Province</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">MWh</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Geothermal Power Plants</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sonoma County (12&nbsp;plants)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">512.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">512.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">512.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">512.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,789,094</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Lake County (2&nbsp;plants)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,061,720</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calistoga
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">536,906</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sonoma
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">385,647</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">West Ford Flat
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">228,679</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bear Canyon
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150,149</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Aidlin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">144,061</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Geothermal Power Plants&nbsp;(19)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">850.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,296,256</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Gas-Fired Power Plants</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Saltend Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">UK</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,200.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,200.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,200.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,200.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,326,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Broad River Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">SC</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">840.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">840.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">429,110</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pasadena Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">751.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">787.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">751.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">787.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,754,618</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Magic Valley Generating Station
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">687.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">687.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">South Point Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">555.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">555.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,904,851</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Los Medanos Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">493.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">555.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">493.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">555.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,099,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sutter Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AZ</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">516.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">547.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">516.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">547.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,656,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Lost Pines&nbsp;1 Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">545.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">261.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">272.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,006,008</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Westbrook Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">ME</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">487.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">525.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">487.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">525.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,464,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Hidalgo Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">502.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">502.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78.5%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,164,502</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Texas City Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">465.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">471.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">465.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">471.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,162,396</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">RockGen Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">WI</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">460.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">460.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,584</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Clear Lake Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">335.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">412.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">335.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">412.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,574,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Aries Power Project
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">MO</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">516.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">591.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">258.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">295.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Rumford Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">ME</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,746,382</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Hog Bayou Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tiverton Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">RI</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">240.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">240.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">240.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">240.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,764,918</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gordonsville Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">VA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">233.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">238.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pine Bluff Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">447,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Country,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">US State</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">or Can.</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Generation</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="left" nowrap><B><FONT size="1">Power Plant</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Province</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">MWh</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Lockport Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NY</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">176,928</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Channel Energy Center (simple-cycle)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">474,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">DePere Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">WI</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Morris Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">IL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">507,844</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bayonne Power Plant(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NJ</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dighton Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">MA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">168.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">168.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">713,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Androscoggin Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">ME</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">160.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">160.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.3%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Auburndale Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">FL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,046,265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Grays Ferry Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">PA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gilroy Peaking Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gilroy Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">131.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">131.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">972,343</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pryor Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">OK</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">312,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sumas Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">WA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">550,837</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Parlin Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NJ</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">387,456</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">King City Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">853,059</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Kennedy International Airport Power
	Plant&nbsp;(&#147;KIAC&#148;)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NY</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">504,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pittsburg Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">442,273</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Newark Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NJ</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">393,262</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bethpage Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NY</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">344,429</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Greenleaf&nbsp;1 Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">392,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Greenleaf&nbsp;2 Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">342,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Whitby Cogeneration
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">ON</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">King City Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stony Brook Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">NY</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">247,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Watsonville Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">208,743</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Agnews Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Philadelphia Water Project
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">PA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Gas-Fired Power Plants&nbsp;(45)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,354.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,652.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,037.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,239.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,629,252</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Operating Power Plants&nbsp;(64)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,204.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,502.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,887.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,089.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,925,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,805.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,995.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,359.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,516.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,542,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity (Unconsolidated) Projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,399.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,507.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">528.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">573.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,383,215</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">We sold our 7.5% interest in this facility on
	March&nbsp;12, 2001.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Projects Under Construction</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Country,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine Net</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">US State</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Calpine</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">or Can.</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Baseload</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Peaking</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="left" nowrap><B><FONT size="1">Power Plant</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fuel</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Province</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MW)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Projects Under Construction</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acadia Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">LA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,080.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,239.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">540.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">619.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oneta Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">OK</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">960.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,137.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">960.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,137.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Freestone Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,002.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,051.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,002.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,051.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deer Park Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">773.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,007.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">773.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,007.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Delta Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">798.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">874.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">798.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">874.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Baytown Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">704.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">834.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">704.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">834.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decatur Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">659.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">794.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">659.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">794.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Morgan Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">790.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">790.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Hillabee Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">710.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">770.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">710.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">770.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pastoria Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Hermiston Power Project
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">OR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">530.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">630.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">530.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">630.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Osprey Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">FL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">530.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">590.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">530.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">590.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Washington Parish Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">LA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">509.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">509.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ontelaunee Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">PA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">511.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">541.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">511.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">541.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Corpus Christi Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Carville Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">LA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Zion Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">IL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">495.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">495.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Channel Energy Center (combined-cycle)*
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">TX</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">365.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">438.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">365.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">438.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calgary Energy Centre
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">AB</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Santa Rosa Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">FL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Island Cogeneration
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">BC</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Goldendale Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">WA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">248.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">248.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">248.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">248.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Auburndale Expansion*
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">FL</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Yuba City Energy Center
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Gas</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">CA</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Projects Under Construction&nbsp;(22)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,587.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,761.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,047.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,142.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">*&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Expansion projects not included in total of 86
	projects in which Calpine has an interest.
	</FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">ACQUISITIONS OF POWER PROJECTS AND PROJECTS
UNDER CONSTRUCTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have extensive experience in the development
and acquisition of power generation projects. We have
historically focused principally on the development and
acquisition of interests in gas-fired and geothermal power
projects, although we may also consider projects that utilize
other power generation technologies. We have significant
expertise in a variety of power generation technologies and have
substantial capabilities in each aspect of the development and
acquisition process, including design, engineering, procurement,
construction management, fuel and resource acquisition and
management, power marketing, financing and&nbsp;operations.
</FONT>

<P align="left">
<B><FONT size="2">Acquisitions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will consider the acquisition of an interest
in operating projects as well as projects under development
where we would assume responsibility for completing the
development of the project. In the acquisition of power
generation facilities, we generally seek to acquire 100%
ownership of facilities that offer us attractive opportunities
for earnings growth, and that permit us to assume sole
responsibility for the operation and
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<FONT size="2">maintenance of the facility. In evaluating and
selecting a project for acquisition, we consider a variety of
factors, including the type of power generation technology
utilized, the location of the project, the terms of any existing
power or thermal energy sales agreements, gas supply and
transportation agreements and wheeling agreements, the quantity
and quality of any geothermal or other natural resource
involved, and the actual condition of the physical plant. In
addition, we assess the past performance of an operating project
and prepare financial projections to determine the profitability
of the&nbsp;project.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although our preference is to own 100% of the
power plants we acquire or develop, there are situations when we
take less than 100% ownership. Reasons why we may take less than
a 100% interest in a power plant may include, but are not
limited to: (a)&nbsp;our acquisitions of other independent power
producers such as Cogeneration Corporation of America in 1999
and SkyGen Energy&nbsp;LLC in 2000 in which minority interest
projects were included in the portfolio of assets owned by the
acquired entities (Grays Ferry Power Plant (40% now owned by
Calpine) and Androscoggin Energy Center (32.3% now owned by
Calpine), respectively); (b)&nbsp;opportunities to co-invest
with non-regulated subsidiaries of regulated electric utilities,
which under PURPA are restricted to 50% ownership of
cogeneration qualifying facilities&nbsp;&#151; such as our
investment in Gordonsville Power Plant (50% owned by Calpine and
50% owned by Edison Mission Energy, which is wholly-owned by
Edison International Company); and (c)&nbsp;opportunities to
invest in merchant power projects with partners who bring
marketing, funding, permitting or other resources that add value
to a project. An example of this is Acadia Energy Center, which
is under construction in Louisiana (50%&nbsp;owned by Calpine
and 50% owned by Cleco Midstream Resources, an affiliate of
Cleco Corporation).
</FONT>

<P align="left">
<B><FONT size="2">Projects Under Construction</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The development and construction of power
generation projects involves numerous elements, including
evaluating and selecting development opportunities, designing
and engineering the project, obtaining power sales agreements in
some cases, acquiring necessary land rights, permits and fuel
resources, obtaining financing, procuring equipment and managing
construction. We intend to focus primarily on opportunities
where we are able to capitalize on our expertise in implementing
an innovative and fully integrated approach to project
development in which we control the entire development process.
Utilizing this approach, we believe that we are able to enhance
the value of our projects throughout each stage of development
in an effort to maximize our return on&nbsp;investment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the constraints mentioned above under
&#147;Recent Developments&nbsp;&#151; Construction
Program&#148;, we are pursuing the development of highly
efficient, low-cost power plants to provide competitively priced
and environmentally friendly power to electricity markets. We
intend to sell all or a portion of the power generated by such
plants into the competitive market through a portfolio of short,
medium and long-term power sales agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Acadia Energy
Center.</FONT></I><FONT size="2"> On March&nbsp;6, 2000, we
announced that we entered into a partnership agreement with
Cleco Midstream Resources, an affiliate of Pineville,
Louisiana-based Cleco Corporation, to build, own and operate the
1,239-megawatt natural gas-fired Acadia Energy Center near
Eunice, Louisiana. We have a 50% net interest in this facility.
Construction began in mid 2000 and commercial operation is
expected in mid&nbsp;2002. On October&nbsp;20, 2000, we jointly
announced with Cleco Corporation the signing of a 20-year
contract with Aquila Energy, a wholly owned subsidiary of
UtiliCorp United, for 580 megawatts of the output of the Acadia
Energy Center. Under terms of a tolling agreement, starting
July&nbsp;1, 2002, Aquila Energy will supply the natural gas
needed to generate 580&nbsp;megawatts of electricity and will
own and market the produced power.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oneta Energy Center.</FONT></I><FONT size="2">
On July&nbsp;20, 2000, we acquired the development rights to
construct, own and operate the Oneta Energy Center from Panda
Energy, International, Inc. Oneta is a 1,138-megawatt, natural
gas-fired energy center under construction in Coweta, Oklahoma,
southeast of Tulsa. We anticipate that the first phase of the
Oneta Energy Center will commence commercial operation in
mid&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Freestone Energy
Center.</FONT></I><FONT size="2"> On June&nbsp;15, 2000, we
announced that we acquired the rights to develop, build, own and
operate the Freestone Energy Center from New&nbsp;Orleans,
Louisiana-based Entergy Corp. Freestone is a 1,052-megawatt,
natural gas-fired energy center located in Freestone County,
Texas, near
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<FONT size="2">Fairfield, about 80&nbsp;miles southeast of
Dallas. Construction commenced in the summer of 2000 and
commercial operation is expected to begin in the summer
of&nbsp;2002.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Deer Park Energy
Center.</FONT></I><FONT size="2"> In March 2001 we announced
plans to build, own and operate a 1,007-megawatt, natural
gas-fired energy center in Deer Park, Texas. The proposed Deer
Park Energy Center will supply steam to Shell Chemical Company,
and electric power generated at the facility will be sold on the
wholesale market. Construction began in mid-2001. The first,
second and third phases of the project are expected to begin
commercial operation in February 2003, August 2003, and June
2004, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Delta Energy Center.</FONT></I><FONT size="2">
In February 1999 we, together with Bechtel Enterprises,
announced plans to develop an 874-megawatt, natural gas-fired
cogeneration energy center in Pittsburg, California. In November
2001 we acquired Bechtel&#146;s interest in the project. The
Delta Energy Center will provide steam and electricity to the
nearby Dow Chemical Company facility and market the excess
electricity into the California power market. Construction began
in April&nbsp;2000 and we expect commercial operation to
commence in the spring of&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Baytown Power Plant.</FONT></I><FONT size="2">
In October 1999 we announced plans to build, own and operate an
834-megawatt, natural gas-fired cogeneration power plant at
Bayer Corporation&#146;s chemical facility in Baytown, Texas.
The Baytown Power Plant will supply Bayer with all of its
electric and steam requirements for 20&nbsp;years and market
excess electricity into the Texas wholesale power market.
Construction commenced in early 2000 and commercial operation is
expected to commence in the summer of&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Decatur Energy
Center.</FONT></I><FONT size="2"> On February&nbsp;2, 2000, we
announced plans to build, own and operate a 794-megawatt,
natural gas-fired cogeneration energy center at Solutia
Inc.&#146;s Decatur, Alabama chemical facility. Under a 20-year
agreement, Solutia will lease a portion of the facility to meet
its electricity needs and purchase its steam requirements from
us. Excess power from the facility will be sold into the
Southeastern Wholesale Power Market under a variety of short,
medium and long-term contracts. We will also build a new
intrastate natural gas pipeline to fuel the energy center.
Construction began in September 2000 and commercial operation
for the first phase is scheduled for mid&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Morgan Energy
Center.</FONT></I><FONT size="2"> On June&nbsp;27, 2000, we
announced plans to build, own and operate a natural gas-fired
cogeneration energy center at the BP&nbsp;Amoco chemical
facility in Decatur, Alabama. The Morgan Energy Center will
generate approximately 790 megawatts of electricity in addition
to supplying steam for BP&nbsp;Amoco&#146;s facility.
Construction began in September 2000 and we expect commercial
operation to begin in mid&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Hillabee Energy
Center.</FONT></I><FONT size="2"> On February&nbsp;24, 2000, we
announced plans to build, own and operate the Hillabee Energy
Center, a 770-megawatt, natural gas-fired cogeneration facility
in Tallapoosa County, Alabama. Construction began in mid-2001
and we expect commercial operation of the facility will commence
in late&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Pastoria Energy
Center.</FONT></I><FONT size="2"> In April 2001 we acquired the
rights to develop the 750-megawatt Pastoria Energy Center, a
combined-cycle project planned for Kern County, California.
Construction began in the summer of 2001 and commercial
operation is scheduled to begin in the fall of&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Hermiston Power
Project.</FONT></I><FONT size="2"> On January&nbsp;28, 2000, we
acquired the development rights for the Hermiston Power Project,
a 630-megawatt, natural gas-fired cogeneration power facility
located near Hermiston, Oregon. Construction commenced in the
summer of 2000 and we anticipate that commercial operation of
the facility will commence in the summer of&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Osprey Energy
Center.</FONT></I><FONT size="2"> On January&nbsp;11, 2000, we
announced plans to build, own and operate the Osprey Energy
Center, a 590-megawatt, natural gas-fired cogeneration energy
center near the city of Auburndale, Florida. On February 12,
2001, the Florida Public Service Commission approved the
application for the facility, which will be built adjacent to
our existing power facility, the Auburndale Power Plant.
Construction commenced in the fall of 2001 and commercial
operation of the facility is scheduled to begin in the fall of
2003. Upon commercial operation, the Osprey Energy Center will
supply electric power to Tampa, Florida-
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<FONT size="2">based Seminole Electric Cooperative, Inc.
(&#147;Seminole&#148;) to help meet Seminole&#146;s member
systems&#146; power needs for a period of 17&nbsp;years.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Washington Parish Energy
Center.</FONT></I><FONT size="2"> On January&nbsp;26, 2001, we
announced the acquisition of the development rights from
Cogentrix, an independent power company based in North Carolina,
for the 565-megawatt Washington Parish Energy Center, located
near Bogalusa, Louisiana. We are managing construction of the
facility, which began in January 2001, and will operate the
facility when it enters commercial operation in mid&nbsp;2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ontelaunee Energy
Center.</FONT></I><FONT size="2"> In June 1999 we announced that
we had acquired the rights to develop a 541-megawatt, natural
gas-fired energy center in Ontelaunee Township in eastern
Pennsylvania. Construction began in July 2000 and commercial
operation is estimated to commence in mid 2002. Output from the
Ontelaunee Energy Center will be sold into the Pennsylvania/ New
Jersey/ Maryland power pool and pursuant to bilateral contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Corpus Christi Energy
Center.</FONT></I><FONT size="2"> The Corpus Christi Energy
Center is a 523-megawatt combined-cycle, cogeneration energy
center located in Corpus Christi, Texas. Construction began in
June 2000 and we expect commercial operation to begin in July
2002. In March 1999 a long-term energy services agreement was
executed with CITGO Refining and Chemicals Company,&nbsp;L.P.
(&#147;CITGO&#148;) under which CITGO will purchase from the
Corpus Christi Energy Center all of the steam and electricity
that it requires but does not internally generate at its Corpus
Christi refinery.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Carville Energy
Center.</FONT></I><FONT size="2"> The Carville Energy Center is
a 523-megawatt combined-cycle, cogeneration energy center
located in St. Gabriel, Louisiana. Construction of the facility
began in October 2000 and commercial operation is expected to
commence in November 2002. On December&nbsp;28, 1999, a
long-term energy services agreement was executed with Cos-Mar
Inc. (&#147;Cos-Mar&#148;) under which Cos-Mar will purchase
from the Carville Energy Center all of the steam and electric
power (if allowed under applicable regulations) that it requires
but does not internally generate at its St. Gabriel
chemical&nbsp;plant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Zion Energy Center.</FONT></I><FONT size="2">
The Zion Energy Center is a 495-megawatt simple-cycle facility
located in Zion, Illinois. Construction began in August 2001 and
commercial operation for the first phase is expected to commence
in August 2002. In December 2000 and March 2001 contracts were
executed for the long-term sale of capacity from the Zion Energy
Center.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Channel Energy Center
(combined-cycle).</FONT></I><FONT size="2"> In October 1999 we
announced we had executed a letter of intent that gave us the
exclusive right to negotiate with LYONDELL-CITGO
Refining&nbsp;LP to build, own and operate a 628-megawatt,
natural gas-fired cogeneration energy center at the
LYONDELL-CITGO refinery in Houston, Texas. The Channel Energy
Center will supply all of the electricity and steam requirements
for 20&nbsp;years to the refinery. Construction began in early
2000, simple-cycle commercial operation (190&nbsp;megawatts)
commenced in the summer of 2001, and combined-cycle commercial
operation (438&nbsp;megawatts) is scheduled to begin in the
spring of&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Calgary Energy
Centre.</FONT></I><FONT size="2"> On April&nbsp;20, 2000, we
announced plans to construct the Calgary Energy Centre.
Scheduled to begin commercial operation in the spring of 2003,
the 300-megawatt, natural gas-fired, combined-cycle facility was
the first independent power project announced in the Calgary
area and represents our first investment in the Canadian power
industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Santa Rosa Energy
Center.</FONT></I><FONT size="2"> The Santa Rosa Energy Center
is a 252-megawatt combined-cycle energy center located near
Pensacola, Florida. Construction began in September 2000 and
commercial operation is expected to commence in June&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Island Cogeneration.</FONT></I><FONT size="2">
In September 2001 we acquired from Westcoast Energy a
250-megawatt, natural gas-fired cogeneration facility located
near Campbell River, British Columbia on Vancouver Island.
Construction began in September 1998 and we expect commercial
operation to begin in the spring of 2002. Island Cogeneration
will deliver electricity to BC Hydro under the terms of a
20-year agreement and will provide steam to Norske Skog for
industrial processing under the terms of a 15-year contract.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Goldendale Energy
Center.</FONT></I><FONT size="2"> In April 2001 we acquired the
rights to develop a 248-megawatt combined-cycle energy center
located in Goldendale, Washington. Construction of the
Goldendale Energy Center began in the spring of 2001 and
commercial operation is expected to commence in the fall of
2002. Energy generated by the facility will be sold directly
into the Northwest Power&nbsp;Pool.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Auburndale
Expansion.</FONT></I><FONT size="2"> On July&nbsp;6, 2000, we
announced the addition of 115&nbsp;megawatts of peaking capacity
to the natural gas-fired cogeneration facility located in
Auburndale, Florida. Construction began in August 2001 and
commercial operation is expected to commence in June&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Yuba City Energy
Center.</FONT></I><FONT size="2"> In January 2002 construction
began on this 45-megawatt project located adjacent to the
Greenleaf&nbsp;2 Power Plant in Yuba City, California. Upon
commercial operation, which is scheduled for mid 2002, the Yuba
City Energy Center, and other Calpine peaking facilities, will
supply peaking power to DWR in accordance with a 20-year
contract.
</FONT>

<P align="center">
<B><FONT size="2">OIL AND GAS PROPERTIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Montis Niger.</FONT></I><FONT size="2"> In
January 1997 we purchased Montis Niger,&nbsp;Inc., a gas
production and pipeline company operating primarily in the
Sacramento Basin in northern California, which we subsequently
renamed Calpine Gas Company. Calpine Gas Company owns proven
natural gas reserves and leasehold acreage, and operates an
80-mile pipeline delivering gas to our Greenleaf&nbsp;1
and&nbsp;2 Power Plants. We currently supply the majority of the
fuel requirements for the Greenleaf&nbsp;1 and&nbsp;2 Power
Plants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Calpine Natural Gas
Company.</FONT></I><FONT size="2"> In October 1999 we purchased
Sheridan Energy, Inc. (&#147;Sheridan&#148;), a natural gas
exploration and production company operating in northern
California and the Gulf Coast region, which we subsequently
renamed Calpine Natural Gas Company (&#147;CNGC&#148;).
CNGC&#146;s oil and gas properties are primarily natural gas and
are located in strategic markets where we are developing
low-cost natural gas supplies and proprietary pipeline systems
in support of our natural gas-fired power&nbsp;plants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Vintage Petroleum.</FONT></I><FONT size="2">
In December 1999 we completed the acquisition of Vintage
Petroleum, Inc.&#146;s interest in the Rio&nbsp;Vista Gas Unit
and related areas, representing primarily natural gas reserves
located in the Sacramento Basin in northern California.
Primarily as a result of this acquisition and the Sheridan
acquisition, we own a 100% working interest in the
Rio&nbsp;Vista Gas Unit and certain development acreage in
northern California.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Western Gas
Resources.</FONT></I><FONT size="2"> On February&nbsp;4, 2000,
we acquired 100% of the stock of Western Gas Resources
California (&#147;Western&#148;) from Western Gas Resources,
Inc. Western&#146;s assets include the 130-mile Steelhead
natural gas pipeline and the remaining interest in the
Sacramento River Gas System natural gas pipeline, now 100% owned
by&nbsp;us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gulf of Mexico.</FONT></I><FONT size="2"> In
June 2000 we acquired an interest in the East Cameron, High
Island and South Pelto fields in the Gulf of Mexico which
included 10&nbsp;producing wells and 5&nbsp;drilling locations
enhanced with 3-D&nbsp;seismic, three of which have already been
successfully drilled.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Calpine Canada Natural Gas,
Ltd.</FONT></I><FONT size="2"> On July&nbsp;5, 2000, we
purchased Calgary-based Quintana Minerals Canada Corp., a
natural gas exploration and production company, whose reserves
are located in British Columbia, Alberta and Saskatchewan
provinces in Canada. We subsequently changed its name to Calpine
Canada Natural Gas,&nbsp;Ltd. (&#147;CCNG&#148;). The assets
included interests in 1,300&nbsp;wells.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, on November&nbsp;15, 2000, we
acquired TriGas Exploration&nbsp;Inc., of Calgary, Alberta, an
exploration company focused on developing and producing gas
reserves in south-central Alberta. We subsequently merged the
company into CCNG. The assets include an interest in
74&nbsp;producing wells located in the Acme, Lone Pine, Lone
Pine South and Irricana fields, 48,000&nbsp;net acres of
undeveloped lands, two compression facilities, a 26.6% working
interest in the Crossfield gas processing plant located near the
fields, and a majority interest in 63&nbsp;miles of pipeline
that conduct the gas to two nearby gas-fired power generation
facilities.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Colorado and Gulf
Coast.</FONT></I><FONT size="2"> In July 2000 we acquired
natural gas assets in the Piceance Basin, Colorado and onshore
Gulf Coast from a privately held Houston, Texas-based company.
The assets included 126&nbsp;producing wells, 79,000&nbsp;acres
of undeveloped lands, and 195 potential drilling locations with
historical success rates of over 90&nbsp;percent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The Bayless
Companies.</FONT></I><FONT size="2"> On April&nbsp;17, 2001, we
acquired certain natural gas assets of The Bayless Companies for
approximately $35.1&nbsp;million. As part of the acquisition,
certain individuals began employment with the Company. The
reserves acquired are located in the western portion of the San
Juan Basin in New Mexico and currently produce approximately
5.2&nbsp;net million cubic feet equivalent per day
(&#147;mmcfe/d&#148;), 100&nbsp;percent of which is gas. We
anticipate drilling additional development wells in the future
on the 6,185&nbsp;undeveloped acreage remaining at year&nbsp;end.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Encal Energy Ltd.
(&#147;Encal&#148;).</FONT></I><FONT size="2"> On April&nbsp;19,
2001, we completed our merger with Encal, a Calgary,
Alberta-based natural gas and petroleum exploration and
development company. Encal shareholders received, in exchange
for each share of Encal common stock, 0.1493&nbsp;shares of
Calpine common equivalent shares (called &#147;exchangeable
shares&#148;) of the Company&#146;s subsidiary, Calpine Canada
Holdings Ltd. A total of 16,603,633&nbsp;exchangeable shares
were issued to Encal shareholders in exchange for all of the
outstanding shares of Encal common stock. Each exchangeable
share is exchangeable for one share of Calpine common stock. The
aggregate value of the transaction was approximately
US$1.1&nbsp;billion, including the assumed indebtedness of
Encal. The transaction was accounted for as a
pooling-of-interests. Upon completion of the acquisition, we
gained approximately 664&nbsp;billion cubic feet equivalent of
proved natural gas reserves, net of royalties. This transaction
also provides access to firm gas transportation capacity from
western Canada to California and the eastern U.S., and an
accomplished management team capable of leading our business
expansion in Canada. In addition, Encal had proved undeveloped
acreage totaling approximately 1.2&nbsp;million acres.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael Petroleum
Corporation.</FONT></I><FONT size="2"> On August&nbsp;15, 2001,
we acquired approximately 86% of the outstanding stock of
Michael Petroleum Corporation (&#147;MPC&#148;), a natural gas
exploration and production company, from various shareholders.
The remaining 14% of outstanding stock was purchased on
October&nbsp;22, 2001, resulting in the Company owning 100% of
MPC. The cash purchase price of the acquisition was
$315.8&nbsp;million plus assumed indebtedness of
$54.5&nbsp;million, and the acquisition was accounted for as a
purchase. The MPC assets consisted of approximately
531&nbsp;wells, producing approximately 33.5&nbsp;net mmcfe/d,
of which gas is 90&nbsp;percent, and developed and non-developed
acreage totaling approximately 82,590&nbsp;net acres at
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Whiting Petroleum
Corporation.</FONT></I><FONT size="2"> On December&nbsp;14,
2001, we acquired certain natural gas assets of Whiting
Petroleum Corporation and other minority partner interest owners
for approximately $8&nbsp;million. These certain assets are
located in close proximity to The Bayless Companies property
acquisition in the San Juan Basin of New Mexico completed in
April 2001. Current production from this acquisition is
approximately 1.7&nbsp;mmcfe/d, and the Company anticipates
future infield drilling on its existing 3,520&nbsp;acres by year
end&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the Company&#146;s oil and gas
acquisition and drilling program activity, equity equivalent net
production was approximately 380&nbsp;mmcfe/d at
December&nbsp;31, 2001, enough to fuel approximately
2,188&nbsp;megawatts of our power plant&nbsp;fleet.
</FONT>

<P align="center">
<B><FONT size="2">MARKETING, HEDGING, OPTIMIZATION, AND TRADING
ACTIVITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Most of the electric power generated by our
plants is transferred to our marketing and risk management unit,
CES, which sells it to load-bearing entities
(e.g.,&nbsp;utilities and end users) and to other third parties
(e.g.,&nbsp;power trading and marketing companies). Because a
sufficiently liquid market does not exist for electricity
financial instruments (typically, exchange and over-the-counter
traded contracts that net settle rather than entail physical
delivery) at most of the locations where Calpine sells power,
CES also enters into incremental physical purchase and sale
transactions as part of its hedging, balancing, and optimization
activities.
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any hedging, balancing, and optimization
activities that we engage in are directly related to exposures
that arise from our ownership and operation of power plants and
gas reserves and are designed to protect or enhance our
&#147;spark spread&#148; (the difference between our fuel cost
and the revenue we receive for our electric generation). In many
of these transactions CES purchases and resells power and gas in
contracts with third parties (typically trading companies). We
also engage in limited trading activity as described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We utilize derivatives, which are defined in
Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No.&nbsp;133, &#147;Accounting for Derivative Instruments and
Hedging Activities&#148; to include many physical commodity
contracts and commodity financial instruments such as
exchange-traded swaps and forward contracts, to optimize the
returns that we are able to achieve from our power and gas
assets. While certain of our contracts are considered energy
trading contracts as defined in Emerging Issues Task Force
(&#147;EITF&#148;) Issue No.&nbsp;98-10, our traders have very
low capital at risk and value at risk limits for energy trading,
and our risk management policy limits, at any given time, our
net sales of power and our net purchases of gas to our
generating capacity and fuel consumption requirements,
respectively, calculated on a total portfolio basis. Total
electricity and gas trading gains recognized in 2001, consisting
of unrealized mark-to-market gains as well as realized gains,
together accounted for approximately 12% of our gross profit.
This model is markedly different from that of companies that
actively and extensively engage in commodity trading operations
that are unrelated to underlying physical assets. Following is a
discussion of the types of electricity and gas hedging,
balancing, optimization, and trading activities in which CES
engages. The accounting treatment for these various types of
activities is discussed in Note 19 to our consolidated financial
statements and in management&#146;s discussion and analysis of
financial condition and results of&nbsp;operation.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electricity
Transactions</FONT></I></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Electricity hedging</FONT></I><FONT size="2">
	activities are done to reduce potential volatility in future
	results. An example of an electricity hedging transaction would
	be one in which we sell power at a fixed rate to allow us to
	predict the future revenues from our portfolio of generating
	plants. Hedging is a dynamic process; from time to time we
	adjust the extent to which our portfolio is hedged. An example
	of an electricity hedge adjusting transaction would be the
	purchase of power in the market to reduce the extent to which we
	had previously hedged our generation portfolio through fixed
	price power sales. To illustrate, suppose we had elected to
	hedge 65% of our portfolio of generation capacity for the
	following six months but then believed that prices for
	electricity were going to steadily move up during that same
	period. We might buy electricity on the open market to reduce
	our hedged position to, say, 50%. If electricity prices, do in
	fact increase, we might then sell electricity again to increase
	our hedged position back to the 65%&nbsp;level.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Electricity
	balancing</FONT></I><FONT size="2"> activities are typically
	short-term in nature and are done to make sure that sales
	commitments to deliver power are fulfilled. An example of an
	electricity balancing transaction would be where one of our
	generating plants has an unscheduled outage so we buy
	replacement power to deliver to a customer to meet our sales
	commitment.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Electricity
	optimization</FONT></I><FONT size="2"> activity, also generally
	short-term in nature, is done to maximize our profit potential
	by executing the most profitable alternatives in the power
	markets. An example of an electricity optimization transaction
	would be fulfilling a power sales contract with power purchases
	from third parties instead of generating power when the market
	price for power is below the cost of generation. In all cases,
	optimization activity is associated with the operating
	flexibility in our systems of power plants, natural gas assets,
	and gas and power contracts. That flexibility provides us with
	alternatives to most profitably manage our&nbsp;portfolio.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Energy trading</FONT></I><FONT size="2">
	activities are done with the purpose of profiting from movement
	in commodity prices or to transact business with customers in
	market areas where we do not have generating assets. An example
	of an electricity trading contract would be where we buy and
	sell electricity, typically with trading company counterparties,
	solely to profit from electricity price movements. We have
	engaged in limited activity of this type to date in terms of
	earnings impact. Mostly, it is done by CES through short-term
	contracts. Another example of an electricity trading contract
	would be one in which we
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD></TD>
	<TD align="left">
	<FONT size="2">transact with customers in market areas where we
	do not have generating assets, generally to develop market
	experience and customer relations in areas where we expect to
	have generation assets in the future. We have done a small
	number of such transactions to&nbsp;date.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural Gas
Transactions</FONT></I></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Gas hedging</FONT></I><FONT size="2">
	activities are also done to reduce potential volatility in
	future results. An example of a gas hedging transaction would be
	where we purchase gas at a fixed rate to allow us to predict the
	future costs of fuel for our generating plants or conversely
	where we enter into a financial forward contract to essentially
	swap floating rate (indexed) gas for fixed price gas. Similar to
	electricity hedging, gas hedging is a dynamic process, and from
	time to time we adjust the extent to which our portfolio is
	hedged. To illustrate, suppose we had elected to hedge 65% of
	our gas requirements for our generation capacity for the next
	six months through fixed price gas purchases but then believed
	that prices for gas were going to steadily decline during that
	same period. We might sell fixed price gas on the open market to
	reduce our hedged gas position to 50%. If gas prices do in fact
	decrease, we might then buy fixed price gas again to increase
	our hedged position back to the 65%&nbsp;level.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Gas balancing</FONT></I><FONT size="2">
	activities are typically short-term in nature and are done to
	make sure that purchase commitments for gas are adjusted for
	changes in production schedules. An example of a gas balancing
	transaction would be where one of our generating plants has an
	unscheduled outage so we sell the gas that we had purchased for
	that plant to a third&nbsp;party.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Gas optimization</FONT></I><FONT size="2">
	activities are also generally short-term in nature and are done
	to maximize our profit potential by executing the most
	profitable alternatives in the gas markets. An example of gas
	optimization is selling our gas supply, not generating power,
	and fulfilling power sales contracts with power purchases from
	third parties, instead of generating power when market gas
	prices spike relative to our gas supply&nbsp;cost.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Gas trading</FONT></I><FONT size="2">
	activities are done with the purpose of profiting from movement
	in commodity prices. An example of gas trading contracts would
	be where we buy and sell gas, typically with a trading company
	counterparty, solely to profit from gas price movements or where
	we transact with customers in market areas where we do not have
	fuel consumption requirements. We have engaged in a limited
	level of this type of activity to date. Mostly it is done by CES
	and through short-term contracts.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In some instances economic hedges may not be
designated as hedges for accounting purposes. The accounting
treatment of our various risk management and trading activities
is governed by SFAS No.&nbsp;133 and EITF Issue No.&nbsp;98-10,
as discussed above. An example of an economic hedge that is not
a hedge for accounting purposes would be a long-term fixed price
electric sales contract that economically hedges us against the
risk of falling electric prices, but which for accounting
purposes is exempted from derivative accounting under SFAS
No.&nbsp;133 as a normal&nbsp;sale.
</FONT>

<P align="center">
<B><FONT size="2">GOVERNMENT REGULATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to complex and stringent energy,
environmental and other governmental laws and regulations at the
federal, state and local levels in connection with the
development, ownership and operation of our energy generation
facilities. Federal laws and regulations govern transactions by
electric and gas utility companies, the types of fuel which may
be utilized by an electricity generating plant, the type of
energy which may be produced by such a plant and the ownership
of a plant. State utility regulatory commissions must approve
the rates and, in some instances, other terms and conditions
under which public utilities sell at retail electricity that
they have purchased from independent producers. Under certain
circumstances where specific exemptions are otherwise
unavailable, state utility regulatory commissions may have broad
jurisdiction over non-utility electric power plants. Energy
producing projects also are subject to federal, state and local
laws and administrative regulations which govern the emissions
and other substances produced, discharged or disposed of by a
plant and the geographical location, zoning, land use and
operation of a plant. Applicable federal environmental laws
typically have both state and local enforcement and
implementation provisions. These
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<FONT size="2">environmental laws and regulations generally
require that a wide variety of permits and other approvals be
obtained before the commencement of construction or operation of
an energy producing facility and that the facility then operate
in compliance with such permits and&nbsp;approvals.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Federal
Energy Regulation</I></FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PURPA</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The enactment of PURPA and the adoption of
regulations thereunder by FERC provided incentives for the
development of cogeneration facilities and small power
production facilities (those utilizing renewable fuels and
having a capacity of less than 80&nbsp;megawatts).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A domestic electricity generating project must be
a QF under FERC regulations in order to take advantage of
certain rate and regulatory incentives provided by PURPA. PURPA
exempts owners of QFs from the Public Utility Holding Company
Act of 1935, as amended (PUHCA), and exempts QFs from most
provisions of the Federal Power Act (the FPA) and, except under
certain limited circumstances, state laws concerning rate or
financial regulation. These exemptions are important to us and
our competitors. We believe that each of the
electricity-generating projects in which we own an interest and
which operates as a QF power producer currently meets the
requirements under PURPA necessary for QF&nbsp;status.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">PURPA provides two primary benefits to QFs.
First, QFs generally are relieved of compliance with extensive
federal and state regulations that control the financial
structure of an electricity generating plant and the prices and
terms on which electricity may be sold by the plant. Second,
FERC&#146;s regulations promulgated under PURPA require that
electric utilities purchase electricity generated by QFs at a
price based on the purchasing utility&#146;s avoided cost, and
that the utility sell back-up power to the QF on a
non-discriminatory basis. The term avoided cost is defined as
the incremental cost to an electric utility of electric energy
or capacity, or both, which, but for the purchase from QFs, such
utility would generate for itself or purchase from another
source. FERC regulations also permit QFs and utilities to
negotiate agreements for utility purchases of power at rates
lower than the utilities&#146; avoided costs. While public
utilities are not explicitly required by PURPA to enter into
long-term power sales agreements, PURPA helped to create a
regulatory environment in which it has been common for long-term
agreements to be&nbsp;negotiated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to be a QF, a cogeneration facility must
produce not only electricity, but also useful thermal energy for
use in an industrial or commercial process for heating or
cooling applications in certain proportions to the facilities
total energy output, and must meet certain energy efficiency
standards. A geothermal facility may qualify as a QF if it
produces less than 80&nbsp;megawatts of electricity. Finally, a
QF (including a geothermal QF or other qualifying small power
producer) must not be controlled or more than 50% owned by one
or more electric utilities or by most electric utility holding
companies, or one or more subsidiaries of such a utility or
holding company or any combination thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We endeavor to develop our projects, monitor
compliance by the projects with applicable regulations and
choose our customers in a manner which minimizes the risks of
any project losing its QF status. Certain factors necessary to
maintain QF status are, however, subject to the risk of events
outside our control. For example, loss of a thermal energy
customer or failure of a thermal energy customer to take
required amounts of thermal energy from a cogeneration facility
that is a QF could cause the facility to fail requirements
regarding the level of useful thermal energy output. Upon the
occurrence of such an event, we would seek to replace the
thermal energy customer or find another use for the thermal
energy which meets PURPA&#146;s requirements, but no assurance
can be given that this would be&nbsp;possible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If one of the facilities in which we have an
interest should lose its status as a QF, the project would no
longer be entitled to the exemptions from PUHCA and the FPA.
This could also trigger certain rights of termination under the
facility&#146;s power sales agreement, could subject the
facility to rate regulation as a public utility under the FPA
and state law and could result in us inadvertently becoming an
electric utility holding company by owning more than 10% of the
voting securities of, or controlling, a facility that would no
longer be exempt from PUHCA. This could cause all of our
remaining projects to lose their qualifying status, because QFs
may not be controlled or more than 50% owned by such electric
utility holding companies. Loss of QF
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<DIV align="left">
<FONT size="2">status may also trigger defaults under covenants
to maintain QF status in the projects power sales agreements,
steam sales agreements and financing agreements and result in
termination, penalties or acceleration of indebtedness under
such agreements such that loss of status may be on a retroactive
or a prospective basis.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Energy Policy Act of 1992, if a
facility can be qualified as an exempt wholesale generator
(EWG), meaning that all of its output is sold for resale rather
than to end users, it will be exempt from PUHCA even if it does
not qualify as a QF. Therefore, another response to the loss or
potential loss of QF status would be to apply to have the
project qualified as an EWG. However, assuming this changed
status would be permissible under the terms of the applicable
power sales agreement, rate approval from FERC would be
required. In addition, the facility would be required to cease
selling electricity to any retail customers (such as the thermal
energy customer) to retain its EWG status and could become
subject to state regulation of sales of thermal energy. See
Public Utility Holding Company Regulation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, Congress is considering proposed
legislation that would repeal PUHCA and amend PURPA by limiting
its mandatory purchase obligation to existing contracts. In
light of the circumstances in California, the Pacific Gas and
Electric Company bankruptcy and the Enron bankruptcy, among
other events in 2001, there are a number of federal legislative
and regulatory initiatives that could result in changes in how
the energy markets are regulated. We do not know whether this
legislation or regulatory initiatives will be adopted or, if
adopted, what form they may take. We cannot provide assurance
that any legislation or regulation ultimately adopted would not
adversely affect our existing domestic projects.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Public
Utility Holding Company Regulation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under PUHCA, any corporation, partnership or
other legal entity which owns or controls 10% or more of the
outstanding voting securities of a public utility company, or a
company which is a holding company for a public utility company,
is subject to registration with the Securities and Exchange
Commission (SEC) and regulation under PUHCA, unless eligible for
an exemption. A holding company of a public utility company that
is subject to registration is required by PUHCA to limit its
utility operations to a single integrated utility system and to
divest any other operations not functionally related to the
operation of that utility system. Approval by the SEC is
required for nearly all important financial and business
dealings of a registered holding company. Under PURPA, most QFs
are not public utility companies under&nbsp;PUHCA.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Energy Policy Act of 1992, among other
things, amends PUHCA to allow EWGs, under certain circumstances,
to own and operate non-QF electric generating facilities without
subjecting those producers to registration or regulation under
PUHCA. The effect of such amendments has been to enhance the
development of non-QFs which do not have to meet the fuel,
production and ownership requirements of PURPA. We believe that
these amendments benefit us by expanding our ability to own and
operate facilities that do not qualify for QF status. However,
they have also resulted in increased competition by allowing
utilities and their affiliates to develop such facilities which
are not subject to the constraints of&nbsp;PUHCA.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
Natural Gas Transportation Regulation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have an ownership interest in
38&nbsp;gas-fired cogeneration plants in operation or under
construction. The cost of natural gas is ordinarily the largest
expense of a gas-fired project and is critical to the projects
economics. The risks associated with using natural gas can
include the need to arrange transportation of the gas from great
distances, including obtaining removal, export and import
authority if the gas is transported from Canada; the possibility
of interruption of the gas supply or transportation (depending
on the quality of the gas reserves purchased or dedicated to the
project, the financial and operating strength of the gas
supplier, whether firm or non-firm transportation is purchased
and the operations of the gas pipeline); and obligations to take
a minimum quantity of gas and pay for it
(i.e.,&nbsp;take-and-pay obligations).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Natural Gas Act, FERC has
jurisdiction over the transportation and storage of natural gas
in interstate commerce. With respect to most transactions that
do not involve the construction of pipeline facilities,
regulatory authorization can be obtained on a self-implementing
basis. However, interstate pipeline rates and terms and
conditions for such services are subject to continuing
FERC&nbsp;oversight.
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal Power
Act Regulation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the FPA, FERC is authorized to regulate the
transmission of electric energy and the sale of electric energy
at wholesale in interstate commerce. Unless otherwise exempt,
any person that owns or operates facilities used for such
purposes is considered a public utility subject to FERC
jurisdiction. FERC regulation under the FPA includes approval of
the disposition of utility property, authorization of the
issuance of securities by public utilities, regulation of the
rates, terms and conditions for the transmission or sale of
electric energy at wholesale in interstate commerce, the
regulation of interlocking directorates, a uniform system of
accounts and reporting requirements for public utilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">FERC regulations implementing PURPA provide that
a QF is exempt from regulation under the foregoing provisions of
the FPA. An EWG is not exempt from the FPA and therefore an EWG
that makes sales of electric energy at wholesale in interstate
commerce is subject to FERC regulation as a public utility.
However, many of the regulations which customarily apply to
traditional public utilities have been waived or relaxed for
power marketers, EWGs and other non-traditional public utilities
that lack market power. EWGs are regularly granted authorization
to charge market-based rates, blanket authority to issue
securities, and waivers of certain FERC requirements pertaining
to accounts, reports and interlocking directorates. Such action
is intended to implement FERC&#146;s policy to foster a more
competitive wholesale power&nbsp;market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of the generating projects in which we own
an interest are operated as QFs and are therefore exempt from
FERC regulation under the FPA. However, several of our
generating projects are or will be EWGs subject to FERC
jurisdiction under the FPA. Several of our affiliates have been
granted authority to engage in sales at market-based rates and
to issue securities, and have also been granted the customary
waivers of FERC regulations available to non-traditional public
utilities; however, we cannot assure that such authorities or
waivers will be granted in the future to other&nbsp;affiliates.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;State Regulation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">State public utility commissions (PUCs) have
historically had broad authority to regulate both the rates
charged by, and the financial activities of, electric utilities
operating in their states and to promulgate regulation for
implementation of PURPA. Since a power sales agreement becomes a
part of a utility&#146;s cost structure (generally reflected in
its retail rates), power sales agreements with independent
electricity producers, such as EWGs, are potentially under the
regulatory purview of PUCs and in particular the process by
which the utility has entered into the power sales agreements.
If a PUC has approved the process by which a utility secures its
power supply, a PUC is generally inclined to pass through the
expense associated with a power purchase agreement with an
independent power producer to the utility&#146;s retail
customers. However, a regulatory commission under certain
circumstances may disallow the full reimbursement to a utility
for the cost to purchase power from a QF or an EWG. In addition,
retail sales of electricity or thermal energy by an independent
power producer may be subject to PUC regulation depending on
state law. Independent power producers which are not QFs under
PURPA, or EWGs pursuant to the Energy Policy Act of 1992, are
considered to be public utilities in many states and are subject
to broad regulation by a PUC, ranging from requirement of
certificate of public convenience and necessity to regulation of
organizational, accounting, financial and other corporate
matters. States may assert jurisdiction over the siting and
construction of electricity generating facilities including QFs
and EWGs and, with the exception of QFs, over the issuance of
securities and the sale or other transfer of assets by these
facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">State PUCs also have jurisdiction over the
transportation of natural gas by local distribution companies
(LDCs). Each states regulatory laws are somewhat different;
however, all generally require the LDC to obtain approval from
the PUC for the construction of facilities and transportation
services if the LDCs generally applicable tariffs do not cover
the proposed transaction. LDC rates are usually subject to
continuing PUC&nbsp;oversight.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;Regulation of Canadian
Gas</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Canadian natural gas industry is subject to
extensive regulation by governmental authorities. At the federal
level, a party exporting gas from Canada must obtain an export
license from the Canadian National
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<DIV align="left">
<FONT size="2">Energy Board (NEB). The NEB also regulates
Canadian pipeline transportation rates and the construction of
pipeline facilities. Gas producers also must obtain a removal
permit or license from provincial authorities before natural gas
may be removed from the province, and provincial authorities may
regulate intra-provincial pipeline and gathering systems. In
addition, a party importing natural gas into the United States
first must obtain an import authorization from the U.S.
Department of&nbsp;Energy.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">Environmental Regulations</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exploration for and development of geothermal
resources, oil, gas liquids and natural gas, and the
construction and operation of wells, fields, pipelines, various
other mid stream facilities and equipment, and power projects,
are subject to extensive federal, state and local laws and
regulations adopted for the protection of the environment and to
regulate land use. The laws and regulations applicable to us
primarily involve the discharge of emissions into the water and
air and the use of water, but can also include wetlands
preservation, endangered species, hazardous materials handling
and disposal, waste disposal and noise regulations. These laws
and regulations in many cases require a lengthy and complex
process of obtaining licenses, permits and approvals from
federal, state and local&nbsp;agencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Noncompliance with environmental laws and
regulations can result in the imposition of civil or criminal
fines or penalties. In some instances, environmental laws also
may impose clean-up or other remedial obligations in the event
of a release of pollutants or contaminants into the environment.
The following federal laws are among the more significant
environmental laws as they apply to us. In most cases, analogous
state laws also exist that may impose similar, and in some cases
more stringent, requirements on us as those discussed below.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clean Air
Act</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Federal Clean Air Act of 1970 (the Clean Air
Act) provides for the regulation, largely through state
implementation of federal requirements, of emissions of air
pollutants from certain facilities and operations. As originally
enacted, the Clean Air Act sets guidelines for emissions
standards for major pollutants (i.e., sulfur dioxide and
nitrogen oxide) from newly built sources. In late 1990, Congress
passed the Clean Air Act Amendments (the 1990 Amendments). The
1990 Amendments attempt to reduce emissions from existing
sources, particularly previously exempted older power plants. We
believe that all of our operating plants are in compliance with
federal performance standards mandated for such plants under the
Clean Air Act and the 1990&nbsp;Amendments.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clean Water
Act</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Federal Clean Water Act (the Clean Water Act)
establishes rules regulating the discharge of pollutants into
waters of the United States. We are required to obtain a
wastewater and storm water discharge permit for wastewater and
runoff, respectively, from certain of our facilities. We believe
that, with respect to our geothermal operations, we are exempt
from newly promulgated federal storm water requirements. We
believe that we are in material compliance with applicable
discharge requirements of the Clean Water&nbsp;Act.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Resource
Conservation and Recovery Act</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Resource Conservation and Recovery Act (RCRA)
regulates the generation, treatment, storage, handling,
transportation and disposal of solid and hazardous waste. We
believe that we are exempt from solid waste requirements under
RCRA. However, particularly with respect to our solid waste
disposal practices at the power generation facilities and steam
fields located at The Geysers, we are subject to certain solid
waste requirements under applicable California laws. We believe
that our operations are in material compliance with
such&nbsp;laws.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
Environmental Response, Compensation, and
Liability&nbsp;Act</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (CERCLA or
Superfund), requires cleanup of sites from which there has been
a release or threatened release
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<DIV align="left">
<FONT size="2">of hazardous substances and authorizes the United
States Environmental Protection Agency to take any necessary
response action at Superfund sites, including ordering
potentially responsible parties (PRPs) liable for the release to
take or pay for such actions. PRPs are broadly defined under
CERCLA to include past and present owners and operators of, as
well as generators of wastes sent to, a site. As of the present
time, we are not subject to liability for any Superfund matters.
However, we generate certain wastes, including hazardous wastes,
and send certain of our wastes to third party waste disposal
sites. As a result, there can be no assurance that we will not
incur liability under CERCLA in the&nbsp;future.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD></TD>
	<TD>
	<B><I><FONT size="2">Various Federal and State Laws Regulating
	Oil and Gas Exploration and Production Activities, Including the
	Operation of Midstream&nbsp;Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Regulations and procedures as issued by
U.S.&nbsp;Dept. of Interior/ Bureau of Land Management for our
federal oil and gas leases, U.S.&nbsp;Dept. of Interior/ Bureau
of Indian Affairs for our oil and gas leases on Indian lands and
State agencies for our State oil and gas leases; regulations and
procedures as issued by the State agencies in California,
Colorado, Wyoming, Montana, New Mexico, Texas, Oklahoma,
Arkansas, Mississippi and Louisiana, including operating permits
and bonds covering our onshore operations; and regulations by
the U.S.&nbsp;Department of Transportation/ U.S.&nbsp;Coast
Guard and Office of Pipeline Safety, the U.S.&nbsp;Department of
Interior/ Minerals Management Service covering our offshore
U.S.&nbsp;Gulf of Mexico operations including operating permits
and bonds. These agencies have varied remedies for enforcement,
including fines and penalties, permit and license revocation,
and suspension of production. As a result, there can be no
assurance that we will not incur liability for fines and
penalties or otherwise subject Calpine to the various remedies
by these agencies, but we believe that we are currently in
material compliance.
</FONT>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">See &#147;Risk Factors&#148; section starting
on page&nbsp;F-5 under &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operation&#148;
included elsewhere in this report.</FONT></B>

<P align="center">
<B><FONT size="2">EMPLOYEES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we employed
3,719&nbsp;people, of whom 50&nbsp;were represented by
collective bargaining agreements. We have never experienced a
work stoppage or strike, and we consider relations with our
employees to be good. Although we are an asset-based company, we
are successful because of the talents, intelligence,
resourcefulness and energy level of our employees. As discussed
in our strategy section, our employee knowledge base enables us
to optimize the value and profitability of our electricity
production and prudently manage the risks inherent in
our&nbsp;business.
</FONT>

<!-- link2 "Item 2. Properties" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Properties</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive office located in San
Jose, California is held under leases that expire through 2008,
and we also lease offices in Dublin, California; Houston, Texas;
Boston, Massachusetts; Northbrook, Illinois and Calgary,
Alberta. We hold additional leases for our Construction
Management office in Folsom, California and for other satellite
offices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We either lease or own the land upon which our
power-generating facilities are built. We believe that our
properties are adequate for our current operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have leasehold interests in 105&nbsp;leases
comprising 21,217&nbsp;acres of federal, state and private
geothermal resource lands in The Geysers area in northern
California. In the Glass Mountain and Medicine Lake areas in
northern California, we hold leasehold interests in
42&nbsp;leases comprising approximately 47,159&nbsp;acres of
federal geothermal resource&nbsp;lands.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, under these leases, we have the
exclusive right to drill for, produce and sell geothermal
resources from these properties and the right to use the surface
for all related purposes. Each lease requires the payment of
annual rent until commercial quantities of geothermal resources
are established. After such time,
</FONT>

<P align="center"><FONT size="2">24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">the leases require the payment of minimum advance
royalties or other payments until production commences, at which
time production royalties are payable. Such royalties and other
payments are payable to landowners, state and federal agencies
and others, and vary widely as to the particular lease. The
leases are generally for initial terms varying from 10&nbsp;to
20&nbsp;years or for so long as geothermal resources are
produced and sold. Certain of the leases contain drilling or
other exploratory work requirements. In certain cases, if a
requirement is not fulfilled, the lease may be terminated and in
other cases additional payments may be required. We believe that
our leases are valid and that we have complied with all the
requirements and conditions material to the continued
effectiveness of the leases. A number of our leases for
undeveloped properties may expire in any given year. Before
leases expire, we perform geological evaluations in an effort to
determine the resource potential of the underlying properties.
We cannot assure that we will decide to renew any expiring
leases.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on independent petroleum engineering
reports of Netherland, Sewell&nbsp;&#38; Associates,&nbsp;Inc.,
and Gilbert Laustsen Jung Associates,&nbsp;Ltd., as of
December&nbsp;31, 2001, utilizing year end product prices and
costs held constant, our proved oil, natural gas, and natural
gas liquids (&#147;NGLs&#148;) reserve volumes, in millions of
barrels (&#147;MMBbls&#148;) and billions of cubic feet
(&#147;Bcf&#148;) are as&nbsp;follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">As&nbsp;of December&nbsp;31, 2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Oil and NGLs</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(MMBbls)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gas (Bcf)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">United States</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved developed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved undeveloped
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">590</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Canada</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved developed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved undeveloped
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Consolidated</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved developed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">772</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved undeveloped
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">263</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,035</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">43.2 MMBbls of oil is equivalent to 259&nbsp;Bcf
	of&nbsp;gas.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proved oil and natural gas reserves are the
estimated quantities of crude oil, natural gas and natural gas
liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating
conditions. Estimated future development costs associated with
proved non-producing and proved undeveloped reserves as of
December&nbsp;31, 2001, totaled approximately
$222.3&nbsp;million.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our interest in
undeveloped acreage, developed acreage and productive wells in
which we own a working interest as of December&nbsp;31, 2001.
Gross represents the total number of acres or wells in which we
own a working interest. Net represents our proportionate working
interest resulting from our ownership in the gross acres or
wells. Productive wells are wells in which we have a working
interest and are capable of producing oil or natural&nbsp;gas.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Undeveloped Acres</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Developed Acres</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Productive Wells</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">United States</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Arkansas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,823</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,967</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">California
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,738</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73,901</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">221</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">169</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Colorado
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,843</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,519</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,721</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Louisiana
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,472</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,228</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,821</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mississippi
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">270</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,584</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Montana
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,583</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,423</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">New Mexico
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,011</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,545</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oklahoma
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,765</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">953</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Texas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,556</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,832</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,874</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,867</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Wyoming
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,016</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,664</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Offshore
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,510</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,892</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237,631</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">259,441</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,307</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Canada</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,672,199</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,197,269</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">946,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">507,234</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Consolidated Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,909,830</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,387,753</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,206,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">712,541</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,880</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,473</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Gross Wells Drilled</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the number of
gross exploratory and gross development wells drilled in which
the Company participated during the last three fiscal years. The
number of wells drilled refers to the number of wells commenced
at any time during the respective fiscal year. Productive wells
are either producing wells or wells capable of commercial
production. At December 31, 2001, the Company was in the process
of drilling three wells (net 1.8) in the US and six wells (net
4.8) in Canada.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Exploratory</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Developmental</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Productive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Dry</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Productive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Dry</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">290</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">Net Wells Drilled</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for each of the
last three fiscal years, the number of net exploratory and net
developmental wells drilled by the Company:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Exploratory</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Developmental</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Productive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Dry</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Productive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Dry</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">156.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canada
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the Company&#146;s
annual average wellhead sales prices and average production
costs (excluding production taxes). The average sales prices
include realized gains and losses for derivative contracts the
Company enters to manage price risk related to the
Company&#146;s sales&nbsp;volumes.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">UNITED STATES</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas (per&nbsp;Mcf)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.91</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.96</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.66</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and condensate (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.71</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas liquids (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.67</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.77</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.05</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production cost (per&nbsp;Mcfe)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.53</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">CANADA</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas (per&nbsp;Mcf)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.60</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and condensate (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.03</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.99</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas liquids (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.96</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.67</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production cost (per&nbsp;Mcfe)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.53</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.43</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.42</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">TOTAL</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas (per&nbsp;Mcf)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.81</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.66</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and condensate (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.92</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas liquids (per&nbsp;barrel)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production cost (per&nbsp;Mcfe)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.53</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.42</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Item 3. Legal Proceedings" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;3.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Legal Proceedings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Calpine Corporation v. Automated Credit
Exchange (&#147;ACE&#148;).</FONT></I><FONT size="2"> On
March&nbsp;5, 2002, Calpine sued ACE in the Superior Court of
the State of California for the County of Alameda for negligence
and breach of contract to recover reclaim trading credits, a
form of emission reduction credits that should have been held in
Calpine&#146;s account with U.S.&nbsp;Trust Company
(US&nbsp;Trust). ACE is a broker in emission reduction credits
based in Pasadena, California. Calpine had paid ACE for Nitrogen
oxide (NOx) coastal credits that were to be purchased by ACE and
held by US&nbsp;Trust. The credits were to be held by
US&nbsp;Trust pursuant to a Credit Holding Agreement, which
provided, among other things, that US&nbsp;Trust was to hold the
credits until receiving instructions from ACE to disburse the
credits. ACE had agreed that (i)&nbsp;upon prior written
instruction from Calpine, to instruct US&nbsp;Trust to take such
actions as may be directed by Calpine to disburse the credits
held in escrow pursuant to the Credit Holding Agreement and
(ii)&nbsp;not to take any action, or otherwise instruct
US&nbsp;Trust to take any action, concerning the credits held in
escrow pursuant to the Credit Holding Agreement without prior
written instruction from Calpine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ben Johnson v. Peter Cartwright, et
al.</FONT></I><FONT size="2"> On December&nbsp;17, 2001, a
shareholder filed a derivative lawsuit on behalf of Calpine
against its directors and one of its senior officers. This
lawsuit is styled <I>Johnson&nbsp;vs. Cartwright, et al.</I>
(No.&nbsp;CV803872), and is pending in the California Superior
Court, Santa Clara County. Calpine is a nominal defendant in
this lawsuit, which alleges claims relating to purportedly
misleading statements about Calpine and stock sales by certain
of the director defendants and the officer defendant. Calpine
has filed a demurrer asking the court to dismiss the complaint
on the ground that the shareholder plaintiff lacks standing to
pursue claims on behalf of Calpine. The individual defendants
have filed a demurrer asking the court to dismiss the complaint
on the ground that it fails to state any claims against them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Securities Class Action
Lawsuits.</FONT></I><FONT size="2"> Over the past several weeks,
five shareholder lawsuits have been filed against Calpine and
certain of its officers in the United States District Court,
Northern District of California. The action captioned <I>Weisz
vs. Calpine Corp., et&nbsp;al.</I>, filed March&nbsp;11, 2002,
is a purported class action on behalf of purchasers of Calpine
stock between March&nbsp;15, 2001 and December&nbsp;13, 2001.
The four other actions, captioned <I>Local&nbsp;144 Nursing Home
Pension Fund vs. Calpine Corp., Lukowski vs. Calpine Corp., Hart
vs. Calpine Corp., </I>and <I>Atchison vs. Calpine Corp.</I>,
were filed between March&nbsp;18, 2002 and March&nbsp;26, 2002.
The complaints in these four actions are virtually identical,
and each was filed by the same law firm, in conjunction with
other law firms as co-counsel. All four lawsuits are purported
class actions on behalf of purchasers of Calpine&#146;s
securities between January&nbsp;5, 2001 and December&nbsp;13,
2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The complaints in these five actions allege that,
during the purported class periods, defendants Calpine and
certain senior executives issued false and misleading statements
about Calpine&#146;s financial condition in violation of
Sections&nbsp;10(b) and 20(a) of the Securities Exchange Act of
1934, as well as Rule&nbsp;10b-5. These actions seek an
unspecified amount of damages, in addition to other forms of
relief. We expect that these actions, as well as any related
actions that may be filed in the future, will be consolidated by
the court into a single securities class action. We consider the
lawsuits to be without merit, and we intend to defend vigorously
against these allegations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Public Utilities Commission of the State of
California v. Sellers of Long Term Contracts to the California
Department of Water Resources; California Electricity Oversight
Board v. Sellers of Long Term Contracts to the California
Department of Water Resources.</FONT></I><FONT size="2"> In
February 2002, both the California Public Utilities Commission
and the California Electric Oversight Board filed complaints
under Section&nbsp;206 of the Federal Power Act with the Federal
Energy Regulatory Commission (FERC) (EL02-60-000 and
EL02-62-000, respectively) alleging that the prices and terms of
the long-term contracts with the California Department of Water
Resources (DWR) are unjust and unreasonable and counter to the
public interest. Calpine Energy Services, L.P.&nbsp;(CES) is a
respondent and the four long-term contracts entered into between
CES and DWR are subject to the complaint. <I>(see, Risk
Factors&nbsp;&#151; California Long-Term Supply Agreements)</I>
The FERC has noticed this proceeding and responsive pleadings
were due from the respondents on or before March&nbsp;22, 2002.
Calpine believes that the complaints are without merit and
intends to defend its position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Lockport Energy Associates, L.P. and the
New&nbsp;York Public Service Commission v. New&nbsp;York State
Electricity and Gas Company.</FONT></I><FONT size="2"> An action
was filed against Lockport Energy Associates,&nbsp;L.P. and the
</FONT>

<P align="center"><FONT size="2">28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">New&nbsp;York Public Service Commission
(&#147;NYPSC&#148;) in August 1997 by New&nbsp;York State
Electricity and Gas Company (&#147;NYSEG&#148;) in the Federal
District Court for the Northern District of New York. NYSEG
requested the Court to direct NYPSC and FERC to modify contract
rates to be paid to the Lockport Power Plant. In October 1997
NYPSC filed a cross-claim alleging that the FERC violated the
Public Utility Regulatory Policies Act of 1978, as amended, and
the Federal Power Act by failing to reform the NYSEG contract
that was previously approved by the NYPSC. On September&nbsp;29,
2000, the New York Federal District Court dismissed NYSEG&#146;s
complaint and NYPSC&#146;s cross-claim. The Court stated that
FERC has no authority to alter or waive its regulations or
exemptions to alter the terms of the applicable power purchase
agreements and that Qualifying Facilities are entitled to the
benefit of their bargain, even if at the expense of NYSEG and
its ratepayers. On October&nbsp;5, 2001, the United States Court
of Appeals affirmed the judgment of the federal district court
and dismissed all of the claims raised by NYSEG against Lockport.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is involved in various other claims
and legal actions arising out of the normal course of business.
The Company does not expect that the outcome of these
proceedings will have a material adverse effect on the
Company&#146;s financial position or results of&nbsp;operations.
</FONT>

<!-- link2 "Item 4. Submission of Matters to a Vote of Security Holders" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;4.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Submission of Matters to a Vote of
	Security&nbsp;Holders</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None.
</FONT>

<!-- link1 "PART II" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Item 5. Market for Registrant&#146;s Common Equity and Related Stockholder Matters" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;5.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Market for Registrant&#146;s Common Equity
	and Related Stockholder&nbsp;Matters</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine&#146;s common stock is traded on the New
York Stock Exchange under the symbol &#147;CPN.&#148; Public
trading of the common stock commenced on September&nbsp;20,
1996. Prior to that, there was no public market for the common
stock. The following table sets forth, for the periods
indicated, the high and low sale price per share of the common
stock on The New York Stock Exchange. The information in the
following table reflects the 2&nbsp;for&nbsp;1 stock split that
became effective on June&nbsp;8, 2000, and the 2&nbsp;for&nbsp;1
stock split that became effective on November&nbsp;14, 2000.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">First Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30.75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.09</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Second Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fourth Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.97</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">First Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Second Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fourth Quarter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of March&nbsp;26, 2002, there were
approximately 1,347&nbsp;holders of record of our common stock.
On March&nbsp;26, 2002, the last sale price reported on the New
York Stock Exchange for our common stock was $12.18
per&nbsp;share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have not declared any cash dividends on the
common stock during the past two fiscal years. We do not
anticipate paying any cash dividends on the common stock in the
foreseeable future because we intend to retain our earnings to
finance the expansion of our business and for general corporate
purposes. In addition, our ability to pay cash dividends is
restricted under certain of our indentures and our other debt
agreements.
</FONT>

<P align="center"><FONT size="2">29
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Future cash dividends, if any, will be at the
discretion of our board of directors and will depend upon, among
other things, our future operations and earnings, capital
requirements, general financial condition, contractual
restrictions and such other factors as the board of directors
may deem&nbsp;relevant.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Retirement Savings
Plan.</FONT></I><FONT size="2"> Effective September 1999 Calpine
Corporation amended its Retirement Savings Plan to add a Calpine
Common Stock Fund as one of the investment options for employee
contributions to the Plan. As the result of this amendment, the
exemption from registration under the Securities Act of 1933 for
both the plan participation interests and the shares of Common
Stock previously afforded by Section&nbsp;3(a)(2) of the
Securities Act ceased to be available. In April 2000 Calpine
filed with the Securities and Exchange Commission a registration
statement on Form&nbsp;S-8 registering both the plan
participation interests and the shares of Common Stock offered
and sold under the Plan after the effective date of the
registration statement. While Calpine believes that many of the
sales made prior to such registration would qualify as exempt
transactions under Section&nbsp;4(2) of the Securities Act, it
has not undertaken an evaluation of the eligibility of each Plan
participant to purchase securities in a private placement, and
expects that such an evaluation would show that not all of the
Plan participants who purchased unregistered securities
would&nbsp;qualify.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine estimates that, from the date of the plan
amendment through the effective date of the registration
statement, (i)&nbsp;the market value of unregistered plan
participation interests sold was $25.9 million and (ii)&nbsp;the
number of unregistered shares of Common Stock sold was
1,542,860. Because employee contributions that are directed to
the Calpine Common Stock Fund are used by the Plan&#146;s
trustee to purchase shares of Common Stock in the open market,
Calpine does not receive any proceeds from the sale of
the&nbsp;shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">4% Convertible Senior Notes due
2006.</FONT></I><FONT size="2"> On December&nbsp;26, 2001, we
completed a private placement of $1.0&nbsp;billion aggregate
principal amount of 4% Convertible Senior Notes due 2006 (the
&#147;senior notes due 2006&#148;). The initial purchaser of the
senior notes due 2006 was Deutsche Bank Alex. Brown Inc. (the
&#147;initial purchaser&#148;). The initial purchaser exercised
its option to acquire an additional $200.0&nbsp;million
aggregate principal amount of the senior notes due 2006 by
purchasing an additional $100.0&nbsp;million aggregate principal
amount of the senior notes due 2006 on each of December&nbsp;31,
2001 and January&nbsp;3, 2002. The offering price of the senior
notes due 2006 was 100% of the principal amount of the senior
notes due 2006, less an aggregate underwriting discount of
$30.0&nbsp;million. Each sale of the senior notes due 2006 to
the initial purchaser was exempt from registration in reliance
on Section&nbsp;4(2) and Regulation&nbsp;D under the Securities
Act of 1933, as amended, as a transaction not involving a public
offering. The senior notes due 2006 were re-offered by the
initial purchaser to qualified institutional buyers in reliance
on Rule&nbsp;144A under the Securities Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The senior notes due 2006 are convertible into
shares of our common stock at a conversion price of $18.07 per
share. The conversion price is subject to adjustment in certain
circumstances. We have reserved 66,408,411 shares of our
authorized common stock for issuance upon conversion of the
senior notes due 2006. The senior notes due 2006 are convertible
at any time on or before the close of business on the day that
is two business days prior to the maturity date,
December&nbsp;26, 2006, unless we have previously repurchased
the senior notes due 2006. Holders of the senior notes due 2006
have the right to require us to repurchase their senior notes
due 2006 on December&nbsp;26, 2004. We may choose to pay the
repurchase prince in cash or shares of common stock, or a
combination thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Zero Coupon Convertible Debentures due
2021.</FONT></I><FONT size="2"> On April&nbsp;30, 2001, we
completed a private placement of $850.0&nbsp;million aggregate
principal amount of Zero Coupon Convertible Debentures due 2021
(the &#147;debentures due 2021&#148;). The initial purchaser of
the debentures due 2021 was Goldman, Sachs &#38; Co. (the
&#147;initial purchaser&#148;). On April&nbsp;30, 2001, the
initial purchaser exercised its option to acquire an additional
$150.0&nbsp;million aggregate principal amount of the debentures
due 2021. The offering price of the debentures due 2021 was 100%
of the principal amount of the debentures due 2021, less an
aggregate underwriting discount of $22.5&nbsp;million. Each sale
of the debentures due 2021 to the initial purchaser was exempt
from registration in reliance on Section&nbsp;4(2) and
Regulation&nbsp;D under the Securities Act of 1933, as amended,
as a transaction not involving a public offering. The debentures
due 2021 were re-offered by the initial purchaser to qualified
institutional buyers in reliance on Rule&nbsp;144A under the
Securities Act.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The debentures due 2021 are convertible into
shares of our common stock at a conversion ratio of 13.2714
shares of common stock per each $1,000 principal amount of
debentures due 2021, which is equivalent to a conversion price
of $75.35 per share. The conversion ratio is subject to
adjustment in certain circumstances. We have reserved 13,271,400
shares of our authorized common stock for issuance upon
conversion of the debentures due 2021. The debentures due 2021
are convertible at any time on or before the close of business
on April&nbsp;29, 2021, the day prior to the maturity date,
April&nbsp;30, 2021, unless we have previously redeemed or
repurchased the debentures due 2021. Holders of debentures due
2021 called for redemption will be entitled to convert them on
or before the close of business on the business day immediately
preceding the date fixed for redemption. Holders of the senior
notes due 2006 have the right to require us to repurchase their
senior notes due 2006 on April&nbsp;30, 2002, 2004, 2006, 2008,
2011 and 2016. We may choose to pay the repurchase price in cash
or shares of common stock, or a combination thereof (except on
April&nbsp;30, 2016, when the repurchase price must be paid in
cash). As of March&nbsp;28, 2002, $314.5&nbsp;million aggregate
principal amount of the debentures due 2021 had been repurchased
in open market and privately negotiated transactions and
$685.5&nbsp;million aggregate principal amount of the debentures
due 2021 remained outstanding.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;6.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Selected Financial Data</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required hereunder is set forth
under &#147;Selected Consolidated Financial Data&#148; included
in the Consolidated Financial Statements that are a part of
this&nbsp;report.
</FONT>

<!-- link2 "Item 7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operation" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;7.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Management&#146;s Discussion and Analysis
	of Financial Condition and Results
	of&nbsp;Operation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required hereunder is set forth
under &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operation&#148; included
elsewhere in this&nbsp;report.
</FONT>

<!-- link2 "Item 7a. Quantitative and Qualitative Disclosure About Market Risk" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;7a.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Quantitative and Qualitative Disclosure
	About Market&nbsp;Risk</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required hereunder is set forth
under &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operation&nbsp;&#151;
Financial Market Risks&#148; included in the Consolidated
Financial Statements that are a part of this&nbsp;report.
</FONT>

<!-- link2 "Item 8. Financial Statements and Supplementary Data" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;8.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Financial Statements and
	Supplementary&nbsp;Data</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required hereunder is set forth
under &#147;Report of Independent Public Accountants,&#148;
&#147;Consolidated Balance Sheets,&#148; &#147;Consolidated
Statements of Operations,&#148; &#147;Consolidated Statements of
Stockholders&#146; Equity,&#148; &#147;Consolidated Statements
of Cash Flows,&#148; and &#147;Notes to Consolidated Financial
Statements&#148; included in the Consolidated Financial
Statements that are a part of this report. Other financial
information and schedules are included in the Consolidated
Financial Statements that are a part of this&nbsp;report.
</FONT>

<!-- link2 "Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="8%"></TD>
	<TD width="92%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;9.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Changes in and Disagreements With
	Accountants on Accounting and
	Financial&nbsp;Disclosure</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;22, 2002 Calpine determined to
dismiss Arthur Andersen LLP (&#147;Andersen&#148;) as its
independent public accountants after completion of the audit for
the year ended December&nbsp;31, 2001, and appointed Deloitte
and Touche LLP (&#147;Deloitte and Touche&#148;) as its new
independent public accountants for the fiscal year ending
December&nbsp;31, 2002. This determination followed
Calpine&#146;s decision to seek proposals from independent
accountants to audit Calpine&#146;s financial statements for the
fiscal year ending December&nbsp;31, 2002. The decision to
dismiss Andersen and to retain Deloitte and Touche was approved
by Calpine&#146;s Board of Directors upon the recommendation of
its Audit Committee. The decision to change auditors is not a
reflection of Andersen&#146;s capabilities or commitment.
Andersen has provided quality service and demonstrated
consistent professionalism during their 10&nbsp;year
relationship with Calpine. The appointment of Deloitte and
Touche as Calpine&#146;s new independent public accountants is
subject to stockholder ratification at Calpine&#146;s 2002
Annual Meeting of Stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The audit reports of Andersen on the consolidated
financial statements of Calpine and subsidiaries as of and for
the fiscal years ended December&nbsp;31, 2001 and 2000, did not
contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope, or
accounting principles. During
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Calpine&#146;s two most recent fiscal years ended
December&nbsp;31, 2001, and the subsequent interim period
through the filing with the SEC of this Annual Report on
Form&nbsp;10-K there were no disagreements between Calpine and
Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to Andersen&#146;s
satisfaction would have caused them to make reference to the
subject matter of the disagreement in connection with their
reports.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of the reportable events described under
Item&nbsp;304(a)(1)(v) of Regulation S-K occurred within
Calpine&#146;s two most recent fiscal years and the subsequent
interim period through the filing of this Annual Report on
Form&nbsp;10-K.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine provided Andersen with a copy of the
foregoing disclosures. A letter from Andersen dated
March&nbsp;29, 2002, stating its agreement with these statements
is included as Exhibit 16.1 hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During Calpine&#146;s two most recent fiscal
years ended December&nbsp;31, 2001, and the subsequent interim
period through the filing of this Annual Report on
Form&nbsp;10-K, Calpine did not consult with Deloitte and Touche
regarding any of the matters or events set forth in
Item&nbsp;304(a)(2)(i) and (ii) of Regulation&nbsp;S-K.
</FONT>

<!-- link1 "PART III" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">PART III</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Item 10. Directors and Executive Officers of the Registrant" -->
<DIV align="left"><A NAME="012"></A></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;10.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Directors and Executive Officers of
	the&nbsp;Registrant</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Incorporated by reference to Proxy Statement
relating to the 2002 Annual Meeting of Stockholders to
be&nbsp;filed.
</FONT>

<!-- link2 "Item 11. Executive Compensation" -->
<DIV align="left"><A NAME="013"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;11.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Executive Compensation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Incorporated by reference to Proxy Statement
relating to the 2002 Annual Meeting of Stockholders to
be&nbsp;filed.
</FONT>

<!-- link2 "Item 12. Security Ownership of Certain Beneficial Owners and Management" -->
<DIV align="left"><A NAME="014"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;12.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Security Ownership of Certain Beneficial
	Owners and&nbsp;Management</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Incorporated by reference to Proxy Statement
relating to the 2002 Annual Meeting of Stockholders to
be&nbsp;filed.
</FONT>

<!-- link2 "Item 13. Certain Relationships and Related Transactions" -->
<DIV align="left"><A NAME="015"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;13.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Certain Relationships and Related
	Transactions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Incorporated by reference to Proxy Statement
relating to the 2002 Annual Meeting of Stockholders to
be&nbsp;filed.
</FONT>

<!-- link1 "PART IV" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="center">
<B><FONT size="2">PART IV</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K" -->
<DIV align="left"><A NAME="017"></A></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="9%"></TD>
	<TD width="91%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">Item&nbsp;14.</FONT></B></TD>
	<TD>
	<B><I><FONT size="2">Exhibits, Financial Statement Schedules,
	and Reports on&nbsp;Form&nbsp;8-K</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">(a)-1.&nbsp;<B>Financial Statements and Other
Information</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following items appear in Appendix&nbsp;F of
this report:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2"> Selected Consolidated Financial Data
</FONT>

<DIV align="left">
<FONT size="2">Management&#146;s Discussion and Analysis of
Financial Condition and Results of&nbsp;Operation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Report of Independent Public Accountants
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Consolidated Balance Sheets, December&nbsp;31,
2001 and 2000
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Consolidated Statements of Operations for the
Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Consolidated Statements of Stockholders&#146;
Equity for the Years Ended December&nbsp;31, 2001, 2000,
and&nbsp;1999
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Consolidated Statements of Cash Flows for the
Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Notes to Consolidated Financial Statements for
the Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
</FONT>
</DIV>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<FONT size="2">(a)-2.&nbsp;<B>Financial Statement Schedules</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Schedule&nbsp;II&nbsp;&#151; Valuation and
Qualifying Accounts
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<B>Reports on Form&nbsp;8-K</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registrant filed the following reports on
Form&nbsp;8-K during the quarter ended December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" nowrap><B><FONT size="1">Date of Report</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date Filed</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Item Reported</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">October&nbsp;2, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">October 9, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">October&nbsp;11, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">October 12, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">October&nbsp;25, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">October 26, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">October&nbsp;16, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">November 13, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">November&nbsp;28, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">December 3, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;6, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">December 7, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;12, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">December 13, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">November&nbsp;14, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">December 20, 2001
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5, 7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">(c)&nbsp;<B>Exhibits</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following exhibits are filed herewith unless
otherwise indicated:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Certificate of Incorporation
	of Calpine Corporation.(a)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Correction of Calpine
	Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Amendment of Amended and Restated
	Certificate of Incorporation of Calpine Corporation.(c)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Designation of Series&nbsp;A
	Participating Preferred Stock of Calpine Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment to Certificate of Designation of
	Series&nbsp;A Participating Preferred Stock of Calpine
	Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment to Certificate of Designation of
	Series&nbsp;A Participating Preferred Stock of Calpine
	Corporation.(c)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Designation of Special Voting
	Preferred Stock of Calpine Corporation.(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated By-laws of Calpine
	Corporation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of May&nbsp;16, 1996, between
	the Company and Fleet National Bank, as Trustee, including form
	of&nbsp;Notes.(f)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	August&nbsp;1, 2000, between the Company and State Street Bank
	and Trust Company (successor trustee to Fleet National Bank),
	as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of July&nbsp;8, 1997, between
	the Company and The Bank of New&nbsp;York, as Trustee, including
	form of&nbsp;Notes.(g)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Supplemental Indenture dated as of
	September&nbsp;10, 1997, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(h)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;31, 1998,
	between the Company and The Bank of New&nbsp;York, as Trustee,
	including form of&nbsp;Notes.(i)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Supplemental Indenture dated as of July&nbsp;24,
	1998, between the Company and The Bank of New&nbsp;York,
	as&nbsp;Trustee.(i)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;29, 1999,
	between the Company and The Bank of New York, as Trustee,
	including form of&nbsp;Notes.(j)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of New
	York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.5.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;29, 1999,
	between the Company and The Bank of New York, as Trustee,
	including form of&nbsp;Notes.(j)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.5.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of New
	York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.6.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of August&nbsp;10, 2000,
	between the Company and Wilmington Trust Company, as Trustee.(k)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.6.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	September&nbsp;28, 2000, between the Company and Wilmington
	Trust Company, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of April&nbsp;30, 2001,
	between the Company and Wilmington Trust Company, as Trustee.(m)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Indenture dated as of
	October&nbsp;16, 2001, between Calpine Canada Energy Finance ULC
	and Wilmington Trust Company, as&nbsp;Trustee.(1)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee Agreement dated as of April&nbsp;25,
	2001, between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(o)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment, dated as of October&nbsp;16,
	2001, to Guarantee Agreement dated as of April&nbsp;25, 2001,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of October&nbsp;18, 2001,
	between Calpine Canada Energy Finance II ULC and Wilmington
	Trust Company, as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture, dated as of
	October&nbsp;18, 2001, between Calpine Canada Energy
	Finance&nbsp;II ULC and Wilmington Trust Company,
	as&nbsp;Trustee.(1)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee Agreement dated as of October&nbsp;18,
	2001, between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment, dated as of October&nbsp;18,
	2001, to Guarantee Agreement dated as of October&nbsp;18, 2001,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Rights Agreement, dated as
	of September&nbsp;19, 2001, between Calpine Corporation and
	Equiserve Trust Company,&nbsp;N.A., as Rights&nbsp;Agent.(n)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Exchangeable Share Provisions and Other
	Provisions to Be Included in the Articles of Calpine Canada
	Holdings Ltd. (included as Exhibit&nbsp;B to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Support Agreement between the Company and
	Calpine Canada Holdings Ltd. (included as Exhibit&nbsp;C to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;I.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Trust of Calpine Capital Trust, a
	Delaware statutory trust, dated September&nbsp;29, 1999.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Corrected Certificate of Certificate of Trust of
	Calpine Capital Trust, a Delaware statutory trust, filed
	October&nbsp;4,&nbsp;1999.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital Trust,
	dated as of October&nbsp;4, 1999, among Calpine Corporation, as
	Depositor, The Bank of New&nbsp;York (Delaware), as Delaware
	Trustee, The Bank of New&nbsp;York, as Property Trustee, and the
	Administrative Trustees named&nbsp;therein.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of November&nbsp;2, 1999,
	between Calpine Corporation and The Bank of New&nbsp;York, as
	Trustee, including form of&nbsp;Debenture.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement, dated November&nbsp;2,
	1999, among Calpine Corporation, Calpine Capital Trust, The Bank
	of New&nbsp;York, as Tender Agent, and Credit Suisse First
	Boston Corporation, as Remarketing Agent.(p)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust, dated as of November&nbsp;2, 1999, among
	Calpine Corporation, as Depositor and Debenture Issuer, The Bank
	of New&nbsp;York (Delaware), as Delaware Trustee, and The Bank
	of New York, as Property Trustee, and the Administrative
	Trustees named therein, including form of Preferred Security and
	form of Common Security.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement, dated
	as of November&nbsp;2, 1999, between Calpine Corporation and The
	Bank of New York, as Guarantee Trustee.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;II.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Trust of Calpine Capital Trust II,
	a Delaware statutory trust, filed January&nbsp;25, 2000.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital Trust II,
	dated as of January&nbsp;24, 2000, among Calpine Corporation, as
	Depositor and Debenture Issuer, The Bank of New York (Delaware),
	as Delaware Trustee, The Bank of New York, as Property Trustee,
	and the Administrative Trustees named therein.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of January&nbsp;31, 2000,
	between Calpine Corporation and The Bank of New York, as
	Trustee, including form of&nbsp;Debenture.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement, dated as of
	January&nbsp;31, 2000, among Calpine Corporation, Calpine
	Capital Trust&nbsp;II, The Bank of New York, as Tender Agent,
	and Credit Suisse First Boston Corporation, as Remarketing
	Agent.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Registration Rights Agreement, dated
	January&nbsp;31, 2000, among Calpine Corporation, Calpine
	Capital Trust&nbsp;II, Credit Suisse First Boston Corporation
	and ING Barings&nbsp;LLC.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust II, dated as of January&nbsp;31, 2000,
	among Calpine Corporation, as Depositor and Debenture Issuer,
	The Bank of New York (Delaware), as Delaware Trustee, The Bank
	of New York, as Property Trustee, and the Administrative
	Trustees named therein, including form of Preferred Security and
	form of Common Security.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement, dated
	as of January&nbsp;31, 2000, between Calpine Corporation and The
	Bank of New&nbsp;York, as Guarantee Trustee.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;III.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Certificate of Trust of
	Calpine Capital Trust&nbsp;III, a Delaware statutory trust,
	filed July&nbsp;19,&nbsp;2000.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital
	Trust&nbsp;III dated June&nbsp;28, 2000, among the Company, as
	Depositor and Debenture Issuer, The Bank of New York (Delaware),
	as Delaware Trustee, The Bank of New York, as Property Trustee
	and the Administrative Trustees named therein.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment No.&nbsp;1 to the Declaration of Trust
	of Calpine Capital Trust III dated July&nbsp;19, 2000, among the
	Company, as Depositor and Debenture Issuer, Wilmington Trust
	Company, as Delaware Trustee, Wilmington Trust Company, as
	Property Trustee, and the Administrative Trustees named
	therein.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of August&nbsp;9, 2000,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement dated as of August&nbsp;9,
	2000, among the Company, Calpine Capital Trust III, Wilmington
	Trust Company, as Tender Agent, and Credit Suisse First Boston
	Corporation, as Remarketing Agent.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Registration Rights Agreement dated as
	August&nbsp;9, 2000, between the Company, Calpine Capital
	Trust&nbsp;III, Credit Suisse First Boston Corporation, ING
	Barings&nbsp;LLC and CIBC&nbsp;World Markets&nbsp;Corp.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust&nbsp;III dated as of August&nbsp;9, 2000,
	the Company, as Depositor and Debenture Issuer, Wilmington Trust
	Company, as Delaware Trustee, Wilmington Trust Company, as
	Property Trustee, and the Administrative Trustees named therein,
	including the form of Preferred Security and form of Common
	Security.(r)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement dated as
	of August&nbsp;9, 2000, between the Company, as Guarantor, and
	Wilmington Trust Company, as Guarantee Trustee.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">PASS THROUGH CERTIFICATES (TIVERTON
	AND&nbsp;RUMFORD).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement dated as of
	December&nbsp;19, 2000, among Tiverton Power Associates Limited
	Partnership, Rumford Power Associates Limited Partnership and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including the form
	of&nbsp;Certificate.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement dated as of
	December&nbsp;19, 2000, among the Company, Tiverton Power
	Associates Limited Partnership, Rumford Power Associates Limited
	Partnership, PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, National Association, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	National Association, as Pass Through Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of December&nbsp;19, 2000, between
	PMCC&nbsp;Calpine New England Investment LLC and State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, including the forms of Lessor&nbsp;Notes.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Tiverton)
	dated as of December&nbsp;19, 2000, by Calpine, as Guarantor, to
	PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, as Indenture Trustee, and State Street
	Bank and Trust Company of Connecticut, as Pass
	Through&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Rumford)
	dated as of December&nbsp;19, 2000, by Calpine, as Guarantor, to
	PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, as Indenture Trustee, and State Street
	Bank and Trust Company of Connecticut, as Pass
	Through&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">PASS THROUGH CERTIFICATES (SOUTH POINT, BROAD
	RIVER AND&nbsp;ROCKGEN).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement A dated as of
	October&nbsp;18, 2001, among South Point Energy
	Center,&nbsp;LLC, Broad River Energy&nbsp;LLC, RockGen Energy
	LLC and State Street Bank and Trust Company of Connecticut,
	National Association, as Pass Through Trustee, including the
	form of 8.400% Pass Through Certificate, Series&nbsp;A.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement&nbsp;B dated as of
	October&nbsp;18, 2001, among South Point Energy
	Center,&nbsp;LLC, Broad River Energy&nbsp;LLC, RockGen
	Energy&nbsp;LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including the form of 9.825% Pass Through Certificate,
	Series&nbsp;B.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-1) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center, LLC, South Point OL-1,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-1, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-2) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point&nbsp;OL-2, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-2, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-3) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point OL-3,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-3, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-4) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point OL-4,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-4, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-1) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River&nbsp;OL-1, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-1, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-2) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River&nbsp;OL-2, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-2, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-3) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River OL-3, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-3, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-4) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River OL-4, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-4, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-1) dated as of
	October&nbsp;18, 2001, among the Company, RockGen
	Energy&nbsp;LLC, RockGen OL-1, LLC, Wells Fargo Bank Northwest,
	National Association, as Lessor Manager, SBR&nbsp;OP-1, LLC,
	State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee, and State Street Bank and
	Trust Company of Connecticut, National Association, as Pass
	Through Trustee, including Appendix&nbsp;A&nbsp;&#151;
	Definitions and Rules of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-2) dated as of
	October&nbsp;18, 2001, among the Company, RockGen
	Energy&nbsp;LLC, RockGen OL-2, LLC, Wells Fargo Bank Northwest,
	National Association, as Lessor Manager, SBR&nbsp;OP-2, LLC,
	State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee, and State Street Bank and
	Trust Company of Connecticut, National Association, as Pass
	Through Trustee, including Appendix&nbsp;A&nbsp;&#151;
	Definitions and Rules of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-3) dated as of
	October&nbsp;18, 2001, among the Company, RockGen Energy LLC,
	RockGen OL-3, LLC, Wells Fargo Bank Northwest, National
	Association, as Lessor Manager, SBR&nbsp;OP-3, LLC, State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
	Interpretation.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">37
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-4) dated as of
	October&nbsp;18, 2001, among the Company, RockGen Energy LLC,
	RockGen OL-4, LLC, Wells Fargo Bank Northwest, National
	Association, as Lessor Manager, SBR&nbsp;OP-4, LLC, State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
	Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-1, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-2, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-3, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-4, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-1, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-2, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-3, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-4, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-1, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-2, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-3, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">38
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-4, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-1, LLC, SBR OP-1, LLC, State Street
	Bank and Trust Company of Connecticut, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, as Pass
	Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-1, LLC, SBR&nbsp;OP-1, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-1, LLC, SBR&nbsp;OP-1, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">9.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Voting and Exchange Trust Agreement
	between the Company, Calpine Canada Holdings Ltd. and CIBC
	Mellon Trust Company, as Trustee (included as Exhibit&nbsp;D to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Purchase Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Combination Agreement, dated as of
	February&nbsp;7, 2001, by and between the Company and Encal
	Energy Ltd.(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amending Agreement to the Combination Agreement,
	dated as of March&nbsp;16, 2001, between the Company and Encal
	Energy Ltd.(t)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Plan of Arrangement Under
	Section&nbsp;186 of the Business Corporations Act (Alberta)
	Involving and Affecting Encal Energy Ltd. and the Holders of its
	Common Shares and Options (included as Exhibit&nbsp;A to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Financing Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Calpine Construction Finance
	Company Financing Agreement (&#147;CCFC I&#148;), dated as of
	February&nbsp;15, 2001.(d)(u)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Construction Finance Company Financing
	Agreement (&#147;CCFC II&#148;), dated as of October&nbsp;16,
	2000.(b)(v)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Amended and Restated Credit Agreement,
	dated as of May&nbsp;23, 2000 (&#147;Second Amended and Restated
	Credit Agreement&#148;), among the Company, Bayerische
	Landesbank, as Co-Arranger and Syndication Agent, The Bank of
	Nova Scotia, as Lead Arranger and Administrative Agent, and the
	Lenders named therein.(w)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment and Waiver to Second Amended and
	Restated Credit Agreement, dated as of April&nbsp;19, 2001,
	among the Company, The Bank of Nova Scotia, as Administrative
	Agent, and the Lenders named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Amendment to Second Amended and Restated
	Credit Agreement, dated as of March&nbsp;8, 2002, among the
	Company, The Bank of Nova Scotia, as Administrative Agent, and
	the Lenders named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Credit Agreement, dated as of March&nbsp;8, 2002,
	among the Company, the Lenders named therein, The Bank of Nova
	Scotia and Bayerische Landesbank Girozentrale, as lead arrangers
	and bookrunners, Salomon Smith Barney Inc. and Deutsche Banc
	Alex. Brown Inc., as lead arrangers and bookrunners, Bank of
	America, National Association, and Credit Suisse First Boston,
	Cayman Islands Branch, as lead arrangers and syndication agents,
	TD Securities (USA)&nbsp;Inc., as lead arranger, The Bank of
	Nova Scotia, as joint administrative agent and funding agent,
	and Citicorp USA, Inc., as joint administrative agent.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Assignment and Security Agreement, dated as of
	March&nbsp;8, 2002, by the Company in favor of The Bank of Nova
	Scotia, as administrative agent for each of the Lender Parties
	named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pledge Agreement, dated as of March&nbsp;8, 2002,
	by the Company in favor of The Bank of Nova Scotia, as Agent for
	the Lender Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pledge Agreement, dated as of March&nbsp;8, 2002,
	by Quintana Minerals (USA), Inc., JOQ Canada, Inc. and Quintana
	Canada Holdings, LLC in favor of The Bank of Nova Scotia, as
	Agent for the Lender Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee, dated as of March&nbsp;8, 2002, by
	Quintana Minerals (USA), Inc., JOQ&nbsp;Canada, Inc. and
	Quintana Canada Holdings, LLC, in favor of each of the Lender
	Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Other Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation Stock Option Program and
	forms of agreements there under.(x)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation 1996 Stock Incentive Plan and
	forms of agreements there under.(y)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Peter
	Cartwright.(q)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Ms.&nbsp;Ann&nbsp;B.
	Curtis.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Ron&nbsp;A.
	Walter.(*)(z)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">40
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Robert&nbsp;D.
	Kelly.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Thomas&nbsp;R.
	Mason.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation Annual Management Incentive
	Plan.(s)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$500,000 Promissory Note Secured by Deed of Trust
	made by Thomas R. Mason and Debra J. Mason in favor of Calpine
	Corporation.(s)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Indemnification Agreement for directors
	and officers.(y)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Indemnification Agreement for directors
	and officers.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">12.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Statement on Computation of Ratio of Earnings to
	Fixed Charges.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">16.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Letter re Change in Certifying Public
	Accountant.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Subsidiaries of the Company.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Arthur Andersen LLP, Independent
	Public Accountants.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Ernst &#38; Young LLP, Independent
	Chartered Accountants.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Netherland, Sewell &#38; Associates,
	Inc., independent engineer.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Gilbert Laustsen Jung Associates,
	Ltd., independent engineer.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">24.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Power of Attorney of Officers and Directors of
	Calpine Corporation (set forth on the signature pages of this
	report).(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Letter pursuant to Temporary Note 3T to
	Article&nbsp;3 of Regulation&nbsp;S-X.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">41
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of Section&nbsp;13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">CALPINE CORPORATION
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="2%"></TD>
	<TD width="58%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">By:&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">/s/ ROBERT D. KELLY
	</FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<FONT size="2">Robert D. Kelly
	</FONT></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<I><FONT size="2">Executive Vice President and Chief</FONT></I></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<I><FONT size="2">Financial Officer</FONT></I></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="center">
	<I><FONT size="2">(Principal Financial Officer)</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Date: March&nbsp;28, 2002
</FONT>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL PERSONS BY THESE PRESENTS: That the
undersigned officers and directors of Calpine Corporation do
hereby constitute and appoint Peter Cartwright and Ann&nbsp;B.
Curtis, and each of them, the lawful attorney and agent or
attorneys and agents with power and authority to do any and all
acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, determine may be
necessary or advisable or required to enable Calpine Corporation
to comply with the Securities and Exchange Act of 1934, as
amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this
Form&nbsp;10-K Annual Report. Without limiting the generality of
the foregoing power and authority, the powers granted include
the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this
Form&nbsp;10-K Annual Report or amendments or supplements
thereto, and each of the undersigned hereby ratifies and
confirms all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, each of the undersigned has
executed this Power of Attorney as of the date indicated
opposite the name.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ PETER CARTWRIGHT<BR>
	<HR size="1" noshade>Peter Cartwright
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Chairman, President, Chief Executive
	and&nbsp;Director<BR>
	(Principal Executive Officer)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ ANN B. CURTIS<BR>
	<HR size="1" noshade>Ann B. Curtis
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Executive Vice President, Vice&nbsp;Chairman
	and&nbsp;Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ ROBERT D. KELLY<BR>
	<HR size="1" noshade>Robert D. Kelly
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Executive Vice President and Chief Financial
	Officer<BR>
	(Principal Financial Officer)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">42
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ CHARLES B. CLARK, JR.<BR>
	<HR size="1" noshade>Charles B. Clark, Jr.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Senior Vice President and
	Corporate&nbsp;Controller<BR>
	(Principal Accounting Officer)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ KENNETH DERR<BR>
	<HR size="1" noshade>Kenneth Derr
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ JEFFREY E. GARTEN<BR>
	<HR size="1" noshade>Jeffrey E. Garten
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ GERALD GREENWALD<BR>
	<HR size="1" noshade>Gerald Greenwald
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<BR>
	<HR size="1" noshade><FONT size="2">Susan C. Schwab
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<FONT size="2">/s/ GEORGE J. STATHAKIS<BR>
	<HR size="1" noshade>George J. Stathakis
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">March&nbsp;28, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" valign="top">
	<BR>
	<HR size="1" noshade><FONT size="2">John O. Wilson
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">43
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION" -->
<DIV align="left"><A NAME="019"></A></DIV>

<DIV align="center">
<B><FONT size="2">INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">AND OTHER INFORMATION</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2001</FONT></B>
</DIV>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="91%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Selected Consolidated Financial Data
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Management&#146;s Discussion and Analysis of
	Financial Condition and Results of&nbsp;Operation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Report of Independent Public Accountants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-54</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Balance Sheets December&nbsp;31,
	2001 and&nbsp;2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statements of Operations for the
	Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-57</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statements of Stockholders&#146;
	Equity for the Years Ended December&nbsp;31, 2001, 2000,
	and&nbsp;1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-59</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statements of Cash Flows for the
	Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-60</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes to Consolidated Financial Statements for
	the Years Ended December&nbsp;31, 2001, 2000, and&nbsp;1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-62</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2"> CALPINE CORPORATION AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">SELECTED CONSOLIDATED FINANCIAL DATA</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands, except earnings per share and ratio data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Statement of operations data(1):</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">511,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">783,482</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,072,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,586,685</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,282</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,921</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,462</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">948,177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from unconsolidated investments in
	power&nbsp;projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,819</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">371,518</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">650,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">466,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,700,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,258,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,544</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">318,835</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">846,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Project development expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,537</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,712</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,556</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,860</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative&nbsp;expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,024</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102,551</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Merger expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,403</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,431</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,456</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,096,663</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,732</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,248</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions on trust preferred&nbsp;securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,210</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,334</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,744</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,642</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29,215</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(40,678</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(116,354</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before provision for income&nbsp;taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">638,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">986,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,035</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,183</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">264,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">345,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,158</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">373,837</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge), net of (tax)/
	benefit of $&#151;, $441, $793, $796 and&nbsp;$(3,606)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(641</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,150</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,517</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings per common&nbsp;share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average shares of common
	stock&nbsp;outstanding
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,159</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">176,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">225,375</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">281,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">303,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/ (charge) and
	cumulative effect of a change in accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in
	accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<DIV align="center">
<FONT size="2">(The information contained in the Selected
Financial Data is derived from the audited
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Consolidated Financial Statements of
Calpine&nbsp;Corporation&nbsp;and&nbsp;Subsidiaries.)
</FONT>
</DIV>

<P align="center"><FONT size="2">F-2
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands, except earnings per share and ratio data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings per common&nbsp;share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average shares of common stock
	outstanding before dilutive effect of certain
	convertible&nbsp;securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,601</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">185,067</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">238,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">317,919</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before dilutive effect of certain
	convertible securities, extraordinary gain/ (charge) and
	cumulative effect of a change in accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilutive effect of certain
	convertible&nbsp;securities(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.17</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/ (charge) and
	cumulative effect of a change in accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in
	accounting&nbsp;principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.87</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Balance sheet data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,513</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,371</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,525,417</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment,&nbsp;net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">981,615</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,372,319</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,276,180</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,979,160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,384,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments in power&nbsp;projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">222,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">221,509</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,225</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378,614</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,328,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,643,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,032,009</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,400,902</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,323,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,309,295</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Short-term debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,966</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,450</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,470</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,558</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">903,444</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843,268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,211,377</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,214,921</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,689,562</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,824,417</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,448,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">956,234</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,216,827</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,262,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,751,120</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,727,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Company-obligated mandatorily redeemable
	convertible preferred securities of subsidiary&nbsp;trusts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">270,713</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,122,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,123,024</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interests
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,705</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370,658</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">402,710</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,100,089</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,422,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,010,569</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Cash flow data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash provided by operating&nbsp;activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">199,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">314,361</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">802,550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">557,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash used in investing&nbsp;activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(496,393</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(488,834</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,599,456</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752,657</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,500,518</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash provided by financing&nbsp;activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300,429</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">337,144</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,537,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,813</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,876,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effect of exchange rate changes on cash and
	cash&nbsp;equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net increase(decrease) in cash and cash
	equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(47,457</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,019</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,839</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">929,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<DIV align="center">
<FONT size="2">(The information contained in the Selected
Financial Data is derived from the audited
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Consolidated Financial Statements of
Calpine&nbsp;Corporation&nbsp;and&nbsp;Subsidiaries.)
</FONT>
</DIV>

<P align="center"><FONT size="2">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands, except earnings per share and ratio data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Reconciliation of net income to EBITDA,
	as&nbsp;adjusted:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,517</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from unconsolidated investment in
	power&nbsp;projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,819</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,240</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,593</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,639</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,763</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions from unconsolidated investments in
	power&nbsp;projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,042</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,717</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,318</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjusted net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,375</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">377,942</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">645,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,732</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,248</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">1/3 of operating lease&nbsp;expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,710</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,624</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions on trust preferred&nbsp;securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,210</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,334</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provision for income&nbsp;taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,035</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,183</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">264,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">345,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">338,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">EBITDA, as adjusted(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,918</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">282,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">433,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,015,571</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,595,148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Other financial data
	and&nbsp;ratios:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ratio of earnings to fixed charges(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.68x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.52x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.83x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.26x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.64x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Certain prior years&#146; amounts have been
	reclassified to conform to the 2001 presentation.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Includes the effect of the assumed conversion of
	certain convertible securities. For the years 2000 and 2001,
	respectively, the assumed conversion calculation adds 31,746 and
	54,183 shares of common stock and $20,841 and $45,898 to the net
	income results, representing the after tax expense on certain
	convertible securities avoided upon conversion.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">This non-GAAP measure is defined as net income
	less income from unconsolidated investments, plus cash received
	from unconsolidated investments, plus provision for tax, plus
	interest expense, plus one-third of operating lease expense,
	plus depreciation and amortization, plus distributions on our
	Company-obligated mandatorily redeemable convertible preferred
	securities of subsidiary trusts (&#147;HIGH TIDES&#148;).
	EBITDA, as adjusted is presented not as a measure of operating
	results, but rather as a measure of our ability to service debt.
	EBITDA, as adjusted should not be construed as an alternative to
	either (i)&nbsp;income from operations (determined in accordance
	with generally accepted accounting principles) or (ii)&nbsp;cash
	flows from operating activities (determined in accordance with
	generally accepted accounting principles). Prior to 2000,
	EBITDA, as adjusted had been calculated according to an
	indenture definition. EBITDA, as adjusted for 1997 through 1999
	has been restated to conform to the definition set forth above.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">For purposes of computing our consolidated ratio
	of earnings to fixed charges, earnings consist of pre-tax income
	before adjustment for minority interests in our consolidated
	subsidiaries or income or loss from equity investees, plus fixed
	charges, amortization of capitalized interest, and distributed
	income of equity investees, reduced by interest capitalized and
	the minority interest in pre-tax income of subsidiaries that
	have not incurred fixed charges. Fixed charges consist of
	interest expensed and capitalized (including amortized premiums,
	discounts and capitalized expenses related to indebtedness), an
	estimate of the interest within rental expense and the
	distributions on our HIGH TIDES.
	</FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<DIV align="center">
<FONT size="2">(The information contained in the Selected
Financial Data is derived from the audited
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Consolidated Financial Statements of
Calpine&nbsp;Corporation&nbsp;and&nbsp;Subsidiaries.)
</FONT>
</DIV>

<P align="center"><FONT size="2">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS
OF</FONT></B>

<DIV align="center">
<B><FONT size="2">FINANCIAL CONDITION AND RESULTS OF
OPERATION</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">In addition to historical information, this
report contains forward-looking statements. Such statements
include those concerning Calpine Corporation&#146;s (&#147;the
Company&#146;s&#148;) expected financial performance and its
strategic and operational plans, as well as all assumptions,
expectations, predictions, intentions or beliefs about future
events. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
a number of risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements
such as, but not limited to, (i)&nbsp;unseasonable weather
patterns that reduce demand for power and natural gas,
(ii)&nbsp;systemic economic slowdowns, which can adversely
affect consumption of power by businesses and consumers,
(iii)&nbsp;the timing and extent of deregulation of energy
markets and the rules and regulations adopted on a transitional
basis with respect thereto, (iv)&nbsp;the timing and extent of
changes in commodity prices for energy, particularly natural gas
and electricity, (v)&nbsp;commercial operations of new plants
that may be delayed or prevented because of various development
and construction risks, such as a failure to obtain financing
and the necessary permits to operate or the failure of
third-party contractors to perform their contractual
obligations, (vi)&nbsp;cost estimates are preliminary and actual
costs may be higher than estimated, (vii)&nbsp;a
competitor&#146;s development of a lower-cost gas-fired power
plant, (viii)&nbsp;risks associated with marketing and selling
power from power plants in the newly-competitive energy market,
or (ix)&nbsp;the successful exploitation of an oil or gas
resource that ultimately depends upon the geology of the
resource, the total amount and cost to develop recoverable
reserves, and operational factors relating to the extraction of
natural gas. All information set forth in this filing is as of
March&nbsp;29, 2002, and Calpine undertakes no duty to update
this information. Readers should carefully review the &#147;Risk
Factors&#148; section of this document as well as in other
documents filed with the Securities and Exchange Commission,
including, but not limited to, the Quarterly Reports on
Form&nbsp;10-Q to be filed by the Company in fiscal
year&nbsp;2002.</FONT></I>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Corporation (&#147;Calpine&#148;), a
Delaware corporation, and subsidiaries (collectively, &#147;the
Company&#148;) is engaged in the generation of electricity in
the United States, Canada and the United Kingdom. We are
involved in the development, acquisition, ownership and
operation of power generation facilities and the sale of
electricity and its by-product, thermal energy, primarily in the
form of steam. We have ownership interests in and operate
gas-fired power generation and cogeneration facilities, gas
fields, gathering systems and gas pipelines, geothermal steam
fields and geothermal power generation facilities in the United
States. In Canada we have power facilities and oil and gas
operations. In the United Kingdom we own the Saltend Energy
Centre. Each of the generation facilities produces and markets
electricity for sale to utilities and other third party
purchasers. Thermal energy produced by the gas-fired
cogeneration facilities is primarily sold to governmental and
industrial users. Gas produced and not physically delivered to
our generating plants is sold to third parties. At
March&nbsp;20, 2002, we had interests in 64&nbsp;operating power
plants, representing 12,090&nbsp;megawatts of net capacity. See
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Overview&#148;
</FONT>

<P align="left">
<B><FONT size="2">Selected Operating Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is certain selected operating
information for our power plants and, through May 1999 for our
geothermal steam fields at The Geysers, for which results are
consolidated in our statements of operations. Results vary for
the twelve months ended December&nbsp;31, 2001, as compared to
the same period in 2000 and 1999, primarily due to the
consolidation of acquisitions, changing energy pricing, and
increased production. Electricity revenue is composed of fixed
capacity payments, which are not related to production, and
variable energy payments, which are related to production.
Capacity revenues include, besides traditional capacity
payments, other revenues such as Reliability Must Run and
Ancillary Service revenues. The information set forth under
thermal and other revenue consists of host steam sales and other
thermal revenue, including our
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">geothermal steam field revenues prior to our
acquisition of the PG&#38;E&nbsp;geothermal power plants at The
Geysers on May&nbsp;7, 1999.
</FONT>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands, except production and pricing data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Power Plants:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity and steam
	(&#147;E&#38;S&#148;)&nbsp;revenues:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Energy
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">334,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">458,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,220,718</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,724,830</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capacity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">123,380</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">247,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">382,478</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">569,231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thermal and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,112</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,112</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,297</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">138,217</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">507,897</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">760,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,702,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,432,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Spread on sales of purchased&nbsp;power(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">334</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,476</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,933</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">337,583</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjusted E&#38;S&nbsp;revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">508,231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">762,801</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,769,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Megawatt hours produced
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,158,008</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,864,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,802,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,749,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,542,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All-in electricity price per megawatt
	hour&nbsp;generated
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109.95</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.52</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51.53</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.61</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">From hedging, balancing and optimization
	activities related to our generating assets.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is a table summarizing the dollar
amounts and percentages of our total revenue for the years ended
December&nbsp;31, 2001, 2000, and 1999 that represent purchased
power and purchased gas sales and the costs we incurred to
purchase the power and gas that we resold during these periods
(in thousands, except for percentage data):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased&nbsp;power
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,157</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,056,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As a percentage of total&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sale of purchased gas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,416</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">520,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As a percentage of total&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total cost of revenue&nbsp;(&#147;COR&#148;)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,700,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,258,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased power expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,681</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,708,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As a percentage of total COR
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased gas expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">492,587</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As a percentage of total&nbsp;COR
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The primary reasons for the significant increase
in these sales and costs of revenue in 2001 as compared with
2000 are: (a)&nbsp;the growth of Calpine Energy Services
(&#147;CES&#148;) in 2001 as compared with 2000 and the
corresponding increase in hedging, balancing, optimization, and
trading activities; (b)&nbsp;particularly volatile markets and
high prices for electricity and natural gas, which prompted us
to frequently adjust our hedge positions by buying power and gas
and reselling it; (c)&nbsp;the accounting requirements under
SAB&nbsp;101 and EITF&nbsp;99-19, which require us to show most
of our hedging contracts on a gross basis (as opposed to netting
sales and cost of revenue); and (d)&nbsp;rules in effect
throughout 2001 associated with the NEPOOL market in
New&nbsp;England, which require that all power generated in
NEPOOL be sold directly to the Independent System Operator
(&#147;ISO&#148;) in that market; we then buy from the ISO to
serve our customer contracts. Generally accepted accounting
principles require us to account for this activity, which
applies to three of our merchant generating facilities, as the
aggregate of two distinct sales and one purchase. This gross
basis presentation
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">increases revenues but not gross profit. The
table below details the financial extent of our transactions
with NEPOOL for the period indicated. The total purchases and
sales do not constitute the total amount of the gross up effect
of NEPOOL transactions on our financial statements but, rather,
we are supplying this information to give an indication of the
extent of our transactions with NEPOOL. The increase in 2001 is
primarily due to our entrance into the NEPOOL market, which
began with our acquisition of the Dighton, Tiverton, and Rumford
facilities on December&nbsp;15, 2000.
</FONT>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales to NEPOOL from power we&nbsp;generated
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">285,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales to NEPOOL from hedging and
	other&nbsp;activity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,416</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total sales to NEPOOL
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">451,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total purchases from&nbsp;NEPOOL
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">413,875</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Results of Operation</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Year Ended
December&nbsp;31, 2001, Compared to Year Ended December&nbsp;31,
2000</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue</FONT></I><FONT size="2">&nbsp;&#151;
Total revenue increased to $7,590.0&nbsp;million for the twelve
months ended December&nbsp;31, 2001, compared to
$2,547.1&nbsp;million for the same period in 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Electric generation and marketing
revenue</FONT></I><FONT size="2"> increased to
$6,586.7&nbsp;million in 2001 compared to $2,073.0&nbsp;million
in 2000. Approximately $729.8&nbsp;million of the
$4,513.7&nbsp;million variance was due to electricity and steam
sales, which increased due to our growing portfolio. Electric
power generation of 43.5&nbsp;million megawatt-hours in 2001
exceeded the 22.7&nbsp;million megawatt-hours in 2000 by 92%
which offset a decrease of $11.75 in the average all-in
electricity price per megawatt-hour generated. Our revenue for
the year ended December&nbsp;31, 2001, includes the consolidated
results of additional facilities that we acquired or completed
construction during 2001. Similarly, this year&#146;s results
benefited from a full year of production from facilities that we
acquired at various times during 2000. Our power marketing
activities contributed an increase of $3,685.9&nbsp;million due
to increased hedging, balancing, optimization, and trading
activity as a result of the growth of CES and our operating
plant portfolio during 2001 and also reflects the significant
volatility in commodity pricing which led to a high volume of
hedging and hedge adjusting activity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also recognized $98.1&nbsp;million (net of a
reserve of $13.1&nbsp;million) in mark-to-market gains on power
derivatives. This reserve is related to gains generated by
Enron&#146;s insolvency which required earnings recognition for
contracts that had previously been exempted from SFAS
No.&nbsp;133 accounting as normal purchases or sales, and which
represented the change in fair value of cash flow hedges between
the ineffectiveness date and the date of termination. The
reserve equals 100% of the net mark-to-market gain that would
have otherwise been recognized. The reserve was established due
to the uncertainty surrounding the termination and settlement of
the Enron contracts and will be reevaluated as we complete the
Enron settlement process.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximately $68.5&nbsp;million of the
$98.1&nbsp;million of the mark-to-market gain was recognized in
the second quarter of 2001 from entering into a fixed price
firm-quantity power sales contract for 2002&nbsp;-&nbsp;2006
with one counterparty in a market area where we will not have
generating assets for at least the first six months of the
contract. The contract presented us with an opportunity to
establish a commercial relationship with an important customer
in a market where we will eventually have generation assets, and
we determined there was substantial benefit in executing the
agreement for the entire term requested by the counterparty as
opportunities to enter into such contract may be available
infrequently. Because of the structure of the contract, under
SFAS No.&nbsp;133 the contract and the related commodity
derivative transactions did not constitute a hedge or a normal
purchase or sale. Before taking into account time value of money
considerations, the aggregate gain was $79.9&nbsp;million. At
September&nbsp;30, 2001, this gain was locked in as a result of
entering into offsetting fixed price power purchases. However,
on December&nbsp;10, 2001, we terminated the portion of those
offsetting purchases where Enron was the counterparty, which
constituted approximately
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

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<DIV align="left">
<FONT size="2">30% of the power purchases. We have completed the
process of replacing these contracts. At March&nbsp;20, 2002, we
had replaced 100% of the terminated volume. Our future expansion
plans may result in our entry into new markets, which could
present similar opportunities, and any resulting power and gas
contracts will require similar accounting treatment.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil and gas production and marketing
revenue</FONT></I><FONT size="2"> increased to
$948.2&nbsp;million in 2001 compared to $444.5&nbsp;million in
2000. Approximately $412.4&nbsp;million of the increase relates
to purchased gas sold to third parties in hedging, balancing,
optimization, and trading transactions. Additionally,
approximately $91.3&nbsp;million of the variance relates to
increased production and commodity prices in sales to third
parties from our reserves in Canada and in the
United&nbsp;States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income from unconsolidated investments in
power projects</FONT></I><FONT size="2"> decreased to
$8.8&nbsp;million in 2001 compared to $24.6&nbsp;million during
2000. The variance is primarily due to the contractual reduction
in distributions from the Sumas Power Plant of approximately
$12.9&nbsp;million. We also experienced a $4.1&nbsp;million
decrease in income from our Grays Ferry investment and
$2.0&nbsp;million less in income due to the sale of our Bayonne
investment in March&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other revenue</FONT></I><FONT size="2">
increased to $46.4&nbsp;million in 2001 compared to
$5.0&nbsp;million in 2000. This increase is due primarily to
$21.3&nbsp;million recognized in 2001 from Power Systems Mfg.,
L.L.C. (&#147;PSM&#148;), which was acquired in December 2000,
$6.9&nbsp;million in revenues from our WRMS subsidiary,
$5.9&nbsp;million in commissioning services related to an
unconsolidated construction project and a $2.0&nbsp;million
increase in interest income on loans to power projects.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of
revenue</FONT></I><FONT size="2">&nbsp;&#151; Cost of revenue
increased to $6,258.5&nbsp;million in 2001 compared to
$1,700.1&nbsp;million in 2000. Approximately
$3,350.2&nbsp;million of the $4,558.4&nbsp;million increase
relates to the cost of power purchased by our energy services
organization in hedging, balancing, optimization and trading
activities. Similarly, oil and gas production and marketing
expense grew by $408.2&nbsp;million, largely due to a
$384.3&nbsp;million increase in expense for the cost of gas
purchased (and resold) by our energy services organization. Fuel
expense increased 82%, from $612.9&nbsp;million in 2000 to
$1,116.1&nbsp;million in 2001, due to a 92% increase in megawatt
hours generated which was partially mitigated by a 7% decrease
in average fuel price, and mark-to-market gains of
$36.7&nbsp;million on natural gas derivatives. Depreciation,
depletion and amortization expense increased by 47%, from
$230.8&nbsp;million in 2000 to $338.2&nbsp;million in 2001, due
to additional power facilities in operation in 2001 and due to
$42.6&nbsp;million in higher depreciation and depletion in our
oil and gas operating subsidiaries. Operating lease expense
increased by $49.5&nbsp;million due to a full year of operating
lease expense in connection with operating leases entered into
or acquired for our Pasadena, Tiverton, Rumford, KIAC, West Ford
Flat and Bear Canyon facilities during 2000, and additional
operating lease expense for our Rockgen, South Point, and Broad
River facilities for operating leases entered into in
October&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Project development
expense</FONT></I><FONT size="2">&nbsp;&#151; Project
development expense increased 30% due to an increase in the
number of projects in the early stage of&nbsp;development.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General and administrative
expense</FONT></I><FONT size="2">&nbsp;&#151; General and
administrative expense increased 53% to $157.4&nbsp;million for
the year ended December&nbsp;31, 2001, as compared to
$102.6&nbsp;million for the same period in 2000. The increase
was attributable to continued growth in personnel and associated
overhead costs necessary to support the overall growth in our
operations and due to recent acquisitions, including power
facilities and natural gas operations. The growth-induced
increase was offset by a decrease in cash bonus accruals to
reflect a higher mix of stock options in the Company&#146;s
incentive program for&nbsp;management.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Merger
expense</FONT></I><FONT size="2">&nbsp;&#151; We incurred
approximately $41.6&nbsp;million of expense in 2001 in
connection with our merger with Encal Energy&nbsp;Ltd. on
April&nbsp;19, 2001. The transaction was accounted for under the
pooling-of-interests method and, accordingly, all transaction
costs have been expensed as incurred and all periods presented
have been restated to reflect the&nbsp;transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest
expense</FONT></I><FONT size="2">&nbsp;&#151; Interest expense
increased 121% to $165.4&nbsp;million for the year ended
December&nbsp;31, 2001, from $74.7&nbsp;million for the same
period in 2000. Interest expense increased primarily due to a
full year of interest expense in 2001 for $1.0&nbsp;billion of
senior notes issued in 2000, in addition to interest expense on
approximately $4.0&nbsp;billion, C$200&nbsp;million, and
&#163;200&nbsp;million of senior notes issued in 2001. The
associated
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

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<DIV align="left">
<FONT size="2">incremental interest expense was partially offset
by interest capitalized. In 2001, total capitalized interest was
$498.7&nbsp;million versus $207.0&nbsp;million in 2000.
Capitalized interest increased between years due to the
significant increase in our power plant construction program,
which offset the slight decrease in our interest capitalization
rate due to a decrease in market interest&nbsp;rates.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Distributions on trust preferred
securities</FONT></I><FONT size="2">&nbsp;&#151; Distributions
on trust preferred securities increased 39% to
$61.3&nbsp;million in 2001 compared to $44.2&nbsp;million in
2000. The increase is attributable to the issuance of additional
trust preferred securities in August 2000, as well as a full
period of distributions in 2001 with respect to the January 2000
trust preferred offering and the subsequent exercise of the
initial purchasers&#146; option to purchase additional
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest
income</FONT></I><FONT size="2">&nbsp;&#151; Interest income
increased to $72.6&nbsp;million for 2001, compared to
$39.9&nbsp;million for the same period in 2000. This increase is
due primarily to the significantly higher cash balances that we
have maintained as a result of our senior notes and convertible
securities offerings in 2001, in addition to $10.3&nbsp;million
interest income in 2001 realized in connection with
$265.6&nbsp;million of Pacific Gas and Electric Company
(&#147;PG&#38;E&#148;) pre-bankruptcy petition receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other income
(expense)</FONT></I><FONT size="2">&nbsp;&#151; Other income
(expense) increased to $43.9&nbsp;million in 2001 from
$3.5&nbsp;million in 2000. Other income in 2001 is comprised of
approximately $19.4&nbsp;million related to gains on the sale of
non-strategic oil and gas properties and $28.1&nbsp;million
related to the settlement and termination of a contract with a
gas supplier. Additionally, we recorded gains of
$7.2&nbsp;million on the sale of our interests in the Elwood
development project and $11.3&nbsp;million on the sale of our
interest in the Bayonne Power Plant including related contingent
income recognized as earned thereafter. These increases were
partially offset by a $17.7&nbsp;million reserve resulting from
the nonperformance by a third party in delivering certain
emissions reduction credits that we had purchased, and by the
sale of the balance of our PG&#38;E pre-bankruptcy petition
receivables at a $9.0&nbsp;million discount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Provision for income
taxes</FONT></I><FONT size="2">&nbsp;&#151; The effective income
tax rate was approximately 35% and 41.5% for 2001 and 2000,
respectively, reflecting our expansion into Canada and the
United Kingdom and our cross border financings, which reduced
our effective tax&nbsp;rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Extraordinary gain (charge),
net</FONT></I><FONT size="2">&nbsp;&#151; The $6.0&nbsp;million
gain in 2001 was primarily a result of repurchasing
$122.0&nbsp;million aggregate principal amount of our Zero
Coupon Convertible Debentures Due 2006 (&#147;Zero
Coupons&#148;), which was comprised primarily of a
$7.4&nbsp;million gain from repurchasing the Zero Coupons at a
discount and a partially offsetting loss due to the write off of
unamortized deferred financing costs. The extraordinary gain was
partially offset by extraordinary losses of $1.4&nbsp;million
related to the write off of unamortized deferred financing costs
resulting from the repayment of $105&nbsp;million in aggregate
outstanding principal amount of the 9&nbsp;1/4% Senior Notes Due
2004 and bridge credit facilities entered into in
June&nbsp;2001. The $1.2&nbsp;million charge in 2000 represents
the write-off of deferred financing costs related to the
repayment of bridge financing and the Bank One, Texas,&nbsp;N.A.
borrowing base&nbsp;facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cumulative effect of a change in accounting
principle</FONT></I><FONT size="2">&nbsp;&#151; The
$1.0&nbsp;million of additional income, net of tax, is due to
the adoption in 2001 of Statement of Financial Accounting
Standards (&#147;SFAS&#148;) No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities,&#148; amended by
SFAS No.&nbsp;137 and SFAS&nbsp;No.&nbsp;138 (&#147;SFAS
No.&nbsp;133&#148;).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD></TD>
	<TD>
	<B><I><FONT size="2">Year Ended December&nbsp;31, 2000, Compared
	to Year Ended December&nbsp;31,&nbsp;1999</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue</FONT></I><FONT size="2">&nbsp;&#151;
Total revenue increased 159% to $2,547.1&nbsp;million in 2000
compared to $983.5&nbsp;million in 1999, primarily due to the
impact of recognition of a full year&#146;s income from various
assets that were acquired in 1999, recognition of a partial
year&#146;s income from various assets that were acquired in
2000, increased hedging, balancing, and optimization activity,
increased production, and favorable pricing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Electric generation and marketing
revenue</FONT></I><FONT size="2"> increased 165% to
$2,073.0&nbsp;million in 2000 compared to $783.5&nbsp;million in
1999. Approximately $269.4&nbsp;million of the increase was
generated by a full year&#146;s activity of our geothermal
facilities, which we initially acquired in May 1999. The
facilities that we acquired as part of the Cogeneration
Corporation of America, Inc. acquisition in December 1999, which
was later renamed
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

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<DIV align="left">
<FONT size="2">Calpine Cogeneration Corporation
(&#147;CCC&#148;), contributed $107.2&nbsp;million in 2000.
Additionally, commencement of commercial operations at our
Hidalgo facility and of our Pasadena expansion generated
approximately $147.1&nbsp;million. During 2000, our acquisitions
of KIAC, Stony Brook, Auburndale, and Agnews contributed an
additional $113.5&nbsp;million to the overall increase in
revenue. The balance was primarily due to increased production
and favorable energy pricing in various markets, particularly
California. Sales of purchased power increased
$347.3&nbsp;million due to increased Calpine Energy Services, LP
(&#147;CES&#148;) hedging, balancing, and optimization activity.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil and gas production and marketing
revenue</FONT></I><FONT size="2"> increased 185% to
$444.5&nbsp;million in 2000 compared to $156.0&nbsp;million in
1999. Approximately $194.6&nbsp;million of the increase was due
to increased production and favorable pricing, in addition to
the acquisition of Sheridan Energy, Inc. in October 1999 and
several strategic gas acquisitions during 2000, including
Quintana Minerals Canada Corp. and TriGas Exploration Inc. The
remainder of the variance was caused by the increased CES
hedging, balancing, and optimization activity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income from unconsolidated investments in
power projects</FONT></I><FONT size="2"> decreased 33% to
$24.6&nbsp;million in 2000 compared to $36.6&nbsp;million in
1999. Approximately $5.2&nbsp;million of the decrease is
primarily attributable to the consolidation of KIAC, Stony
Brook, Auburndale, and Agnews&#146; results in electricity and
steam sales as a result of our purchase of these facilities
during 2000. We also recorded $8.8&nbsp;million less equity
income from Sumas, and $1.2&nbsp;million less equity income from
our investment in Bayonne. These amounts were partially offset
by $4.7&nbsp;million of revenue that we recorded in connection
with our investment in the Grays Ferry facility that we acquired
in December&nbsp;1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of
revenue</FONT></I><FONT size="2">&nbsp;&#151; Cost of revenue
increased to $1,700.1&nbsp;million in 2000 compared to
$664.6&nbsp;million in 1999, an increase of
$1,035.5&nbsp;million, or&nbsp;156%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Electric generation and marketing
expense</FONT></I><FONT size="2"> increased by
$432.1&nbsp;million to $587.2&nbsp;million in 2000 compared to
$155.1&nbsp;million in 1999 due primarily to an increase of
$337.9&nbsp;million in the cost of purchased power by CES in
hedging, balancing, and optimization activity, and additionally
to the incremental effect of acquisitions made in 1999 such as
CCC&nbsp;facilities and the geothermal facilities which reflect
a full year of activity in 2000, and due to acquisitions made in
2000. Production royalties increased by $18.5&nbsp;million to
$32.3&nbsp;million in 2000 compared to $13.8&nbsp;million in
1999 primarily due to royalties paid to third parties in
connection with geothermal energy generation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil and gas production and marketing
expense</FONT></I><FONT size="2"> increased by
$132.4&nbsp;million to $197.8&nbsp;million in 2000 compared to
$65.4&nbsp;million in 1999 due primarily to a $95.7&nbsp;million
increase in cost of gas purchased and resold as a result of
increased CES hedging, balancing, and optimization activity, in
addition to an increase in production combined with higher
third-party facility charges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Fuel expense</FONT></I><FONT size="2">
increased by $344.2&nbsp;million to $612.9&nbsp;million in 2000
compared to $268.7&nbsp;million in 1999 due primarily to the
incremental effect of acquisitions made in 1999 such as the CCC
facilities which reflect a full year of activity in 2000, and
due to acquisitions made in 2000. Additionally, we incurred
significantly higher gas prices during&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Depreciation, depletion and amortization
expense</FONT></I><FONT size="2"> increased by
$95.9&nbsp;million to $230.8&nbsp;million in 2000 compared to
$134.9&nbsp;million in 1999 primarily due to an approximate
$63.6&nbsp;million increase in depletion expense relating to our
natural gas production. The remainder is substantially the
result of the incremental effect of acquisitions that we made
during 1999 and&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating lease
expense</FONT></I><FONT size="2"> increased by
$35.8&nbsp;million to $69.4&nbsp;million in 2000 compared to
$33.6&nbsp;million in 1999. Approximately $15.0&nbsp;million was
due to the lease associated with our acquisition of the
remaining 50% interest in KIAC in May 2000. Another
$8.7&nbsp;million was due to the inclusion of a full year&#146;s
operations of our geothermal facilities, $5.0&nbsp;million was
attributable to the Pasadena sales-leaseback that we entered
into in September 2000, and $6.4&nbsp;million was due to the
higher contingent lease payments at our Watsonville facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Project development
expense</FONT></I><FONT size="2">&nbsp;&#151; Project
development expense increased by $16.9&nbsp;million, or 158%, in
2000 to $27.6&nbsp;million compared to $10.7&nbsp;million in
1999 due to heavier activities in identifying and obtaining
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">acquisition and project development opportunities
resulting from a larger number of development projects. For
additional information, see &#147;Item&nbsp;1&nbsp;&#151;
Business&nbsp;&#151; Project Development
and&nbsp;Acquisitions.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General and administrative
expense</FONT></I><FONT size="2">&nbsp;&#151; In 2000, general
and administrative expense was $102.6&nbsp;million compared to
$55.7&nbsp;million in 1999. The increase of 84% or
$46.9&nbsp;million is largely attributable to our acquisitions
and continued growth in personnel and associated overhead costs
necessary to support the overall growth of our operations and
construction programs during this period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest
expense</FONT></I><FONT size="2">&nbsp;&#151; Interest expense
before capitalization of interest was $281.7&nbsp;million in
2000 compared to $150.5&nbsp;million in 1999, an increase of
$131.2&nbsp;million due to higher debt balances in 2000. Total
debt increased by approximately $2.5&nbsp;billion due primarily
to our issuance of $1&nbsp;billion of senior notes in August
2000 and due to debt acquired in connection with various
acquisitions such as capital leases associated with our Hidalgo,
Agnews, and Stony Brook acquisitions. After capitalization of
interest on our significant construction program during this
period, our interest expense decreased by approximately
$28.5&nbsp;million in 2000 to $74.7&nbsp;million from
$103.2&nbsp;million in&nbsp;1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Distributions on trust preferred
securities</FONT></I><FONT size="2">&nbsp;&#151; Distributions
on trust preferred securities increased to $44.2&nbsp;million in
2000 from $2.6&nbsp;million in 1999, due to a full year of
distributions on our HIGH TIDES issuance of November 1999, in
addition to HIGH TIDES issuances in January and August 2000,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest
income</FONT></I><FONT size="2">&nbsp;&#151; In 2000, interest
income was $39.9&nbsp;million compared to $24.1&nbsp;million in
1999. The increase of 66% or $15.8&nbsp;million is attributable
to higher average cash balances in 2000 owing to the public
offerings of senior notes and common stock in August 2000 and
due to the issuance of HIGH&nbsp;TIDES in January and August
of&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Provision for income
taxes</FONT></I><FONT size="2">&nbsp;&#151; The effective income
tax rate was approximately 41% in 2000 compared to approximately
39% in 1999. The rate increase in 2000 is primarily attributable
to a higher average tax rate based on the locations in which we
operated. In 2000, our provision for federal and state income
taxes totaled $264.8&nbsp;million versus $68.1&nbsp;million in
1999, an increase of $196.7&nbsp;million, which is due primarily
to higher taxable income in&nbsp;2000.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General</FONT></I><FONT size="2">&nbsp;&#151;
The latter half of 2001, and particularly the fourth quarter,
saw a significant contraction in the availability of capital for
participants in the energy sector. This was due to a range of
factors, including uncertainty arising from the collapse of
Enron. While we have continued to be able to access the capital
and bank credit markets, as discussed below, we recognize that
terms of available financing in the future may not be attractive
to us. To protect against this possibility, we have scaled back
our capital expenditure program for 2002 and 2003 to enable us
to conserve our available capital resources, but remain ready to
access the capital markets as attractive opportunities arise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To date, we have obtained cash from our
operations; borrowings under our credit facilities and other
working capital lines; sales of debt, equity, trust preferred
securities and convertible debentures; proceeds from
sale/leaseback transactions and project financing. We have
utilized this cash to fund our operations, service debt
obligations, fund acquisitions, develop and construct power
generation facilities, finance capital expenditures, support our
hedging, balancing and optimization activities at CES, and meet
our other cash and liquidity needs. Our business is capital
intensive. Our ability to capitalize on growth opportunities is
dependent on the availability of capital on attractive terms.
Our strategy is also to reinvest our cash from operations into
our business development and construction program, rather than
to pay cash&nbsp;dividends.
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cash Flow
Activities</FONT></I><FONT size="2">&nbsp;&#151; The following
table summarizes our cash flow activities for the periods
indicated:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Beginning cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,371</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">557,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">802,550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">314,361</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,500,518</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752,657</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,599,456</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Financing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,876,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,813</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,537,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effect of exchange rates changes on cash and
	cash&nbsp;equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net increase in cash and cash&nbsp;equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">929,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,839</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ending cash and cash&nbsp;equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,525,417</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,371</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating activities for 2001 provided net cash
of $557.2&nbsp;million, a 31% decrease from 2000, consisting of
an approximately $2.0&nbsp;billion increase in operating
liabilities ($1.4&nbsp;billion related to derivative
liabilities), $369.9&nbsp;million of depreciation and
amortization, $648.1&nbsp;million of net income,
$6.0&nbsp;million of distributions from unconsolidated
investments in power projects, $9.8&nbsp;million of minority
interest, and $20.6&nbsp;million of deferred income taxes. This
was partially offset by $2.3&nbsp;billion in increases in
operating assets ($1.3&nbsp;billion related to derivative
assets) and $8.8&nbsp;million of income from unconsolidated
investments. The decrease in cash provided by operating
activities in 2001 is primarily due to the pre-bankruptcy
petition PG&#38;E receivables, which were sold to a third party
effective December&nbsp;31, 2001, but cash was not received
until the first quarter of 2002).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investing activities for 2001 consumed net cash
of $7.5&nbsp;billion, primarily due to $6.2&nbsp;billion for
construction costs and capital expenditures including gas
turbine generator costs and associated capitalized interest,
$1.8&nbsp;billion for acquisitions (see Note&nbsp;4 of the Notes
to Consolidated Financial Statements for further discussion),
$149.4&nbsp;million of advances to joint ventures including
associated capitalized interest for investments in power
projects under construction, $143.8&nbsp;million of capitalized
project development costs including associated capitalized
interest, a $12.0&nbsp;million increase in notes receivables
primarily due to the PG&#38;E note for our Gilroy Cogen
facility, which is not yet due and payable and a
$62.5&nbsp;million increase in restricted cash. This was
partially offset by $815.5&nbsp;million in sale/leaseback
proceeds, $49.1&nbsp;million in disposals of property, plant and
equipment and $4.0 in maturities of collateral securities. The
increase in cash used in investing activities in 2001 is
primarily due to increased construction and acquisition activity
compared to&nbsp;2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financing activities for 2001 provided
$7.9&nbsp;billion of net cash consisting of $1.0&nbsp;billion of
proceeds from the issuance of Zero Coupons, $1.1&nbsp;billion of
proceeds from our issuance of Convertible Senior Notes Due 2006,
$4.6&nbsp;billion of proceeds from other Senior Notes offerings,
$3.6&nbsp;billion in additional project financing,
$75.4&nbsp;million from the issuance of common stock and
$151.5&nbsp;million in borrowings under lines of credit. This
was offset by $2.3&nbsp;billion of repayments on various credit
facilities, $105.0&nbsp;million for the redemption of the Senior
Notes Due 2004, $122.0&nbsp;million for repurchase of Zero
Coupons, and $154.6&nbsp;million of financing costs. The
increase in cash provided from financing activities in 2001 is
primarily due to the debt offerings in&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to evaluate current and forecasted
cash flow as a basis for financing operating requirements and
capital expenditures. We believe that we will have sufficient
liquidity from cash flow from operations, borrowings available
under the lines of credit, access to the capital markets and
working capital to satisfy all obligations under outstanding
indebtedness, to finance anticipated capital expenditures and to
fund working capital requirements for the next
twelve&nbsp;months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">PG&#38;E and Enron
Bankruptcies</FONT></I><FONT size="2">&nbsp;&#151; In December
2001 the bankruptcy court approved an agreement between Calpine
and PG&#38;E whereby PG&#38;E would repay the
$265.6&nbsp;million in past due pre-bankruptcy petition
receivables plus accrued interest thereon beginning on
December&nbsp;31, 2001, and with monthly
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">payments thereafter over the next 11&nbsp;months.
Shortly following receipt of this bankruptcy court approval and
the first payments from PG&#38;E on December&nbsp;31, 2001, we
sold the remaining PG&#38;E receivables to a third party at
96.125% of face value.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;18 of the Notes to
Consolidated Financial Statements and under the caption
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Recent
Developments&#148;, there is considerable uncertainty
surrounding the Enron bankruptcy. Regardless of the resolution
of the current situation, we believe, based on legal analysis,
that we have no net exposure to&nbsp;Enron.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CES Margin Deposits and Other Credit
Support</FONT></I><FONT size="2">&nbsp;&#151; As of
December&nbsp;31, 2001, CES had deposited $345.5&nbsp;million in
cash as margin deposits with third parties related to its
business activities and letters of credit outstanding in support
of CES business activities of $259.4&nbsp;million. As of
December&nbsp;31, 2000, CES had no margin deposits with third
parties. The Company is evaluating various relationships with
potential partners to strengthen its ability to conduct risk
management activities and to support the credit requirements of
its trading activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of credit support required to support
CES&#146;s operations is a function primarily of the changes in
fair value of commodity contracts that CES has entered into and
Calpine&#146;s credit rating. While some portion of the
increased credit support requirements resulted from
Calpine&#146;s credit ratings downgrades in the fourth quarter
of 2001, the increases in the amount of cash margin deposits and
letters of credit provided by the Company for CES&#146;
transactions in 2001 as compared with 2000 were largely due to
the decrease in natural gas prices in 2001, compounded by the
significantly increased volumes of trading engaged in by CES in
2001 as compared with 2000. Since December&nbsp;31, 2001,
however, the amount of credit support provided by the Company
for CES transactions has declined, largely due to recent
increases in natural gas prices during this period as compared
with late 2001. While we believe that we have adequate liquidity
to support CES&#146; operations at this time, it is difficult to
predict how these various factors will develop in 2002 and
beyond. Therefore, no assurance can be given as to the amount of
credit support that the Company may need to provide as part of
its business operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revised Capital Expenditure
Program</FONT></I><FONT size="2">&nbsp;&#151; Following a
comprehensive review of our power plant development program, we
announced in January 2002 the adoption of a revised capital
expenditure program, which contemplates the completion of
27&nbsp;power projects (representing 15,200&nbsp;MW) currently
under construction during 2002 and 2003. Three of these
facilities achieved full or partial commercial operations as of
March&nbsp;20, 2002. Construction of an additional
34&nbsp;advanced-stage development projects (representing
15,100&nbsp;MW) will be placed on &#147;hot standby&#148;
following completion of advanced development activities pending
further review, reducing previously forecasted 2002 capital
spending by as much as $2&nbsp;billion. Construction of these
advanced stage development projects is expected to proceed when
there is an established market need for additional generating
resources at prices that will allow us to meet our established
investment criteria, and when capital is available to us on
attractive terms. However, our development and construction
program is flexible and subject to continuing review and
revision based upon such&nbsp;criteria.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2002, we announced a new
turbine program that reduces previously forecasted capital
spending by approximately $1.2&nbsp;billion in 2002 and
$1.8&nbsp;billion in 2003. The revision includes adjusted timing
of turbine delivery and related payment schedules and also
cancellation orders. As a result of the cancellation, we will
record a pre-tax charge of $161&nbsp;million in the first
quarter of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Uses and Sources of
Funding</FONT></I><FONT size="2">&nbsp;&#151; Our estimated uses
of funds for 2002 are as follows: construction costs of
$2.5&nbsp;billion, cost to repurchase the remaining Zero Coupons
of $0.7&nbsp;billion, maintenance and gas capital expenditures
of $0.3&nbsp;billion, cash lease payments of $0.3&nbsp;billion,
estimated Enron contract settlement payments of
$0.1&nbsp;billion and $0.7&nbsp;billion for turbines for
financeable and future projects. These uses of funds will be
funded primarily through an estimated $1.2&nbsp;billion of 2002
operating cash flow and by cash on hand of $1.6&nbsp;billion
(consists of cash on hand of $1.5&nbsp;billion at
December&nbsp;31, 2001, $0.2&nbsp;billion from the sale of the
PG&#38;E receivables, $0.1&nbsp;billion from the Convertible
Senior Notes offering in early January 2002 and after spending
$0.2&nbsp;billion for the repurchase of Zero Coupons in the open
market). The other sources of funding will include
$1.0&nbsp;billion from the new revolver, $0.5&nbsp;billion of
cash collateral to be replaced with letters of credit to be
issued under the new revolver and $0.6&nbsp;billion from our
construction revolvers and our proposed
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">California peaker leases. We are also negotiating
the sale of non-strategic assets for approximately
$0.3&nbsp;billion. Other potential sources of cash include
monetizing our Canadian power generation assets for
approximately $0.3&nbsp;billion, entering into a sale/leaseback
transaction for our Zion facility for cash proceeds of
$0.2&nbsp;billion, the sale of our Gilroy accounts receivable
for proceeds of $0.2&nbsp;billion and financing for our future
turbines of $0.3&nbsp;billion. Actual costs for the projected
use of funds identified above, and net proceeds from the
projected sources of funds identified above could vary from
those estimates, potentially in material respects. Factors that
could affect the accuracy of these estimates include the factors
identified at the beginning of this section and under &#147;Risk
Factors&#148; below, as well as continued market impacts of the
demise of Enron.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capital Availability&nbsp;&#151;
</FONT></I><FONT size="2">Notwithstanding recent uncertainties
in the domestic energy and capital markets, we have raised
substantial capital. In the last quarter of 2001 and early 2002,
we have raised over $5&nbsp;billion of capital, including
$2.6&nbsp;billion in sale/leaseback transactions and senior
notes issued in the U.S., Canada, the U.K. and other European
markets (representing an increase in size from the
$2.0&nbsp;billion that we had initially sought to raise),
$1.2&nbsp;billion in convertible senior notes in a private
placement in the U.S.&nbsp;(representing an increase in size
from the $500&nbsp;million that we had initially sought to
raise), and $1.6&nbsp;billion secured working capital credit
facility, which closed in March 2002. Proceeds from the senior
notes offerings were used to refinance bridge loans that were
incurred in the third quarter of 2001 and for working capital
and general corporate purposes. Proceeds from the convertible
senior notes will be primarily used to retire the Zero Coupons
that remain outstanding, either in open-market purchases,
negotiated transactions or upon exercise by holders of the April
2002 put option. From December 2001 through February 2002 we
repurchased $314.5&nbsp;million in aggregate principal of the
Zero Coupons.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Credit
Considerations</FONT></I><FONT size="2">&nbsp;&#151; On
December&nbsp;14, 2001, Moody&#146;s Investors Service
(&#147;Moody&#146;s&#148;) downgraded our long-term debt from
Baa3 (its lowest investment grade rating) to Ba1 (its highest
non-investment grade rating) after reviewing our near-term
cashflow, liquidity sources and financial flexibility. We remain
on credit watch with negative implications at Moody&#146;s. In
addition, on December&nbsp;19, 2001, Fitch, Inc.
(&#147;Fitch&#148;) downgraded our long-term debt from BBB- (its
lowest investment grade rating) to BB+ (its highest
non-investment grade rating). On March&nbsp;12, 2002, Fitch
further downgraded our senior unsecured debt to BB. On
March&nbsp;25, 2002, Standard &#38; Poor&#146;s downgraded our
corporate credit rating from BB+ to BB and our investor
unsecured debt from BB+ to B+. Many other issuers in the power
generation sector have also been downgraded by one or more of
the ratings agencies during this period. Such downgrades can
have a negative impact on our liquidity by reducing attractive
financing opportunities and increasing the amount of collateral
required by trading counterparties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Performance
Indicators</FONT></I><FONT size="2">&nbsp;&#151; We believe the
following factors are important in assessing our ability to
continue to fund our growth in the capital markets: (a)&nbsp;our
debt-to-capital ratio; (b)&nbsp;various interest coverage
ratios; (c)&nbsp;our credit and debt ratings by the rating
agencies; (d)&nbsp;the trading prices of our senior notes in the
capital markets; (e)&nbsp;the price of our common stock on The
New York Stock Exchange; (f)&nbsp;our anticipated capital
requirements over the coming quarters and years; (g)&nbsp;the
profitability of our operations; (h)&nbsp;our cash balances and
remaining capacity under existing revolving credit construction
and general purpose credit facilities; (i)&nbsp;compliance with
covenants in existing debt facilities; (j)&nbsp;progress in
raising new or replacement capital; and (k)&nbsp;the stability
of future contractual cash flows. We believe that our ability to
complete the financing transactions described above in difficult
conditions affecting the market, and our sector, in general
demonstrate our ability to have access to the capital markets on
acceptable terms in the future, although availability of capital
has tightened significantly throughout the power generation
industry in the first quarter of&nbsp;2002 and, therefore, there
can be no assurance that we will have access to capital in the
future as and when we may desire.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Off-Balance Sheet Commitments&nbsp;&#151;
</FONT></I><FONT size="2">In accordance with SFAS No.&nbsp;13
and SFAS No.&nbsp;98, &#147;Accounting for Leases&#148; our
operating leases are not reflected on our balance sheet (see
Note&nbsp;21 to the Notes to Consolidated Financial Statements).
We have also entered into several sale/leaseback transactions.
All counterparties in these transactions are third parties that
are unrelated to Calpine. The sale/leaseback transactions
involving Tiverton, Rumford, South Point, Broad River, and
RockGen utilize special-purpose entities formed by the equity
investors with the sole purpose of owning a power generation
facility (see Note&nbsp;5 to the Notes to Consolidated Financial
Statements). Some of the Company&#146;s operating leases contain
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">customary restrictions on dividends, additional
debt and further encumbrances similar to those typically found
in project finance instruments. Calpine guarantees $3.0 billion
of the total future minimum lease payments of its consolidated
subsidiaries related to its operating leases. In accordance with
APB Opinion No.&nbsp;18 &#147;The Equity Method of Accounting
For Investments in Common Stock&#148; and
FASB&nbsp;Interpretation No.&nbsp;35, &#147;Criteria for
Applying the Equity Method of Accounting for Investments in
Common Stock (An Interpretation of APB Opinion
No.&nbsp;18)&#148;, the debt on the books of our unconsolidated
investments in power projects is not reflected on our balance
sheet (see Note&nbsp;6 to the Notes to Consolidated Financial
Statements). Calpine has no ownership or other interest in any
of these special-purpose entities. At December&nbsp;31, 2001,
investee debt is approximately $737.9&nbsp;million. Based on our
pro rata ownership share of each of the investments, our share
would be approximately $248.5&nbsp;million. However, all such
debt is non-recourse to us. For the Aries Power Plant
construction debt, we and Aquila Energy, a wholly owned
subsidiary of UtiliCorp United, have provided support
arrangements until construction is completed to cover cost
overruns, if&nbsp;any.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Two wholly-owned finance subsidiaries of Calpine,
Calpine Canada Energy Finance&nbsp;ULC and Calpine Canada Energy
Finance&nbsp;II&nbsp;ULC, issued Senior Notes in 2001 (see
Note&nbsp;13 to the Notes to Consolidated Financial Statements).
The securities are fully and unconditionally guaranteed by
Calpine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Contractual Cash
Obligations</FONT></I><FONT size="2">&nbsp;&#151; The
Company&#146;s total debt, capital lease obligations, operating
leases and turbine commitments as of December&nbsp;31, 2001, are
as follows (in&nbsp;thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">Payments Due by Period</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" nowrap><B><FONT size="1">Contractual Obligations</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">901,238</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,032,326</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,425,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,521,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,387,288</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital Lease Obligations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,206</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,272</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,782</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating Leases
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360,603</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">419,487</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">291,121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">267,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,790</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,118,665</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Turbine Commitments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,148,460</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">629,207</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,204,717</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,172,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">752,064</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">181,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">HIGH TIDES
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,123,024</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Contractual Obligations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,412,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,412,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,924,944</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,693,384</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,533,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,002,146</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Notes&nbsp;8 through&nbsp;13 of the Notes to
Consolidated Financial Statements for more information on the
debt and capital lease obligations outstanding in 2000 and 2001.
See Note&nbsp;21 of the Notes to Consolidated Financial
Statements for more information on the Company&#146;s operating
leases and turbine commitments. We have substantial flexibility
to cancel our turbine orders if conditions warrant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Commercial
Commitments</FONT></I><FONT size="2">&nbsp;&#151; The
Company&#146;s primary commercial obligations as of
December&nbsp;31, 2001, are as follows (in&nbsp;thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="27"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="27" align="center" nowrap><B><FONT size="1">Amounts of Commitment Expiration Per Period</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total Amounts</FONT></B></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD align="left" nowrap><B><FONT size="1">Commercial Commitments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Committed</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Letters of Credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">642,496</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">580,883</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,168</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Debt Guarantees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,012,892</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">195,023</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">249,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,316</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,195,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Commercial Commitments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,655,388</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">775,906</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">253,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,316</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">173,270</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,195,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our commercial commitments primarily include
letters of credit and debt guarantees. The debt guarantees
consist of parent guarantees for the finance subsidiaries
referred to above and guarantees of portions of operating lease
payments for several of our operating leases. We also issue
guarantees for normal course of business activities.
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Performance Metrics</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In understanding our business, we believe that
certain performance metrics are particularly important. These
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average gross profit margin based on pro forma
	(non-GAAP) revenue and pro forma (non-GAAP) cost of
	revenue.</FONT></I><FONT size="2"> A high percentage of our
	revenue consists of CES&nbsp;hedging, balancing, optimization,
	and trading activity undertaken primarily to enhance the value
	of our generating assets (see &#147;Marketing, Hedging,
	Optimization, and Trading&#148; subsection of our Business
	Section). CES&#146;s hedging, balancing, optimization, and
	trading activity is primarily accomplished by buying and selling
	electric power and buying and selling natural gas or by entering
	into gas financial instruments such as exchange-traded swaps or
	forward contracts. Under Staff Accounting Bulletin
	(&#147;SAB&#148;) No.&nbsp;101 and EITF No.&nbsp;99-19, we must
	show the purchases and sales of electricity and gas on a gross
	basis in our statement of operations when we act as a principal,
	take title to the electricity and gas we purchase for resale,
	and enjoy the risks and rewards of ownership. This is
	notwithstanding the fact that the net gain or loss on certain
	financial hedging instruments, such as exchange-traded forward
	contracts for natural gas, is shown as a net item in our GAAP
	financials. Because of the inflating effect on revenue of our
	hedging, balancing, optimization, and trading activity, we
	believe that revenue levels and trends do not reflect our
	performance as accurately as gross profit, and that it is
	analytically useful to look at our results on a pro&nbsp;forma,
	non-GAAP basis with all hedging, balancing, optimization, and
	trading activity netted. This analytical approach nets the sales
	of purchased power with purchased power expense (with the
	exception of net realized sales and expenses on electrical
	trading activity, which is shown on a net basis in sales of
	purchased power) and includes that net amount as an adjustment
	to electricity and steam (&#147;E&#38;S&#148;) revenue for our
	generation assets. Similarly, we believe that it is analytically
	useful to net the sales of purchased gas with purchased gas
	expense (with the exception of net realized sales and expenses
	on gas trading activity, which is shown on a net basis in sales
	of purchased gas) and include that net amount as an adjustment
	to cost of oil and natural gas burned by power plants, a
	component of fuel expense. This allows us to look at all
	hedging, balancing, optimization, and trading activity
	consistently (net presentation) and better understand our
	performance trends. It should be noted that in this non-GAAP
	analytical approach, total gross profit does not change from the
	GAAP presentation, but the gross profit margins as a percent of
	revenue do differ from corresponding GAAP amounts because the
	inflating effects on our revenue of hedging, balancing,
	optimization, and trading activities are&nbsp;removed.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average availability and average capacity
	factor or operating rate.</FONT></I><FONT size="2"> Availability
	represents the percent of total hours during the period that our
	plants were available to run after taking into account the
	downtime associated with both scheduled and unscheduled outages.
	The capacity factor, sometimes called operating rate, is
	calculated by dividing (a)&nbsp;total megawatt hours generated
	by our power plants (excluding peakers) by the product of
	multiplying (b)&nbsp;the weighted average megawatts in operation
	during the period by (c)&nbsp;the total hours in the period. The
	capacity factor is thus a measure of total actual generation as
	a percent of total potential generation. If we elect not to
	generate during periods when electricity pricing is too low or
	gas prices too high to operate profitably, the capacity factor
	will reflect that decision as well as both scheduled and
	unscheduled outages due to maintenance and repair requirements.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average heat rate for gas-fired fleet of power
	plants expressed in Btu&#146;s of fuel consumed per kWh
	generated.</FONT></I><FONT size="2"> We calculate the average
	heat rate for our gas-fired power plants (excluding peakers) by
	dividing (a)&nbsp;fuel consumed in Btu&#146;s by
	(b)&nbsp;kilowatt-hours generated. The resultant heat rate is a
	measure of fuel efficiency, so the lower the heat rate, the
	better. We also calculate a &#147;steam-adjusted&#148; heat
	rate, in which we adjust the fuel consumption in Btu&#146;s down
	by the equivalent heat content in steam or other thermal energy
	exported to a third party, such as to steam hosts for our
	cogeneration facilities. Our goal is to have the lowest average
	heat rate in the&nbsp;industry.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average all-in realized electric price
	expressed in dollars per MWh
	generated.</FONT></I><FONT size="2"> We calculate the all-in
	realized electric price per MWh generated by dividing
	(a)&nbsp;adjusted E&#38;S revenue, which includes capacity
	revenues, energy revenues, thermal revenues and the spread on
	sales of purchased electricity for hedging, balancing, and
	optimization activity, by (b)&nbsp;total generated MWh&#146;s in
	the&nbsp;period.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average cost of natural gas expressed in
	dollars per millions of Btu&#146;s of fuel
	consumed.</FONT></I><FONT size="2"> At Calpine, the fuel costs
	for our gas-fired power plants are a function of the price we
	pay for fuel purchased and the results of the fuel hedging,
	balancing, and optimization activities by CES. Accordingly, we
	calculate the cost of natural gas per millions of Btu&#146;s of
	fuel consumed in our power plants by dividing (a)&nbsp;adjusted
	cost of oil and natural gas burned by power plants which
	includes the cost of fuel consumed by our plants (adding back
	cost of intercompany &#147;equity&#148; gas from Calpine Natural
	Gas, which is eliminated in consolidation), and the spread on
	sales of purchased gas for hedging, balancing, and optimization
	activity by (b)&nbsp;the heat content in millions of Btu&#146;s
	of the fuel we consumed in our power plants for the&nbsp;period.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Average spark spread expressed in dollars per
	MWh generated.</FONT></I><FONT size="2"> Our risk management
	activities focus on managing the spark spread for our portfolio
	of power plants, the spread between the sales price for
	electricity generated and the cost of fuel. We calculate the
	spark spread per MWh generated by subtracting (a)&nbsp;adjusted
	cost of oil and natural gas burned by power plants from
	(b)&nbsp;adjusted E&#38;S revenue and dividing the difference by
	(c)&nbsp;total generated MWh&#146;s in the&nbsp;period.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents, side-by-side, both our
GAAP and pro&nbsp;forma non-GAAP netted revenue, costs of
revenue and gross profit showing the purchases and sales of
electricity and gas for hedging, balancing, optimization, and
trading activity on a net basis. It also shows the other
performance metrics discussed above.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Non-GAAP Netted</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">GAAP Presentation</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Presentation</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Revenue, Cost of Revenue and
	Gross&nbsp;Profit</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity and steam revenue(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,432,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,702,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,769,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased power(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,056,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric power derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total electric generation and
	marketing&nbsp;revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,586,685</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,072,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,877,840</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">427,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">336,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">427,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">336,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased gas(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">520,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total oil and gas production and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">948,177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,462</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">446,673</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">336,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) from unconsolidated investments in
	power projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,379,629</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,080,123</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing&nbsp;expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Plant operating expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">327,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">196,213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">327,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">196,213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Royalty expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased power expense(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,708,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total electric generation and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,063,726</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">587,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">354,881</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">228,538</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,387</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,442</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,387</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,442</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased gas expense(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">492,587</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total oil and gas production and
	marketing&nbsp;expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">605,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">197,773</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,387</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,442</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of oil and natural gas burned by
	power&nbsp;plants(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,152,785</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,143,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,693</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,693</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,116,092</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,107,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">338,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">338,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating lease expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,258,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,700,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,048,109</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,233,155</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">846,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">846,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit margin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Non-GAAP Netted</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Presentation</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Other Non-GAAP Performance Metrics</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average availability and capacity factor:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average availability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average capacity factor or operating rate based
	on total hours (excluding&nbsp;peakers)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average heat rate for gas-fired power plants
	(excluding peakers) (Btu&#146;s/kWh):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Not steam adjusted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,294</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Steam adjusted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,398</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,816</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average all-in realized electric&nbsp;price:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjusted electricity and steam revenue
	(in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,769,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">MWh generated (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average all-in realized electric price per MWh
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.61</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average cost of natural&nbsp;gas:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of oil and natural gas burned by power
	plants (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,143,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel cost elimination
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,854</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjusted cost of oil and natural gas burned by
	power&nbsp;plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,243,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">669,001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">MMBtu of fuel consumed by generating plants
	(in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150,669</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average cost of natural gas per&nbsp;MMBtu
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">MWh generated (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average cost of oil and natural gas burned by
	power plants per&nbsp;MWh
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.41</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average spark spread:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjusted electricity and steam revenue
	(in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,769,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: Adjusted cost of oil and natural gas burned
	by power plants (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,243,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">669,001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Spark spread (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,526,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,045,425</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">MWh generated (in&nbsp;thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average spark spread per&nbsp;MWh
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.05</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.95</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The non-GAAP presentation above also facilitates
a look at the total &#147;trading&#148; activity impact on gross
profit. In 2001 trading activity consisted&nbsp;of:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Electricity</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Electric generation and marketing&nbsp;revenue
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Realized gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	&nbsp;&nbsp;<FONT size="2">Sales of purchased power
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	&nbsp;&nbsp;<FONT size="2">Electric power derivative
	mark-to-market&nbsp;gain
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Gas</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Oil and gas production and marketing&nbsp;revenue
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Realized gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	&nbsp;&nbsp;<FONT size="2">Sales of purchased gas
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Fuel Expense
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	&nbsp;&nbsp;<FONT size="2">Natural gas derivative
	mark-to-market&nbsp;gain
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,912</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross&nbsp;Profit</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Total Trading Activity
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">163,891</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.3%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Realized gains
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,145</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Unrealized (mark-to-market) gains(2)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,746</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<FONT size="2">Trading activity in 2000 was immaterial
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Following is a reconciliation of GAAP to non-GAAP
	presentation further to the narrative set forth under this
	Performance Metrics section: ($ in thousands)
	</FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">To Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Hedging,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balancing &#38;</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">To Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Netted</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">GAAP</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Optimization</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Trading</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Non-GAAP</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Activity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Activity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity and steam revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,432,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">337,583</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,769,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased power
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,056,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,324,162</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(722,267</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased gas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">520,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(497,283</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,222</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased power expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,708,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,986,578</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(722,267</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased gas expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">492,587</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(468,760</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(23,827</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of oil and natural gas burned by power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,152,785</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(28,522</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,143,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity and steam revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,702,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,933</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,714,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased power
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(370,582</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased gas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(108,329</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased power expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(358,649</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased gas expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(108,331</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of oil and natural gas burned by power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The mark-to-market gains shown above as
	&#147;trading&#148; activity includes a net loss on hedge
	ineffectiveness of $883, consisting of an ineffectiveness gain
	on power hedges of $1,866 and an ineffectiveness (loss) on gas
	hedges of&nbsp;($2,749).
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For a discussion of the Company&#146;s strategy
and management&#146;s outlook, see &#147;Item&nbsp;1&nbsp;&#151;
Business&nbsp;&#151; Strategy&#148;.
</FONT>

<P align="left">
<B><FONT size="2">Risk Factors</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We depend on our electricity and thermal
energy customers.</FONT></I><FONT size="2"> Our systems of power
generation facilities rely on one or more power sales agreements
with one or more utilities or other customers for a substantial
portion of our revenue. In addition, sales of electricity to one
customer during 2001, Enron Corporation, comprised approximately
22% of our total revenue that year. The loss of significant
power sales agreements with PG&#38;E could have a negative
effect on our results of operations. In addition, any material
failure by any customer to fulfill its obligations under a power
sales agreement could have a negative effect on the cash flow
available to us and on our results of operations. Enron filed
for protection under bankruptcy law on December&nbsp;2, 2001.
While this action did not directly impact our business in a
materially adverse way, we and
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">all in the industry have felt the aftermath
effects in terms of constricted credit support availability for
transactions with certain trading company counterparties.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Competition could adversely affect our
performance.</FONT></I><FONT size="2"> The power generation
industry is characterized by intense competition, and we
encounter competition from utilities, industrial companies and
other independent power producers. In recent years, there has
been increasing competition in an effort to obtain power sales
agreements, and this competition has contributed to a reduction
in electricity prices in certain markets. In addition, many
states are implementing or considering regulatory initiatives
designed to increase competition in the domestic power industry.
In California, the CPUC issued decisions that provide for direct
access for all customers as of April&nbsp;1, 1998; however, the
CPUC has recently suspended direct access in California
effective September&nbsp;20, 2001. As a result, uncertainty
exists as to the future course for direct access in California
in the aftermath of the energy crisis in that state. In Texas,
legislation phases-in a deregulated power market commencing
January&nbsp;1, 2001. Regulatory initiatives are also being
considered in other states, including New&nbsp;York and states
in New England. This competition has put pressure on electric
utilities to lower their costs, including the cost of purchased
electricity, and increasing competition in the supply of
electricity in the future will increase this pressure. See
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Recent
Developments&nbsp;&#151; California Power Market.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our international investments may face
uncertainties. </FONT></I><FONT size="2">We have investments in
oil and natural gas resources and power projects in Canada in
development and in operation, and an investment in a power
generation facility in the U.K., and we may pursue additional
international investments in the future subject to the
limitations on our expansion plans due to current capital market
constraints. International investments are subject to unique
risks and uncertainties relating to the political, social and
economic structures of the countries in which we invest. Risks
specifically related to investments in non-United States
projects may include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">fluctuations in currency valuation;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">currency inconvertibility;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">expropriation and confiscatory taxation;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased regulation; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">approval requirements and governmental policies
	limiting returns to foreign investors.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enron
Bankruptcy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company, primarily through our
CES subsidiary, transacted a significant volume of business with
units of Enron Corp. (&#147;Enron&#148;) mainly Enron Power
Marketing, Inc. (&#147;EPMI&#148;) and Enron North America Corp.
(&#147;ENA&#148;). ENA is the parent corporation of EPMI. Enron
is the direct or indirect parent corporation of ENA. Most of
these transactions were contracts for sales and purchases of
power and gas for hedging and optimization purposes, some of
which extended out as far as 2009. In October and November of
2001, Enron announced a series of developments including
restatement of the last four years of earnings, an investigation
by the Securities and Exchange Commission relating to the
adequacy of Enron&#146;s disclosures of certain off-balance
sheet financial transactions or structures and dismissals of
certain members of senior management. On December&nbsp;2, 2001,
Enron Corp. and certain of its subsidiaries filed voluntary
petitions for Chapter&nbsp;11 reorganization with the
U.S.&nbsp;Bankruptcy Court for the Southern District of
New&nbsp;York. EPMI and ENA are among the subsidiaries of Enron
that filed for reorganization on December&nbsp;2, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001,
$1.7&nbsp;billion or 22% of our revenue was with Enron
subsidiaries, primarily EPMI and ENA. We, primarily through our
subsidiary, CES, purchased significant amounts of fuel and power
from ENA and EPMI prior to the bankruptcy filings, which gave
rise to current accounts payable and open contract fair value
positions. For the year ended December&nbsp;31, 2001, CES had
power and fuel purchases from ENA and EPMI of $1.6&nbsp;billion.
These purchases must be included in an overall understanding of
our Enron exposure. The sales to and purchases from various
Enron subsidiaries were mostly hedging and
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">optimization transactions, and in most cases the
purchases and sales are not related and should not be netted to
try to gauge the profitability of transactions with Enron
subsidiaries.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In assessing our exposure to ENA and EPMI, we
analyze our accounts receivable and accounts payable balances on
contracts that have already settled and also the fair value
(mark-to-market value) of the contracts that have not settled.
In the event of a default by one or more of the Enron
subsidiaries and affiliates, and our termination of some or all
of the open contracts, we would have an exposure to realize the
fair value of the positive (&#147;in the money&#148;) contracts.
In managing the overall credit exposure to each other, Calpine
and Enron entered into a netting agreement in which overall
mark-to-market exposures are netted or offset from all
transactions between certain Enron subsidiaries and CES to
liabilities between those entities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unrealized pre-tax losses on derivatives
designated as effective cash flow hedges that were recorded in
OCI associated with Enron activity for the year ended
December&nbsp;31, 2001, were $118.6&nbsp;million. Recognized
gains on derivatives not designated as hedges associated with
Enron activity were $381.8&nbsp;million for the year ended
December&nbsp;31, 2001. Recognized losses on derivatives not
designated as hedges associated with Enron activity were
$495.0&nbsp;million for the year ended December&nbsp;31, 2001.
Recognized gross gains (losses) on fair value hedges (which are
perfectly offset by the gains and losses on the hedged items)
associated with Enron activity were $9.8&nbsp;million and
$(31.6) million, respectively, for the year ended
December&nbsp;31, 2001. As mentioned above, these transactions
with Enron are generally not related to each other and should
not be netted to try to guage the profitability of transactions
with Enron subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;14, 2001, CES, ENA and EPMI
entered into a Master Netting, Setoff and Security Agreement
(the &#147;Netting Agreement&#148;). The Netting Agreement
permits CES, on the one hand, and ENA and EPMI, on the other
hand, to set off amounts owed to each other under an ISDA Master
Agreement between CES and ENA, an Enfolio Master Firm Purchase/
Sale Agreement between CES and ENA and a Master Energy Purchase/
Sale Agreement between CES and EPMI (in each case, after giving
effect to the netting provisions contained in each of these
agreements).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Netting Agreement, Enron&#146;s
bankruptcy constituted an event of default, and CES effected an
early termination of the ISDA Master Agreement, the Enfolio
Master Agreement and the Master Energy Agreement on
December&nbsp;10, 2001. CES is presently determining its losses,
damages, attorneys&#146; fees and other expenses arising from
the default by Enron and its affiliates, as it is entitled to do
pursuant to the underlying documents. The Company expects that
there will be a net amount payable to ENA pursuant to these
agreements after giving effect to the Netting Agreement, and
thus that there will be no net credit exposure to Enron and its
affiliates arising from these transactions. The Company filed a
copy of the Netting Agreement as an exhibit to a Current Report
on Form&nbsp;8-K dated November&nbsp;14, 2001, and filed on
January&nbsp;16, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company believes that the Netting Agreement
is enforceable in accordance with its terms, based upon the
following analysis, although there can be no assurance in this
regard. Section&nbsp;553 of the Bankruptcy Code preserves the
right of a creditor who owes a debt to the debtor to offset that
debt against a debt owed by the debtor to the creditor, to the
extent that such a right was in existence between the parties
prior to the bankruptcy. Setoff rights will be preserved in
bankruptcy, in general, where four conditions are met:
(1)&nbsp;the creditor has a claim against the debtor that arose
before the bankruptcy case was filed (a pre-petition claim);
(2)&nbsp;the creditor owes a debt to the debtor that also arose
pre-petition; (3)&nbsp;the claim and debt are mutual, meaning
that the identical entities or individual parties must each owe
the other a debt in the same capacity; and (4)&nbsp;the claim
and debt are each valid and enforceable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Bankruptcy Code expressly permits the
non-debtor party to certain types of contracts, such as swap
contracts and forward contracts, to terminate and liquidate the
contracts after the commencement of a bankruptcy case as the
result of a bankruptcy default. Section&nbsp;556 provides, among
other things, that the contractual right of a forward contract
merchant to cause the liquidation of a forward contract pursuant
to a bankruptcy termination clause will not be stayed, avoided
or otherwise limited by operation of any provision of the
Bankruptcy Code or by the order of any court in any proceeding
under the Bankruptcy Code. Similarly, Section&nbsp;560 provides,
among other things, that the contractual right of any swap
participant to cause the termination of a swap agreement
pursuant to a bankruptcy termination clause or to offset or net
out any
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>

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<DIV align="left">
<FONT size="2">termination values or payment amounts under or in
connection with a swap agreement shall not be stayed, avoided or
otherwise limited by operation of any provision of the
Bankruptcy Code or by order of a court or administrative agency
in any proceeding under the Bankruptcy Code.
Section&nbsp;362(b)(6) of the Bankruptcy Code authorizes the
setoff of any mutual debts and claims arising from forward
contracts and securities contracts between a debtor and a
non-debtor, and 362(b)(17) of any mutual debts arising from one
or more&nbsp;swap agreements between a debtor and a non-debtor.
Finally, &#147;swap agreement&#148; is defined by
Section&nbsp;101(53B)(C) of the Bankruptcy Code to include any
master agreement relating to derivative instruments of the
nature identified in that section (which includes commodity
derivatives).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company believes that the netting of debts
and claims across the underlying master agreements and the
transactions entered into pursuant to the master agreements, as
provided for in the Netting Agreement, is entitled to the
benefits of the provisions of the Bankruptcy Code summarized
above although there can be no assurance in this regard. This
conclusion is based not only on the language of the relevant
statutory provisions, but also the policy underlying their
adoption, which was to preserve the ability of counterparties to
derivative contracts to immediately net and close out their
contracts in the event of a bankruptcy. This is viewed as a
beneficial way to mitigate systemic risk that could otherwise
arise in a bankruptcy where the presence of the automatic stay,
as well as the bankruptcy trustee&#146;s broad equitable powers
with respect to executory contracts, would cast significant
doubt upon the ongoing enforceability of derivative
transactions. Separate and apart from these special protections
provided by the Bankruptcy Code for forward contracts and swap
agreements, the Netting Agreement and the netting provisions of
the underlying master agreements are formal written agreements
that would in any event be enforceable. The setoffs made by CES
are often referred to as &#147;triangular setoffs&#148;.
A&nbsp;triangular setoff is one where A seeks to offset an
obligation it owes to B against a debt that B owes to&nbsp;C.
Here, a triangular setoff is one where CES seeks to set off an
obligation it owes to ENA against a debt that EPMI owes to CES
or, put another way, one where CES seeks to require the Enron
entities to aggregate their debts and claims for setoff
purposes. While the strict mutuality of Section&nbsp;553 of the
Bankruptcy Code is not present, if the parties all agree in a
pre-petition contract that a setoff may be taken between A, B
and C, then the agreement may be enforced in bankruptcy to the
extent that it is enforceable under applicable nonbankruptcy
law. This exception is limited, however, to cases where there is
a formal pre-petition contract, such as the Netting Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the written Netting Agreement, for
nearly a year prior to the bankruptcy filing by Enron and
certain of its affiliates, CES and the Enron entities offset and
netted debts and claims under all of the forward contracts and
swap agreements among the parties pursuant to an oral agreement
that was relied upon. It is established that the &#147;formal
contract&#148; required to establish the right of setoff under
the Bankruptcy Code need not be in writing, so long as there is
sufficient evidence indicating a definite understanding or
agreement between the debtor and the corporation seeking a
setoff.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Note&nbsp;18 of the Notes to Consolidated
Financial Statements for our accounts receivable (payable)
balances as well as the fair value of our open contracts with
ENA and EPMI at December&nbsp;31, 2001. We had no net exposure
at December&nbsp;31, 2001, because of our netting arrangements
with ENA and EPMI. In view of the foregoing, a reserve is not
needed for our Enron positions, in the opinion of management.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our treasury department includes a credit group
focused on monitoring and managing counterparty risk. The credit
group monitors the net exposure with each counterparty on a
daily basis. The analysis is performed on a mark-to-market basis
using the forward curves audited by our Risk Controls group. The
net exposure is compared against a counterparty credit risk
threshold which is determined based on the counterparty&#146;s
credit ratings, evaluation of the financial statements and bond
values. The credit department monitors these thresholds to
determine the need for additional collateral or an adjustment to
activity with the counterparty.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effects of the Enron bankruptcy upon our
business and upon the energy industry in general are difficult
to predict. The outcome of the bankruptcy proceeding will not be
known for some time, and thus we cannot be certain that our
analysis of our rights and obligations with respect to Enron
will prevail during that proceeding. It is also difficult to
predict whether the demise of Enron will have ancillary effects
on our market, including the regulatory environment in which we
operate. Any such changes could affect our business plan,
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

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<DIV align="left">
<FONT size="2">including our ability to engage in hedging,
balancing or optimization transactions relating to our portfolio
of assets.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital
Resources</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our credit ratings have been downgraded and
could be downgraded further.</FONT></I><FONT size="2"> In
December 2001, Moody&#146;s and Fitch downgraded our long-term
debt credit rating and we remain on credit watch with negative
implications at Moody&#146;s. In addition, in March 2002, Fitch
downgraded our senior unsecured debt credit rating and
Standard&nbsp;&#38;&nbsp;Poor&#146;s downgraded our corporate
credit rating and our senior unsecured debt credit rating. We
cannot assure you that Moody&#146;s, Fitch and
Standard&nbsp;&#38;&nbsp;Poor&#146;s will not further downgrade
our credit ratings in the future. If our credit rating is
downgraded, we could be required to, among other things, pay
additional interest under our credit agreements, or provide
additional guarantees, collateral, letters of credit or cash for
credit support obligations andit could increase our cost of
capital, make our efforts to raise capital more difficult and
have an adverse impact on us and our subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We have substantial indebtedness that we may
be unable to service and that restricts our
activities.</FONT></I><FONT size="2"> We have substantial debt
that we incurred to finance the acquisition and development of
power generation facilities. As of December&nbsp;31, 2001, our
total consolidated indebtedness was $12.7&nbsp;billion, our
total consolidated assets were $21.3&nbsp;billion and our
stockholders&#146; equity was $3.0&nbsp;billion. Whether we will
be able to meet our debt service obligations and repay our
outstanding indebtedness will be dependent primarily upon the
performance of our power generation facilities and of our oil
and gas properties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This high level of indebtedness has important
consequences, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">limiting our ability to borrow additional amounts
	for working capital, capital expenditures, debt service
	requirements, execution of our growth strategy, or other
	purposes;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">limiting our ability to use operating cash flow
	in other areas of our business because we must dedicate a
	substantial portion of these funds to service the&nbsp;debt;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increasing our vulnerability to general adverse
	economic and industry conditions;&nbsp;and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">limiting our ability to capitalize on business
	opportunities and to react to competitive pressures and adverse
	changes in government regulation.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The operating and financial restrictions and
covenants in certain of our existing debt agreements limit or
prohibit our ability&nbsp;to:
</FONT>
<P>

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<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">incur indebtedness;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">make prepayments of indebtedness in whole or in
	part;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">pay dividends;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">make investments;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">engage in transactions with affiliates;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">create liens;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">sell assets; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">acquire facilities or other businesses.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also, if our management or ownership changes, the
indentures governing certain of our senior notes may require us
to make an offer to purchase those senior notes. We cannot
assure that we will have the financial resources necessary to
purchase those senior notes in this event.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our cash flow from operations,
together with other available sources of funds, including
borrowings under our existing borrowing arrangements, will be
adequate to pay principal and interest on our senior notes and
other debt and to enable us to comply with the terms of our
indentures and other debt agreements. If we are unable to comply
with the terms of our indentures and other debt agreements and
fail to
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

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<DIV align="left">
<FONT size="2">generate sufficient cash flow from operations in
the future, we may be required to refinance all or a portion of
our senior notes and other debt or to obtain additional
financing. However, we may be unable to refinance or obtain
additional financing because of our high levels of debt and the
debt incurrence restrictions under our indentures and other debt
agreements. If cash flow is insufficient and refinancing or
additional financing is unavailable, we may be forced to default
on our senior notes and other debt obligations. In the event of
a default under the terms of any of our indebtedness, the debt
holders may accelerate the maturity of our obligations, which
could cause defaults under our other obligations.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our ability to repay our debt depends upon the
performance of our subsidiaries.</FONT></I><FONT size="2">
Almost all of our operations are conducted through our
subsidiaries and other affiliates. As a result, we depend almost
entirely upon their earnings and cash flow to service our
indebtedness, including our ability to pay the interest on and
principal of our senior notes. The lease agreements of certain
of our subsidiaries and other affiliates generally restrict
their ability to pay dividends, make distributions, or otherwise
transfer funds to us prior to the payment of other obligations,
including operating expenses, lease payments and reserves.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our subsidiaries and other affiliates are
separate and distinct legal entities and have no obligation to
pay any amounts due on our senior notes, and do not guarantee
the payment of interest on or principal of these notes. The
right of our senior note holders to receive any assets of any of
our subsidiaries or other affiliates upon our liquidation or
reorganization will be subordinated to the claims of any
subsidiaries&#146; or other affiliates&#146; creditors
(including trade creditors and holders of debt issued by our
subsidiaries or affiliates). As of December&nbsp;31, 2001, our
subsidiaries had $3.4&nbsp;billion of project financing. We may
utilize project financing, when appropriate in the future, and
this financing will be effectively senior to our senior notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While the indentures impose limitations on our
ability and the ability of our subsidiaries to incur additional
indebtedness, the indentures do not limit the amount of project
financing that our subsidiaries may incur to finance the
acquisition and development of new power generation facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We may be unable to secure additional
financing in the future.</FONT></I><FONT size="2"> Each power
generation facility that we acquire or develop will require
substantial capital investment. Our ability to arrange financing
and the cost of the financing are dependent upon numerous
factors. These factors include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">general economic and capital market conditions;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">conditions in energy markets;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">regulatory developments;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">credit availability from banks or other lenders
	for us and our industry peers, as well as the economy in general
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">investor confidence in the industry and in us;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the continued success of our current power
	generation facilities; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">provisions of tax and securities laws that are
	conducive to raising capital.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Financing for new facilities may not be
available to us on acceptable terms in the
future.</FONT></I><FONT size="2"> We have financed our existing
power generation facilities using a variety of leveraged
financing structures, consisting of senior unsecured
indebtedness, construction financing, project financing, and
lease obligations. Most of our construction costs during 2001
were financed through one of our two Calpine Construction
Finance Company (&#147;CCFC&#148;) non-recourse debt facilities
(see Note&nbsp;8 of the Notes to Consolidated Financial
Statements). As of December&nbsp;31, 2001, we had approximately
$12.7&nbsp;billion of total consolidated indebtedness,
$3.4&nbsp;billion of construction/ project financing,
$0.2&nbsp;billion of capital lease obligations,
$7.0&nbsp;billion in senior notes, $0.9&nbsp;billion in Zero
Coupons, $1.1&nbsp;billion in Convertible Senior Notes Due 2006,
and $0.1&nbsp;million of notes payable and borrowings under
lines of credit. Each project financing and lease obligation is
structured to be fully paid out of cash flow provided by the
facility or facilities financed or leased. In the event of a
default under a financing agreement which we do not cure, the
lenders or lessors would generally have rights to the facility
and any related assets. In the event of foreclosure after a
default, we might not retain any interest in the facility. While
we intend to utilize non-recourse or lease financing when
appropriate, market conditions and other factors may
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

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<DIV align="left">
<FONT size="2">prevent similar financing for future facilities.
We do not believe the existence of non-recourse or lease
financing will significantly affect our ability to continue to
borrow funds in the future in order to finance new facilities.
However, it is possible that we may be unable to obtain the
financing required to develop our power generation facilities on
terms satisfactory to&nbsp;us.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have from time to time guaranteed certain
obligations of our subsidiaries and other affiliates. Our
lenders or lessors may also require us to guarantee the
indebtedness for future facilities. Guarantees render our
general corporate funds vulnerable in the event of a default by
the facility or related subsidiary. Additionally, certain of our
indentures may restrict our ability to guarantee future debt,
which could adversely affect our ability to fund new facilities.
Our indentures do not limit the ability of our subsidiaries to
incur non-recourse or lease financing for investment in new
facilities.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operations</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue under some of our power sales
agreements may be reduced significantly upon their expiration or
termination.</FONT></I><FONT size="2"> Some of the electricity
we generate from our existing portfolio is sold under long-term
power sales agreements that expire at various times. We also
sell power under short to intermediate (1&nbsp;to 5&nbsp;year)
contracts. When the terms of each of these various power sales
agreements expire, it is possible that the price paid to us for
the generation of electricity may be reduced significantly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Derivatives trading activities can create
volatility in earnings and may require significant cash
collateral.</FONT></I><FONT size="2"> During 2001, we recognized
$134.8&nbsp;million in mark-to-market gains on electric power
and natural gas derivatives. Please see Impact of Recent
Accounting Pronouncements for a detailed discussion of the
accounting requirements under SFAS No.&nbsp;133. We may enter
into other transactions in future periods that require us to
mark various derivatives to market through earnings. The nature
of the transactions that we enter into in addition to volatility
of natural gas and electric power prices will determine the
volatility of earnings that we may experience.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result, in part, of the fallout from
Enron&#146;s decline and declaration of bankruptcy on
December&nbsp;20, 2001, companies engaging in derivative trading
activities have become sensitized to the inherent risks of such
transactions. Consequently, companies, including us, are
requiring cash collateral for certain derivative transactions in
excess of what was previously required. As of December&nbsp;31,
2001, we had $345.5&nbsp;million in margin deposits with
counterparties and $259.4&nbsp;million of letters of credit
related to our CES activities, compared to none at
December&nbsp;31, 2000. This change is due to new cash and
letters of credit collateralization of derivative transactions
in addition to our increased activity in such transactions.
Future cash collateral requirements may increase based on the
extent of our involvement in derivative activities and based on
our credit ratings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We may be unable to obtain an adequate supply
of natural gas in the future.</FONT></I><FONT size="2"> To date,
our fuel acquisition strategy has included various combinations
of our own gas reserves, gas prepayment contracts, short, medium
and long-term supply contracts and gas hedging transactions. In
our gas supply arrangements, we attempt to match the fuel cost
with the fuel component included in the facility&#146;s power
sales agreements in order to minimize a project&#146;s exposure
to fuel price risk. In addition, the focus of our CES risk
management organization is to manage the &#147;spark
spread&#148; for our portfolio of generating plants, the spread
between the cost of fuel and electricity revenues, and we
actively enter into hedging transactions to lock in gas costs
and spark spreads. We believe that there will be adequate
supplies of natural gas available at reasonable prices for each
of our facilities when current gas supply agreements expire.
However, gas supplies may not be available for the full term of
the facilities&#146; power sales agreements, and gas prices may
increase significantly. If gas is not available, or if gas
prices increase above the level that can be recovered in
electricity prices, there could be a negative impact on our
results of operations.
</FONT>

<P align="center"><FONT size="2">F-26
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our power project development and acquisition
activities may not be successful.</FONT></I><FONT size="2"> The
development of power generation facilities is subject to
substantial risks. In connection with the development of a power
generation facility, we must generally obtain:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">necessary power generation equipment;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">governmental permits and approvals;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">fuel supply and transportation agreements;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">sufficient equity capital and debt financing;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">electrical transmission agreements; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">site agreements and construction contracts.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may be unsuccessful in accomplishing any of
these matters or in doing so on a timely basis. In addition,
project development is subject to various environmental,
engineering and construction risks relating to cost-overruns,
delays and performance. Although we may attempt to minimize the
financial risks in the development of a project by securing a
favorable power sales agreement, obtaining all required
governmental permits and approvals, and arranging adequate
financing prior to the commencement of construction, the
development of a power project may require us to expend
significant sums for preliminary engineering, permitting and
legal, and other expenses before we can determine whether a
project is feasible, economically attractive or financeable. If
we were unable to complete the development of a facility, we
might not be able to recover our investment in the project. The
process for obtaining initial environmental, siting and other
governmental permits and approvals is complicated and lengthy,
often taking more than one year, and is subject to significant
uncertainties. We cannot assure that we will be successful in
the development of power generation facilities in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We have grown substantially in recent years as
a result of acquisitions of interests in power generation
facilities and steam fields.</FONT></I><FONT size="2"> We
believe that although the domestic power industry is undergoing
consolidation and significant acquisition opportunities are
available, we are likely to confront significant competition for
acquisition opportunities. In addition, we may be unable to
continue to identify attractive acquisition opportunities at
favorable prices or, to the extent that any opportunities are
identified, we may be unable to complete the acquisitions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our projects under construction may not
commence operation as scheduled.</FONT></I><FONT size="2"> The
commencement of operation of a newly constructed power
generation facility involves many risks, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">start-up problems;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the breakdown or failure of equipment or
	processes; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">performance below expected levels of output or
	efficiency.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New plants have no operating history and may
employ recently developed and technologically complex equipment.
Insurance is maintained to protect against certain risks,
warranties are generally obtained for limited periods relating
to the construction of each project and its equipment in varying
degrees, and contractors and equipment suppliers are obligated
to meet certain performance levels. The insurance, warranties or
performance guarantees, however, may not be adequate to cover
lost revenues or increased expenses. As a result, a project may
be unable to fund principal and interest payments under its
financing obligations and may operate at a loss. A default under
such a financing obligation, unless cured, could result in
losing our interest in a power generation facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In certain situations, power sales agreements
entered into with a utility early in the development phase of a
project may enable the utility to terminate the agreement, or to
retain security posted as liquidated damages, if a project fails
to achieve commercial operation or certain operating levels by
specified dates or fails to make specified payments. In the
event a termination right is exercised, the default provisions
in a financing agreement may be triggered (rendering such debt
immediately due and payable). As a result, the project may be
rendered insolvent and we may lose our interest in the project.
In recent years we have relied less and less
</FONT>

<P align="center"><FONT size="2">F-27
</FONT>

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<DIV align="left">
<FONT size="2">on traditional project financing, so the risk of
a financing agreement default linked to a default under a power
sales agreement comes into play infrequently.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our power generation facilities may not
operate as planned.</FONT></I><FONT size="2"> Upon completion of
our projects currently under construction, we will operate 82 of
the 86 power plants in which we will have an interest. The
continued operation of power generation facilities involves many
risks, including the breakdown or failure of power generation
equipment, transmission lines, pipelines or other equipment or
processes, and performance below expected levels of output or
efficiency. Although from time to time our power generation
facilities have experienced equipment breakdowns or failures,
these breakdowns or failures have not had a significant effect
on the operation of the facilities or on our results of
operations. For calendar year 2001, our gas-fired and geothermal
power generation facilities have operated at an average
availability of approximately 93% and 92%, respectively.
Although our facilities contain various redundancies and back-up
mechanisms, a breakdown or failure may prevent the affected
facility from performing under applicable power sales
agreements. In addition, although insurance is maintained to
protect against operating risks, the proceeds of insurance may
not be adequate to cover lost revenues or increased expenses. As
a result, we could be unable to service principal and interest
payments under our financing obligations which could result in
losing our interest in the power generation facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We cannot assure that our estimates of oil and
gas reserves are accurate.</FONT></I><FONT size="2"> Estimates
of proved oil and gas reserves and the future net cash flows
attributable to those reserves are prepared by independent
petroleum and geological engineers. There are numerous
uncertainties inherent in estimating quantities of proved oil
and gas reserves and cash flows attributable to such reserves,
including factors beyond our control and that of our engineers.
Reserve engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured
in an exact manner. The accuracy of an estimate of quantities of
reserves, or of cash flows attributable to such reserves, is a
function of the available data, assumptions regarding future oil
and gas prices and expenditures for future development and
exploitation activities, and of engineering and geological
interpretation and judgment. Additionally, reserves and future
cash flows may be subject to material downward or upward
revisions, based upon production history, development and
exploration activities and prices of oil and gas. Actual future
production, revenue, taxes, development expenditures, operating
expenses, quantities of recoverable reserves and the value of
cash flows from such reserves may vary significantly from the
assumptions set forth herein. In addition, different reserve
engineers may make different estimates of reserves and cash
flows based on the same available data.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our geothermal energy reserves may be
inadequate for our operations.</FONT></I><FONT size="2"> The
development and operation of geothermal energy resources are
subject to substantial risks and uncertainties similar to those
experienced in the development of oil and gas resources. The
successful exploitation of a geothermal energy resource
ultimately depends upon:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the heat content of the extractable fluids;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the geology of the reservoir;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the total amount of recoverable reserves;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">operating expenses relating to the extraction of
	fluids;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">price levels relating to the extraction of fluids
	or power generated; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">capital expenditure requirements relating
	primarily to the drilling of new wells.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with each geothermal power plant,
we estimate the productivity of the geothermal resource and the
expected decline in productivity. The productivity of a
geothermal resource may decline more than anticipated, resulting
in insufficient reserves being available for sustained
generation of the electrical power capacity desired. An
incorrect estimate by us or an unexpected decline in
productivity could lower our results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Geothermal reservoirs are highly complex. As a
result, there exist numerous uncertainties in determining the
extent of the reservoirs and the quantity and productivity of
the steam reserves. Reservoir engineering is an
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

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<DIV align="left">
<FONT size="2">inexact process of estimating underground
accumulations of steam or fluids that cannot be measured in any
precise way, and depends significantly on the quantity and
accuracy of available data. As a result, the estimates of other
reservoir specialists may differ materially from ours. Estimates
of reserves are generally revised over time on the basis of the
results of drilling, testing and production that occur after the
original estimate was prepared. While we have extensive
experience in the operation and development of geothermal energy
resources and in preparing such estimates, we cannot assure that
we will be able to successfully manage the development and
operation of our geothermal reservoirs or that we will
accurately estimate the quantity or productivity of our steam
reserves.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;California
Power Market</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The current issues in the California power
market could adversely affect our
performance.</FONT></I><FONT size="2"> The deregulation of the
California power market has produced significant unanticipated
results in the past two years. The deregulation froze the rates
that utilities can charge their retail and business customers in
California, until rate increases were approved by the California
Public Utilities Commission (&#147;CPUC&#148;) in 2001, and
prohibited the utilities from buying power on a forward basis,
while wholesale power prices were not subjected to limits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A series of factors reduced the supply of power
to California from mid 2000 through the spring of 2001, which
resulted in wholesale power prices for that period that were
significantly higher than historical levels. Several factors
contributed to this increase. These included:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">significantly increased volatility in prices and
	supplies of natural gas;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">an unusually dry fall and winter in the Pacific
	Northwest during 2000, which reduced the amount of available
	hydroelectric power from that region (typically, California
	imports a portion of its power from this source);
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the large number of power generating facilities
	in California nearing the end of their useful lives, resulting
	in increased downtime (either for repairs or because they had
	exhausted their air pollution credits and replacement credits
	had become too costly to acquire on the secondary market); and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">continued obstacles to new power plant
	construction in California, which deprived the market of new
	power sources that could have, in part, ameliorated the adverse
	effects of the foregoing factors.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the period of higher wholesale prices,
there was significant under-recovery of costs by two of the
major California utilities. As a consequence, these two
utilities defaulted under a variety of contractual obligations,
including payment obligations to power generators. PG&#38;E
defaulted on payment obligations to the Company under its
long-term QF contracts, which are subject to federal regulation
under the Public Utility Regulatory Policies Act of 1978, as
amended (&#147;PURPA&#148;). The PG&#38;E QF contracts are in
place at eleven of our facilities and represent nearly 600
megawatts of electricity for Northern California customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing in the second half of 2001, the
supply/ demand imbalance for electric power has been
substantially reduced in the short term, resulting in
significantly lower power prices than were seen in the earlier
part of the year. These reductions may be attributed to milder
than expected summer and fall in California and the western
United States, a reduction in the demand for power as a result
of the economic downturn in the region and greater consumer
conservation, changes in the power market, including a greater
portion of power sold on a long-term, forward basis, than on a
short-term spot basis, reduction in the natural gas prices, and
the introduction of new supplies of power.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;6, 2001, PG&#38;E filed for
bankruptcy protection under Chapter&nbsp;11 of the United States
Bankruptcy Code. As of April&nbsp;6, 2001, we had recorded
approximately $265.6&nbsp;million in accounts receivable with
PG&#38;E under our QF contracts, plus $68.7&nbsp;million in
notes receivable not yet due and payable. On July&nbsp;6, 2001,
we announced that we had entered into a binding agreement with
PG&#38;E to modify all of our QF contracts with PG&#38;E and
that, based upon such modification, PG&#38;E had agreed to
assume all of the QF contracts. Under the terms of this
agreement, we continue to receive our contractual capacity
payments under the QF contracts, plus a five-year fixed energy
price component that averages 5.37&nbsp;cents per kilowatt-hour
in
</FONT>

<P align="center"><FONT size="2">F-29
</FONT>

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<DIV align="left">
<FONT size="2">lieu of the short run avoided cost. In addition,
all past due receivables under the QF contracts were elevated to
administrative priority status in the PG&#38;E bankruptcy
proceeding and are to be paid to the Company, with interest,
upon the effective date of a confirmed plan of reorganization.
Administrative claims enjoy priority over payments made to the
general unsecured creditors in bankruptcy. The bankruptcy court
approved the agreement on July&nbsp;12, 2001. On
December&nbsp;6, 2001, Calpine and PG&#38;E executed a
supplemental agreement to the July&nbsp;6, 2001, agreement
whereby PG&#38;E agreed to commence paying Calpine all
pre-petition receivables due under the QF contracts with
interest at a rate of 5% per annum. The payments are to be made
in twelve monthly installments with the first payment of
principal made on December&nbsp;31, 2001, including all accrued
interest from the initial default dates, and the last payment of
principal and interest on November&nbsp;30, 2002. In the event
that the effective date of a confirmed plan of reorganization
occurs sooner than the payment dates, PG&#38;E is required to
make all payments owed to Calpine, including interest thereon
accruing at 5%, as of such effective date. However, under the
terms of the supplemental agreement, PG&#38;E&#146;s obligation
to make such payments is separate from and not dependent upon
the confirmation of a plan of reorganization. The bankruptcy
court approved the supplemental agreement on December&nbsp;21,
2001. There has been no final plan of reorganization approved by
the bankruptcy court. After receiving the first of twelve
payments, including accrued interest through December&nbsp;31,
2001, the Company sold the remaining receivable on
December&nbsp;31, 2001, for 96.125% of its face value.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CPUC Proceeding Regarding QF Contract Pricing
for Past Periods.</FONT></I><FONT size="2"> Our QF contracts
with PG&#38;E provide that the CPUC has the authority to
determine the appropriate utility &#147;avoided cost&#148; to be
used to set energy payments for certain QF contracts by
determining the short run avoided cost (&#147;SRAC&#148;) energy
price formula. In mid 2000, our QF facilities elected the option
set forth in Section&nbsp;390 of the California Public Utility
Code, which provides QFs the right to elect to receive energy
payments based on the California Power Exchange (&#147;PX&#148;)
market clearing price instead of the price determined by SRAC.
Having elected such option, we were paid based upon the PX zonal
day ahead clearing price (&#147;PX Price&#148;) from summer 2000
until January&nbsp;19, 2001, when the PX ceased operating a day
ahead market. The CPUC has conducted proceedings (R.99-11-022)
to determine whether the PX Price was the appropriate price for
the energy component upon which to base payments to QFs which
had elected the PX-based pricing option. The CPUC at one point
issued a proposed decision to the effect that the PX Price was
the appropriate price for energy payments under the California
Public Utility Code but tabled it, and a final decision has not
been issued to date. Therefore, it is possible that the CPUC
could order a payment adjustment based on a different energy
price determination. We believe that the PX Price was the
appropriate price for energy payments but there can be no
assurance that this will be the outcome of the CPUC proceedings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Current California QF Contract
Pricing.</FONT></I><FONT size="2"> When the PX ceased operation
on January&nbsp;19, 2001, the CPUC ordered that the QFs that had
previously switched to the PX Price be switched back to the
applicable SRAC energy price formula. On June&nbsp;14, 2001,
however, the CPUC issued an order (Decision 01-06-015) (the
&#147;June 2001 Decision&#148;) that authorized the California
utilities, including PG&#38;E, to amend QF contracts to elect a
fixed energy price component that averages 5.37&nbsp;cents per
kilowatt-hour for a five-year term under those contracts in lieu
of using the SRAC energy price formula. By this order, the CPUC
authorized the QF contract energy price amendments without
further CPUC concurrence. As part of the agreement we entered
into with PG&#38;E pursuant to which PG&#38;E, in bankruptcy,
agreed to assume its QF contracts with us, PG&#38;E agreed with
us to amend these contracts to adopt the fixed price component
that averages 5.37&nbsp;cents pursuant to the June 2001
Decision. This election became effective as of July&nbsp;16,
2001. As a result of the June 2001 Decision and our agreement
with PG&#38;E to amend the QF contracts to adopt the fixed price
energy component, the energy price component in our QF contracts
is now fixed for five years. As of July&nbsp;1, 2006, the energy
payment under the QF contracts with PG&#38;E will be determined
by the CPUC in accordance with its determination of the SRAC
energy price formula.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">California Long-Term Supply Contracts.
</FONT></I><FONT size="2">California has adopted legislation
permitting it to issue long-term revenue bonds to provide
funding for wholesale purchases of power. The bonds will be
repaid with the proceeds of payments by retail customers over
time. The California Department of Water Resources
(&#147;DWR&#148;) sought bids for long-term power supply
contracts in a publicly announced auction. Calpine successfully
bid in that auction and signed several long-term power supply
contracts with DWR.
</FONT>

<P align="center"><FONT size="2">F-30
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;7, 2001, we announced the
signing of a 10-year, $4.6&nbsp;billion fixed price contract
with DWR to provide electricity to the State of California. We
committed to sell up to 1,000&nbsp;megawatts of electricity,
with initial deliveries of 200&nbsp;megawatts starting
October&nbsp;1, 2001, which increases to 1,000&nbsp;megawatts by
January&nbsp;1, 2004. The electricity will be sold directly to
DWR on a 24&nbsp;hours-a-day, 7&nbsp;days-a-week basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2001, we announced the
signing of two long-term power sales contracts with DWR. Under
the terms of the first contract, a 10-year, $5.2&nbsp;billion
fixed price contract, we committed to sell up to
1,000&nbsp;megawatts of generation. Initial deliveries began
July&nbsp;1, 2001, with 200&nbsp;megawatts and increase to
1,000&nbsp;megawatts by as early as July 2002. Under the terms
of the second contract, a 20-year contract totaling up to
$3.1&nbsp;billion, we will supply DWR with up to
495&nbsp;megawatts of peaking generation, beginning with
90&nbsp;megawatts in August 2001 and increasing up to
495&nbsp;megawatts as early as August&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;11, 2001, we announced the signing
of a three-year peaking contract to supply DWR with up to
225&nbsp;megawatts of peaking generation beginning in the summer
of 2002 through April&nbsp;30, 2005, from the Los Esteros
Critical Energy Facility currently under development in San
Jose, California. In the event that the Los Esteros Critical
Energy Facility has not achieved commercial operation by
October&nbsp;1, 2002, DWR would have the right to terminate the
contract.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December 11, 2001, Calpine announced that it
was meeting with officials from the State of California at their
request to discuss whether, and if so how, the long-term
contracts with DWR could be modified. No definitive
modifications have been agreed to and the discussions have been
ongoing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, we currently have a dispute with DWR
concerning payment of the capacity payment on the 495-megawatt
peaking contract dated February&nbsp;28, 2001. The contract
provides that CES may earn a capacity payment by committing to
supply electricity to DWR from a source other than the peaker
units designated in the contract either through substitution of
those designated units or by providing replacement energy. DWR
has made certain assertions challenging CES&#146; right to
substitute units or provide replacement energy and has withheld
capacity payments in the amount of $9.5&nbsp;million since
December 2001. The resolution of this dispute is part of the
ongoing discussions regarding modifications to the contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;25, 2002, both the CPUC and the
California Electric Oversight Board filed complaints under
Section&nbsp;206 of the Federal Power Act with the FERC
(EL02-60-000 and EL02-62-000, respectively) alleging that the
prices and terms of the long-term contracts with DWR are unjust
and unreasonable and counter to the public interest. Calpine is
a respondent and the four long-term contracts entered into by
Calpine are subject to the complaint. The FERC has noticed this
proceeding and responsive filings are due from the respondents
on or before March&nbsp;22, 2002. Calpine believes that the
complaints are without merit and intends to defend its position
vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2002, in accordance with the
state legislation that authorized DWR to enter into the
long-term power contracts, the CPUC issued a Rate Agreement,
which dedicates a portion of the retail rate paid by electricity
customers of the California investor-owned utilities to a fund
to pay bondholders of bonds to be issued by DWR and to a fund to
pay electricity suppliers such as Calpine. The proceeds from
those bonds will be used in part to fund the Electric Power Fund
established by the state legislation authorizing DWR to enter
into long-term power contracts with the power suppliers whose
recourse in the event of a default by DWR is to the Electric
Power Fund. Proceeds from the bonds will also be used to repay
the state of California General Fund. The bonds have not been
issued, but representatives of the State have indicated that the
bonds should be issued in the near future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">FERC Investigation into California Wholesale
Markets</FONT></I><FONT size="2">&nbsp;&#151; In August 2000,
FERC initiated an investigation of the California power markets.
In November 2000 FERC found that the California power market
structure and market rules were seriously flawed, and that these
flaws, together with short supply relative to demand, resulted
in unusually high energy prices. FERC proposed specific remedies
to the identified market flaws that included the potential
refund of rates charged for service determined by FERC not to be
just and reasonable.
</FONT>

<P align="center"><FONT size="2">F-31
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through a series of orders most recently
culminating in its order of December&nbsp;19, 2001, FERC has
prescribed a methodology for determining potential refunds in
the California wholesale electric markets. The key elements of
this methodology are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the refund period runs from October&nbsp;2, 2000,
	through June&nbsp;19, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the only sales subject to price mitigation and
	potential refund are spot market transactions (sales entered
	into 24 hours or less in advance of the delivery of power).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the methodology for determining refunds is based
	upon the costs associated with the least efficient generating
	unit needed to meet system requirements during any relevant
	pricing interval.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">any refunds calculated under this methodology are
	to be offset by amounts owed to the seller from various entities
	purchasing power in California.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">actual application of the methodology and
	calculations of any refunds remain subject to ongoing
	proceedings before the FERC which are scheduled to conclude
	during the latter half of 2002.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The scope of the ongoing FERC investigation is
limited to spot market sales made to the ISO and PX during the
October&nbsp;2, 2000, to June&nbsp;19, 2001, time period, and so
Calpine&#146;s forward long-term contracts (including its QF
contracts) are not subject to this investigation. Due to the
ongoing nature of this investigation and ambiguities concerning
how the refund methodology is to be applied, it is not possible
at this time to predict the amount of any potential refunds that
Calpine ultimately may be required to pay. However, based on the
information available at this time, we do not believe that the
proceeding will result in a material adverse effect on our
financial conditions or results of operations. It also should be
noted that all of FERC orders issued in these proceedings to
date are subject to judicial review sought by various parties.
The outcome of these judicial proceedings cannot be determined
at this time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;19, 2001, FERC ordered price
mitigation in 11&nbsp;states in the western United States in an
attempt to reduce the dependence of the California market on
spot markets in favor of longer-term committed energy supplies.
The order provides for price mitigation in the spot market
throughout the 11&nbsp;state western region during &#147;reserve
deficiency hours,&#148; which is when operating reserves in
California fall below seven percent. This price will be a single
market clearing price based upon the marginal operating cost of
the last unit dispatched by the California ISO. In addition,
FERC implemented price mitigation in non-reserve deficiency
hours, which will be set at 85% of the market clearing price
during the last reserve deficiency period. These price
mitigation procedures went into effect on June&nbsp;20, 2001,
and will remain in effect until September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The retention by FERC of a market-based, rather
than a cost-of-service-based, rate structure will enable us to
continue to realize benefits from our efficient, modern power
plants. We believe that Calpine&#146;s marginal costs will
continue to be below any price cap imposed by FERC, whether
during reserve deficiency hours or at other times. Therefore, we
believe that FERC&#146;s mitigation plan will not have a
material adverse effect on Calpine&#146;s financial condition or
results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">FERC also ordered all sellers and buyers in
wholesale power markets administered by the California ISO, as
well as representatives of the State of California, to
participate in a settlement conference before a FERC
administrative law judge. The settlement discussions were
intended to resolve all issues that remain outstanding to
resolve past accounts, including sellers&#146; claims for unpaid
invoices, and buyers&#146; claims for refunds of alleged
overcharges, for past periods. The settlement discussions began
on June&nbsp;25, 2001, and ended on July&nbsp;9, 2001. The Chief
Administrative Law Judge issued his report and recommendations
to FERC on July&nbsp;12, 2001. On July&nbsp;25, 2001, FERC
ordered an expedited fact-finding hearing to calculate refunds
for spot market transactions in California. The hearing has been
delayed pending the submission by the California ISO and the PX
of data for the purpose of developing the factual basis needed
to implement the refund methodology and order refunds, and at
this time it is not possible to determine when the proceeding
will conclude. While it is not possible to predict the amount of
any refunds until the hearings take place, based upon the
information available at this time, we do not believe that this
proceeding will result in a material adverse effect on the
Company&#146;s financial condition or results of operations.
</FONT>

<P align="center"><FONT size="2">F-32
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;13, 2002, FERC initiated an
investigation of potential manipulation of electric and natural
gas prices in the western United States. This investigation was
initiated as a result of allegations that Enron Corp. through
its affiliates used its market position to distort electric and
natural gas markets in the West. The scope of the investigation
is to consider whether as a result of any manipulation in the
short-term markets for electric energy or natural gas or other
undue influence on the wholesale markets by any party since
January&nbsp;1, 2000, the rates of the long-term contracts
subsequently entered into in the West are potentially unjust and
unreasonable. FERC has stated that it may use the information
gathered in connection with the investigation to determine how
to proceed on any existing or future complaint brought under
Section&nbsp;206 of the Federal Power Act involving long-term
power contracts entered into in the West since January&nbsp;1,
2000, or to initiate a Federal Power Act Section&nbsp;206 or
Natural Gas Act Section&nbsp;5 proceeding on its own initiative.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Government
Regulation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We are subject to complex government
regulation which could adversely affect our
operations.</FONT></I><FONT size="2"> Our activities are subject
to complex and stringent energy, environmental and other
governmental laws and regulations. The construction and
operation of power generation facilities require numerous
permits, approvals and certificates from appropriate federal,
state and local governmental agencies, as well as compliance
with environmental protection legislation and other regulations.
While we believe that we have obtained the requisite approvals
for our existing operations and that our business is operated in
accordance with applicable laws, we remain subject to a varied
and complex body of laws and regulations that both public
officials and private individuals may seek to enforce. Existing
laws and regulations may be revised or reinterpreted, or new
laws and regulations may become applicable to us that may have a
negative effect on our business and results of operations. We
may be unable to obtain all necessary licenses, permits,
approvals and certificates for proposed projects, and completed
facilities may not comply with all applicable permit conditions,
statutes or regulations. In addition, regulatory compliance for
the construction of new facilities is a costly and
time-consuming process. Intricate and changing environmental and
other regulatory requirements may necessitate substantial
expenditures to obtain permits. If a project is unable to
function as planned due to changing requirements or local
opposition, it may create expensive delays or significant loss
of value in a project.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operations are potentially subject to the
provisions of various energy laws and regulations, including
PURPA, the Public Utility Holding Company Act of 1935, as
amended, (&#147;PUHCA&#148;), and state and local regulations.
PUHCA provides for the extensive regulation of public utility
holding companies and their subsidiaries. PURPA provides QFs (as
defined under PURPA) and owners of QFs exemptions from certain
federal and state regulations, including rate and financial
regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under present federal law, we are not subject to
regulation as a holding company under PUHCA, and will not be
subject to such regulation as long as the plants in which we
have an interest (1)&nbsp;qualify as QFs, (2)&nbsp;are subject
to another exemption or waiver or (3)&nbsp;qualify as an Exempt
Wholesale Generator (&#147;EWG&#148;) under the Energy Policy
Act of 1992. In order to be a QF, a facility must be not more
than 50% owned by one or more electric utility companies or
electric utility holding companies. In addition, a QF that is a
cogeneration facility, such as the plants in which we currently
have interests, must produce electricity as well as thermal
energy for use in an industrial or commercial process in
specified minimum proportions. The QF also must meet certain
minimum energy efficiency standards. Generally, any geothermal
power facility which produces up to 80&nbsp;megawatts of
electricity and meets PURPA ownership requirements is considered
a QF.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any of the plants in which we have an interest
lose their QF status or if amendments to PURPA are enacted that
substantially reduce the benefits currently afforded QFs, we
could become a public utility holding company, which could
subject us to significant federal, state and local regulation,
including rate regulation. If we become a holding company, which
could be deemed to occur prospectively or retroactively to the
date that any of our plants loses its QF status, all our other
power plants could lose QF status because, under FERC
regulations, a QF cannot be owned by an electric utility or
electric utility holding company. In addition, a loss of QF
status could, depending on the particular power purchase
agreement, allow the power purchaser to cease taking and paying
for electricity or to seek refunds of past amounts paid and thus
could cause the loss of some or all contract revenues or
otherwise impair the value of a project. If a power purchaser
were to cease taking and paying for electricity or seek to
obtain refunds of past amounts paid, there can be no assurance
that the
</FONT>

<P align="center"><FONT size="2">F-33
</FONT>

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<DIV align="left">
<FONT size="2">costs incurred in connection with the project
could be recovered through sales to other purchasers. Such
events could adversely affect our ability to service our
indebtedness, including our senior notes. See
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Government
Regulation&nbsp;&#151; Federal Energy Regulation&nbsp;&#151;
Federal Power Act Regulation.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, Congress is considering proposed
legislation that would repeal PUHCA and amend PURPA by limiting
its mandatory purchase obligation to existing contracts. In
light of the circumstances in California, the Pacific Gas and
Electric Company bankruptcy and the Enron Corp. bankruptcy,
among other events in 2001, there are a number of federal
legislative and regulatory initiatives that could result in
changes in how the energy markets are regulated. We do not know
whether this legislation or regulatory initiatives will be
adopted or, if adopted, what form they may take. We cannot
provide assurance that any legislation or regulation ultimately
adopted would not adversely affect our existing domestic
projects.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, many states are implementing or
considering regulatory initiatives designed to increase
competition in the domestic power generation industry and
increase access to electric utilities&#146; transmission and
distribution systems for independent power producers and
electricity consumers. However, in light of the circumstances in
the California power markets and the bankruptcies of both
PG&#38;E and Enron, the pace and direction of further
deregulation at the state level in many jurisdictions is
uncertain. See &#147;Item&nbsp;1&nbsp;&#151;
Business&nbsp;&#151; Recent Developments&nbsp;&#151; California
Power Market.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Risk
Factors</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We depend on our senior management.
</FONT></I><FONT size="2">Our success is largely dependent on
the skills, experience and efforts of our senior management. The
loss of the services of one or more members of our senior
management could have a negative effect on our business,
financial results and future growth.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Seismic disturbances could damage our
projects. </FONT></I><FONT size="2">Areas where we operate and
are developing many of our geothermal and gas-fired projects are
subject to frequent low-level seismic disturbances. More
significant seismic disturbances are possible. Our existing
power generation facilities are built to withstand relatively
significant levels of seismic disturbances, and we believe we
maintain adequate insurance protection. However, earthquake,
property damage or business interruption insurance may be
inadequate to cover all potential losses sustained in the event
of serious seismic disturbances. Additionally, insurance may not
continue to be available to us on commercially reasonable terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our results are subject to quarterly and
seasonal fluctuations.</FONT></I><FONT size="2"> Our quarterly
operating results have fluctuated in the past and may continue
to do so in the future as a result of a number of factors,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the timing and size of acquisitions;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the completion of development projects;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">variations in levels of production; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">seasonal variations in energy prices.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, because we receive the majority of
capacity payments under some of our power sales agreements
during the months of May through October, our revenues and
results of operations are, to some extent, seasonal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The price of our common stock is
volatile.</FONT></I><FONT size="2"> The market price for our
common stock has been volatile in the past, and several factors
could cause the price to fluctuate substantially in the future.
These factors include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">announcements of developments related to our
	business;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">fluctuations in our results of operations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">our debt to equity ratios and other leverage
	ratios;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">effect of significant events relating to the
	energy sector in general;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">sales of substantial amounts of our securities
	into the marketplace;
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-34
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">general conditions in our industry, the power
	markets in which we participate, or the worldwide economy;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">an outbreak of war or hostilities;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a shortfall in revenues or earnings compared to
	securities analysts&#146; expectations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in analysts&#146; recommendations or
	projections; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">announcements of new acquisitions or development
	projects by us.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market price of our common stock may
fluctuate significantly in the future, and these fluctuations
may be unrelated to our performance. General market price
declines or market volatility in the future could adversely
affect the price of our common stock, and the current market
price may not be indicative of future market prices.
</FONT>

<P align="left">
<B><FONT size="2">Financial and Commodity Market Risks</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Short-term
investments</FONT></I><FONT size="2">&nbsp;&#151;&nbsp;As of
December&nbsp;31, 2001, we had short-term investments of
$1.0&nbsp;billion. These short-term investments consist of
highly liquid investments with maturities of less than three
months. We have the ability to hold these investments to
maturity, and as a result, we would not expect the value of
these investments to be affected to any significant degree by
the effect of a sudden change in market interest rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest rate swaps and cross currency
swaps</FONT></I><FONT size="2">&nbsp;&#151;&nbsp;From time to
time, we use interest rate swap and cross currency swap
agreements to mitigate our exposure to interest rate and
currency fluctuations associated with certain of our debt
instruments. We do not use interest rate swap and currency swap
agreements for speculative or trading purposes. In regards to
foreign currency denominated senior notes, the swap notional
amounts equal the amount of the related principal debt. The
following tables summarize the fair market values of our
existing interest rate swap and currency swap agreements as of
December&nbsp;31, 2001 (dollars in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Notional Principal</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Market</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Maturity Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(Pay)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(Receive)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2009
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,862</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,182</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2011
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53,126</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2012
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,692</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,723</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2014
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,929</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,217</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2015
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,227</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2018
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,875</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">294,609</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3-month US LIBOR</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,459</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Frequency of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fixed Currency</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Currency</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Market</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Maturity Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Notional Principal</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exchange</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exchange</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(Pay/Receive)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(Pay/Receive)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2007
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">US$127,763/</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">C$200,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">US$5,545/</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">C$8,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Semi-annually</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,479</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2008
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#163;109,550/</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2"><FONT face="times new roman,times">&#128;</FONT>175,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#163;5,152/</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2"><FONT face="times new roman,times">&#128;</FONT>7,328</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">Semi-annually</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,012</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Certain Trading Activities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Energy price
fluctuations</FONT></I><FONT size="2">&nbsp;&#151;&nbsp;As an
independent power producer primarily focused on generation of
electricity using gas-fired turbines, our natural physical
commodity position is &#147;short&#148; (we require) gas and
&#147;long&#148; (we own) power capacity. To manage forward
exposure to price fluctuation in these and (to a lesser extent)
other commodities, we enter into derivative commodity
instruments. All transactions are subject to our risk management
policy which prohibits positions that exceed production capacity
and fuel requirements
</FONT>

<P align="center"><FONT size="2">F-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">on a total portfolio basis. Any hedging,
balancing, or optimization activities that we engage in are
directly related to our asset-based business model of owning and
operating gas-fired electric power plants. We hedge exposures
that arise from the ownership and operation of power plants and
related sales of electricity and purchases of natural gas, and
we utilize derivatives to optimize the returns we are able to
achieve from these assets for our shareholders. This model is
markedly different from that of companies that engage in
significant commodity trading operations that are unrelated to
underlying physical assets. Derivative commodity instruments are
accounted for under the requirements of SFAS No.&nbsp;133.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The change in fair value of outstanding commodity
derivative instruments from January&nbsp;1, 2001 through
December&nbsp;31, 2001 is summarized in the table below (in
thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fair value of contracts outstanding at
	January&nbsp;1, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87,413</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Gains) losses realized or otherwise settled
	during the period(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(161,627</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in fair value attributable to changes in
	valuation techniques and assumptions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other changes in fair value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,909</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fair value of contracts outstanding at
	December&nbsp;31, 2001(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Realized cash flow hedges of $132.5&nbsp;million
	reported in footnote 19 of the financial statements and
	$29.1&nbsp;million realized gain on trading activity reported in
	the performance metrics section of the management discussion and
	analysis, both included in this filing.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Net liabilities reported in Note&nbsp;19 of the
	Notes to Consolidated Financial Statements included in this
	filing.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of outstanding derivative
commodity instruments at December&nbsp;31, 2001, based on price
source and the period during which the instruments will mature
(i.e., be realized) are summarized in the table below (in
thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Fair Value Source</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003-2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005-2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">After 2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prices actively quoted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(176,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(252,128</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(428,365</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prices provided by other external sources
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">223,597</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51,923</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,241</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,761</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prices based on models and other valuation methods
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,859</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,726</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(67,068</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fair value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">152,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(195,479</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,827</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s traders maintain fair value
price information derived from various sources in the
Company&#146;s trading and risk management systems. The
propriety of that information is validated by the Company&#146;s
Risk Control function. Prices actively quoted include validation
with prices sourced from commodities exchanges (e.g., New York
Mercantile Exchange). Prices provided by other external sources
include quotes from commodity brokers and electronic trading
platforms. Prices based on models and other valuation methods
are validated using quantitative methods. Validation methods
have been independently reviewed for propriety.
</FONT>

<P align="center"><FONT size="2">F-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The counterparty credit quality associated with
the fair value of outstanding derivative commodity instruments
at December&nbsp;31, 2001, and the period during which the
instruments will mature (i.e., be realized) are summarized in
the table below (in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Credit Quality (based on March 15, 2002 ratings)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003-2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005-2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">After 2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investment grade
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,229</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,197</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Noninvestment grade
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125,287</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(212,077</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(57,342</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(144,132</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">No external ratings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,401</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,104</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fair value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">152,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(195,479</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44,827</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of outstanding derivative
commodity instruments and the change in fair value that would be
expected from a ten percent adverse price change are shown in
the table below (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Change In Fair</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value From</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">10% Adverse</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price Change</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">At December&nbsp;31, 2001:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Crude oil
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,573</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,364</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,849</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(73,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(624,545</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(134,289</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(217,590</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Derivative commodity instruments included in the
table are those included in Note 19 of the Notes to Consolidated
Financial Statements. The fair values of derivative commodity
instruments included in the table are calculated based on
discounted cash flows derived using forward price curves. During
2001, significant electricity price volatility occurred
particularly in the western United States. The positive fair
value of electricity derivative commodity instruments includes
the effect of decreased power prices versus our derivative
forward commitments. Conversely, the negative fair value of the
natural gas derivatives reflects the general decline in gas
prices. Derivative commodity instruments offset physical
positions exposed to the cash market. None of the offsetting
physical positions are included in the above table.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Price changes were calculated by assuming an
across-the-board ten percent adverse price change regardless of
term or historical relationship between the contract price of an
instrument and the underlying commodity price. It may be
unlikely that an across-the-board ten percent adverse price
change would occur. In the event of an actual change in prices
that averages ten percent, the fair value of Calpine&#146;s
derivative portfolio would typically change by more than ten
percent for earlier forward months and less than ten percent for
later forward months because of the higher volatilities in the
near term and the effects of discounting expected future cash
flows.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The primary factors affecting the fair value of
the Company&#146;s derivatives at any point in time are
(1)&nbsp;the volume of open derivative positions (MMBbls, MMBtu,
and Mwh), and (2)&nbsp;changing commodity market prices,
principally for crude oil, electricity, and natural gas. The
total volume of open gas derivative positions increased 899% in
2001 while the total volume of open power derivative positions
increased 1,251% for the same period. In that prices for
electricity and natural gas are among the most volatile of all
commodity prices, there may be material changes in the fair
value of the Company&#146;s derivatives over time, driven both
by price volatility and the increases in volume of open
derivative transactions. Under SFAS No.&nbsp;133, the change
since the last balance sheet date in the total value of the
derivatives (both assets and liabilities) is reflected either in
OCI, net of tax, or in the statement of operations as an item
(gain or loss) of current earnings. As of December&nbsp;31,
2001, the majority of the balance in accumulated OCI represented
the unrealized net loss associated with commodity cash flow
hedging transactions. As noted above, there is a substantial
amount of
</FONT>

<P align="center"><FONT size="2">F-37
</FONT>

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<DIV align="left">
<FONT size="2">volatility inherent in accounting for the fair
value of these derivatives, and the Company&#146;s results
during 2001 have reflected this. See Note&nbsp;19 for additional
information on derivative activity.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Critical Accounting Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our financial statements reflect the selection
and application of accounting policies which require management
to make significant estimates and assumptions. We believe that
the following are some of the more critical judgment areas in
the application of our accounting policies that currently affect
our financial condition and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue Recognition/ Fair Value
Accounting&nbsp;</FONT></I><FONT size="2">&#151; We derive a
significant portion of our revenues from sales of physical power
in the wholesale electricity market as well as from energy
marketing and risk management activities. With respect to
physical power sales, we consider revenue earned upon output,
delivery or satisfaction of specific targets, all as specified
by contractual terms. Revenues under long-term power sales
arrangements are recognized on an accrual basis. In addition, we
account for certain transactions and activities at fair value.
The majority of these represent energy trading and marketing
contracts which are marked-to-market under EITF No.&nbsp;98-10,
&#147;Accounting for Contracts Involved in Energy Trading and
Risk Management Activities&#148; and derivatives which are
carried at fair value in accordance with SFAS No.&nbsp;133. For
energy marketing and risk management activities, we follow
either the mark-to-market method of accounting as prescribed by
SFAS No.&nbsp;133 or EITF No.&nbsp;98-10. Under the
mark-to-market method of accounting, financial instruments and
contractual commitments are recorded at fair value upon contract
execution. The initial recognition of value as well as
subsequent changes in value affect reported earnings in the
respective period. The values of those instruments that remain
open at the balance sheet date represent unrealized gains or
losses and are presented as derivative risk management assets
and liabilities in the consolidated balance sheets. Please see
&#147;Impact of Recent Accounting Pronouncements&#148; for
further discussion of our adoption and application of
SFAS&nbsp;No.&nbsp;133.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The determination of fair value of energy
marketing and risk management contracts as well as derivatives
can be complex and relies on judgments concerning future prices
and liquidity, among other things. Generally speaking the longer
the term of the contract, the more difficult it is to estimate
accurate fair value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recognize our revenue and related expense from
energy marketing and risk management activities in accordance
with EITF No.&nbsp;99-19 &#147;Reporting Revenue Gross as a
Principal versus Net as an Agent.&#148; This requires us to
report a substantial amount of our hedging, balancing,
optimization and trading activity on a gross basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income
Taxes&nbsp;</FONT></I><FONT size="2">&#151; SFAS No.&nbsp;109,
&#147;Accounting for Income Taxes,&#148; requires the asset and
liability approach for financial accounting and reporting for
deferred income taxes. We use the asset and liability method of
accounting for deferred income taxes and provide deferred income
taxes for all significant income tax temporary differences (See
Note&nbsp;15 to the Notes to Consolidated Financial Statements
for additional details).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the process of preparing our
consolidated financial statements we are required to estimate
our income taxes in each of the jurisdictions in which we
operate. This process involves us estimating our actual current
tax exposure together with assessing temporary differences
resulting from differing treatment of items, such as
depreciation, for tax and accounting purposes. These differences
result in deferred tax assets and liabilities, which are
included within our consolidated balance sheet.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We must then assess the likelihood that our
deferred tax assets will be recovered from future taxable income
and to the extent we believe that recovery is not likely, we
must establish a valuation allowance. Significant management
judgment is required in determining our provision for income
taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. To the
extent we establish a valuation allowance or increase this
allowance in a period, we must include an expense within the tax
provisions in the statement of income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have recorded on our consolidated balance
sheet deferred tax assets of $140.0&nbsp;million at
December&nbsp;31, 2001 which includes amounts relating to loss
carryforwards. We believe there will be sufficient capital
</FONT>

<P align="center"><FONT size="2">F-38
</FONT>

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<DIV align="left">
<FONT size="2">gains and taxable income in the future allowing
us to utilize these loss carryforwards in the tax jurisdictions
where they exist.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have also recorded deferred taxes on
undistributed earnings of foreign subsidiaries if those earnings
are to be repatriated to the United States. Deferred tax assets
have been recorded for foreign tax credits that we expect to
utilize in the future as we generate taxable income from our
foreign subsidiaries. Deferred taxes have not been accrued if
those earnings have been, or are intended to be, indefinitely
reinvested.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Long-Lived Assets, Including
Intangibles&nbsp;</FONT></I><FONT size="2">&#151; We evaluate
long-lived assets, such as property, plant and equipment, equity
method investments, patents, and specifically identifiable
intangibles, when events or changes in circumstances indicate
that the carrying value of such assets may not be recoverable.
Factors which could trigger an impairment include significant
underperformance relative to historical or projected future
operating results; significant changes in the manner of our use
of the acquired assets or the strategy for our overall business;
and significant negative industry or economic trends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The determination of whether an impairment has
occurred is based on an estimate of undiscounted cash flows
attributable to the assets, as compared to the carrying value of
the assets. If an impairment has occurred, the amount of the
impairment loss recognized would be determined by estimating the
fair value of the assets and recording a loss if the fair value
was less than the book value. For equity method investments and
assets identified as held for sale, the book value is compared
to the estimated fair value to determine if an impairment loss
is required. For equity method investments, we would record a
loss when the decline in value is other than temporary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our assessment regarding the existence of
impairment factors is based on market conditions, operational
performance and legal factors of our businesses. Our review of
factors present and the resulting appropriate carrying value of
our goodwill, intangibles, and other long-lived assets are
subject to judgments and estimates that management is required
to make. Future events could cause us to conclude that
impairment indicators exist and that our goodwill, intangibles,
and other long-lived assets might be impaired.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capitalized
Interest&nbsp;</FONT></I><FONT size="2">&#151; The Company
capitalizes interest on capital invested in projects during the
advanced stages of development and the construction period in
accordance with SFAS No.&nbsp;34, &#147;Capitalization of
Interest Cost,&#148; as amended by SFAS No.&nbsp;58,
&#147;Capitalization of Interest Cost in Financial Statements
That Include Investments Accounted for by the Equity Method (an
Amendment of FASB Statement No.&nbsp;34).&#148; The
Company&#146;s qualifying assets include construction in
progress, certain oil and gas properties under development,
construction costs related to unconsolidated investments in
power projects under construction, and advanced stage
development costs. Upon commencement of plant operation,
capitalized interest, as a component of the total cost of the
plant, is amortized over the estimated useful life of the plant.
The increase in the amount of interest capitalized during the
year ended December&nbsp;31, 2001, reflects the significant
increase in the Company&#146;s power plant construction program.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with SFAS No.&nbsp;34, the Company
determines which debt instruments best represent a reasonable
measure of the cost of financing construction assets in terms of
interest cost incurred that otherwise could have been avoided.
These debt instruments and associated interest cost are included
in the calculation of the weighted average interest rate used
for capitalizing interest on general funds. The primary debt
instruments included in the rate calculation for 2000 and 2001
are the Senior Notes and the $400 million corporate revolver.
</FONT>

<P align="left">
<B><FONT size="2">Impact of Recent Accounting
Pronouncements</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;133</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2001, we adopted Financial
Accounting Standards Board (&#147;FASB&#148;) Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
</FONT>

<P align="center"><FONT size="2">F-39
</FONT>

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<DIV align="left">
<FONT size="2">Activities&#148;, as amended by SFAS
No.&nbsp;137, &#147;Accounting for Derivative Instruments and
Hedging Activities&nbsp;&#151; Deferral of the Effective Date of
FASB Statement No.&nbsp;133&nbsp;&#151; an Amendment of FASB
Statement No.&nbsp;133&#148;, and SFAS No.&nbsp;138,
&#147;Accounting for Certain Derivative Instruments and Certain
Hedging Activities&nbsp;&#151; an Amendment of FASB Statement
No. 133.&#148; Calpine currently holds six classes of derivative
instruments that are impacted by the new
pronouncement&nbsp;&#151; foreign currency swaps, interest rate
swaps, forward interest rate agreements, commodity financial
instruments, commodity contracts, and physical options.
</FONT>
</DIV>

<P align="center"><FONT size="2">F-40
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consistent with the requirements of SFAS
No.&nbsp;133, we evaluate all of our contracts to determine
whether or not they qualify as derivatives under the accounting
pronouncement. For a given contract, there are typically three
steps we use to determine its proper accounting treatment.
First, based on the terms and conditions of the contract, as
well as the applicable guidelines established by SFAS
No.&nbsp;133, we identify the contract as being either a
derivative or non-derivative contract. Second, if the contract
is not a derivative, we further identify its specific
classification (e.g. whether or not it qualifies as a lease) and
apply the appropriate non-derivative accounting treatment.
Alternatively, if the contract does qualify as a derivative
under the guidance of SFAS No.&nbsp;133, we evaluate whether or
not it qualifies for the &#147;normal&#148; purchases and sales
exception (as described below). If the contract qualifies for
the exception, we apply the traditional accrual accounting
treatment. Finally, if the contract qualifies as a derivative
and does not qualify for the &#147;normal&#148; purchases and
sales exception, we apply the accounting treatment required by
SFAS No.&nbsp;133, which is outlined below in further detail.
The graph below illustrates the process we use for the purposes
of identifying the classification and subsequent accounting
treatment of our contracts:
</FONT>

<P align="center">
<IMG src="f80168f8016801.gif" alt="Types of Accounting Transactions">

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an independent power producer primarily
focused on generation of electricity using gas-fired turbines,
Calpine&#146;s natural physical commodity position is
&#147;short&#148; fuel (i.e.,&nbsp;natural gas consumer) and
&#147;long&#148; power capacity (i.e.,&nbsp;electricity seller).
Additionally, we also have a natural &#147;long&#148; crude
position due to our petroleum reserves. To manage forward
exposure to price fluctuation, we execute commodity derivative
contracts as defined by SFAS No.&nbsp;133. As we apply SFAS
No.&nbsp;133, derivatives can receive one of four
</FONT>

<P align="center"><FONT size="2">F-41
</FONT>

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<DIV align="left">
<FONT size="2">treatments depending on associated circumstances:
1.&nbsp;exemption from SFAS No.&nbsp;133 accounting treatment if
these instruments qualify as &#147;normal&#148; purchases and
sales contracts. 2.&nbsp;cash flow hedges. 3.&nbsp;fair value
hedges. 4.&nbsp;undesignated derivatives.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Normal
purchases and sales</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Normal purchases and sales, as defined by
paragraph 10&nbsp;b. of SFAS No.&nbsp;133 and amended by SFAS
No.&nbsp;138, are exempt from SFAS No.&nbsp;133 accounting
treatment. As a result, these contracts are not required to be
recorded on the balance sheet at their fair values and any
fluctuations in these values are not required to be reported
within earnings. Probability of physical delivery from our
generation plants, in the case of electricity sales, and to our
generation plants, in the case of natural gas contracts, is
required over the life of the contract within reasonable
tolerances.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;27, 2001, the FASB cleared SFAS
No.&nbsp;133 Implementation Issue No.&nbsp;C15 dealing with a
proposed electric industry normal purchases and sales exception
for capacity sales transactions (&#147;The Eligibility of Option
Contracts in Electricity for the Normal Purchases and Normal
Sales Exception&#148;). On October&nbsp;10, 2001, the FASB
revised the criteria for qualifying for the &#147;normal&#148;
exception. As a result of Issue No.&nbsp;C15, as revised,
certain power purchase and/or sale agreements that are
structured as capacity sales contracts are now eligible to
qualify for the normal purchases and sales exception. Because we
are &#147;long&#148; power capacity, we often enter into
capacity sales contracts as a means to recover the costs
incurred from maintaining and operating our power plants as well
as the costs directly associated with the generation and sale of
electricity to our customers. Under Issue No.&nbsp;C15, a
capacity sales contract will qualify for the normal purchases
and sales exception subject to certain conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that most of our capacity sales
contracts will qualify for the normal purchases and sales
exception.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flow hedges
and fair value hedges</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Within the energy industry, cash flow and fair
value hedge transactions typically use the same types of
standard transactions (i.e., <I>offered </I>for purchase/sale in
over-the-counter markets or commodity exchanges).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As further defined in SFAS No.&nbsp;133, fair
value hedge transactions hedge the exposure to changes in the
fair value of either all or a specific portion of a recognized
asset or liability or of an unrecognized firm commitment. The
accounting treatment for fair value hedges requires reporting
both the changes in fair values of a <I>hedged </I>item (the
underlying risk) and the <I>hedging </I>instrument (the
derivative designated to offset the underlying risk) on both the
balance sheet and the income statement. On that basis, when a
firm commitment is associated with a hedge instrument that
attains 100% effectiveness (under the effectiveness criteria
outlined in SFAS No.&nbsp;133), there is no net earnings impact
because the earnings caused by the changes in fair value of the
hedged item will move in an equal, but opposite, amount as the
earnings caused by the changes in fair value of the hedging
instrument. In other words, the earnings volatility caused by
the underlying risk factor will be neutralized because of the
hedge. For example, if Calpine wants to manage the price risk
(i.e. the risk that market electric rates will rise, making the
fixed price contract less valuable) associated with all or a
portion of a fixed price power sale that has been identified as
a &#147;normal&#148; transaction (as described above), it might
create a fair value hedge by purchasing fixed price power. From
that date and time forward until delivery, the change in fair
value of the hedged item and hedge instrument will be reported
in earnings with asset/liability offsets on the balance sheet.
If there is 100% effectiveness, there is no net earnings impact.
If there is less than 100% effectiveness, the fair value change
of the hedged item (the underlying risk) and the hedging
instrument (the derivative) will likely be different and the
&#147;ineffectiveness&#148; will result in a net earnings impact.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As further defined in SFAS No.&nbsp;133, cash
flow hedge transactions hedge the exposure to variability in
expected future cash flows (i.e., in Calpine&#146;s case, the
price variability of forecasted purchases of gas and sales of
power, as well as interest rate and foreign exchange rate
exposure). In the case of cash flow hedges, the hedged item (the
underlying risk) is generally unrecognized (i.e., not recorded
on the balance sheet prior to delivery), and any changes in this
fair value, therefore, will not be recorded within earnings.
Conceptually, if a
</FONT>

<P align="center"><FONT size="2">F-42
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">cash flow hedge is effective, this means that a
variable such as movements in power prices has been effectively
fixed, so that any fluctuations will have no net result on
either cash flows or earnings. Therefore, if the changes in fair
value of the hedged item are not recorded in earnings, then the
changes in fair value of the hedging instrument (the derivative)
must also be excluded from the income statement, or else a
one-sided net impact on earnings will be reported, despite the
fact that the establishment of the effective hedge results in no
net economic impact. To prevent such a scenario from occurring,
SFAS No.&nbsp;133 requires that the fair value of a derivative
instrument designated as a cash flow hedge be recorded as an
asset or liability on the balance sheet, but with the offset
reported as part of other comprehensive income
(&#147;OCI&#148;), to the extent that the hedge is effective
under SFAS No.&nbsp;133. Similar to fair value hedges, any
ineffectiveness portion will be reflected in earnings. The graph
below illustrates the process used to account for derivatives
designated as cash flow hedges:
</FONT>
</DIV>

<P align="center">
<IMG src="f80168f8016802.gif" alt="Accounting for Cash Flow Hedges flow chart">

<P align="left">
<FONT size="2">Certain contracts could either qualify for
exemption from SFAS No.&nbsp;133 accounting as normal purchases
or sales or be designated as effective hedges. Our marketing and
fuels groups generally transact with load serving entities and
other end-users of electricity and with fuel suppliers,
respectively, in physical contracts where delivery is expected.
These transactions are structured as normal purchases and sales,
when possible. Conversely, our CES risk management desks
generally transact in over-the-counter or exchange traded
contracts, in hedging transactions. These transactions are
designated as hedges when possible, notwithstanding the fact
that some might qualify as normal purchases or sales.
</FONT>

<P align="center"><FONT size="2">F-43
</FONT>

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<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Undesignated
derivatives</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair values and changes in fair values of
undesignated derivatives are recorded in earnings, with the
corresponding offsets recorded as derivative assets or
liabilities on the balance sheet. Calpine has the following
types of undesignated transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">transactions are executed at a location where
	Calpine does not have an associated natural long (generation
	capacity) or short (fuel consumption requirements) position of
	sufficient quantity for the entire term of the transaction
	(e.g., power sales where Calpine does not own generating assets
	or intend to acquire transmission rights for delivery from other
	assets for a portion of the contract term), and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">transactions executed with the intent to profit
	from short-term price movements
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Discontinuance (de-designation) of hedge
	treatment prospectively consistent with paragraphs&nbsp;25 and
	32 of SFAS No.&nbsp;133. In circumstances where we believe the
	hedge relationship is no longer necessary, Calpine will remove
	the hedge designation and close out the hedge positions by
	entering into an equal and offsetting derivative position.
	Prospectively, the two derivative positions should generally
	have no net earnings impact because the changes in their fair
	values are offsetting.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Accumulated
Other Comprehensive Income</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accumulated other comprehensive income
(&#147;AOCI&#148;) includes the following components:
(i)&nbsp;unrealized pre-tax gains/losses, net of
reclassification-to-earnings adjustments, from effective cash
flow hedges as designated pursuant to SFAS No.&nbsp;133, (see
Note 19&nbsp;&#151; &#147;Derivative Instruments&#148; in the
Notes to the Consolidated Financial Statements);
(ii)&nbsp;unrealized pre-tax gains/losses that result from the
translation of foreign subsidiaries&#146; balance sheets from
the foreign functional currency (primarily C$) to our
consolidated reporting currency (US&nbsp;$); and (iii)&nbsp;the
taxes associated with the unrealized gains/losses from
items&nbsp;(i) and (ii). See Note&nbsp;17&nbsp;&#151;
&#147;Stockholders&#146; Equity&#148; in the Notes to the
Consolidated Financial Statements for further information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">One result of the Company&#146;s adoption on
January&nbsp;1, 2001, of SFAS No.&nbsp;133 has been volatility
in the AOCI component of Stockholders&#146; Equity on the
balance sheet. As explained in Notes&nbsp;17 and 19 to our
consolidated financial statements, our AOCI balances are
primarily related to our cash flow hedging activity, which is
highlighted within our discussion of &#147;Impact of Recent
Accounting Pronouncements&#148;. The quarterly balances for 2001
in AOCI related to cash flow hedging activity are summarized in
the table below (in thousands).
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">Quarter Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">March 31</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">June 30</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">September 30</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December 31</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">AOCI balances related to cash flow hedging
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(53,570</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,352</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(187,560</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(183,377</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under SFAS No.&nbsp;133 until the effects of an
associated hedged item are recognized in earnings, the change in
fair value of each derivative, other than exempted derivatives
such as normal purchases and sales, is recorded in AOCI or
current earnings with an offset to an asset or liability. The
accounting treatment varies with the designation of the
derivative as summarized below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">In the case of fair value hedges, the change in
	fair value is recorded in current earnings with an offset to an
	asset or liability; however, uniquely for fair value hedges, the
	change in fair value of the hedged item is also recorded in
	current earnings with an offset to an asset or liability. If the
	hedge is perfectly effective, the two entries to earnings will
	be equal and offsetting so that there is no net effect on
	earnings.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">For cash flow hedges, the effective portion of
	the change in fair value of the hedge instrument is recorded in
	AOCI, net of the tax impact, which is recorded as deferred
	taxes. In contrast to a fair value hedge, however, the hedged
	item is generally not recorded on the balance sheet prior to
	delivery or settlement, but if it is, it is recorded at
	historical cost, not market value. Neither the effective portion
	of
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-44
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD></TD>
	<TD align="left">
	<FONT size="2">the hedge nor the change in fair value of the
	hedged item are recorded in earnings prior to delivery or
	settlement.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">For trading activity or other derivatives not
	designated as hedges, the change in fair value is recorded in
	current earnings with an offset to an asset or liability.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effective portion of cash flow hedges stays
on the balance sheet in AOCI in Stockholders&#146; Equity until
the effects of an associated hedged item are recognized in
earnings. This is illustrated in the example below. However,
since AOCI contains the cash flow hedge instrument but excludes
the hedged item, it is not appropriate to conclude that either a
gain or a loss in AOCI will eventually produce a net gain or
loss in earnings. To illustrate this, consider the following
simplified example:
</FONT>

<P align="left">
<FONT size="2">Example of a Cash Flow Hedging Transaction
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company on October&nbsp;1, 2001, enters into
a fixed price 100-MW power contract with a two-year term with
deliveries commencing January&nbsp;1, 2002. Because the power
price is fixed, the Company decides to acquire fixed price gas
to assure a positive spark spread, the margin between the value
of the electricity sold and the cost of fuel to generate that
electricity. Failure to lock in the price of natural gas could
lead to losses if gas prices were to rise significantly over the
term of the power sales agreement. In our example, we choose on
October&nbsp;1, 2001, to enter into a swap transaction to
convert spot or index gas to a fixed price of $3.50 per MMBtu on
a monthly basis from January 2002 to December 2003. Assume gas
volume is 500,000 MMBtus per month. We designate the swap as a
cash flow hedge of our future gas requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Scenario 1:</FONT></I><FONT size="2"> At
December&nbsp;31 gas prices have decreased to an average of
$3.00 over the term of the swap agreement and hold at that level
during the month of January 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Scenario&nbsp;1 the change in fair value of
the gas contract would be out-of-the-money by $5,400,000 at
December&nbsp;31, 2001, computed as follows: 500,000 MMBtus/mo.
multiplied by 24&nbsp;months, multiplied by the gas price
decline ($3.00 minus $3.50), multiplied by the average present
value factor (assume 90%). This results in a loss of $5,400,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We would record a liability of $5,400,000 on our
balance sheet (current and non-current components) with the
corresponding offset as a debit (reduction)&nbsp;to AOCI of
$3,510,000 ($5,400,000, net of tax effect of $1,890,000,
assuming a 35% tax rate) and a debit (decrease)&nbsp;to deferred
tax of $1,890,0000. Thus, in Scenario&nbsp;1 we have an
unrealized pre-tax loss of $5,400,000 that, assuming no further
change in gas prices, will be reclassified to earnings as swap
settlements occur over the following 24&nbsp;months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January, we realize a loss of $250,000 on the
swap settlement for January 2002 calculated as follows: 500,000
mm Btu&#146;s multiplied by a realized loss on gas ($3.00 minus
$3.50). However, to provide our plant with fuel, we actually
purchase gas at the index rate of $3.00 per MMBtu. Our total
fuel expense for January is:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel cost purchased (500,000 MMBtus times $3.00)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,500,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Gain)/ Loss on swap
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,750,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel cost in $/MMBtu
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Scenario&nbsp;2:</FONT></I><FONT size="2"> At
December&nbsp;31 gas prices have increased to an average of
$4.00 over the term of the swap agreement and hold at that level
during the month of January 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Scenario&nbsp;2 the change in fair value of
the gas contract would be in-the-money by $5,400,000 at
December&nbsp;31, 2001, computed as follows: 500,000 MMBtus/mo.
multiplied by 24&nbsp;months, multiplied by the gas price
increase ($4.00 minus $3.50), multiplied by the average present
value factor (assume 90%). This results in a gain of $5,400,000.
</FONT>

<P align="center"><FONT size="2">F-45
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We would record an asset of $5,400,000 on our
balance sheet (current and non-current components) with the
corresponding offset as a credit (increase)&nbsp;to AOCI of
$3,510,000 ($5,400,000, net of tax effect of $1,890,000,
assuming a 35% tax rate) and a credit (increase)&nbsp;to
deferred tax of $1,890,0000. Thus, in Scenario&nbsp;2 we have an
unrealized pre-tax gain of $5,400,000 that, assuming no further
change in gas prices, will be reclassified to earnings as swap
settlements occur over the following 24&nbsp;months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January, we realize a gain of $250,000 on the
swap settlement for January 2002 calculated as follows: 500,000
MMBtus multiplied by a realized gain on gas ($4.00 minus $3.50).
However, to provide our plant with fuel, we actually purchase
gas at the index rate of $4.00 per&nbsp;MMBtu. Our total fuel
expense for January is:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel cost purchased (500,000 MMBtus times $4.00)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,000,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Gain)/ Loss on swap
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(250,000</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,750,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel cost in $/MMBtu
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The important point to note from the example is
that by hedging we locked in a fuel price of
$3.50&nbsp;per&nbsp;MMBtu which was realized regardless of the
direction of gas price fluctuations after the hedge was
established. In both scenarios&nbsp;1 and&nbsp;2, we realized a
net $3.50 fuel price. The unrealized gain or loss in AOCI
presents only half of the accounting impact because the hedged
item (the purchase of fuel at index) is excluded from the AOCI
calculation, and ultimately, the unrealized gain or loss in AOCI
leads to the same net realized result. Accordingly, we believe
the AOCI balance resulting from cash flow hedging activity is
not, in and of itself, a reliable indicator of net future gains
or losses to be realized after considering the effects of the
hedged item.
</FONT>

<P align="left">
<FONT size="2">Cash flow impact of SFAS No.&nbsp;133 entries
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to delivery or settlement, there is no net
cash flow impact resulting from the SFAS No.&nbsp;133 entries to
record derivatives as assets or liabilities, and in the case of
cash flow hedges to AOCI on the balance sheet, or from
marking-to-market gains or losses to earnings. All cash flow
activity from derivatives is recorded within &#147;Cash flows
from operating activities&#148; within our Consolidated
Statements of Cash Flows. The derivative components of our cash
flow activity for 2001 are summarized below:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net Income from SFAS No.&nbsp;133:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric power derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,282</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,083</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(46,181</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Net Income from SFAS No.&nbsp;133
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustments to reconcile net income to net cash
	provided by operating activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,513</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(183,377</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in operating assets and liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(763,162</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(564,952</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">625,339</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">822,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,725</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable and accrued expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,190</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash used by operating activities from SFAS
	No.&nbsp;133
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(50,341</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net cash outlay from derivative activities
was caused primarily by the cash settlement of several forward
interest rate agreements related to our 8&nbsp;&nbsp;1/2% Senior
Notes Due 2011 and our 8&nbsp;&nbsp;1/2% Senior Notes Due 2008
totaling $25.9&nbsp;million and the early termination and cash
settlement of certain of our interest rate swaps in connection
with the sale and leaseback of our Broad River and RockGen
facilities totaling $24.4&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Note&nbsp;19 of the Notes to Consolidated
Financial Statements for the financial statement effects of SFAS
No.&nbsp;133.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;141</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001 the FASB issued SFAS No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets&#148;, which
supersedes APB Opinion No.&nbsp;17, &#147;Intangible
Assets&#148;. SFAS No.&nbsp;142 eliminates the current
requirement to amortize goodwill and indefinite-lived intangible
assets, extends the allowable useful lives of certain intangible
assets, and requires impairment testing and recognition for
goodwill and intangible assets. SFAS No.&nbsp;142 will apply to
goodwill and other intangible assets arising from transactions
completed both before and after its effective date. The
provisions of SFAS No.&nbsp;142 are required to be applied
starting with fiscal years beginning after December&nbsp;15,
2001. As of December&nbsp;31, 2001, the Company&#146;s
unamortized goodwill and other intangible assets balance was
$261.9&nbsp;million, and was being amortized over periods
ranging from 3 to 35&nbsp;years. As a result of SFAS
No.&nbsp;142, the Company currently estimates that the
elimination of goodwill and other intangible assets amortization
will result in pre-tax savings of approximately
$12.1&nbsp;million in 2002. The Company has not yet finalized
the financial statement impact of SFAS No.&nbsp;142.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;142</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001 the FASB issued SFAS No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets&#148;, which
supersedes APB Opinion No.&nbsp;17, &#147;Intangible
Assets&#148;. SFAS No.&nbsp;142 eliminates the current
requirement to amortize goodwill and indefinite-lived intangible
assets, extends the allowable useful lives of certain intangible
assets, and requires impairment testing and recognition for
goodwill and intangible assets. SFAS No.&nbsp;142 will apply to
goodwill and other intangible assets arising from transactions
completed both before and after its effective date. The
provisions of SFAS No.&nbsp;142 are required to be applied
starting with fiscal years beginning after December&nbsp;15,
2001. As of December&nbsp;31, 2001, the Company&#146;s
unamortized goodwill and other intangible assets balance was
$29.4 million, and was being amortized over periods ranging from
10 to 20&nbsp;years. As a result of SFAS No.&nbsp;142, the
Company currently estimates that the elimination of goodwill and
other intangible assets amortization will result in pre-tax
savings of $1.8&nbsp;million in 2002. The Company has not yet
finalized the financial statement impact of SFAS No.&nbsp;142.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;143</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001 the FASB issued SFAS No.&nbsp;143,
&#147;Accounting for Asset Retirement Obligations&#148;, which
amends SFAS No.&nbsp;19, &#147;Financial Accounting and
Reporting by Oil and Gas Producing Companies&#148;. SFAS
</FONT>

<P align="center"><FONT size="2">F-47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">No.&nbsp;143 addresses financial accounting and
reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement
costs. SFAS No.&nbsp;143 requires that the fair value of a
liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of
fair value can be made. SFAS No.&nbsp;143 is effective for
financial statements issued for fiscal years beginning after
June&nbsp;15, 2002. We do not believe that SFAS No.&nbsp;143
will have a material effect on our consolidated financial
statements.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;144</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001 the FASB issued SFAS No.&nbsp;144,
&#147;Accounting for the Impairment or Disposal of Long-Lived
Assets&#148;, which supersedes SFAS No.&nbsp;121,
&#147;Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of&#148;, and the accounting
and reporting provisions of APB Opinion No.&nbsp;30,
&#147;Reporting the Results of Operations&nbsp;&#151; Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions&#148;, for the disposal of a segment of a business
(as previously defined in that APB Opinion). SFAS No.&nbsp;144
establishes a single accounting model, based on the framework
established in SFAS No.&nbsp;121, for long-lived assets to be
disposed of by sale. SFAS No.&nbsp;144 also resolves several
significant implementation issues related to SFAS No.&nbsp;121,
such as eliminating the requirement to allocate goodwill to
long-lived assets to be tested for impairment and establishing
criteria to define whether a long-lived asset is held for sale.
SFAS No.&nbsp;144 is effective for financial statements issued
for fiscal years beginning after December&nbsp;15, 2001. We do
not believe that SFAS No.&nbsp;144 will have a material effect
on our consolidated financial statements.
</FONT>

<P align="left">
<B><FONT size="2">Summary of Key Activities</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mergers and
Acquisitions</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Seller</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/3/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired WRMS Engineering, Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">WRMS shareholders
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$7.8&nbsp;million, including the assumed
	indebtedness of WRMS.
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/17/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired certain natural gas assets of The
	Bayless Companies and a number of individuals from Bayless began
	employment with the Company
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">The Bayless Companies and a number of individuals
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$35.1&nbsp;million
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/19/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Merged with Encal Energy Ltd.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Encal shareholders
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$1.1&nbsp;billion, including the assumed
	indebtedness of Encal
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">8/24/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired the 1,200-megawatt Saltend Energy Centre
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Entergy Corporation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$818.1&nbsp;million (at exchange rates at the
	closing of the acquisition)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/12/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired remaining 33.3% interests in Hog Bayou
	and Pine Bluff Energy Centers
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Intergen (North America), Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$9.6&nbsp;million
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/20/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired 100% interest in the 250-megawatt Island
	Cogeneration facility and 50% interest in the 50-megawatt Whitby
	Cogeneration facility
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Westcoast Energy Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$212.1&nbsp;million (at exchange rates at the
	closing of the acquisition)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/16/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired California Energy General Corporation
	and CE Newburry, Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">MidAmerican Energy Holdings Company
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$22.0&nbsp;million
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-48
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Seller</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/22/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Completed the acquisition of 100% of the voting
	stock of Michael Petroleum Corporation, natural gas exploration
	and production company
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Shareholders of Michael Petroleum Corporation
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$315.8 million and $54.5 million assumption of
	debt
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/5/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired Highland Energy Company
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Entergy Power Gas Operations Corporation and
	Louis Morrison III
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$4.5&nbsp;million
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/6/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired remaining 50% interest in Delta Energy
	Center, Metcalf Energy Center and Russell City Energy Center
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Bechtel Enterprises Holdings, Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Approximately $154 million and the assumption of
	approximately $141&nbsp;million of debt
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/14/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired certain natural gas assets of Whiting
	Petroleum Corporation and other minority partner interest owners
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Whiting Petroleum Corporation and other minority
	partner interest owners
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Approximately $8&nbsp;million
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales of Senior Notes:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Rate</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Due</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Issuer</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&nbsp;2/15/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$1.15&nbsp;billion(1)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.500%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2011
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Corporation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&nbsp;4/25/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$1.5&nbsp;billion(2)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.500%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2008
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Canada Energy Finance ULC
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/16/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$530&nbsp;million(2)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.500%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2008
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Canada Energy Finance ULC
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/16/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">US$850&nbsp;million(1)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.500%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2011
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Corporation
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/18/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">C$200&nbsp;million
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.750%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2007
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Canada Energy Finance ULC
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/18/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">&#163;200&nbsp;million
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.875%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2011
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Canada Energy Finance II ULC
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/18/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2"><FONT face="times new roman,times">&#128;</FONT>175&nbsp;million
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">8.375%
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">2008
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Calpine Canada Energy Finance II ULC
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Issued as fungible tranches by Calpine with the
	same CUSIP number and identical economic terms.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Issued as fungible tranches by our subsidiary,
	Calpine Canada Energy Finance ULC, with the same CUSIP number
	and identical economic terms.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Redemption of Senior Note and Note Repayment:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/7/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">$105&nbsp;million</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">9.250% Senior Notes Due 2004; 100% of the
	principal amount plus accrued interest to the redemption date
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/13/02
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">$64.8&nbsp; million</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Michael Petroleum Note Payable
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Corporation&#146;s Sale of Zero-Coupon
Convertible Debentures Due 2021:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Conversion Price</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Use of Proceeds</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/30/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0&nbsp;billion</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">$75.35 per common share
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Refinance certain debt and for working capital
	and general corporate purposes
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Repurchases of Zero-Coupon Convertible Debentures
Due 2021:
</FONT>

<CENTER>
<TABLE width="50%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/14/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$60&nbsp;million
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/17/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$62&nbsp;million
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">January&nbsp;2, 2002, through February&nbsp;11,
	2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$192.5&nbsp;million
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-49
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sale/Leaseback Transactions:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Proceeds</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Facility</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/18/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$800.0&nbsp;million
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">South Point Energy Center, Broad River Energy
	Center and RockGen Energy Center
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Corporation&#146;s Sale of 4% Convertible
Senior Notes Due 2006:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Conversion Price</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Use of Proceeds</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/26/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">$1&nbsp;billion</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$18.07 per common share
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Retire Zero-Coupon Convertible Debentures Due
	2021 and for general corporate purposes
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/31/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">$100&nbsp; million</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$18.07 per common share
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">For general corporate purposes
	</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">&nbsp;1/3/02
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">$100&nbsp; million</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom">
	<FONT size="2">$18.07 per common share
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">For general corporate purposes
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Working Capital Credit Facility:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Security</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Use of Proceeds</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/12/02
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="right" valign="bottom"><FONT size="2">$1.6&nbsp; billion<BR>$400 million</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Natural gas properties, Saltend Power Plant and
	our equity investment in 9 U.S.&nbsp;power plants
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Finance capital expenditures and other general
	corporate purposes
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/28/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced the amendment of certain provisions of
	the Stockholder Rights Agreement.
	</FONT></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/2/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Moody&#146;s Investors Service upgraded corporate
	credit and senior unsecured notes to Baa3 from Ba1.
	</FONT></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/14/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Moody&#146;s Investors Service downgraded
	corporate credit and senior unsecured notes from Baa3 to Ba1.
	</FONT></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">12/19/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Fitch, Inc. lowered the credit rating on senior
	unsecured debt rating from BBB- to BB+, and it lowered the
	rating on convertible trust preferred securities from BB to BB-.
	</FONT></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/12/02
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Fitch, Inc. lowered the credit rating on senior
	unsecured debt from BB+ to BB, and it lowered the rating on
	convertible trust preferred securities from BB- to B.
	</FONT></TD>
</TR>

<TR>
	<TD align="right" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/25/02
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Standard &#38; Poor&#146;s downgraded corporate
	credit rating from BB+ to BB, and senior unsecured debt from BB+
	to B+.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Power Plant
Development and Construction</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Project</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">1/17/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">850-megawatt Augusta Energy Center located in
	Augusta, Georgia
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">1/26/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">565-megawatt Washington Parish Energy Center
	located near Bogalusa, Louisiana
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced acquisition of development rights from
	Cogentrix
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2/12/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">590-megawatt Osprey Energy Center located in
	Auburndale, Florida
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Application approved in Florida Public Service
	Commission need determination hearing
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2/13/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">600-megawatt Riverside Energy Center located near
	Beloit, Wisconsin
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/16/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">336-megawatt Blue Spruce Energy Center located
	east of Denver, Colorado
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/22/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">600-megawatt Rocky Mountain Energy Center located
	in Weld County, Colorado
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/27/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,007-megawatt Deer Park Energy Center located in
	Deer Park, Texas
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-50
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Project</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">3/29/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,065-megawatt East Altamont Energy Center
	located in Alameda County, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Filed an Application For Certification
	(&#147;AFC&#148;) with the California Energy Commission
	(&#147;CEC&#148;)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/11/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">750-megawatt Pastoria Energy Center located in
	Kern County, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired the development rights from Enron North
	America
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">4/17/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">248-megawatt Goldendale Energy Center located in
	Goldendale, Washington
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired the development rights from National
	Energy Systems Company
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">5/9/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">525-megawatt Westbrook Energy Center located in
	Westbrook, Maine
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced commercial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">5/15/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,030-megawatt Berrien Energy Center located in
	Berrien, Michigan
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">5/23/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">600-megawatt Russell City Energy Center located
	in Hayward, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Filed an AFC with the CEC and announced plans for
	development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/4/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">545-megawatt Lost Pines 1 Energy Center located
	in Bastrop County, Texas
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced initial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/5/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">135-megawatt Gilroy Peaking Energy Center located
	in Gilroy, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced initiation of construction activities
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/7/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">555-megawatt South Point Energy Center located in
	Mohave County, Arizona
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced full operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/8/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">670-megawatt Inland Empire Energy Center located
	in southwestern Riverside County, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/20/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">600-megawatt Metcalf Energy Center located in San
	Jose, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced that the Presiding Members&#146;
	Proposed Decision recommends that the full five-member CEC
	approve the Metcalf Energy Center
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">6/28/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">590-megawatt Osprey Energy Center located in
	Auburndale, Florida
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced that Florida&#146;s Power Plant Siting
	Board granted final state regulatory approval for the Osprey
	Energy Center
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/2/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">547-megawatt Sutter Energy Center located near
	Yuba City, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced commercial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/9/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">555-megawatt Los Medanos Energy Center located in
	Pittsburg, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced initial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/10/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">510-megawatt Otay Mesa Generating Project located
	in San Diego County, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Acquired from the PG&#38;E National Energy Group
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/11/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">600-megawatt Russell City Energy Center located
	in Hayward, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">AFC met the CEC&#146;s data adequacy
	requirements; project approved for expedited review
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/11/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">180-megawatt Los Esteros Critical Energy Facility
	located in San Jose, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-51
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Project</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/11/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">247-megawatt Hog Bayou Energy Center located in
	Mobile, Alabama
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced commercial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/16/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">591-megawatt Aries Power Project located near
	Pleasant Hill, Missouri
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced simple-cycle operation
	(320&nbsp;megawatts)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/17/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">900-megawatt Sherry Mills Energy Center located
	in Wood County, Wisconsin
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">7/30/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">628-megawatt Channel Energy Center located in
	Houston, Texas
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced simple-cycle operation
	(190&nbsp;megawatts)
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">8/2/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">115-megawatt Auburndale Expansion located in Polk
	County, Florida
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced initiation of full-scale construction
	activities
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">8/8/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">460-megawatt RockGen Energy Center located near
	Cambridge, Wisconsin
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced full operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">8/23/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">750-megawatt Pastoria Energy Center located in
	Kern County, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced groundbreaking
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">8/24/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">630-megawatt Wawayanda Energy Center located in
	the Town of Wawayanda, New York
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced filing of Article&nbsp;X Application
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/5/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">840-megawatt Broad River Energy Center located in
	Gaffney, South Carolina
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced commercial operation of 300-megawatt
	expansion
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/24/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">213-megawatt Pine Bluff Energy Center located
	south of Little Rock, Arkansas
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced commercial operation
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">9/24/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">602-megawatt Metcalf Energy Center located in San
	Jose, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">CEC voted unanimously to approve the license
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10/30/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">49.5-megawatt Fourmile Hill Geothermal Project
	located in the Glass Mountain Known Geothermal Resource Area in
	California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/1/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">905-megawatt Palmetto Energy Center located in
	York County, South Carolina
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/1/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,060-megawatt Central Valley Energy Center
	located in San Joaquin, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced filing of AFC with the CEC
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/13/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">590-megawatt Osprey Energy Center located in
	Auburndale, Florida
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced groundbreaking
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">11/21/01
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,058-megawatt Chippokes Energy Center located in
	Surry County, Virginia
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Announced plans for development
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Turbine
Purchases</FONT></I></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date of</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Announcement</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Turbines</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Manufacturer</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4/19/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">35 model 7FB and 11 model 7FA gas turbines
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">GE Power Systems
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">8/9/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">27 steam turbines
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Siemens Westinghouse
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">8/22/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">19 steam turbines
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Toshiba International Corporation
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Turbine
Cancellations</FONT></I></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Announcement</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reduction in Capital Spending</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Earnings Effect</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3/12/02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">$1.2&nbsp;billion in 2002</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$161&nbsp;million pre-tax charge in 2002
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">$1.8&nbsp;billion in 2003</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Power
Contracts</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date of</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Announcement</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Purchaser</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Power Purchased</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Term of Contract(s)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Facility Supplying Power</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">5/9/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">San Francisco Public Utilities Commission
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">50 megawatts
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">5&nbsp;years</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">Not specified</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">7/17/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Reliant Energy Services, Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">1,000 megawatts
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">5&nbsp;years</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">ERCOT system of plants</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">7/19/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Excelon Generation&#146;s Power Team
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">100 megawatts
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">10&nbsp;years</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">Morris Power Plant</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">12/20/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Six major industrial customers
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">More than 500 megawatts
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top"><FONT size="2">Each of several agreements is for a term of one to two years</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">ERCOT system of plants</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gas Storage
Agreement</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date of</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Announcement</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Gas Storage Provider</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Storage Facility</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Storage Provided Under the Agreement</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1/11/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Western Hub Properties LLC&#146;s subsidiary,
	Lodi Gas Storage, LLC
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Lodi Gas Storage facility near Lodi, California
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Up to 4&nbsp;billion cubic feet of working gas
	inventory
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
Developments</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="18%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date of</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Announcement</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Individual</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4/19/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Orville Wright
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Retirement from the Board of Directors
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">7/16/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Michael Polsky
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Resignation from the Board of Directors and as an
	officer of the Company
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">7/17/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Gerald Greenwald
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Appointment to the Board of Directors
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">7/24/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Robert D. Kelly
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Named President of Calpine Finance Company
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">11/5/01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">David Johnson
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Resignation as President and Chief Executive
	Officer of Calpine Canada
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual
Meeting of Stockholders on May&nbsp;17, 2001</FONT></I></B>

<P align="left">
<B><U><FONT size="2">Stockholders&#146; Voting
Results</FONT></U></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Elected Ann B. Curtis and Kenneth T. Derr as
	Class&nbsp;II Directors for a three-year term expiring 2004
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Approved the amendment to the Amended and
	Restated Certificate of Incorporation to increase the number of
	authorized shares of Common Stock, par value $.001 per share,
	from 500,000,000 to 1,000,000,000
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Ratified the appointment of Arthur Andersen LLP
	as independent accountants for the fiscal year ending
	December&nbsp;31, 2001
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;Item&nbsp;1.&nbsp;&#151;
Business&nbsp;&#151; Recent Developments&#148; for a discussion
of the Enron bankruptcy, our revised capital expenditure
program, our recent capital market offerings, the California
power market, the PG&#38;E bankruptcy, the CPUC proceedings
regarding QF market pricing, the California long-term supply
contracts, the FERC investigation into California wholesale
markets and litigation.
</FONT>

<P align="center"><FONT size="2">F-53
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">and Stockholders of Calpine Corporation:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheets of Calpine Corporation (a Delaware corporation)
and subsidiaries as of December&nbsp;31, 2001 and 2000, and the
related consolidated statements of operations,
stockholders&#146; equity and cash flows for each of the three
years in the period ended December&nbsp;31, 2001. These
financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audits. We
did not audit the balance sheet of Encal Energy Ltd.
(&#147;Encal&#148;), a company acquired on April&nbsp;19, 2001,
in a transaction accounted for as a pooling-of-interests, as
discussed in Note&nbsp;2 to the financial statements, as of
December&nbsp;31, 2000, or the related statements of operations,
stockholders&#146; equity and cash flows for each of the two
years in the period ended December&nbsp;31, 2000. Such
statements are included in the consolidated financial statements
of Calpine Corporation and reflect total assets and total
revenues of 5.7&nbsp;percent and 10.4&nbsp;percent,
respectively, in 2000, and total revenues of 13.8&nbsp;percent
in 1999 of the related consolidated totals. These statements
were audited by other auditors, whose report has been furnished
to us and our opinion, insofar as it relates to amounts included
for Encal, is based solely upon the report of the other auditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and
the report of the other auditors provide a reasonable basis for
our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, based on our audits and the
report of the other auditors, the financial statements referred
to above present fairly, in all material respects, the financial
position of Calpine Corporation and subsidiaries as of
December&nbsp;31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in
the period ended December&nbsp;31, 2001, in conformity with
accounting principles generally accepted in the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As explained in Note&nbsp;2 to the financial
statements, effective January&nbsp;1, 2001, the Company changed
its method of accounting for derivative instruments and hedging
activities by adopting Statement of Financial Accounting
Standards No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities.&#148;
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">ARTHUR ANDERSEN LLP
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">San Jose, California
</FONT>

<DIV align="left">
<FONT size="2">February&nbsp;6, 2002
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">(except for Note&nbsp;24 as to which the date is
March&nbsp;22, 2002)
</FONT>
</DIV>

<P align="center"><FONT size="2">F-54
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT CHARTERED
ACCOUNTANTS</FONT></B>

<P align="left">
<FONT size="2">The Board of Directors of Encal Energy Ltd.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the consolidated balance sheets
of Encal Energy Ltd. as of December&nbsp;31, 2000, 1999 and 1998
and the related consolidated statements of earnings, changes in
shareholders&#146; equity, and cash flows for each of the three
years in the three year period ended December&nbsp;31, 2000.
These financial statements are the responsibility of the
company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Encal Energy Ltd. at
December&nbsp;31, 2000, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the
three years in the three year period ended December&nbsp;31,
2000, in conformity with accounting principles generally
accepted in the United States.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">ERNST AND YOUNG LLP
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Calgary, Canada
</FONT>

<DIV align="left">
<FONT size="2">February&nbsp;16, 2001
</FONT>
</DIV>

<P align="center"><FONT size="2">F-55
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2001 and 2000</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands, except share</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">and per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="11" align="center" valign="top">
	<B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,525,417</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts receivable, net of allowance of $15,422
	and $11,555
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">966,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">727,893</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Margin deposits and other prepaid expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">480,656</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventories
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,862</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,456</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">763,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193,525</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,007,702</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,437,106</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restricted cash
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,833</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">88,618</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes receivable, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Project development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">179,783</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,597</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments in power projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378,614</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred financing costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">210,811</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,049</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,384,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,979,160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">564,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">328,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,309,295</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,323,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="11" align="center" valign="top">
	<B><FONT size="2">LIABILITIES &#38; STOCKHOLDERS&#146;
	EQUITY</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,283,843</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843,641</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued payroll and related expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,285</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued interest payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">160,115</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77,878</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63,409</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes payable and borrowings under lines of
	credit, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,238</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,087</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital lease obligation, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,206</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,985</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Zero-Coupon Convertible Debentures Due 2021
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">878,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Construction/ project financing, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">625,339</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,228,838</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,249,233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes payable and borrowings under lines of
	credit, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">455,067</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital lease obligation, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">207,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">208,876</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Construction/ project financing, net of current
	portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,393,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,473,869</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Convertible Senior Notes Due 2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,100,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior notes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,049,038</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,551,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">964,346</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">618,529</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred lease incentive
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,676</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154,381</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">92,511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">822,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76,247</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,529</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,128,313</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,741,040</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commitments and contingencies (see Note&nbsp;21)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Company-obligated mandatorily redeemable
	convertible preferred securities of subsidiary trusts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,123,024</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,122,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interests
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Preferred stock, $.001 par value per share;
	authorized 10,000,000 shares; issued and outstanding one share
	in 2001 and 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock, $.001 par value per share;
	authorized 1,000,000,000 shares in 2001 and 500,000,000 shares
	in 2000; issued and outstanding 307,058,751 shares in 2001 and
	300,074,078 shares in 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">307</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional paid-in capital
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,040,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,896,987</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retained earnings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,196,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">547,895</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated other comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(226,574</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(23,085</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,010,569</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,422,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities and stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,309,295</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,323,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CALPINE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS" -->
<DIV align="left"><A NAME="022"></A></DIV>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">For the Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electricity and steam revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,432,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,702,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">760,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased power
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,056,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,157</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric power derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total electric generation and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,586,685</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,072,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">783,482</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">427,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">336,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">141,567</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of purchased gas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">520,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,416</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total oil and gas production and marketing revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">948,177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,462</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from unconsolidated investments in power
	projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Plant operating expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">327,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">196,213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,619</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Royalty expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,767</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased power expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,708,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,681</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total electric generation and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,063,726</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">587,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,067</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,387</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,442</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchased gas expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">492,587</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total oil and gas production and marketing expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">605,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">197,773</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65,438</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of oil and natural gas burned by power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,152,785</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268,734</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,693</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fuel expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,116,092</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">612,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268,734</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">338,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating lease expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,419</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,594</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,909</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,258,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,700,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">846,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">318,835</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Project development expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,860</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,556</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,712</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102,551</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Merger expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,096,663</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">716,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,456</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-57
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">For the Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,248</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions on trust preferred securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,334</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,210</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(72,608</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,901</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,106</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(43,882</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,461</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,109</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,684</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">986,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">638,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">345,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">264,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">373,837</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge), net of tax
	(provision)/benefit<BR>
	of $(3,606), $796 and $793
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,150</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle, net of tax benefit of $669
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average shares of common stock
	outstanding
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">303,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">281,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">225,375</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average shares of common stock
	outstanding before dilutive effect of certain convertible
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">317,919</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">297,507</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">238,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before dilutive effect of certain
	convertible securities, extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilutive effect of certain convertible
	securities(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.17</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.87</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Includes the effect of the assumed conversion of
	certain convertible securities. For the twelve months ended
	December&nbsp;31, 2001 and 2000, respectively, the assumed
	conversion calculation adds 54,183 and 31,746 shares of common
	stock and $45,898 and $20,841 to the net income results,
	representing the after tax expense on certain convertible
	securities avoided upon conversion.
	</FONT></TD>
</TR>

</TABLE>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-58
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146;
EQUITY</FONT></B>

<DIV align="center">
<B><FONT size="2">For the Years Ended December&nbsp;31, 2001,
2000, and 1999</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Additional</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Paid-in</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholders&#146;</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Loss</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Equity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income (Loss)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">(In thousands, except share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 1998
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">356,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,643</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,659</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">402,710</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of 91,228,316 shares of common stock,
	net of issuance costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">581,339</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">581,430</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit from stock options exercised and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,977</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,977</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation gain, net of tax
	provision of $2,124
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,322</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,322</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,322</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,972</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">943,865</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19,337</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,100,089</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of 28,190,682 shares of common stock,
	net of issuance costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">785,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">785,928</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of 3,501,532 shares of common stock for
	acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit from stock options exercised and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,631</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,631</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation loss net of tax
	benefit of $2,278
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,748</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,748</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,748</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">368,854</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,896,987</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">547,895</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(23,085</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,422,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of 6,833,497 shares of common stock, net
	of issuance costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,680</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,687</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Issuance of 151,176 shares of common stock for
	acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit from stock options exercised and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,669</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,669</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive loss on commodity cash flow hedges,
	net of tax benefit of $87,678 and net of reclassification
	adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(135,706</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(135,706</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(135,706</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive loss on interest rate cash flow
	hedges, net of tax benefit of $27,170 and net of
	reclassification adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(45,434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(45,434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(45,434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive loss on foreign currency cash flow
	hedges, net of tax benefit of $1,515 and net of reclassification
	adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation loss, net of tax
	benefit of $14,563
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,112</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,112</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,112</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total comprehensive income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,616</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">307</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,040,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,196,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(226,574</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,010,569</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CALPINE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS" -->
<DIV align="left"><A NAME="023"></A></DIV>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">For the Years Ended December&nbsp;31,
2001,&nbsp;2000,&nbsp;and 1999</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash flows from operating activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustments to reconcile net income to net cash
	provided by operating activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">369,870</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">218,118</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">139,305</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,029</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interests
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,813</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(398</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from unconsolidated investments in power
	projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,763</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,639</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,593</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Distributions from unconsolidated investments in
	power projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,318</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Gain) loss on sale of assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(38,258</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,051</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(561</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in operating assets and liabilities, net
	of effects of acquisitions:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(207,779</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(515,717</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(38,191</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(80,700</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(46,066</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,919</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(763,162</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(567,484</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,728</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,924</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(564,952</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,672</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(43,256</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,153</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable and accrued expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">481,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684,970</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">625,339</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">822,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,592</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,417</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income relating to derivatives
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(183,377</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by operating activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">557,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">802,550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">314,361</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash flows from investing activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of property, plant and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,171,737</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,184,314</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,074,803</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Disposals of property, plant and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,120</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sale and leaseback of plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">815,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">642,205</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisitions, net of cash acquired
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,829,694</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(840,928</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(540,587</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Advances to joint ventures
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(149,385</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(141,106</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(48,066</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decrease (increase) in notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,046</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(184,535</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,270</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maturities of collateral securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,035</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Project development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(143,835</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(53,129</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(30,635</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decrease (increase) in restricted cash
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(62,484</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,616</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,216</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash used in investing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,500,518</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752,657</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,599,456</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash flows from financing activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from issuance of Zero-Coupon Convertible
	Debentures Due 2021
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-60
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Repurchase of Zero-Coupon Convertible Debentures
	Due 2021
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(122,000</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from notes payable and borrowings under
	lines of credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,107,267</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">219,183</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Repayments of notes payable and borrowings under
	lines of credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(579,892</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,117,946</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(129,721</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Borrowings from project financing
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,569,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,183,603</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,760</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Repayments of project financing
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,708,710</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(580,111</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(123,386</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from issuance of Convertible Senior
	Notes Due 2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,100,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from issuance of senior notes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,596,039</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">600,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Repurchase of senior notes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(105,000</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from Company-obligated mandatorily
	redeemable convertible preferred securities of subsidiary trusts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">877,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">276,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from equity offerings, net of issuance
	costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">773,249</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">597,368</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from issuance of common stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,767</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Write-off of deferred financing costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,031</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,943</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Financing costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(154,582</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(58,942</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(65,405</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,292</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,605</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by financing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,876,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,196,813</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,537,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effect of exchange rate changes on cash and cash
	equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net increase in cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">929,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,839</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,371</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,525,417</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,371</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash paid during the year for:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest, net of amounts capitalized
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,010</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,752</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">271,973</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">144,406</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,066</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-61
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CALPINE CORPORATION AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2001, 2000, and 1999" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">For the Years Ended December&nbsp;31, 2001,
2000, and 1999</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">1. Organization and Operations of the
Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Corporation (&#147;Calpine&#148;), a
Delaware corporation, and subsidiaries (collectively, &#147;the
Company&#148;) is engaged in the generation of electricity in
the United States, Canada and the United Kingdom. The Company is
involved in the development, acquisition, ownership and
operation of power generation facilities and the sale of
electricity and its by-product, thermal energy, primarily in the
form of steam. The Company has ownership interests in and
operates gas-fired power generation and cogeneration facilities,
gas fields, gathering systems and gas pipelines, geothermal
steam fields and geothermal power generation facilities in the
United States. In Canada, the Company has power facilities and
oil and gas operations. In the United Kingdom, the Company has a
gas-fired power cogeneration facility. Each of the generation
facilities produces and markets electricity for sale to
utilities and other third party purchasers. Thermal energy
produced by the gas-fired cogeneration facilities is primarily
sold to governmental and industrial users. Gas produced and not
physically delivered to the Company&#146;s generating plants is
sold to third parties.
</FONT>

<P align="left">
<B><FONT size="2">2. Summary of Significant Accounting
Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Principles of
Consolidation</FONT></I><FONT size="2">&nbsp;&#151; The
accompanying consolidated financial statements include accounts
of the Company. Wholly owned and majority-owned subsidiaries are
consolidated. Less-than-majority-owned subsidiaries and
subsidiaries for which control is deemed to be temporary, are
accounted for using the equity method. For equity method
investments, the Company&#146;s share of income is calculated
according to the Company&#146;s equity ownership or according to
the terms of the appropriate partnership agreement (see
Note&nbsp;6). All intercompany accounts and transactions are
eliminated in consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;19, 2001, Calpine acquired 100% of
the outstanding shares and interests of Encal Energy Ltd.
(&#147;Encal&#148;). Encal is a Calgary, Alberta-based natural
gas and petroleum exploration and development company. As a
result of the merger, the Company issued approximately
16.6&nbsp;million common shares for all of the outstanding Encal
capital stock and options. The merger was accounted for as a
pooling-of-interests, and the consolidated financial statements
have been prepared to give retroactive effect to the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Encal operated under the same fiscal year end as
Calpine, and accordingly, Encal&#146;s balance sheets, as of
December&nbsp;31, 2000 and 1999, and the statements of
operations, shareholders&#146; equity and cash flows for each of
the two fiscal years in the period ended December&nbsp;31, 2000,
have been combined with the Company&#146;s consolidated
financial statements. The results of operations previously
reported by the separate companies and the combined amounts
presented in the consolidated financial statements are
summarized below.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenues:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">847,735</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Encal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">264,308</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135,749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net Income:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">323,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95,093</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Encal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,150</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; Equity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,236,774</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">964,632</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Encal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">185,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,422,097</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,100,089</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-62
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Use of Estimates in Preparation of Financial
Statements</FONT></I><FONT size="2">&nbsp;&#151; The preparation
of financial statements in conformity with generally accepted
accounting principles in the United States requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those
estimates. The most significant estimates with regard to these
financial statements relate to future development costs, useful
lives of the generation facilities, and depletion, depreciation
and impairment of natural gas and petroleum property and
equipment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Foreign Currency
Translation</FONT></I><FONT size="2">&nbsp;&#151; Assets and
liabilities of non-U.S. subsidiaries that operate in a local
currency environment are translated to U.S. dollars at exchange
rates in effect at the balance sheet date with the resulting
translation adjustments recorded in other comprehensive income.
Income and expense accounts are translated at average exchange
rates during the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Fair Value of Financial
Instruments</FONT></I><FONT size="2">&nbsp;&#151; The carrying
value of cash, accounts receivable, marketable securities,
accounts and other payables approximate their respective fair
values due to their short maturities. See Note 12 for
disclosures regarding the fair value of the senior notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cash and Cash
Equivalents</FONT></I><FONT size="2">&nbsp;&#151; The Company
considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The
carrying amount of these instruments approximates fair value
because of their short maturity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has certain project debt agreements
which temporarily limit the use of certain cash balances to
construction spending, operating and maintenance costs, lease
payments, interest and debt principal payments for specific
projects. At December&nbsp;31, 2001, $269.9&nbsp;million of the
cash balance was subject to such project debt agreements. When
restrictions are ongoing, we classify such balances as
&#147;restricted cash&#148; (see below).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Inventories</FONT></I><FONT size="2">&nbsp;&#151;
The Company&#146;s inventories primarily include spare parts and
stored gas. Operating supplies are valued at the lower of cost
or market. Cost for large replacement parts estimated to be used
within one year is determined using the specific identification
method. For the remaining supplies and spare parts, cost is
generally determined using the weighted average cost method.
Stored gas is valued at the lower of cost or market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Margin
Deposits</FONT></I><FONT size="2">&nbsp;&#151; As of
December&nbsp;31, 2001, in order to satisfy the credit
requirements of trading counterparties, the Company&#146;s
Calpine Energy Services, LP (&#147;CES&#148;) subsidiary had
deposited $345.5&nbsp;million in cash as margin deposits. No
such deposits were required as of December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Property, Plant and Equipment,
Net</FONT></I><FONT size="2">&nbsp;&#151; See Note&nbsp;3 for a
discussion of the Company&#146;s accounting policies for its
property, plant and equipment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Project Development
Costs</FONT></I><FONT size="2">&nbsp;&#151; The Company
capitalizes project development costs once it is determined that
it is probable that such costs will be realized through the
ultimate construction of a power plant. These costs include
professional services, salaries, permits and other costs
directly related to the development of a new project. Upon
commencement of construction, these costs are transferred to
construction in progress, a component of property, plant and
equipment. Upon the start-up of plant operations, these
construction costs are amortized as a component of the total
cost of the plant over the estimated useful life of the project.
Capitalized project costs are charged to expense if the Company
determines that the project is impaired. Outside services and
other third party costs are capitalized for acquisition projects.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restricted
Cash</FONT></I><FONT size="2">&nbsp;&#151; The Company is
required to maintain cash balances that are restricted by
provisions of its debt agreements, lease agreements and
regulatory agencies. When the restrictions on these funds are
ongoing during the period of financing, we classify the balances
as restricted cash. These amounts are held by depository banks
in order to comply with contractual provisions requiring
reserves for payments such as debt
</FONT>

<P align="center"><FONT size="2">F-63
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">service, rent service, and major maintenance.
Restricted cash is invested in accounts earning market rates;
therefore, the carrying value approximates fair value. Such cash
is excluded from cash and cash equivalents for the purposes of
the consolidated statements of cash flows.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Deferred Financing
Costs</FONT></I><FONT size="2">&nbsp;&#151; The deferred
financing costs related to the Company&#146;s senior notes and
the Convertible Senior Notes Due 2006 are amortized over the
life of the related debt, ranging from 5 to 10&nbsp;years, using
the straight-line method which approximates the effective
interest rate method (See Note&nbsp;12). The deferred financing
costs associated with the two Calpine Construction Finance
Company facilities are amortized over the 4-year facility lives
using the straight-line method (See Note&nbsp;10). The deferred
financing costs related to the Zero-Coupon Debentures Due 2021
are amortized over 1&nbsp;year due to the put that can be
exercised by the holders in 2002. Costs incurred in connection
with obtaining other financing are deferred and amortized over
the life of the related debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Long-Lived
Assets</FONT></I><FONT size="2">&nbsp;&#151; In accordance with
Financial Accounting Standards Board (&#147;FASB&#148;)
Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No.&nbsp;121, &#147;Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of,&#148; the
Company evaluates the impairment of long-lived assets, including
goodwill, based on the projection of undiscounted cash flows
whenever events or changes in circumstances indicate that the
carrying amounts of such assets may not be recoverable. In the
event such cash flows are not expected to be sufficient to
recover the recorded value of the assets, the assets are written
down to their estimated fair values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Concentrations of Credit
Risk</FONT></I><FONT size="2">&nbsp;&#151; Financial instruments
which potentially subject the Company to concentrations of
credit risk consist primarily of cash, accounts receivable,
notes receivable, and commodity contracts. The Company&#146;s
cash accounts are generally held in FDIC insured banks. The
Company&#146;s accounts and notes receivable are concentrated
within entities engaged in the energy industry, mainly within
the United States (see Note&nbsp;7 and 18). The Company
generally does not require collateral for accounts receivable
from end-user customers, but evaluates the net accounts
receivable, accounts payable, and fair value of commodity
contracts with trading companies and may require security
deposits or letters of credit to be posted if exposure reaches a
certain level.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Trust Preferred
Securities</FONT></I><FONT size="2">&nbsp;&#151; The
Company&#146;s trust preferred securities are accounted for as a
minority interest in the balance sheet and reflected as
&#147;Company-obligated mandatorily redeemable convertible
preferred securities of subsidiary trusts.&#148; The
distributions are reflected on the income statement as
&#147;distributions on trust preferred securities.&#148;
Financing costs related to these issuances are netted with the
principal amounts and are accreted over the securities&#146;
30-year maturity using the straight-line method (See
Note&nbsp;14).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue
Recognition</FONT></I><FONT size="2">&nbsp;&#151; The Company is
primarily an electric generation company, operating a portfolio
of mostly wholly owned plants but also some plants in which its
ownership interest is 50% or less and which are accounted for
under the equity method. In conjunction with its electric
generation business, the Company also produces, as a by-product,
thermal energy for sale to customers, principally steam hosts at
its cogeneration sites. In addition, the Company acquires and
produces natural gas for its own consumption and sells the
balance and small amounts of oil to third parties. To protect
and enhance the profit potential of its electric generation
plants, the Company, through its subsidiary, CES, enters into
electric and gas hedging, balancing, optimization, and trading
transactions in which purchased electricity and gas is resold to
third parties. CES generally acts as a principal, takes title to
the commodities purchased for resale, and assumes the risks and
rewards of ownership. Therefore, in accordance with Staff
Accounting Bulletin No.&nbsp;101, &#147;Revenue Recognition in
Financial Statements&#148; and the Emerging Issues Task Force
(&#147;EITF&#148;) Issue No.&nbsp;99-19, &#147;Reporting Revenue
Gross as a Principal Versus Net as an Agent,&#148; CES
recognizes revenue on a gross basis, except in the case of
financial swap transactions, in which case the net gain or loss
from the financial swap is recorded in income when the effects
of the risks being managed are recognized. Managed risks
typically include sales to third parties of natural gas
produced, purchases of natural gas to fuel power plants, and
sales of generated
</FONT>

<P align="center"><FONT size="2">F-64
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">electricity. The Company, through Power Systems
Mfg., LLC (&#147;PSM&#148;), designs and manufactures certain
spare parts for gas turbines. The Company also generates small
amounts of revenue by occasionally loaning funds to power
projects, by providing operation and maintenance
(&#147;O&#38;M&#148;) services to unconsolidated power plants,
and by performing engineering services for data center and other
facilities requiring highly reliable power. Further details of
the Company&#146;s revenue recognition policy for each type of
revenue transaction are provided below:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Electric Generation and Marketing
Revenue</FONT></I><FONT size="2">&nbsp;&#151; This includes
electricity and steam revenue, sales of purchased power and
mark-to-market gains and losses from electric power derivatives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Electrical energy revenue is recognized upon
transmission to the customer, and capacity and ancillary revenue
is recognized when contractually earned. In accordance with EITF
Issue No.&nbsp;91-6, revenues from contracts entered into or
acquired since May 1992 are recognized at the lesser of amounts
billable under the contract or amounts recognizable at an
average rate over the term of the contract. The Company&#146;s
power sales agreements related to Calpine Geysers Company
(&#147;CGC&#148;) were entered into prior to May&nbsp;1992. Had
the Company applied the methodology described above to the CGC
power sales agreements, the revenues recorded for the years
ended December&nbsp;31, 2001, 2000, and 1999 would have been
approximately $133,000 lower, $8.1&nbsp;million lower, and
$24.2&nbsp;million higher, respectively. Net gains or losses
from qualified hedges of electricity positions are included in
electricity and steam revenue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil and Gas Production and Marketing
Revenue</FONT></I><FONT size="2">&nbsp;&#151; This includes
sales to third parties of oil, gas and related products that are
produced by the Company&#146;s Calpine Natural Gas and Calpine
Canada Natural Gas subsidiaries and also sales of purchased gas.
Oil and gas revenues are recognized pursuant to the sales method.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income from Unconsolidated Investments in
Power Projects</FONT></I><FONT size="2">&nbsp;&#151; The Company
uses the equity method to recognize as revenue its pro rata
share of the net income or loss of the unconsolidated investment
until such time, if applicable, that the Company&#146;s
investment is reduced to zero, at which time equity income is
generally recognized only upon receipt of cash distributions
from the investee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other
Revenue</FONT></I><FONT size="2">&nbsp;&#151; This includes
O&#38;M contract revenue, interest income on loans to power
projects, PSM revenue from sales to third parties, engineering
revenue and miscellaneous revenue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Purchased Power and Gas Sales and
Expense</FONT></I><FONT size="2">&nbsp;&#151; The Company
records the cost of gas consumed in its power plants as fuel
expense, while gas purchased from third parties for hedging,
balancing, and optimization activities is recorded as the cost
of gas purchased and resold, a component of oil and gas
production and marketing expense. The Company records the actual
revenue received from third parties as sales of purchased gas, a
component of oil and gas production and marketing revenue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of power purchased from third parties,
for hedging, balancing, and optimization activities, along with
the subsequent settlement of contracts that have been previously
recorded in results of operations as mark-to-market gains or
losses, is recorded as purchased power expense, a component of
electric generation and marketing expense. The Company markets
on a system basis both power generated by its plants in excess
of amounts under direct contract between the plant and a third
party, and power purchased from third parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Insurance
Program</FONT></I><FONT size="2">&nbsp;&#151; The CPN Insurance
Corporation, a Hawaii-based, wholly owned captive insurance
subsidiary, charges the Company competitive premium rates to
insure workers&#146; compensation, auto and general liability
and all risk property including business interruption. Accruals
for claims under the captive insurance program pertaining to
property including business interruption claims are recorded on
a claims-incurred basis. Accruals for casualty claims under the
captive insurance program are recorded on a monthly basis, and
are based upon the estimate of the total cost of claims incurred
during the policy period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Derivative
Instruments</FONT></I><FONT size="2">&nbsp;&#151; Financial
Accounting Standards Board (&#147;FASB&#148;) Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
Activities&#148; as amended by SFAS No.&nbsp;137,
&#147;Accounting for Derivative Instruments and Hedging
Activities&nbsp;&#151; Deferral of
</FONT>

<P align="center"><FONT size="2">F-65
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">the Effective Date of FASB Statement
No.&nbsp;133&nbsp;&#151; an Amendment of FASB Statement
No.&nbsp;133&#148; and SFAS No.&nbsp;138, &#147;Accounting for
Certain Derivative Instruments and Certain Hedging
Activities&nbsp;&#151; an Amendment of FASB Statement
No.&nbsp;133&#148; established accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes
in the derivative&#146;s fair value be recognized currently in
earnings unless specific hedge criteria are met. Special
accounting for qualifying hedges allows a derivative&#146;s
gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of
transactions that receive hedge accounting. Based on the nature
of the Company&#146;s derivative instruments currently
outstanding and the historical volatility of commodity prices,
the Company expects that SFAS No.&nbsp;133 could increase
volatility in the Company&#146;s earnings and other
comprehensive income for future periods.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS No.&nbsp;133 includes special accounting for
cash flow and fair value hedges. SFAS No.&nbsp;133 provides that
the effective portion of the gain or loss on a derivative
instrument designated and qualifying as a cash flow hedging
instrument be reported as a component of other comprehensive
income and be reclassified into earnings in the same period
during which the hedged forecasted transaction affects earnings.
The remaining gain or loss on the derivative instrument, if any,
must be recognized currently in earnings. SFAS No.&nbsp;133
provides that the changes in fair value of derivatives
designated as fair value hedges and the corresponding changes in
the fair value of the hedged risk attributable to a recognized
asset, liability, or unrecognized firm commitment be recorded in
earnings. If the fair value hedge is effective, the amounts
recorded will offset in earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS No.&nbsp;133 requires that as of the date of
initial adoption, the difference between the fair value of
derivative instruments and the previous carrying amount of these
derivatives be recorded in net income or other comprehensive
income, as appropriate, as the cumulative effect of a change in
accounting principle. Upon adoption of SFAS No.&nbsp;133, the
Company recorded cumulative effects of a change in accounting
principle of $1.0 million (net of a $0.7 million tax provision)
to net income and $39.8 million (net of a $25.7 million tax
provision) to other comprehensive income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">New Accounting
Pronouncements</FONT></I><FONT size="2">&nbsp;&#151; In June
2001 the FASB issued SFAS No.&nbsp;141, &#147;Business
Combinations&#148;, which supersedes Accounting Principles Board
(&#147;APB&#148;) Opinion No.&nbsp;16, &#147;Business
Combinations&#148; and SFAS No.&nbsp;38, &#147;Accounting for
Preacquisition Contingencies of Purchased Enterprises&#148;.
SFAS No.&nbsp;141 eliminates the pooling-of-interests method of
accounting for business combinations and modifies the
recognition of intangible assets and disclosure requirements.
The elimination of the pooling-of-interests method is effective
for transactions initiated after June&nbsp;30, 2001. The
remaining provisions of SFAS No.&nbsp;141 are effective for
transactions accounted for using the purchase method that are
completed after June&nbsp;30, 2001. The Company does not believe
that SFAS No.&nbsp;141 will have a material effect on its
consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001 the FASB issued SFAS No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets&#148;, which
supersedes APB Opinion No.&nbsp;17, &#147;Intangible
Assets&#148;. SFAS No.&nbsp;142 eliminates the current
requirement to amortize goodwill and indefinite-lived intangible
assets, extends the allowable useful lives of certain intangible
assets, and requires impairment testing and recognition for
goodwill and intangible assets. SFAS No.&nbsp;142 will apply to
goodwill and other intangible assets arising from transactions
completed both before and after its effective date. The
provisions of SFAS No.&nbsp;142 are required to be applied
starting with fiscal years beginning after December&nbsp;15,
2001. As of December&nbsp;31, 2001, the Company&#146;s
unamortized goodwill and other intangible assets balance was
$29.4 million, and was being amortized over periods ranging from
10 to 20&nbsp;years. As a result of SFAS No.&nbsp;142, the
Company currently estimates that the elimination of goodwill and
other intangible assets amortization will result in pre-tax
savings of $1.8&nbsp;million in 2002. The Company has not yet
finalized the financial statement impact of SFAS No.&nbsp;142.
</FONT>

<P align="center"><FONT size="2">F-66
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001 the FASB issued SFAS No.&nbsp;143,
&#147;Accounting for Asset Retirement Obligations&#148;, which
amends SFAS No.&nbsp;19, &#147;Financial Accounting and
Reporting by Oil and Gas Producing Companies&#148;. SFAS
No.&nbsp;143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.
SFAS No.&nbsp;143 requires that the fair value of a liability
for an asset retirement obligation be recognized in the period
in which it is incurred if a reasonable estimate of fair value
can be made. SFAS No.&nbsp;143 is effective for financial
statements issued for fiscal years beginning after June&nbsp;15,
2002. The Company does not believe that SFAS No.&nbsp;143 will
have a material effect on its consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001 the FASB issued SFAS No.&nbsp;144,
&#147;Accounting for the Impairment or Disposal of Long-Lived
Assets&#148;, which supersedes SFAS No.&nbsp;121,
&#147;Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of&#148;, and the accounting
and reporting provisions of APB Opinion No.&nbsp;30,
&#147;Reporting the Results of Operations&nbsp;&#151; Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions&#148;, for the disposal of a segment of a business
(as previously defined in that APB Opinion). SFAS No.&nbsp;144
establishes a single accounting model, based on the framework
established in SFAS No.&nbsp;121, for long-lived assets to be
disposed of by sale. SFAS No.&nbsp;144 also resolves several
significant implementation issues related to SFAS No. 121, such
as eliminating the requirement to allocate goodwill to
long-lived assets to be tested for impairment and establishing
criteria to define whether a long-lived asset is held for sale.
SFAS No.&nbsp;144 is effective for financial statements issued
for fiscal years beginning after December&nbsp;15, 2001. The
Company does not believe that SFAS No.&nbsp;144 will have a
material effect on its consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Reclassifications&nbsp;</FONT></I><FONT size="2">&#151;
Certain prior years&#146; amounts in the Consolidated Financial
Statements have been reclassified to conform to the 2001
presentation.
</FONT>

<P align="left">
<B><FONT size="2">3. Property, Plant and Equipment, Net, and
Capitalized Interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001 and 2000, the
components of property, plant and equipment, are stated at cost
less accumulated depreciation, depletion, and amortization as
follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Buildings, machinery, and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,556,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,951,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas properties, including pipelines
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,283,344</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,441,175</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Geothermal properties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">374,123</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">334,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Power sales agreements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,330</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,086</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel supply and fuel management contracts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140,221</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129,999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,563</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,877</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,751,970</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,164,972</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: accumulated depreciation, depletion, and
	amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(949,446</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(614,816</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,802,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,550,156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Land
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80,506</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,578</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Construction in progress
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,501,960</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,416,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,384,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,979,160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Buildings, Machinery, and
Equipment&nbsp;</FONT></I><FONT size="2">&#151; This component
includes cogeneration plants and related equipment. Depreciation
is recorded utilizing the straight-line method over the
estimated original useful life of up to 35&nbsp;years, exclusive
of the estimated salvage value, typically 10%. The Company
defers the costs for
</FONT>

<P align="center"><FONT size="2">F-67
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">major gas turbine generator refurbishment and
amortizes them over 3 to 6&nbsp;years. Additionally, the Company
expenses certain annual planned maintenance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil and gas
properties&nbsp;</FONT></I><FONT size="2">&#151; The Company
follows the successful efforts method of accounting for oil and
natural gas activities. Under the successful efforts method,
lease acquisition costs and all development costs are
capitalized. Proved oil and gas properties are reviewed when
circumstances suggest the need for such a review and, if
required, the proved properties are written down to their
estimated fair value. Unproved properties are reviewed quarterly
to determine if there has been impairment of the carrying value,
with any such impairment charged to expense in the period.
Estimated fair value includes the estimated present value of all
reasonably expected production based on current prices and costs
at the time of review. Exploratory drilling costs are
capitalized until the results are determined. If proved reserves
are not discovered, the exploratory drilling costs are expensed.
Other exploratory costs are expensed as incurred. Interest costs
related to financing major oil and gas projects in progress are
capitalized until the projects are evaluated or until the
projects are substantially complete and ready for their intended
use if the projects are evaluated as successful. The provision
for depreciation, depletion, and amortization is based on the
capitalized costs as determined above, plus future abandonment
costs, and is on a cost center-by-cost center basis using the
units of production method with lease acquisition costs
amortized over total proved reserves and other costs amortized
over proved developed reserves.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Geothermal
Properties&nbsp;</FONT></I><FONT size="2">&#151; The Company
capitalizes costs incurred in connection with the development of
geothermal properties, including costs of drilling wells and
overhead directly related to development activities, together
with the costs of production equipment, the related facilities
and the operating power plants at such time as management
determines that it is probable the property will be developed on
an economically viable basis and that costs will be recovered
from operations. Proceeds from the sale of geothermal properties
are applied against capitalized costs, with no gain or loss
recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Geothermal costs, including an estimate of future
costs to be incurred, costs to optimize the productivity of the
assets, and the estimated costs to dismantle, are amortized by
the units of production method based on the estimated total
productive output over the estimated useful lives of the related
steam fields. Depreciation of the buildings and roads is
computed using the straight-line method over their estimated
useful lives. It is reasonably possible that the estimate of
useful lives, total unit-of-production or total capital costs to
be amortized using the units-of-production method could differ
materially in the near term from the amounts assumed in arriving
at current depreciation expense. These estimates are affected by
such factors as the ability of the Company to continue selling
electricity to customers at estimated prices, changes in prices
of alternative sources of energy such as hydro-generation and
gas, and changes in the regulatory environment. Geothermal steam
turbine generator refurbishments are expensed as incurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Power Sales Agreements, Fuel Supply Contracts,
and Fuel Management
Contracts&nbsp;</FONT></I><FONT size="2">&#151; These contracts
are acquired as a component of certain business combinations.
The amount recorded on the balance sheet represents the value on
the date of acquisition of the difference between the contract
pricing and other terms and the market straight-line pricing and
other terms on that date. The value of the above-market or
below-market pricing and other terms is generally amortized over
the remaining life of the agreement or contract while the value
associated with certain contracts is amortized volumetrically.
These contracts have remaining lives up to 35&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When assets are disposed of, the cost and related
accumulated depreciation are removed from the accounts, and the
resulting gains or losses are included in results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Construction in
Progress&nbsp;</FONT></I><FONT size="2">&#151; Construction in
progress is primarily attributable to gas-fired power projects
under construction including prepayments on gas turbine
generators. Upon commencement of plant operation, these costs
are transferred to the applicable above property category as
appropriate.
</FONT>

<P align="center"><FONT size="2">F-68
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capitalized
Interest&nbsp;</FONT></I><FONT size="2">&#151; The Company
capitalizes interest on capital invested in projects during the
advanced stages of development and the construction period in
accordance with SFAS No.&nbsp;34, &#147;Capitalization of
Interest Cost,&#148; as amended by SFAS No.&nbsp;58,
&#147;Capitalization of Interest Cost in Financial Statements
That Include Investments Accounted for by the Equity Method (an
Amendment of FASB Statement No.&nbsp;34).&#148; The
Company&#146;s qualifying assets include construction in
progress, certain oil and gas properties under development,
construction costs related to unconsolidated investments in
power projects under construction, and advanced stage
development costs. For the years ended December&nbsp;31, 2001
and 2000, the total amount of interest capitalized was
$498.7&nbsp;million and $207.0&nbsp;million, including
$136.0&nbsp;million and $36.0&nbsp;million, respectively, of
interest incurred on funds borrowed for specific construction
projects and $362.7&nbsp;million and $171.0&nbsp;million,
respectively of interest incurred on general corporate funds
used for construction. Upon commencement of plant operation,
capitalized interest, as a component of the total cost of the
plant, is amortized over the estimated useful life of the plant.
The increase in the amount of interest capitalized during the
year ended December&nbsp;31, 2001, reflects the significant
increase in the Company&#146;s power plant construction program.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with SFAS No.&nbsp;34, the Company
determines which debt instruments best represent a reasonable
measure of the cost of financing construction assets in terms of
interest cost incurred that otherwise could have been avoided.
These debt instruments and associated interest cost are included
in the calculation of the weighted average interest rate used
for capitalizing interest on general funds. The primary debt
instruments included in the rate calculation for 2000 and 2001
are the Senior Notes and the $400.0 million corporate revolver.
</FONT>

<P align="left">
<B><FONT size="2">4. Acquisitions</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Western
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;4, 2000, the Company acquired
100% of the stock of Western Gas Resources California
(&#147;Western&#148;) from Western Gas Resources, Inc. for $14.9
million. Western&#146;s assets include the 130-mile Steelhead
natural gas pipeline and the remaining interest in the
Sacramento River Gas System natural gas pipeline, now 100% owned
by Calpine.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hidalgo
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;30, 2000, the Company purchased a
78.5% interest in the 502-megawatt Hidalgo Energy Center
(&#147;Hidalgo&#148;) which was under construction in Edinburg,
Texas, from Duke Energy North America for $235.0&nbsp;million.
The purchase included a cash payment of $134.0&nbsp;million and
the assumption of a $101.0&nbsp;million capital lease
obligation. The Hidalgo Energy Center sells power into the
Electric Reliability Council of Texas&#146; (&#147;ERCOT&#148;)
wholesale market. Construction of the facility began in February
1999 and commercial operation was achieved in June 2000.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KIAC and
Stony Brook Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;31, 2000, Calpine acquired the
remaining 50% interests in the 105-megawatt Kennedy
International Airport Power Plant (&#147;KIAC&#148;) in Queens,
New York and the 40-megawatt Stony Brook Power Plant located at
the State University of New York at Stony Brook on Long Island
from Statoil Energy, Inc. The Company paid approximately
$71.0&nbsp;million in cash and assumed a capital lease
obligation relating to the Stony Brook Power Plant and an
operating lease obligation relating to the KIAC Power Plant. The
Company initially acquired a 50% interest in both facilities in
December 1997.
</FONT>

<P align="center"><FONT size="2">F-69
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Freestone
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;15, 2000, the Company announced that
it had acquired the Freestone Energy Center
(&#147;Freestone&#148;) from Energy Corporation. Freestone is a
1,052-megawatt natural gas-fired energy center under development
in Freestone County, Texas. The Company paid approximately
$61.0&nbsp;million in cash and assumed certain liabilities. This
represented payment for the land and development rights for the
Freestone Energy Center, previous progress payments made for
four General Electric gas turbines, two steam turbines and
related equipment, and development expenditures.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auburndale
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2000, the Company acquired from
Edison Mission Energy the remaining 50% ownership interest in a
153-megawatt natural gas-fired, combined-cycle cogeneration
facility located in Auburndale, Fla. The Company paid
approximately $22.0&nbsp;million in cash and assumed certain
liabilities, including project level debt. The Company acquired
an initial 50% ownership interest in the Auburndale Power Plant
in October 1997.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural Gas
Reserves Transactions</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;5, 2000, the Company completed three
acquisitions of natural gas reserves for $206.5&nbsp;million,
including the acquisition of Calgary-based Quintana Minerals
Canada Corp. (&#147;QMCC&#148;), three fields in the Gulf of
Mexico and natural gas assets in the Piceance Basin, Colorado
and onshore Gulf Coast. The Company subsequently changed
QMCC&#146;s name to Calpine Canada Natural Gas, Ltd.
(&#147;CCNG&#148;).
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oneta
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;20, 2000, the Company completed the
acquisition of the 1,138-megawatt natural gas-fired Oneta Energy
Center, (&#147;Oneta&#148;) in Coseta, Oklahoma, from Panda
Energy International, Inc.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agnews
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;16, 2000, the Company acquired the
remaining 80% interest in the Agnews Power Plant, a 29-megawatt
natural gas-fired, combined-cycle facility located in
San&nbsp;Jose, California from GATX Capital Corporation for a
total purchase price of $4.9&nbsp;million and the assumption of
a capital lease obligation. The Company first acquired a 20%
equity interest in the Agnews Power Plant in 1990.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aidlin
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;31, 2000, the Company acquired the
remaining 45% equity interest in the Aidlin Power Plant from an
affiliate of Sumitomo Corporation for a total purchase price of
$6.4&nbsp;million. The Company initially acquired a 5% equity
interest in the Aidlin Power Plant in 1989, representing
Calpine&#146;s first megawatt of generation. That interest was
increased to 55% with the acquisition of two other
partners&#146; interests in 1999. Located in The Geysers region
of northern California, Aidlin is a 20-megawatt power plant.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SkyGen Energy
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;12, 2000, the Company completed
the acquisition of Northbrook, Illinois-based SkyGen Energy LLC
(&#147;SkyGen&#148;) from Michael Polsky and Wisvest Corporation
(&#147;Wisvest&#148;), an affiliate of Wisconsin Energy Corp.,
for a total purchase price of $359.1&nbsp;million. The purchase
price included cash payments of $294.2&nbsp;million and
2,117,742 shares of Calpine common stock (which were valued in
the aggregate at $64.9&nbsp;million at signing of the letter of
intent).
</FONT>

<P align="center"><FONT size="2">F-70
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TriGas
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;15, 2000, the Company acquired
TriGas Exploration Inc. (&#147;TriGas&#148;), a Calgary-based
oil and gas company, for a total purchase price of
$101.1&nbsp;million. The purchase price included cash payments
of $79.6&nbsp;million, as well as assumed net indebtedness of
$21.5&nbsp;million. The acquisition provided Calpine with
natural gas reserves to fuel its Calgary Energy Centre, and a
26.6% working interest in the East Crossfield Gas Plant, a
majority interest in 63&nbsp;miles of pipeline that conducts the
gas to two nearby gas-fired power generation facilities, and a
significant undeveloped land base with development potential.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PSM
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;13, 2000, the Company completed
the acquisition of Boca Raton, Florida-based PSM for a total
purchase price of $16.3&nbsp;million. The purchase price
included cash payments of $5.6&nbsp;million and 281,189 shares
of Calpine common stock (which were valued in the aggregate at
$10.7&nbsp;million at the closing of the agreement).
Additionally, the agreement provides for five equal installments
of cash payments, totaling $26.7&nbsp;million, beginning in
January 2002, contingent upon future PSM performance. PSM
specializes in the design and manufacturing of turbine hot
section blades, vanes, combustors and low emissions combustion
components.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EMI
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;15, 2000, the Company completed
the acquisition of strategic power assets from Dartmouth,
Massachusetts-based Energy Management, Inc. (&#147;EMI&#148;)
for a total purchase price of $145.0&nbsp;million. The purchase
price included cash payments of $100.0&nbsp;million and
1,102,601 shares of Calpine common stock (which were valued in
the aggregate at $45.0&nbsp;million at the closing of the
agreement). Under the terms of the agreement, the Company
acquired the remaining interest in three recently constructed
combined-cycle power generating facilities located in Dighton,
Massachusetts, Tiverton, Rhode Island, and Rumford, Maine, as
well as Calpine-EMI Marketing LLC, a joint marketing venture
between Calpine and EMI.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following mergers and acquisitions were
consummated during the year ended December&nbsp;31, 2001. All
business combinations made during 2001 were accounted for as
purchases, with the exception of the Encal pooling-of-interests
transaction.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WRMS
Transaction</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;3, 2001, the Company acquired all
of the common shares of WRMS Engineering, Inc.
(&#147;WRMS&#148;), a California-based engineering and
architectural firm, through a stock-for-stock exchange in which
WRMS shareholders received a total of 151,176 shares of Calpine
common stock. The aggregate value of the transaction was
approximately $7.8&nbsp;million, including the assumed
indebtedness of WRMS.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Encal
Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;19, 2001, the Company completed its
merger with Encal, a Calgary, Alberta-based natural gas and
petroleum exploration and development company. Encal
shareholders received, in exchange for each share of Encal
common stock, 0.1493 shares of Calpine common equivalent shares
(called &#147;exchangeable shares&#148;) of the Company&#146;s
subsidiary, Calpine Canada Holdings Ltd. A total of 16,603,633
exchangeable shares were issued to Encal shareholders in
exchange for all of the outstanding shares of Encal common
stock. Each exchangeable share is exchangeable for one share of
Calpine common stock. The aggregate value of the transaction was
approximately US$1.1&nbsp;billion, including the assumed
indebtedness of Encal. The transaction was accounted for as a
pooling-of-interests and, accordingly, all historical amounts
reflected in the consolidated financial statements have been
restated to reflect the transaction in accordance with APB
Opinion
</FONT>

<P align="center"><FONT size="2">F-71
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">No.&nbsp;16, &#147;Business Combinations&#148;
(&#147;APB&nbsp;16&#148;). Encal operated under the same fiscal
year end as Calpine, and accordingly, Encal&#146;s balance sheet
as of December&nbsp;31, 2000, and the statements of operations,
shareholders&#146; equity and cash flows for each of the two
fiscal years in the period ended December&nbsp;31, 2000, have
been combined with the Company&#146;s consolidated financial
statements. The Company incurred $41.6&nbsp;million in
nonrecurring merger costs for this transaction. Upon completion
of the acquisition, we gained approximately 664&nbsp;billion
cubic feet equivalent of proved natural gas reserves, net of
royalties. This transaction also provides access to firm gas
transportation capacity from western Canada to California and
the eastern U.S., and an accomplished management team capable of
leading our business expansion in Canada. In addition, Encal had
proved undeveloped acreage totaling approximately
1.2&nbsp;million acres.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Saltend
Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;24, 2001, the Company acquired and
assumed operations of the Saltend Energy Centre
(&#147;Saltend&#148;), a 1,200-megawatt natural gas-fired power
plant located at Saltend near Hull, Yorkshire, England. The
Company purchased the cogeneration facility from an affiliate of
Entergy Corporation for &#163;565.0&nbsp;million
(US$818.1&nbsp;million at exchange rates at the closing of the
acquisition). Saltend began commercial operation in November
2000 and is one of the largest natural gas-fired electric power
generating facilities in England.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Hog Bayou and
Pine Bluff Transactions</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;12, 2001, the Company purchased
the remaining 33.3% interests in the 247-megawatt Hog Bayou
Energy Center (&#147;Hog Bayou&#148;) and the 213-megawatt Pine
Bluff Energy Center (&#147;Pine Bluff&#148;) from Houston,
Texas-based Intergen (North America), Inc. for approximately
$9.6&nbsp;million.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Westcoast
Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;20, 2001, the Company&#146;s
wholly owned subsidiary, Canada Power Holdings Ltd., acquired
and assumed operations of two Canadian power generating
facilities from British Columbia-based Westcoast Energy Inc.
(&#147;Westcoast&#148;) for C$333.1 million
(US$212.1&nbsp;million at exchange rates at the closing of the
acquisition). The Company acquired a 100% interest in the Island
Cogeneration facility (&#147;Island&#148;), a 250-megawatt
natural gas-fired electric generating facility in the
commissioning phase of construction and located near Campbell
River, British Columbia on Vancouver Island. The Company also
acquired a 50% interest in the 50-megawatt Whitby Cogeneration
facility (&#147;Whitby&#148;) located in Whitby, Ontario.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>California
Energy General Corporation and CE Newburry, Inc.
Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;16, 2001, the Company acquired
California Energy General Corporation (&#147;California
Energy&#148;) and CE Newburry, Inc. (&#147;CE Newburry&#148;)
from MidAmerican Energy Holdings Company for $22.0&nbsp;million.
The transaction includes the companies&#146; geothermal resource
assets, contracts, leases and development opportunities
associated with the Glass Mountain Known Geothermal Resource
Area (&#147;Glass Mountain KGRA&#148;) located in Siskiyou
County, California, approximately 30 miles south of the Oregon
border. These purchases are directly related to the
Company&#146;s plans to develop the 49.5-megawatt Fourmile Hill
Geothermal Project located in the Glass Mountain KGRA.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Michael
Petroleum Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;22, 2001, the Company completed
the acquisition of 100% of the voting stock of Michael Petroleum
Corporation (&#147;Michael&#148;), a natural gas exploration and
production company, for cash of $315.8&nbsp;million, plus the
assumption of $54.5&nbsp;million of debt. The acquired assets
consisted of approximately 531 wells, producing approximately
33.5 net mmcfe/d of which 90&nbsp;percent is gas, and developed
and non-developed acreage totaling approximately 82,590 net
acres at year end.
</FONT>

<P align="center"><FONT size="2">F-72
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Highland
Transaction</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;5, 2001, the Company acquired
Highland Energy Company (&#147;Highland&#148;) from Entergy
Power Gas Operations Corporation and Louis Morrison&nbsp;III for
$4.5&nbsp;million. Highland has an established service that
assists small and medium-size independent producers in the
aggregation of their natural gas, crude oil and natural gas
liquids.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delta,
Metcalf and Russell City Transactions</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;6, 2001, the Company acquired
Bechtel Enterprises Holdings, Inc.&#146;s 50% interest in the
874-megawatt Delta Energy Center (&#147;Delta&#148;), the
600-megawatt Metcalf Energy Center (&#147;Metcalf&#148;) and the
600-megawatt Russell City Energy Center (&#147;Russell
City&#148;) for approximately $154.0&nbsp;million and the
assumption of approximately $141.0&nbsp;million of debt. As a
result of this acquisition, the Company now owns a 100% interest
in all three facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The initial purchase price allocation for all
material business combinations initiated after June&nbsp;30,
2001, is shown below. As of December&nbsp;31, 2001, the Company
had not finalized the purchase price allocation for Westcoast or
Saltend. The Company is currently in negotiations to determine
the proper value of certain tax pools obtained as part of the
Westcoast transaction, and expects a settlement to be reached
during 2002. Additionally, based on the terms of the purchase
agreement, a working capital adjustment related to the Saltend
acquisition had not been finalized.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Michael</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Saltend</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Petroleum</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Westcoast</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,970</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,468</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">906,801</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">535,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212,902</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,478</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments in power plants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,900</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(16,852</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,802</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Derivative liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,862</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(54,500</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax liabilities, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(95,671</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(151,946</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,408</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net purchase price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">818,071</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">315,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212,067</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Pro Forma
Effects of Acquisitions</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Acquired subsidiaries are consolidated upon
acquisition. The table below reflects unaudited pro forma
combined results of the Company, Western, Hidalgo, KIAC, Stony
Brook, Freestone, Auburndale, QMCC, Oneta, Agnews, Aidlin,
SkyGen, TriGas, PSM, EMI, WRMS, Bayless, Saltend, Hog Bayou,
Pine Bluff, Island, Whitby, California Energy, CE Newburry,
Michael, Highland, Delta, Metcalf, and Russell City as if the
acquisitions had taken place at the beginning of fiscal years
2001 and 2000 (in thousands, except per share amounts):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,783,055</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,853,811</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">640,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">397,120</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">647,149</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">395,885</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income per basic share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.41</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income per diluted share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.86</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In management&#146;s opinion, these unaudited pro
forma amounts are not necessarily indicative of what the actual
combined results of operations might have been if the
acquisitions had been effective at the beginning
</FONT>

<P align="center"><FONT size="2">F-73
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">of fiscal years 2001 and 2000. In addition, they
are not intended to be a projection of future results and do not
reflect all the synergies that might be achieved from combined
operations.
</FONT>

<P align="left">
<B><FONT size="2">5. Sale and Leaseback Transactions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001 and 2000, the Company completed the
following sale-leaseback transactions, which resulted in
operating leases. All counterparties in the sale-leaseback
transactions are unrelated to the Company. In connection with
these transactions, the Company recorded deferred gains (losses)
which are being amortized as a reduction of (addition to)
operating lease expense over the respective remaining lives of
the leases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;1, 2000, the Company completed
a leveraged lease financing transaction to provide the term
financing for both Phase I and Phase II of the Pasadena, Texas
Cogeneration project. Under the terms of the lease, the Company
received $400.0&nbsp;million in gross proceeds and recorded a
deferred gain of approximately $65.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;19, 2000, the Company completed
a leveraged lease financing transaction for the Tiverton and
Rumford facilities raising $466.7&nbsp;million in gross
proceeds, resulting in a deferred gain of $1.7&nbsp;million. In
connection with this transaction, Calpine Corporation provided a
guarantee for the obligations under the leases but did not
guarantee the lessors&#146; debt. In connection with this
transaction, the Company issued letters of credit to support the
obligation to make rent payments to the lessor. At
December&nbsp;31, 2001, and 2000, $57.2&nbsp;million, and
$52.1&nbsp;million in letters of credit were outstanding,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;22, 2000, the Company completed
a leveraged lease financing transaction of its West Ford Flat
and Bear Canyon projects. Under the terms of the agreement, the
facilities were incorporated into the Company&#146;s geothermal
lease facility, which the Company originally entered into on
May&nbsp;7, 1999. The Company received $81.0&nbsp;million in
gross proceeds and recorded a deferred loss of approximately
$8.1&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;30, 2001, the Company completed
a leveraged lease financing transaction of its Aidlin project.
Under the terms of the agreement, the facility was incorporated
into the Company&#146;s geothermal lease facility, which the
Company originally entered into on May&nbsp;7, 1999. The Company
received $29.0&nbsp;million in gross proceeds and recorded a
deferred gain of approximately $6.8&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;18, 2001, the Company completed
leveraged lease financing transactions for the South Point,
Broad River and RockGen facilities raising $800.0&nbsp;million
in gross proceeds, resulting in a deferred gain of approximately
$22.8&nbsp;million. In connection with these transactions,
Calpine Corporation provided a guarantee for the obligations of
its subsidiaries under the leases but did not guarantee the
lessors&#146; debt. The lessors issued lessor notes with an
aggregate principal amount of $654.5 million, which was funded
by the proceeds from the issuance of pass through certificates.
In effect, the pass through certificates evidence the debt
component of these sale/leaseback transactions. The pass through
certificates were issued in two tranches: the first, consisting
of $454.5&nbsp;million in aggregate principal amount of 8.4%
Series&nbsp;A Certificates due May&nbsp;30, 2012, and the
second, consisting of $200&nbsp;million in aggregate principal
amount of 9.825% Series&nbsp;B Certificates due May&nbsp;30,
2019.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transactions involving Tiverton, Rumford,
South Point, Broad River, and RockGen utilize special-purpose
entities formed by the lessor with the sole purpose of owning a
power generation facility. The Company is not the owner of the
SPE nor does the Company have any direct or indirect ownership
interest in each respective SPE; therefore the SPEs are
appropriately not consolidated as subsidiaries of the Company.
</FONT>

<P align="center"><FONT size="2">F-74
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">6. Investments in Power Projects</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investments, which are accounted for under the
equity method, are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest as of</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sumas Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acadia Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">223,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,529</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Grays Ferry Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,257</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Aries Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,350</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gordonsville Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,687</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,060</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Lockport Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,919</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bayonne Power Plant(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.5%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Whitby Cogeneration
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Endur(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,421</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,318</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments in power projects
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378,614</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">On December&nbsp;31, 1998, the Partnership
	agreement governing Sumas Cogeneration Company, L.P.
	(&#147;Sumas&#148;) was amended changing the distributions
	schedule for the Company from the previously amended agreement
	dated September&nbsp;30, 1997. From January&nbsp;1, 1998,
	through December 2000 the Company recorded income equal to the
	amount of cash received from partnership distributions. The
	Company received distributions at a rate of 70% of project cash
	flow until December 2000 when a cumulative 24.5% pre-tax rate of
	return was earned on its original investment. As a result, the
	Company&#146;s equity interest in the partnership has been
	reduced to 0.1%.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The Company sold its remaining interest in this
	facility in March 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">On October&nbsp;1, 2001, the Company invested
	$26.0&nbsp;million in Endur, Inc. (formerly known as SuperSite
	Holdings Corporation). Endur is responsible for the development,
	financing, construction, ownership and operation of a high tech
	data center campus to be located next to Calpine&#146;s Los
	Esteros critical energy facility in San Jose, California.
	Calpine&#146;s Los Esteros facility will supply power to the San
	Jose data center to be developed by Endur.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-75
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The combined unaudited results of operations and
financial position of the Company&#146;s equity method
affiliates are summarized below (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Condensed statements of operations:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">401,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">617,914</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">562,401</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148,476</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,777</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245,314</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from continuing operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">161,852</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">83,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,837</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Company&#146;s share of net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Condensed balance sheet:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129,189</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">130,316</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,107</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,379,134</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,424,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,306,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,508,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,554,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,473,432</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,764</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">121,214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">687,645</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">951,013</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,087,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">833,169</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,126,777</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,208,543</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The debt on the books of the Company&#146;s
unconsolidated investments in power projects is not reflected on
our balance sheet. At December&nbsp;31, 2001, investee debt is
approximately $737.9&nbsp;million. Based on the Company&#146;s
pro rata ownership share of each of the investments, the
Company&#146;s share would be approximately $248.5&nbsp;million.
However, all such debt is non-recourse to the Company. For the
Aries Power Plant construction debt, we and Aquila Energy, a
wholly owned subsidiary of UtiliCorp United, have provided
support arrangements until construction is completed to cover
cost overruns, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following details the Company&#146;s income
and distributions from investments in unconsolidated power
projects (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Income from Unconsolidated</FONT></B></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Investments in Power Projects</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Distributions</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">For the Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sumas Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,779</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,779</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Grays Ferry Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">594</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,737</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Lockport Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,562</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,752</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gordonsville Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,453</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,514</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">825</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bayonne Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,196</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,426</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,301</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,808</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stony Brook Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(994</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">857</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,820</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Auburndale Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(712</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,350</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Kennedy International Airport Power Plant
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,769</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,350</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Whitby Cogeneration
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Endur
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(721</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,978</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(986</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">724</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,020</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,318</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-76
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<P align="left">
<FONT size="2">The Company provides for deferred taxes to the
extent that distributions exceed earnings.
</FONT>

<P align="left">
<B><FONT size="2">7. Notes Receivable</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, and
December&nbsp;31, 2000, the components of notes receivable were
(in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">PG&#38;E (Gilroy) note
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,336</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Delta note
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,050</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Panda note
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,818</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,818</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,833</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,906</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,349</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">218,110</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: Notes receivable, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,225</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(183</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes receivable, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Gilroy Cogen, LP (&#147;Gilroy&#148;) had
a long-term power purchase agreement (&#147;PPA&#148;) with
Pacific Gas and Electric Company (&#147;PG&#38;E&#148;) for the
sale of energy through 2018. The terms of the PPA provided for
120 megawatts of firm capacity and up to 10 megawatts of
as-delivered capacity. On December&nbsp;2, 1999, the California
Public Utilities Commission approved the restructuring of the
PPA between Gilroy and PG&#38;E. Under the terms of the
restructuring, PG&#38;E and Gilroy are each released from
performance under the PPA effective November&nbsp;1, 2002. Under
the restructured contract, in addition to the normal capacity
revenue for the period, Gilroy will earn from September 1999 to
October 2002 restructured capacity revenue it would have earned
over the November 2002 through March 2018 time period, for which
PG&#38;E has issued and will issue notes to the Company. These
notes will be paid by PG&#38;E during the period from February
2003 to September 2014. See Note 18 for additional discussion of
transactions with PG&#38;E.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999, the Company, together with Bechtel
Enterprises (&#147;Bechtel&#148;), began the development of an
874-megawatt gas-fired cogeneration project in Pittsburg,
California. As part of this joint venture, the Company had an
interest-bearing note from the project, Delta Energy Center,
LLC. In November 2001 the Company acquired Bechtel&#146;s 50%
interest in the Delta Energy Center, and the note was
extinguished as part of the acquisition (see Note&nbsp;4).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;23, 2000, the Company entered into a
series of turbine sale contracts with a subsidiary of Panda
Energy International, Inc. The loan has an interest rate of
LIBOR plus 5% and is due in 2003.
</FONT>

<P align="center"><FONT size="2">F-77
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">8. Notes Payable and Borrowings Under Lines of
Credit</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of notes payable and borrowings
under lines of credit and related outstanding letters of credit
are (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Letters of Credit</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Borrowings Outstanding</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Corporate revolving line of credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">373,224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine Canada note payable and borrowings under
	line of credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">403,705</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">657</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Michael Petroleum note payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,238</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,449</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total notes payable and borrowings under lines of
	credit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">456,154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">384,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">169,367</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: notes payable and borrowings under lines of
	credit, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,238</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,087</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes payable and borrowings under lines of
	credit, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">455,067</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2000, Calpine entered into an amended and
restated $400.0&nbsp;million, three-year revolving line of
credit (corporate revolving line of credit) with a consortium of
commercial lending institutions with the Bank of Nova Scotia as
agent, which replaced an existing $100.0&nbsp;million credit
facility. At December&nbsp;31, 2001, the Company had no
borrowings and $373.2&nbsp;million in letters of credit
outstanding under the amended and restated credit facility.
Borrowings bear variable interest and interest is paid on the
last day of each interest period for such loans, at least
quarterly. The credit facility specifies that the Company
maintain certain covenants, with which the Company was in
compliance as of December&nbsp;31, 2001 and 2000. Commitment
fees related to this line of credit are charged based on the
unused credit. The interest rate ranged from 5.50% to 8.00%
during 2001 and 7.88% to 9.75% during 2000. This credit facility
was amended in March 2002. See Note&nbsp;24 for further
discussion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company, through its wholly
owned Canadian subsidiaries, maintained three separate Canadian
bank line of credit facilities totaling $202.7&nbsp;million
secured by certain of the Company&#146;s oil and gas reserves in
Canada. The Company had no borrowings and $144.5&nbsp;million
outstanding under these facilities at December&nbsp;31, 2001 and
2000, respectively. In April 2001, these facilities were
canceled. The facilities bore interest at variable rates. The
weighted average rate for each of the facilities was 7.14% and
8.52% in 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company maintained, through its
wholly owned Canadian subsidiaries, an unsecured
$246.8&nbsp;million term credit facility and a
$20.0&nbsp;million operating credit facility from Canadian
chartered banks. The Company had no borrowings and
$159.2&nbsp;million outstanding under the term credit facility
at December&nbsp;31, 2001 and 2000, respectively. The operating
credit facility was reduced to $9.4&nbsp;million on
April&nbsp;19, 2001, and the unsecured term credit facility was
cancelled by the Company in January 2002. Interest rates
averaged 6.13% and 7.23% for 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company, through its wholly owned Canadian
subsidiaries, had two separate issues of $50.0&nbsp;million
unsecured notes. The first issue bore interest at 7.61% and was
scheduled to mature on July&nbsp;11, 2007. The second issue bore
interest at 8.06% and was scheduled to mature on
December&nbsp;21, 2010. In April&nbsp;2001, both note issues
were canceled.
</FONT>

<P align="center"><FONT size="2">F-78
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the Company&#146;s acquisition of
Michael Petroleum Corporation (&#147;MPC&#148;) through its
wholly owned subsidiary Calpine Natural Gas Company, the Company
assumed a $75.0&nbsp;million three-year revolving credit
facility with Bank One, N.A. and other banks. The facility
provides for a current borrowing base of $65.0&nbsp;million.
Amounts outstanding under the facility bear variable interest.
The interest rate ranged from 4.43% to 6.75% during 2001. The
line of credit is secured by the Company&#146;s oil and gas
properties. The Company was out of compliance as of
December&nbsp;31, 2001, with a covenant under the loan
agreement. Subsequent to December&nbsp;31, 2001, the Company
initiated the process to obtain a waiver for the covenant but
chose to instead repay the outstanding balance under the loan
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, in connection with repayment of
outstanding borrowings in August 2000, the termination of
certain credit agreements and the related write-off of
unamortized deferred financing costs, the Company recorded an
extraordinary loss of $1.2&nbsp;million, net of tax of
$0.8&nbsp;million, in 2000.
</FONT>

<P align="left">
<B><FONT size="2">9. Capital Lease Obligations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2000 and 2001, the Company assumed and
consolidated capital leases in conjunction with certain
acquisitions. The asset balances for the leased assets totaled
$181.9&nbsp;million at December&nbsp;31, 2001, with accumulated
amortization of $10.0&nbsp;million. The primary types of
property leased by the Company are power plants and related
equipment. The leases generally provide for the lessee to pay
taxes, maintenance, insurance, and certain other operating costs
of the leased property. The lease terms range from 13 to 28
years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a schedule by years of future
minimum lease payments under capital leases together with the
present value of the net minimum lease payments as of
December&nbsp;31, 2001, (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year Ending December&nbsp;31:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,291</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,728</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,961</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,215</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,418</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">333,850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total minimum lease payments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">424,463</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: Amount representing interest(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(215,038</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Present value of net minimum lease payments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">209,425</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: Capital lease obligation, current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,206</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital lease obligation, net of current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">207,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Amount necessary to reduce net minimum lease
	payments to present value calculated at the implicit interest
	rates of the leases at their inception.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">10. Zero-Coupon Convertible
Debentures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;30, 2001, the Company completed the
sale of $1.0&nbsp;billion of Zero-Coupon Convertible Debentures
Due 2021 (&#147;Zero Coupons&#148;) in a private placement under
Rule&nbsp;144A of the Securities Act of 1933. The Zero Coupons
are convertible into Calpine common shares at a price of $75.35
per share at the option of the holder at any time. Holders have
the right to require the Company to repurchase their Zero
Coupons at periodic intervals from 2002 through 2016 at a
specified price in cash or with Calpine common stock at the
Company&#146;s option, except in 2016 when the repurchase price
must be paid in cash. As the holders
</FONT>

<P align="center"><FONT size="2">F-79
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">of the Zero Coupons have the right to require the
Company to repurchase the debentures during 2002, the Zero
Coupons are classified as current. The effective interest rate,
after amortization of deferred financing costs, was 2.3% in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001 the Company repurchased
$122.0&nbsp;million in aggregate principal amount of its Zero
Coupons in open-market purchases. The Company recorded an
extraordinary gain of $7.4&nbsp;million, net of tax of
$4.5&nbsp;million. All repurchased Zero Coupons were retired,
bringing the amount of Zero Coupons that remain outstanding at
December&nbsp;31, 2001, to $878.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Note 24 for a discussion of the
Company&#146;s additional repurchases of its Zero Coupons during
2002.
</FONT>

<P align="left">
<B><FONT size="2">11. Construction/ Project Financing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of construction/project financing
as of December&nbsp;31, 2001 and 2000, are (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Letters of Credit</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Outstanding at</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Outstanding at December 31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Projects</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine Construction Finance Company
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">967,576</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">544,860</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calpine Construction Finance Company II
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,425,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">156,784</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,303</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">830,711</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">114,364</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,393,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,532,355</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,903</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">114,364</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: current portion
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term project financing
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,393,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,473,869</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Calpine
Construction Finance Company Debt</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1999, the Company entered into a
credit agreement for $1.0&nbsp;billion through its wholly owned
subsidiary Calpine Construction Finance Company L.P. with a
consortium of banks. The lead arranger was The Bank of Nova
Scotia and the lead arranger syndication agent was Credit Suisse
First Boston. The non-recourse credit facility is utilized to
finance the construction of certain of the Company&#146;s
gas-fired power plants currently under development. The Company
currently intends to refinance this construction facility in the
long-term capital markets prior to its four-year maturity of
2003. As of December&nbsp;31, 2001, the Company had
$967.6&nbsp;million in borrowings outstanding under the
facility. Borrowings under this facility bear variable interest.
The credit facility specifies that the Company maintain certain
covenants, with which the Company was in compliance as of
December&nbsp;31, 2001. The interest rate at December&nbsp;31,
2001 and 2000, was 3.44% and 8.44%, respectively. The interest
rate ranged from 3.44% to 9.50% during 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2000, the Company entered into a
credit agreement for $2.5&nbsp;billion through its wholly owned
subsidiary Calpine Construction Finance Company II, LLC with a
consortium of banks. The lead arrangers were The Bank of Nova
Scotia and Credit Suisse First Boston. The non-recourse credit
facility is utilized to finance the construction certain of the
Company&#146;s gas-fired power plants currently under
development. The Company currently intends to refinance this
construction facility in the long-term capital markets prior to
its four-year maturity of 2004. As of December&nbsp;31, 2001,
the Company had $2.4&nbsp;billion in borrowings outstanding
under the facility. Borrowings under this facility bear variable
interest. The credit facility specifies that the Company
maintain certain covenants, with which the Company was in
compliance as of December&nbsp;31, 2001. The interest rate at
December&nbsp;31, 2001 and 2000, was 3.68% and 8.20%,
respectively. The interest rate ranged from 3.68% to 9.75%
during 2001.
</FONT>

<P align="center"><FONT size="2">F-80
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Project
Financing Debt</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999 and 2000, the Company assumed project
financing debt through the acquisition of the following power
plants: Auburndale, Newark and Parlin, Broad River, Pine Bluff,
Hog Bayou, RockGen, Morris, DePere, and Dighton. As of
December&nbsp;31, 2001 and 2000, the Company had no borrowings
and $830.7&nbsp;million borrowings outstanding, respectively.
The Company repaid the outstanding balance under each individual
project loan in 2001. The effective interest rates ranged from
5.51% to 7.68% and 6.43% to 8.24% during 2001 and 2000,
respectively.
</FONT>

<P align="left">
<B><FONT size="2">12. Convertible Senior Notes Due
2006</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001, the Company completed an
issuance of $1.1&nbsp;billion in aggregate principal amount of
4% Convertible Senior Notes Due 2006 (&#147;Convertible Senior
Notes&#148;) issued directly by Calpine. These securities are
convertible, at the option of the holder, into shares of Calpine
common stock at a price of $18.07. The proceeds from the
offering will be used to retire the Zero Coupons, either in
open-market purchases, negotiated transactions or upon exercise
by holders of a put option in April 2002 and for general
corporate purposes. The effective interest rate on these notes,
after amortization of deferred financing costs, was
approximately 4.4% in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Note 24 for a discussion of the
Company&#146;s January&nbsp;3, 2002, issuance of an additional
$100.0&nbsp;million of Convertible Senior Notes.
</FONT>

<P align="left">
<B><FONT size="2">13. Senior Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Senior Notes payable consist of the following as
of December&nbsp;31, 2002 and 2000, (in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">(3)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Fair Value as of</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">First Call</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Rates</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9&nbsp;1/4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;1/4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">223,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10&nbsp;1/2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">171,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">171,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">163,163</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">178,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7&nbsp;5/8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">221,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">239,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2007
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;3/4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">275,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">275,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">266,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2007
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;3/4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2008
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7&nbsp;7/8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">356,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">380,320</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2008
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;1/2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,030,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,776,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2008
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;3/8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,399</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2009
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7&nbsp;3/4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">304,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332,535</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2010
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;5/8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">656,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">726,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2011
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;1/2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,000,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,760,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Senior Notes Due 2011
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;7/8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">290,840</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">261,756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,049,038</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,551,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,222,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,476,225</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Not redeemable prior to maturity.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Redeemable at any time prior to maturity.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents the market values of the Senior Notes
	at the respective dates.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-81
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has completed a series of public debt
offerings since 1994. Interest is payable semiannually at
specified rates. Deferred financing costs are amortized on a
straight-line basis, which approximates the effective interest
method, over the respective lives of the notes. There are no
sinking fund or mandatory redemptions of principal before the
maturity dates of each offering. Certain of the Senior Note
indentures limit the Company&#146;s ability to incur additional
debt, pay dividends, sell assets and enter into certain
transactions. As of December&nbsp;31, 2001, the Company was in
compliance with all debt covenants relating to the Senior Notes.
The effective interest rates for each of the Company&#146;s
Senior Notes outstanding at December&nbsp;31, 2001, are
consistent with the respective notes outstanding during 2000.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2004</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on these notes is payable semi-annually
on February 1 and August 1 each year. The notes would have
matured on February&nbsp;1, 2004, were redeemable, at the option
of the Company, at any time on or after February&nbsp;1, 1999,
at various redemption prices. The effective interest rate on the
$105.0&nbsp;million, after amortization of deferred financing
costs, was 9.6% per annum. On June&nbsp;7, 2001, the Company
redeemed all $105.0&nbsp;million principal amount of the Senior
Notes Due 2004 for 100% of the principal amount plus accrued
interest to the redemption date. The Company recorded an
extraordinary loss of $0.8&nbsp;million, net of tax of
$0.5&nbsp;million, in connection with this redemption.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2005</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on these notes is payable semi-annually
on August&nbsp;15 and February&nbsp;15. The notes mature on
August&nbsp;15, 2005,or may be redeemed at any time prior to
maturity at a redemption price equal to 100% of their principal
amount plus accrued and unpaid interest plus a make-whole
premium. The effective interest rate on the $250.0&nbsp;million,
after amortization of deferred financing costs, is 8.7% per
annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2006</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on these notes is payable semi-annually
on May&nbsp;15 and November&nbsp;15 each year and the notes
mature on May&nbsp;15, 2006, or are redeemable, at the option of
the Company, at any time on or after May&nbsp;15, 2001, at
various redemption prices. In addition, the Company may redeem
up to $63.0&nbsp;million of the Senior Notes Due 2006 from the
proceeds of any public equity offering. The effective interest
rate on the $171.8&nbsp;million, after amortization of deferred
financing costs, is&nbsp;10.8% per annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the 7&nbsp;5/8% notes is payable
semi-annually on April&nbsp;15 and October&nbsp;15 and the notes
mature on April&nbsp;15, 2006, and are not redeemable prior to
maturity. The effective interest rate on the
$250.0&nbsp;million, after amortization of deferred financing
costs, is&nbsp;7.9% per annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2007</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the $275&nbsp;million principal
senior notes is payable semi-annually on January&nbsp;15 and
July&nbsp;15 each year. These notes mature on July 15, 2007, or
are redeemable, at the option of the Company, at any time on or
after July&nbsp;15, 2002, at various redemption prices. In
addition, the Company may redeem up to $96.3&nbsp;million of the
Senior Notes Due 2007 from the proceeds of any public equity
offering. The effective interest rate on the
$275.0&nbsp;million, after amortization of deferred financing
costs, is 9.1% per annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001 Calpine Canada Energy Finance ULC
(&#147;Energy Finance&#148;), a wholly owned subsidiary of the
Company, issued C$200.0&nbsp;million (US$125.6 million as of
December&nbsp;31, 2001) of Senior Notes Due 2007 (&#147;Energy
Finance Senior Notes Due 2007&#148;). Interest is payable
semi-annually on April&nbsp;15 and October&nbsp;15. The Notes
mature on October&nbsp;15, 2007; however, they may be redeemed
prior to maturity, at any time in whole or from time to time in
part, at a redemption price equal to the greater of (a)&nbsp;the
&#147;Discounted Value&#148; of the senior notes, which equals
the sum of the present values of all remaining scheduled
payments of
</FONT>

<P align="center"><FONT size="2">F-82
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">principal and interest, or (b)&nbsp;100% of the
principal amount plus accrued and unpaid interest to the
redemption date. The Notes are fully and unconditionally
guaranteed by the Company. The effective interest rate, after
amortization of deferred financing costs, is 9.3% per annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2008</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the 7&nbsp;7/8% notes is payable
semi-annually on April&nbsp;1 and October&nbsp;1 each year.
These notes mature on April&nbsp;1, 2008, and are not redeemable
prior to maturity. The effective interest rate, after
amortization of deferred financing costs, is&nbsp;8.0% per annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2001 Energy Finance issued
$1,500.0&nbsp;million in aggregate principal amount of
8&nbsp;1/2% Senior Notes Due 2008. In October 2001 Energy
Finance issued an additional $530.0&nbsp;million of 8&nbsp;1/2%
Senior Notes Due&nbsp;2008. Together, these issues form a single
series (&#147;Energy Finance Senior Notes Due&nbsp;2008&#148;)
which is fully and unconditionally guaranteed by the Company.
Interest on these notes is payable semi-annually on May&nbsp;1
and November&nbsp;1. The notes mature on May&nbsp;1, 2008, or
may be redeemed prior to maturity at a redemption price equal to
100% of the principal amount plus accrued and unpaid interest
plus a make-whole premium. The effective interest rate, after
amortization of deferred financing costs, is 8.7% per annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001 the Company&#146;s wholly owned
subsidiary, Calpine Canada Energy Finance&nbsp;II ULC
(&#147;Energy Finance II&#148;), issued
<FONT face="times new roman,times">&#128;</FONT>175.0&nbsp;million
(US$155.9&nbsp;million as of December&nbsp;31, 2001) of
8&nbsp;3/8% Senior Notes Due 2008 (&#147;Energy Finance&nbsp;II
Senior Notes Due 2008&#148;). Interest on these notes is payable
semi-annually on April&nbsp;15 and October&nbsp;15 and the notes
mature on October&nbsp;15, 2008, or may be redeemed prior to
maturity at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest plus a make-whole
premium. The effective interest rate, after amortization of
deferred financing costs, is 8.8% per annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2009</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on these notes is payable semi-annually
on April&nbsp;15 and October 15. The notes mature on
April&nbsp;15, 2009, and are not redeemable prior to maturity.
The effective interest rate, after amortization of deferred
financing costs, is 7.9% per annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2010</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on these notes is payable semi-annually
on August&nbsp;15 and February&nbsp;15 and the notes mature on
August&nbsp;15, 2010, and may be redeemed at any time prior to
maturity at a redemption price equal to 100% of their principal
amount plus accrued and unpaid interest plus a make-whole
premium. The effective interest rate, after amortization of
deferred financing costs, is&nbsp;8.8% per annum.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Notes
Due 2011</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001 the Company completed an
offering of $1,150.0&nbsp;million in aggregate principal amount
of 8 &nbsp;1/2% Senior Notes Due 2011. In October 2001 the
Company issued an additional $850.0&nbsp;million of 8&nbsp;1/2%
Senior Notes Due 2011. Interest on these notes is payable
semi-annually on February&nbsp;15 and August&nbsp;15 and the
notes mature on February&nbsp;15, 2011, and may be redeemed
prior to maturity at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest plus a
make-whole premium. The effective interest rate, after
amortization of deferred financing costs, is&nbsp;8.6% per annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001 the Company&#146;s wholly owned
subsidiary, Energy Finance&nbsp;II, issued
&#163;200.0&nbsp;million (US$290.8&nbsp;million as of
December&nbsp;31, 2001) of 8&nbsp;7/8% Senior Notes
Due&nbsp;2011 (&#147;Energy Finance&nbsp;II Senior Notes Due
2011&#148;). Interest on the notes is payable semi-annually on
April&nbsp;15 and October&nbsp;15 and the notes mature on
October&nbsp;15, 2011, and may be redeemed prior to maturity at
a redemption price equal to 100% of
</FONT>

<P align="center"><FONT size="2">F-83
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">the principal amount plus accrued and unpaid
interest plus a make-whole premium. The effective interest rate,
after amortization of deferred financing costs, is 9.3% per
annum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Energy Finance and Energy Finance II are
wholly-owned finance subsidiaries of Calpine. The securities are
fully and unconditionally guaranteed by Calpine. There are no
restrictions under the indentures governing the Senior Notes or
under the guarantees thereof issued by Calpine on the ability of
Calpine to obtain funds from these subsidiaries by dividend or
loan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the third quarter of 2001, the Company
borrowed a total of $1.2&nbsp;billion under three bridge credit
facilities (which ranked equally with Senior Notes) to finance
several acquisitions. These facilities were refinanced with the
October 2001 issuance of long-term Senior Notes. The Company
recorded an extraordinary loss of $0.6&nbsp;million, net of tax
of $0.4&nbsp;million, related to the write off of unamortized
deferred financing costs.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual Debt
Maturities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The annual principal maturities of the Zero
Coupons, notes payable and borrowings under lines of credit,
project financing, Convertible Senior Notes Due 2006, senior
notes and capital lease obligations as of December&nbsp;31,
2001, are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">903,444</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,035,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,429,106</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">253,782</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,527,115</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,579,271</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,727,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">14. Trust Preferred Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999 and 2000, the Company, through its wholly
owned subsidiaries, Calpine Capital Trust, Calpine Capital
Trust&nbsp;II, and Calpine Capital Trust&nbsp;III, statutory
business trusts created under Delaware law, (collectively,
&#147;the Trusts&#148;) completed offerings of Remarketable Term
Income Deferrable Equity Securities (&#147;HIGH TIDES&#148;) at
a value of $50.00 per share.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="18%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="11%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Conversion Ratio&nbsp;&#151;</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Initial</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Common Shares</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Redemption</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Redemption</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Issue Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Per 1&nbsp;High Tide</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">High Tides I
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">October<BR>
	1999
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5,520,000</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.75%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">268,441</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">268,185</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3.4620</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">November&nbsp;5, 2002
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">101.440%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">High Tides II
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">January and February<BR>
	2000
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">7,200,000</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.50%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">351,182</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">350,865</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.9524</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">February&nbsp;5, 2003
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">101.375%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">High Tides III
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">August<BR>
	2000
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">10,350,000</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">5.00%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">503,401</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">503,440</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.1510</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="1">August&nbsp;5, 2003
	</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">101.250%</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">23,070,000</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,123,024</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,122,490</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net proceeds from each of the offerings were
used by the Trusts to invest in convertible subordinated
debentures of the Company, which represent substantially all of
the respective trusts&#146; assets. The Company has effectively
guaranteed all of the respective trusts&#146; obligations under
the trust preferred securities. The trust preferred securities
have liquidation values of $50.00 per share. The Company has the
right to defer the interest payments on the debentures for up to
twenty consecutive quarters, which would also cause a deferral
</FONT>

<P align="center"><FONT size="2">F-84
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">of distributions on the trust preferred
securities. Currently, the Company has no intention of deferring
interest payments on the debentures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The trust preferred securities are convertible
into shares of the Company&#146;s common stock at the
holder&#146;s option on or prior to the tender notification
date. Additionally, the HIGH TIDES may be redeemed at any time
on or after the initial redemption date. The redemption price
declines to 100% during the one year following the initial
redemption date.
</FONT>

<P align="left">
<B><FONT size="2">15. Provision for Income Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The jurisdictional components of income (loss)
before provision for income taxes at December&nbsp;31, 2001,
2000 and 1999, are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">U.S.&nbsp;</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">906,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">538,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,216</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">International
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,811</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,642</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">986,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">638,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The provision for income taxes for the years
ended December&nbsp;31, 2001, 2000, and 1999 consists of the
following (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214,169</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,564</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,282</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,728</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(30,573</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,961</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,852</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,305</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revision in prior years&#146; tax estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,234</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,469</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,085</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total provision
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">345,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">264,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s effective rate for income
taxes for the years ended December 31, 2001, 2000, and 1999
differs from the United States statutory rate, as reflected in
the following reconciliation:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States statutory tax rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">State income tax, net of federal benefit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depletion and other permanent items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign tax at rates other than U.S. statutory
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effective income tax rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-85
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of the deferred income taxes, net
as of December&nbsp;31, 2001 and 2000, are as follows
(in&nbsp;thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Expenses deductible in a future period
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net operating loss and credit carryforwards
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,472</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Taxes related to risk management activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other differences
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,617</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,382</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property differences
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,037,537</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(681,043</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other differences
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,845</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,868</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,104,382</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(696,911</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net deferred income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(964,346</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(618,529</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net operating loss and credit carryforwards
consist of federal and state net operating loss carryforwards
which expire 2005 through 2014. The federal and state net
operating loss carryforwards available are subject to
limitations on annual usage. It is expected that they will be
fully utilized before expiring. Realization of the deferred tax
assets and federal net operating loss carryforwards is
dependent, in part, on generating sufficient taxable income
prior to expiration of the loss carryforwards. The amount of the
deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income
during the carryforward period are reduced.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cumulative undistributed earnings of foreign
subsidiaries was approximately $29.1&nbsp;million at
December&nbsp;31, 2001. The Company considers these earnings to
be permanently reinvested outside the United States.
Accordingly, no U.S. deferred taxes have been recorded with
respect to such earnings. Should the earnings be remitted as
dividends, additional U.S. taxes may be applicable, net of
available foreign tax credits. This tax is estimated to be
approximately $12.1&nbsp;million.
</FONT>

<P align="left">
<B><FONT size="2">16. Employee Benefit Plans</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retirement
Savings Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a defined contribution savings
plan under Section&nbsp;401(a) and 501(a) of the Internal
Revenue Code. The plan provides for tax deferred salary
deductions and after-tax employee contributions. Employees are
immediately eligible upon hire. Contributions include employee
salary deferral contributions and employer profit-sharing
contributions of 3% of employees&#146; salaries up to $5,100 per
year, made entirely in cash. Effective January&nbsp;1, 2002, the
Company increased its profit sharing contribution, to 4% of
employees&#146; salaries up to $8,000 per year. Employer
profit-sharing contributions in 2001, 2000, and 1999 totaled
$6.9&nbsp;million, $3.1&nbsp;million, and $1.3&nbsp;million,
respectively.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1996 Employee
Stock Purchase Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted the 1996 Employee Stock
Purchase Plan in July 1996. Eligible employees could purchase up
to 2,200,000 shares of common stock at semi-annual intervals
through periodic payroll deductions. Purchases were limited to
15&nbsp;percent of an employee&#146;s eligible compensation, and
to a maximum value of $25,000 per calendar year based on the IRS
code Section&nbsp;423 limitation. Shares were purchased on
January&nbsp;31, and the plan terminated on February&nbsp;1,
2000. Under the 1996 plan, 408,300 shares were issued at a
weighted average fair value of $2.67 per share in 2000. The
purchase price is 85% of the lower of (i)&nbsp;the fair
</FONT>

<P align="center"><FONT size="2">F-86
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">market value of the common stock on the
participant&#146;s entry date into the offering period, or
(ii)&nbsp;the fair market value on the semi-annual purchase date.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2000 Employee
Stock Purchase Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted the 2000 Employee Stock
Purchase Plan (&#147;ESPP&#148;) in May 2000. Eligible employees
may purchase up to 4,000,000 shares of common stock at
semi-annual intervals through periodic payroll deductions.
Purchases are limited to a maximum value of $25,000 per calendar
year based on the IRS code Section&nbsp;423 limitation. Shares
are purchased on May&nbsp;31 and November&nbsp;30 of each year
until termination of the plan on May&nbsp;31, 2010. Under the
ESPP, 1,124,851 and 221,853 shares were issued at a weighted
average fair value of $21.05 and $23.18 per share in 2001 and
2000, respectively. The purchase price is 85% of the lower of
(i)&nbsp;the fair market value of the common stock on the
participant&#146;s entry date into the offering period, or
(ii)&nbsp;the fair market value on the semi-annual purchase date.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1996 Stock
Incentive Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted the 1996 Stock Incentive Plan
(&#147;SIP&#148;) in September 1996. The SIP succeeded the
Company&#146;s previously adopted stock option program. The
Company accounts for the SIP under APB Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees&#148; under which
no compensation cost has been recognized. Had compensation cost
for the SIP been determined consistent with the methodology of
SFAS No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation&#148;, the Company&#146;s net income and earnings
per share would have been reduced to the following pro forma
amounts (in thousands, except per share amounts):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">648,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">372,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pro Forma
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">619,598</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">351,219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94,313</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Earnings per share data:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pro Forma
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.42</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As reported
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.87</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pro Forma
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.79</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of options granted in 2001, 2000,
and 1999 was $22.30, $16.09, and $6.42 on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions: expected dividend yields of 0%,
expected volatility of 76% for 2001, 67% for 2000, and 69% for
1999, risk-free interest rates of 5.02% for 2001, 6.69% for 2000
and 5.74% for 1999, and expected lives of 7&nbsp;years for 2001,
2000, and 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001, the
Company had granted options to purchase 2,841,518 shares of
common stock. Over the life of the SIP, options exercised have
equaled 12,371,413, leaving 27,691,264 granted and not yet
exercised. Under the SIP, the option exercise price generally
equals the stock&#146;s fair market value on date of grant. The
SIP options generally vest ratably over four years and expire
after 10&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the merger with Encal, the
Company adopted Encal&#146;s existing stock option plan. All
outstanding options under the Encal stock option plan were
converted at the time of the merger into options to purchase
Calpine stock. No new options may be granted under the Encal
stock option plan.
</FONT>

<P align="center"><FONT size="2">F-87
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Changes in options outstanding, granted,
exercisable and cancelled during the years 2001, 2000, and 1999,
under the option plans of Calpine and Encal were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Available for</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Option or</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Award</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Outstanding December&nbsp;31, 1998
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,993,481</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,109,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.72</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,911,527</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,604,108</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,604,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,686,228</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.54</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cancelled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,799</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(61,799</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Outstanding December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,362,699</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,965,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,820,757</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,379,129</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,379,129</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,533,946</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.89</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cancelled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">182,742</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(182,742</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.68</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Outstanding December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,987,069</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,628,030</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional shares reserved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,837,150</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Granted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,008,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,008,541</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exercised
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,460,390</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cancelled
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">484,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(484,917</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cancelled options available for award
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,265,232</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Outstanding December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,035,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,691,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options exercisable:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,829,699</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,980,332</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.68</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,656,835</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.84</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-88
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables summarizes information
concerning outstanding and exercisable options at
December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Range of Exercise Prices</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Life in Years</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;0.065&nbsp;&#151; $&nbsp;&nbsp;0.065
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,053,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.065</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,053,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.065</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;0.570&nbsp;&#151; $&nbsp;&nbsp;0.615
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,828,920</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.06</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,828,920</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;0.645&nbsp;&#151; $&nbsp;&nbsp;2.150
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,239,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,470,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.504</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;2.195&nbsp;&#151; $&nbsp;&nbsp;2.250
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,127,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,067,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;2.345&nbsp;&#151; $&nbsp;&nbsp;3.860
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,113,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.752</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,997,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.661</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;&nbsp;4.240&nbsp;&#151; $&nbsp;&nbsp;9.955
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,322,099</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.57</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,699,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.145</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;10.000&nbsp;&#151; $&nbsp;28.270
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,051,953</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.506</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,284,773</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19.045</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;28.830&nbsp;&#151; $&nbsp;52.200
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,855,136</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.554</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">247,544</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.572</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$&nbsp;52.540&nbsp;&#151; $&nbsp;56.990
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,384</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.57</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,835</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">53.055</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">$100.000&nbsp;&#151; $100.000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.70</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,691,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,656,835</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.837</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">17.&nbsp;Stockholders&#146; Equity</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Common
Stock</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Increase in Authorized
Shares</FONT></I><FONT size="2">&nbsp;&#151; On July&nbsp;26,
2001, the Company filed amended certificates with the Delaware
Secretary of State to increase the number of authorized shares
of common stock to 1,000,000,000 from 500,000,000 and the number
of authorized shares of Series&nbsp;A Participating Preferred
Stock to 1,000,000 from 500,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock
Splits</FONT></I><FONT size="2">&nbsp;&#151; On
September&nbsp;20, 1999, the Board of Directors authorized a
two-for-one stock split of the Company&#146;s common stock, in
the form of a stock dividend, effective October&nbsp;7, 1999,
payable to stockholders of record as of September&nbsp;28, 1999.
The Company transferred $27,000 to common stock from additional
paid-in capital, representing the aggregate par value of the
shares issued under the stock split.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;18, 2000, the Board of Directors
authorized a two-for-one stock split of the Company&#146;s
common stock, in the form of a stock dividend, effective
June&nbsp;8, 2000, payable to stockholders of record as of
May&nbsp;29, 2000. The Company transferred $64,000 to common
stock from additional paid-in capital, representing the
aggregate par value of the shares issued under the stock split.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;23, 2000, the Board of Directors
authorized a two-for-one stock split of the Company&#146;s
common stock, in the form of a stock dividend, effective
November&nbsp;14, 2000, payable to stockholders of record as of
November&nbsp;6, 2000. The Company transferred $140,000 to
common stock from additional paid-in capital, representing the
aggregate par value of the shares issued under the stock split.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All references to the number of common shares and
the per common share amounts have been restated to give
retroactive effect to the above stock splits for all periods
presented.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Equity
Offering</FONT></I><FONT size="2">&nbsp;&#151; On August&nbsp;9,
2000, Calpine completed a public offering of 23,000,000 shares
of common stock at $34.75 per share. The gross proceeds from the
offering were $799.3&nbsp;million.
</FONT>

<P align="center"><FONT size="2">F-89
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preferred
Stock and Preferred Share Purchase Rights</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;5, 1997, Calpine adopted a
stockholders&#146; rights plan to strengthen Calpine&#146;s
ability to protect Calpine&#146;s stockholders. The plan was
amended on September&nbsp;19, 2001. The rights plan is designed
to protect against abusive or coercive takeover tactics that are
not in the best interests of Calpine or its stockholders. To
implement the rights plan, Calpine declared a dividend of one
preferred share purchase right for each outstanding share of
Calpine&#146;s common stock held on record as of June&nbsp;18,
1997, and directed the issuance of one preferred share purchase
right with respect to each share of Calpine&#146;s common stock
that shall become outstanding thereafter until the rights become
exercisable or they expire as described below. On
December&nbsp;31, 2001, there were 307,058,751 rights
outstanding. Each right initially represents a contingent right
to purchase, under certain circumstances, one one-thousandth of
a share, called a &#147;unit,&#148; of Calpine&#146;s
Series&nbsp;A Participating Preferred Stock, par value $.001 per
share, at a price of $140.00 per unit, subject to adjustment.
The rights become exercisable and trade independently from
Calpine&#146;s common stock upon the public announcement of the
acquisition by a person or group of 15% or more of
Calpine&#146;s common stock, or ten days after commencement of a
tender or exchange offer that would result in the acquisition of
15% or more of Calpine&#146;s common stock. Each unit purchased
upon exercise of the rights will be entitled to a dividend equal
to any dividend declared per share of common stock and will have
one vote, voting together with the common stock. In the event of
Calpine&#146;s liquidation, each share of the participating
preferred stock will be entitled to any payment made per share
of common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Calpine is acquired in a merger or other
business combination transaction after a person or group has
acquired 15% or more of Calpine&#146;s common stock, each right
will entitle its holder to purchase at the right&#146;s exercise
price a number of the acquiring company&#146;s shares of common
stock having a market value of twice the right&#146;s exercise
price. In addition, if a person or group acquires 15% or more of
Calpine&#146;s common stock, each right will entitle its holder
(other than the acquiring person or group) to purchase, at the
right&#146;s exercise price, a number of fractional shares of
Calpine&#146;s participating preferred stock or shares of
Calpine&#146;s common stock having a market value of twice the
right&#146;s exercise price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rights remain exercisable for up to
90&nbsp;days following a triggering event (such as a person
acquiring 15% or more of the Company&#146;s common Stock). The
rights expire on June&nbsp;18, 2007, unless redeemed earlier by
Calpine. Calpine can redeem the rights at a price of $.01 per
right at any time before the rights become exercisable, and
thereafter only in limited circumstances.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Comprehensive
Income</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Comprehensive income is the total of net income
and all other non-owner changes in equity. Comprehensive income
includes the Company&#146;s net income for the year. It also
includes unrealized gains and losses from derivative instruments
that qualify as cash flow hedges. The total comprehensive income
of $444.6&nbsp;million for the year ended December&nbsp;31,
2001, represents the net of the Company&#146;s 2001 net income
of $648.1&nbsp;million and its unrealized other comprehensive
loss of $203.5&nbsp;million. The other comprehensive loss
represents the decline in the market value of open derivative
positions during the year. During the year as certain derivative
positions are settled, the resulting gain or loss is realized
and is charged to income. The recognition of these gains and
losses is referred to as a reclassification adjustment. Other
comprehensive income also includes the effect of foreign
currency translation adjustments. Prior to the current reporting
year, the only items affecting the Company&#146;s accumulated
OCI balance resulted from the translation of its Canadian
subsidiaries&#146; balance sheets into U.S. dollars and the
corresponding tax effects thereon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company reports Accumulated Other
Comprehensive Income (Loss) (AOCI) in its consolidated balance
sheet. This balance reflects the cumulative balance of
comprehensive income items. This balance is the sum of the
ending AOCI balance from the prior period and the other
comprehensive loss (OCI) from the current period. Accordingly,
accumulated other comprehensive loss of $226.6&nbsp;million as
of December&nbsp;31, 2001
</FONT>

<P align="center"><FONT size="2">F-90
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">is the sum of the current year&#146;s unrealized
OCI loss of $203.5&nbsp;million and the ending OCI balance at
December&nbsp;31, 2000 of $23.1&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the reporting guidance of SFAS
No.&nbsp;130, &#147;Reporting Comprehensive Income,&#148;
unrealized gains/losses from foreign currency translation are
not viewed as deferred losses. As a result, from the total
accumulated OCI loss at December&nbsp;31, 2001, of
$226.6&nbsp;million, only the losses pertaining to cash flow
hedges will be recognized in earnings in future periods. As
disclosed in Note&nbsp;19, these losses total
$299.7&nbsp;million on a pre-tax basis and $183.3&nbsp;million
net of tax. Below is a reconciliation of the Company&#146;s
comprehensive loss from derivatives (as disclosed in
Note&nbsp;19) to the accumulated other comprehensive loss in
stockholders equity on the balance sheet at December&nbsp;31,
2001 (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive loss on
	cash flow hedges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">(299,740</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Add: accumulated other comprehensive loss at
	December&nbsp;31, 2000(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">(23,085</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Add: loss on foreign currency translation during
	the year, net of tax benefit of $14,563
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">(20,112</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less: tax benefit from unrealized loss on open
	derivative positions(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">116,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated Other Comprehensive Loss at December
	31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">(226,574</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Accumulated other comprehensive loss at
	December&nbsp;31, 2000, is deducted because prior to
	January&nbsp;1, 2001, there were no OCI balances related to cash
	flow hedges.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">OCI tax benefit from unrealized loss on cash flow
	hedge of $116,363 is disclosed in Note&nbsp;19.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">18. Significant Customers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, Enron Corp. (&#147;Enron&#148;) was a
significant customer and accounted for more than 10% of the
Company&#146;s annual consolidated revenues. In 2001, 2000 and
1999, Pacific Gas &#38; Electric Company (&#147;PG&#38;E&#148;)
was a significant customer. In 1999, Texas Utilities Electric
Company (&#147;TUEC&#148;) was a significant customer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues earned from the significant customers
for the years ended December&nbsp;31, 2001, 2000, and 1999 were
as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Revenues:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">PG&#38;E(1)(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">723,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">624,458</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">TUEC
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">144,016</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Enron
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,671,737</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Receivables due from the significant customers at
December&nbsp;31, 2001 and 2000, were as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Receivables:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">PG&#38;E Accounts Receivable(2)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,545</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">204,448</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">PG&#38;E Notes Receivable(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,336</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">PG&#38;E Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">266,784</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Enron Accounts Receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,002</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-91
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="2%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">*&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Customer not significant in respective year.
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">See Note&nbsp;23 for further discussion of the
	California energy situation.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">In addition to the accounts receivable shown in
	the table, the Company had a receivable of $224.2&nbsp;million
	from the sale of the pre-bankruptcy petition PG&#38;E
	receivables on December&nbsp;31, 2001. This receivable was paid
	in full from an escrow account in January 2002.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Payments of the PG&#38;E notes receivable are
	scheduled from February 2003 to September 2014 (See Note&nbsp;7
	for further discussion).
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enron</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company, primarily through its
CES subsidiary, transacted a significant volume of business with
units of Enron, mainly Enron Power Marketing, Inc.
(&#147;EPMI&#148;) and Enron North America Corp.
(&#147;ENA&#148;). ENA is the parent corporation of EPMI. Enron
is the direct parent corporation of ENA. Most of these
transactions were contracts for sales and purchases of power and
gas for hedging purposes, some of which extended out as far as
2009. In October and November of 2001, Enron announced a series
of developments including restatement of the last four years of
earnings, an investigation by the Securities and Exchange
Commission relating to the adequacy of Enron&#146;s disclosures
of certain off-balance sheet financial transactions or
structures and dismissals of certain members of senior
management. On December&nbsp;2, 2001, Enron Corp. and certain of
its subsidiaries filed voluntary petitions for Chapter&nbsp;11
reorganization with the U.S.&nbsp;Bankruptcy Court for the
Southern District of New York. EPMI and ENA are among the
subsidiaries of Enron that filed for reorganization on
December&nbsp;2, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company, primarily through our subsidiary
CES, purchased significant amounts of fuel and power from ENA
and EPMI prior to the bankruptcy filings, which gave rise to
current accounts payable and open contract fair value positions.
These purchases must be included in an overall understanding of
the Company&#146;s Enron exposure. For the year ended
December&nbsp;31, 2001, CES had fuel and power purchases from
ENA and EPMI of $1.6&nbsp;billion (See table below).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding the Company&#146;s transactions with Enron for the
year ended December&nbsp;31, 2001, (in thousands of dollars and
thousands of MWh&#146;s, in the case of electricity
transactions, and thousands of MMBtu&#146;s, in the case of oil
and gas transactions):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">For the Year Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Dollar</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Volume</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing revenue
	(electricity and steam revenue and sales of purchased power)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,477,694</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,584</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production and marketing revenue
	(sales of purchased gas)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">189,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,720</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total power and fuel and other revenue from Enron
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,671,737</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Electric generation and marketing expense
	(Purchased power expense)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,473,833</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fuel expense (cost of oil and natural gas burned
	by power plants and natural gas derivative mark-to-market gain
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">152,973</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,006</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total CES power and fuel expenses related to
	Enron(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,626,806</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Expenses of CES only, as other Enron expenses
	incurred are not material.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unrealized pre-tax losses on derivatives
designated as effective cash flow hedges that were recorded in
OCI associated with Enron activity for the year ended
December&nbsp;31, 2001, were $118.6&nbsp;million. Recognized
</FONT>

<P align="center"><FONT size="2">F-92
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">gains on derivatives not designated as hedges
associated with Enron activity were $381.8&nbsp;million for the
year ended December&nbsp;31, 2001. Recognized losses on
derivatives not designated as hedges associated with Enron
activity were $495.0&nbsp;million for the year ended
December&nbsp;31, 2001. Recognized gross gains (losses) on fair
value hedges (which are perfectly offset by the gains and losses
on the hedged items) associated with Enron activity were
$9.8&nbsp;million and $(31.6) million, respectively, for the
year ended December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sales to and purchases from various Enron
subsidiaries were mostly hedging and optimization transactions,
and in most cases the purchases and sales are not related and
should not be netted to try to gauge the profitability of
transactions with Enron subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company reserved $13.1&nbsp;million related
to unrealized mark to market gains generated by Enron&#146;s
insolvency, which caused earnings recognition for contracts that
had previously been exempted from SFAS No.&nbsp;133 accounting
and which caused cash flow hedges to cease to be effective and
mark to market in earnings until termination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;14, 2001, CES, ENA and EPMI
entered into a Master Netting, Setoff and Security Agreement
(the &#147;Netting Agreement&#148;). The Netting Agreement
permits CES, on the one hand, and ENA and EPMI, on the other
hand, to set off amounts owed to each other under an ISDA Master
Agreement between CES and ENA, an Enfolio Master Firm
Purchase/Sale Agreement between CES and ENA and a Master Energy
Purchase/Sale Agreement between CES and EPMI (in each case,
after giving effect to the netting provisions contained in each
of these agreements). Based on legal analysis of the Netting
Agreement, the Company believes it has no net collection
exposure to Enron.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In assessing its exposure to ENA and EPMI, the
Company analyzes its accounts receivable and accounts payable
balances on contracts that have already settled and also the
fair value (mark-to-market value) of the contracts that have not
settled. Following are the accounts receivable and accounts
payable balances, presented on both a gross and net basis, as
well as the gross and net fair values of the open contracts with
ENA and EPMI at December&nbsp;31, 2001. The positive net
positions have realization exposure, while the negative net
positions are existing or potential obligations.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Receivables/Payables</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Fair Values</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net Open</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Receivable</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross Fair</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross Fair</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Positions</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Receivable</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Payable</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(Payable)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value(+)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value(-)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Enron North America
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,549.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,823.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(274.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(277.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Enron Power Marketing
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">237.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(203.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">462.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(356.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(220.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,011.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,179.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(168.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(136.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After netting the receivables and payables and
the value of the open positions from ENA and EPMI, the Company
has an existing or future obligation of $136.6&nbsp;million (the
sum of the net receivable of $31.4&nbsp;million and the net open
positions value of $(168.0)&nbsp;million) as of
December&nbsp;31, 2001, which obligation will be offset by
CES&#146; losses, damages, attorneys&#146; fees and other
expenses arising from the default by Enron.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the above, the Company had no net
exposure to ENA and EPMI at December&nbsp;31, 2001. The Company
has not established any reserve against potential ENA and EPMI
exposure.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s treasury department includes a
credit group focused on monitoring and managing counterparty
risk. The credit group monitors the net exposure with each
counterparty on a daily basis. The analysis is performed on a
mark-to-market basis using the forward curves audited by the
Company&#146;s Risk Controls group. The net exposure is compared
against a counterparty credit risk threshold which is determined
based on the counterparty&#146;s credit ratings, evaluation of
the financial statements and bond values. The credit department
monitors these thresholds to determine the need for additional
collateral or an adjustment to activity with the counterparty.
</FONT>

<P align="center"><FONT size="2">F-93
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&#38;E</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s northern California Qualifying
Facility (&#147;QF&#148;) subsidiaries sell power to PG&#38;E
under the terms of long-term contracts at eleven facilities. On
April&nbsp;6, 2001, PG&#38;E filed for bankruptcy protection
under Chapter&nbsp;11 of the United States Bankruptcy Code.
PG&#38;E is the regulated subsidiary of PG&#38;E Corporation,
and the information on PG&#38;E disclosed herein excludes
PG&#38;E Corporation&#146;s non-regulated subsidiary activity.
The Company has transactions with certain of the non-regulated
subsidiaries, which have not been affected by PG&#38;E&#146;s
bankruptcy. On July&nbsp;12, 2001, the U.S.&nbsp;Bankruptcy
Court for the Northern District of California approved the
agreement the Company had entered into with PG&#38;E to modify
and assume all of Calpine&#146;s QF contracts with PG&#38;E.
Under the terms of the agreement, the Company will continue to
receive its contractual capacity payments plus a five-year fixed
energy price component that averages 5.37 cents per
kilowatt-hour in lieu of the short run avoided cost. In
addition, all past due receivables under the QF contracts were
elevated to administrative priority status and are to be paid to
the Company, with interest, upon the effective date of a
confirmed plan of reorganization. On September&nbsp;20, 2001,
PG&#38;E filed its proposed plan of reorganization with the
bankruptcy court.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of April&nbsp;6, 2001, the date of
PG&#38;E&#146;s bankruptcy filing, the Company had recorded
$265.6&nbsp;million (unaudited estimate) in accounts receivable
with PG&#38;E under the QF contracts, plus $68.7&nbsp;million
(unaudited estimate) in notes receivable not yet due and
payable. PG&#38;E has paid currently for power delivered after
April&nbsp;6, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001 the bankruptcy court approved an
agreement between Calpine and PG&#38;E whereby PG&#38;E is to
repay the $265.6&nbsp;million in past due pre-petition
receivables plus accrued interest ($10.3&nbsp;million through
December&nbsp;31, 2001) thereon beginning on December&nbsp;31,
2001, and with monthly payments thereafter over the next
11&nbsp;months. Shortly following receipt of this bankruptcy
court approval and the first payments from PG&#38;E on
December&nbsp;31, 2001, the Company sold the remaining PG&#38;E
receivables to a third party at a $9.0&nbsp;million discount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CPUC Proceeding Regarding QF Contract Pricing
for Past Periods.</FONT></I><FONT size="2"> Our QF contracts
with PG&#38;E provide that the CPUC has the authority to
determine the appropriate utility &#147;avoided cost&#148; to be
used to set energy payments for certain QF contracts by
determining the short run avoided cost (&#147;SRAC&#148;) energy
price formula. In mid 2000, our QF facilities elected the option
set forth in Section&nbsp;390 of the California Public Utility
Code, which provides QFs the right to elect to receive energy
payments based on the California Power Exchange (&#147;PX&#148;)
market clearing price instead of the price determined by SRAC.
Having elected such option, we were paid based upon the PX zonal
day ahead clearing price (&#147;PX Price&#148;) from summer 2000
until January&nbsp;19, 2001, when the PX ceased operating a day
ahead market. The CPUC has conducted proceedings (R.99-11-022)
to determine whether the PX Price was the appropriate price for
the energy component upon which to base payments to QFs which
had elected the PX-based pricing option. The CPUC at one point
issued a proposed decision to the effect that the PX Price was
the appropriate price for energy payments under the California
Public Utility Code but tabled it, and a final decision has not
been issued to date. Therefore, it is possible that the CPUC
could order a payment adjustment based on a different energy
price determination. We believe that the PX Price was the
appropriate price for energy payments but there can be no
assurance that this will be the outcome of the CPUC proceedings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Current California QF Contract
Pricing.</FONT></I><FONT size="2"> When the PX ceased operation
on January&nbsp;19, 2001, the CPUC ordered that the QFs that had
previously switched to the PX Price be switched back to the
applicable SRAC energy price formula. On June&nbsp;14, 2001,
however, the CPUC issued an order (Decision 01-06-015) (the
&#147;June 2001 Decision&#148;) that authorized the California
utilities, including PG&#38;E, to amend QF contracts to elect a
fixed energy price component that averages 5.37&nbsp;cents per
kilowatt-hour for a five-year term under those contracts in lieu
of using the SRAC energy price formula. By this order, the CPUC
authorized the QF contract energy price amendments without
further CPUC concurrence. As part of the agreement we entered
into with PG&#38;E pursuant to which PG&#38;E, in bankruptcy,
agreed to assume its QF contracts with us, PG&#38;E
</FONT>

<P align="center"><FONT size="2">F-94
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">agreed with us to amend these contracts to adopt
the fixed price component that averages 5.37&nbsp;cents pursuant
to the June 2001 Decision. This election became effective as of
July&nbsp;16, 2001. As a result of the June 2001 Decision and
our agreement with PG&#38;E to amend the QF contracts to adopt
the fixed price energy component, the energy price component in
our QF contracts is now fixed for five years. As of July&nbsp;1,
2006, the energy payment under the QF contracts with PG&#38;E
will be determined by the CPUC in accordance with its
determination of the SRAC energy price formula.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had a combined accounts receivable
balance of $22.7&nbsp;million as of December&nbsp;31, 2001, from
the California Independent System Operator Corporation
(&#147;CAISO&#148;) and Automated Power Exchange, Inc.
(&#147;APX&#148;). Of this balance, $9.4&nbsp;million relates to
past due balances prior to the PG&#38;E bankruptcy filing. The
Company has provided a full reserve for these past due
receivables. CAISO&#146;s ability to pay the Company is directly
impacted by PG&#38;E&#146;s ability to pay CAISO. APX&#146;s
ability to pay the Company is directly impacted by
PG&#38;E&#146;s ability to pay the PX, which in turn would pay
APX for energy delivered by the Company through APX. The PX
ceased operating in January 2001. See Note&nbsp;23 for an update
on the FERC investigation into the California wholesale markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also had an accounts receivable
balance of $34.0&nbsp;million at December&nbsp;31, 2001, from
the California Department of Water Resources (&#147;DWR&#148;).
Past due accounts receivable from the California Department of
Water Resources at December&nbsp;31, 2001, totaled
$1.0&nbsp;million. The Company accordingly has determined that
there is no reserve needed. The Company&#146;s sales to DWR are
primarily pursuant to long term contracts, so the Company has
not had the same degree of collectibility problems that some
generators selling into the day ahead market have experienced
because of administrative and/or political issues between the
CAISO and DWR.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;11, 2001, Calpine announced that
it was meeting with officials from the State of California at
their request to discuss whether, and if so how, the long-term
contracts with DWR could be modified. No definitive
modifications have been agreed to and the discussions have been
ongoing.
</FONT>

<P align="left">
<B><FONT size="2">19. Derivative Instruments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an independent power producer primarily
focused on generation of electricity using gas-fired turbines,
the Company&#146;s natural physical commodity position is
&#147;short&#148; fuel (i.e., natural gas consumer) and
&#147;long&#148; power capacity (i.e., electricity seller). To
manage forward exposure to price fluctuation in these and (to a
lesser extent) other commodities, the Company enters into
derivative commodity instruments. All transactions are subject
to the Company&#146;s risk management policy which prohibits
positions that exceed total portfolio generation and fuel
requirements. Any hedging, balancing, or optimization activities
that the Company engages in are directly related to the
Company&#146;s asset-based business model of owning and
operating gas-fired electric power plants and are designed to
protect the Company&#146;s &#147;spark spread&#148; (the
difference between the Company&#146;s fuel cost and the revenue
it receives for its electric generation). The Company hedges
exposures that arise from the ownership and operation of power
plants and related sales of electricity and purchases of natural
gas, and the Company utilizes derivatives to optimize the
returns the Company is able to achieve from these assets for the
Company&#146;s shareholders. While certain of the Company&#146;s
contracts are considered energy trading contracts as defined in
Emerging Issues Task Force (&#147;EITF&#148;) Issue
No.&nbsp;98-10, the Company&#146;s traders have very low capital
at risk and value at risk limits for energy trading, and its
risk management policy limits, at any given time, its net sales
of power to its generation capacity and limits its net purchases
of gas to its fuel consumption requirements on a total portfolio
basis. This model is markedly different from that of companies
that engage in significant commodity trading operations that are
unrelated to underlying physical assets. Derivative commodity
instruments are accounted for under the requirements of SFAS
No.&nbsp;133, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into various foreign currency
swap agreements to hedge against changes in exchange rates on
certain of its Senior Notes denominated in currencies other than
the U.S.&nbsp;dollar. The
</FONT>

<P align="center"><FONT size="2">F-95
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">foreign currency swaps effectively convert
floating exchange rates into fixed exchange rates so that the
Company can predict with greater assurance what its
U.S.&nbsp;dollar cost will be for purchasing foreign currencies
to satisfy the interest and principal payments on these Senior
Notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into various interest rate
swap agreements to hedge against changes in floating interest
rates on certain of its project financing facilities. The
interest rate swap agreements effectively convert floating rates
into fixed rates so that the Company can predict with greater
assurance what its future interest costs will be and protect
itself against increases in floating rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into various forward interest
rate agreements to hedge against interest rate fluctuations that
may occur after the Company has decided to issue long-term fixed
rate debt but before the debt is actually issued. The forward
interest rate agreements effectively prevent the interest rates
on anticipated future long-term debt from increasing beyond a
certain level, allowing the Company to predict with greater
assurance what its future interest costs on fixed rate long-term
debt will be.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into commodity financial
instruments to convert floating or indexed electricity and gas
(and to a lesser extent oil and refined product) prices to fixed
prices in order to lessen its vulnerability to reductions in
electric prices for the electricity it generates, to reductions
in gas prices for the gas it produces, and to increases in gas
prices for the fuel it consumes in its power plants. The Company
seeks to &#147;self-hedge&#148; its gas consumption exposure to
the maximum extent with its gas production position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also routinely enters into physical
commodity contracts for sales of its generated electricity and
sales of its natural gas production to ensure favorable
utilization of generation and production assets. Such contracts
often meet the criteria of SFAS No.&nbsp;133 as derivatives but
are generally eligible for the normal purchase and sales
exception under SFAS No.&nbsp;138, &#147;Accounting for Certain
Derivative Instruments and Certain Hedging
Activities&nbsp;&#151; An Amendment of FASB Statement
No.&nbsp;133.&#148; For those that are not deemed normal
purchases and sales, most can be designated as hedges of the
underlying consumption of gas or generation of electricity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also enters into physical options for
short-term periods (typically one month) to balance its
short-term generating position. The options, which the Company
may write or purchase, typically provide for a premium component
and firm price for energy when exercised.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the end of each quarter, the changes in fair
values of derivative instruments designated as cash flow hedges
are recorded in OCI for the effective portion and in current
earnings, using the dollar offset method, for the ineffective
portion. The changes in fair values of derivative instruments
designated as fair value hedges are recorded in current
earnings, as are the changes in fair values of the contracts
being hedged. The changes in fair values of derivative
instruments that are not designated as hedges are recorded in
current earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FASB issued SFAS No.&nbsp;133 Implementation
Issue No.&nbsp;C15 dealing with a proposed electric industry
normal purchases and sales exception for capacity sales
transactions (&#147;The Eligibility of Option Contracts in
Electricity for the Normal Purchases and Normal Sales
Exception&#148;). As a result of Issue No.&nbsp;C15, as revised,
the Company expects that most of its capacity sales contracts
will qualify for the normal purchases and sales exception.
</FONT>

<P align="center"><FONT size="2">F-96
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below reflects the amounts (in
thousands) that are recorded as assets, liabilities and in OCI
at December&nbsp;31, 2001, for the Company&#146;s derivative
instruments:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Commodity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Currency</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative asset
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">763,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">763,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative asset
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">564,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">564,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,328,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,328,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current derivative liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,924</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,911</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">610,504</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">625,339</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term derivative liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,535</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">805,733</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">822,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,459</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,491</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,416,237</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,448,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net derivative assets (liabilities)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,459</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,491</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(120,073</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive pre-tax gain/(loss) on cash flow
	hedges before reclassification adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(75,746</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(90,901</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170,399</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for (gain)/loss
	included in net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(132,483</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(129,341</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive
	gain/(loss) on cash flow hedges(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(72,604</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(223,384</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(299,740</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax benefit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,170</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87,678</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,363</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net comprehensive loss from derivative instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(45,434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,237</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(135,706</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(183,377</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents total pre-tax comprehensive loss from
	derivatives, net of amounts recognized in earnings during 2001.
	A reconciliation of this amount to AOCI is disclosed in
	Note&nbsp;17.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table above presents the aggregate amounts of
derivative assets, liabilities, and OCI pertaining to
derivatives as of December&nbsp;31, 2001. Total pre-tax
unrealized comprehensive gain (loss) on cash flow hedges
represents the cumulative effect on the Company&#146;s
accumulated OCI balance from pre-tax losses from effective cash
flow hedges since the adoption of SFAS No.&nbsp;133; it is not
meant to be a measurement of losses for the twelve months ended
December&nbsp;31, 2001. However, because SFAS No.&nbsp;133 was
adopted in January 2001, the cumulative pre-tax OCI balance from
effective cash flow hedges is the same as for the twelve months
ended December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After filing the amended Form&nbsp;10-Q for Q3
2001, the Company became aware of inadvertent errors in the
derivation of the &#147;comprehensive pre-tax gain (loss) on
cash flow hedges before reclassification adjustment&#148; in the
Derivative Instruments footnote to its financial statements for
each of the three-month periods ended March&nbsp;31,
June&nbsp;30 and September&nbsp;30, 2001. In each case, the
disclosures correctly stated the total pre-tax unrealized
comprehensive gain (loss) on cash flow hedges for the periods in
question, but
</FONT>

<P align="center"><FONT size="2">F-97
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">disclosed incorrect numbers in the entries above
this total. Set forth below is a table (in thousands) presenting
the figures as reported and as revised.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">As Reported</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Revised</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Commodity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Rate</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Commodity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Derivative</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Instruments</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">YTD 9/30/01&nbsp;&#151;
	Footnote&nbsp;8&nbsp;&#151; Derivative Instruments</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive pre-tax gain/(loss) on cash flow
	hedges before reclassification adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,585</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(354,011</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(438,596</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,585</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(108,393</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(192,978</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for pre-tax
	(gain)/loss included in net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,085</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">131,894</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,085</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(122,809</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(113,724</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive
	gain/(loss) on cash flow hedges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(75,500</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(231,202</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(306,702</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(75,500</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(231,202</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(306,702</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">YTD 6/30/01&nbsp;&#151;
	Footnote&nbsp;3&nbsp;&#151; Derivative Instruments</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive pre-tax gain/(loss) on cash flow
	hedges before reclassification adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">176,933</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150,996</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,517</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">194,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for pre-tax
	(gain)/loss included in net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,792</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,792</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive
	gain/(loss) on cash flow hedges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172,788</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172,788</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">YTD 3/31/01&nbsp;&#151;
	Footnote&nbsp;2&nbsp;&#151; Summary of significant accounting
	principles</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive pre-tax gain/(loss) on cash flow
	hedges before reclassification adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35,898</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(67,330</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(103,228</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35,898</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(33,236</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,134</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassification adjustment for pre-tax
	(gain)/loss included in net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,047</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,047</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,047</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,047</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive
	gain/(loss) on cash flow hedges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35,898</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(50,283</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(86,181</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35,898</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(50,283</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(86,181</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of the revisions presented in the table
affects (positively or negatively) any of the numbers in our
statement of operations, balance sheet or statement of cash
flows for any of the periods in question. In particular, there
is no impact on our net income, stockholders&#146; equity or
cash flow as disclosed in our quarterly unaudited financial
statements.
</FONT>

<P align="center"><FONT size="2">F-98
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any point in time, it is highly unlikely that
total net derivative assets and liabilities will equal
cumulative pre-tax OCI from derivatives, for two primary reasons:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Earnings effect of these
	derivatives</FONT></I><FONT size="2">&nbsp;&#151; Only
	derivatives that qualify as effective cash flow hedges will have
	an offsetting amount recorded in OCI. Derivatives not designated
	as cash flow hedges and the ineffective portion of derivatives
	designated as cash flow hedges will be recorded into earnings
	instead of OCI, creating a difference between net derivative
	assets and liabilities and pre-tax OCI from derivatives.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<I><FONT size="2">Termination of effective cash flow hedges
	prior to maturity</FONT></I><FONT size="2">&nbsp;&#151;
	Following the termination of a cash flow hedge and subsequent
	settlement with a counterparty, the derivative asset or
	liability is liquidated and removed from the books. At this
	point, no asset or liability exists on the books for the hedge
	but a balance remains in OCI, which is amortized into earnings
	over the remaining original life of the hedge as long as it is
	probable that the forecasted transactions, or exposures that are
	being hedged, will occur. As a result, there will be a temporary
	difference between OCI and derivative assets and liabilities on
	the books until the remaining OCI balance is fully amortized
	into earnings.
	</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">Below is a reconciliation from the Company&#146;s
	net derivative assets/ liabilities to its pre-tax comprehensive
	gain (loss) from derivative instruments at December&nbsp;31,
	2001, (in thousands):
	</FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total pre-tax unrealized comprehensive
	gain/(loss) from derivative instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(299,740</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net derivative assets/(liabilities)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(120,073</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Difference
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">179,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reconciliation:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pre-tax earnings impact from active derivatives
	not designated as cash flow hedges and ineffective portion of
	derivatives designated as cash flow hedges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129,326</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balances in OCI with no corresponding derivative
	asset/ liability, primarily related to effective cash flow
	hedges terminated prior to maturity, net of pre-tax amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total reconciling items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">179,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The asset and liability balances for the
Company&#146;s commodity derivative instruments represent the
net totals after offsetting certain assets against certain
liabilities under the criteria of FASB Interpretation
No.&nbsp;39, &#147;Offsetting of Amounts Related to Certain
Contracts (an Interpretation of APB Opinion No.&nbsp;10 and FASB
Statement No.&nbsp;105)&#148; (&#147;FIN 39&#148;). For a given
contract, FIN 39 will allow the offsetting of assets against
liabilities so long as four criteria are met: each of the two
parties under contract owes the other determinable amounts; the
party reporting under the offset method has the right to set-off
the amount it owes against the amount owed to it by the other
party; the party reporting under the offset method intends to
exercise its right to set-off; and; the right of set-off is
enforceable by law. The table below reflects both the amounts
(in thousands) recorded as assets and liabilities by the Company
and the amounts that would have been recorded had the
Company&#146;s commodity derivative instrument contracts not
qualified for offsetting as of December&nbsp;31, 2001.
</FONT>

<P align="center"><FONT size="2">F-99
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current Derivative Asset
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,064,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">763,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-Term Derivative Asset
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,671,791</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">564,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Derivative Assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,736,691</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,328,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current Derivative Liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,912,242</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">610,504</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-Term Derivative Liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,912,572</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">805,733</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Derivative Liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,824,814</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,416,237</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net Derivative Liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,123</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table above excludes the value of interest
rate and currency derivative instruments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the Company recognized gains (losses) on
derivatives not designated as hedges of $98.1&nbsp;million,
which were recorded in electric generation and marketing revenue
and $36.7&nbsp;million which were recorded in fuel expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the Company also recognized pre-tax
gains (losses) of $(2.7)&nbsp;million related to hedge
ineffectiveness on gas contracts, which are included in fuel
expense, $(1.3)&nbsp;million related to hedge ineffectiveness on
interest rate swap and forward interest rate agreements, which
are included in other income, and $1.9&nbsp;million related to
hedge ineffectiveness on electricity contracts, which are
included in electric generation and marketing revenue. During
2001, the Company excluded from the assessment of hedge
effectiveness the extrinsic values of certain options used in
costless collar arrangements to hedge its crude oil production.
The Company recorded a gain of $3.0&nbsp;million during 2001
associated with the extrinsic value of these options which were
recorded in fuel expense. The Company excluded no components of
any other derivative instruments in assessing hedge
effectiveness.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company&#146;s realized pre-tax
commodity cash flow hedge activity contributed
$132.5&nbsp;million to earnings based on the reclassification
adjustment from OCI to earnings. For the year ended
December&nbsp;31, 2001, power hedges contributed
$163.2&nbsp;million to earnings. At the time the power hedges
were sold, the market price for electricity for the contracted
delivery period was significantly higher than the market price
when delivery actually occurred. For the year ended
December&nbsp;31, 2001, gas and crude oil hedges reduced
earnings by $30.7&nbsp;million. At the time the gas hedges were
purchased, the market price of gas for the contracted delivery
period was significantly higher than the market price when
delivery actually occurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the maximum length
of time over which the Company is hedging its exposure to the
variability in future cash flows for forecasted transactions is
17&nbsp;years. The Company estimates that pre-tax gains of
$116.1&nbsp;million will be reclassified from accumulated OCI
into earnings during the next twelve months as the hedged
transactions affect earnings assuming constant gas and power
prices, interest rates, and exchange rates over time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents (in thousands) the
pre-tax gains (losses) currently held in OCI that will be
amortized annually into earnings, assuming constant gas and
power prices, interest rates, and exchange rates over time.
</FONT>

<P align="center"><FONT size="2">F-100
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">&#38; After</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Crude oil OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,534</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,534</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gas OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(185,333</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(264,931</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101,275</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,229</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(37,430</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(658,198</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Power OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">316,446</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93,761</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,996</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,301</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">228</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">428,280</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest rates OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19,644</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,099</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,515</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,723</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,287</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,336</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(72,604</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,911</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,661</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,429</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,263</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,184</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,696</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,752</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total OCI
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,092</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(184,930</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,671</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(72,219</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(38,600</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,412</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(299,740</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">20. Earnings per Share</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic earnings per common share were computed by
dividing net income by the weighted average number of common
shares outstanding for the period. The dilutive effect of the
potential exercise of outstanding options to purchase shares of
common stock is calculated using the treasury stock method. The
dilutive effect of the assumed conversion of certain convertible
securities into the Company&#146;s common stock is based on the
dilutive common share equivalents and the after tax distribution
expense avoided upon conversion. The reconciliation of basic
earnings per common share to diluted earnings per share is shown
in the following table (in thousands except per share data). All
share data has been adjusted to reflect the two-for-one stock
splits effective October&nbsp;7, 1999, June&nbsp;8, 2000, and
November&nbsp;14, 2000.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="35"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="35" align="center" nowrap><B><FONT size="1">For the Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="35" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">EPS</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">EPS</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">EPS</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="1">Basic earnings per common share:</FONT></B></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Income before extraordinary items and cumulative
	effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">641,062</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">303,522</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2.11</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">373,837</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">281,070</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.33</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">107,800</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">225,375</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.48</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Extraordinary gain/(charge) net of (tax)/tax
	benefit of $(3,606), $796 and $793 for 2001, 2000, and 1999
	respectively
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">6,007</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.02</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(1,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(1,150</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,036</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.01</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">648,105</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">303,522</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2.14</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">372,602</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">281,070</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.33</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">106,650</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">225,375</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.47</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Common shares issuable upon exercise of stock
	options using treasury stock method
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">14,397</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">16,437</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">13,331</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="1">Diluted earnings per common share:</FONT></B></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Income before dilutive effect of certain
	convertible securities, extraordinary items and change in
	accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">641,062</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">317,919</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2.02</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">373,837</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">297,507</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.26</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">107,800</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">238,706</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.45</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Dilutive effect of certain convertible Securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">47,365</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">54,491</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(0.17</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">20,841</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">31,746</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(0.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">688,427</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">372,410</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.85</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">394,678</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">329,253</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.20</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">107,800</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">238,706</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.45</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Extraordinary gain/(charge) net of (tax)/tax
	benefit of $(3,606), $796, and $793 for 2001, 2000, and 1999
	respectively
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">6,007</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.02</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(1,235</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(1,150</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,036</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Net income, as adjusted
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">695,470</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">372,410</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.87</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">393,443</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">329,253</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1.19</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">106,650</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">238,706</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">0.45</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-101
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001 the Company recorded an
extraordinary gain of $7.4&nbsp;million, net of tax of
$4.5&nbsp;million, related to the repurchase of
$122.0&nbsp;million Zero Coupons, which included a pre-tax
$13.1&nbsp;million gain from repurchasing the Zero Coupons at a
discount and a $1.2&nbsp;million pre-tax loss due to the write
off of unamortized deferred financing costs. The extraordinary
gain was offset by extraordinary losses of $1.4&nbsp;million,
net of tax of $0.9&nbsp;million, related to the write off of
unamortized deferred financing costs resulting from the
repayment of $105&nbsp;million in aggregate outstanding
principal amount of the 9 &nbsp;1/4% Senior Notes Due 2004 and
the bridge facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Company recognized a
$1.2&nbsp;million extraordinary loss, net of tax benefit of
$0.8&nbsp;million, representing the write-off of deferred
financing costs related to the termination of certain financing
arrangements described in Note&nbsp;7.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999, the Company recognized an extraordinary
charge of $1.2&nbsp;million, net of tax benefit of
$0.8&nbsp;million, representing the write-off of deferred
financing costs related to non-recourse project financing for
the Gilroy Power Plant. The financing agreement was terminated
and the outstanding balance as of April 1999 of
$120.6&nbsp;million was repaid.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unexercised employee stock options to purchase
13,294,286, 786,802 and 1,053,063 shares of the Company&#146;s
common stock during the years ended December&nbsp;31, 2001,
2000, and 1999, respectively, were not included in the
computation of diluted shares outstanding because such inclusion
would be anti-dilutive.
</FONT>

<P align="left">
<B><FONT size="2">21. Commitments and Contingencies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Turbines.</FONT></I><FONT size="2"> As of
March&nbsp;8, 2002, after turbine cancellations (see
Note&nbsp;24), the Company is under contract or letter of intent
with certain companies to make payments for the delivery of 202
gas and steam turbines and for 35 gas and steam turbines,
previously delivered in the aggregate amount of
$7.3&nbsp;billion. Included in the 202 turbines are 127 General
Electric&nbsp;7F Series turbines and equivalent. Siemens
Westinghouse turbines to be delivered after March 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximate future payments for the 237 turbines
and delivery dates for the 202 turbines are as follows
(in&nbsp;thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Future Payments</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Turbines</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,148,460</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">629,207</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,204,717</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,172,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">752,064</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">181,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,088,117</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">202</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through October 2002, the Company has the ability
to cancel up to 89 turbines for a net cash payment of up to
$89.0&nbsp;million and a non-cash charge of $123.2&nbsp;million.
If these cancellations were made, the future payments would be
reduced by approximately $3.1&nbsp;billion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company estimates that $2.5&nbsp;billion will
be incurred in 2002 for its construction activities including
turbine payments, engineering costs and other equipment costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Power Plant Operating
Leases</FONT></I><FONT size="2">&nbsp;&#151; The Company has
entered into long-term operating leases for cogeneration
facilities and combined-cycle power generating facilities,
expiring through 2049. Many of the lease
</FONT>

<P align="center"><FONT size="2">F-102
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">agreements provide for renewal options, and some
of the agreements contain customary restrictions on dividends,
additional debt and further encumbrances similar to those
typically found in project finance instruments. In accordance
with SFAS No.&nbsp;13 and SFAS No.&nbsp;98, &#147;Accounting for
Leases&#148; the Company&#146;s operating leases are not
reflected on our balance sheet. Future minimum lease payments
under these leases are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Initial</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Watsonville
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,905</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,874</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,399</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">King City
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1996</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,563</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,746</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,344</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Greenleaf
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1998</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Geysers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73,164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,967</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,415</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,890</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,568</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">529,995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">KIAC
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,227</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,467</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,251</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,875</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">312,937</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">435,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Rumford/ Tiverton
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,940</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,942</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">710,292</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">901,479</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pasadena
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">131,018</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,777</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">483,668</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">728,427</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">South Point
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,059</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">336,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">518,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Broad River
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,373</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,744</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,629</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,967</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,352</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,501</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">691,566</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">RockGen
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,861</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,031</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,088</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,822</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">388,932</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">337,071</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">396,518</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">265,268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,276</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">234,638</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,024,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,501,014</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, 2000, and 1999, rent expense for
cogeneration facilities operating leases amounted to
$118.9&nbsp;million, $69.4&nbsp;million and $33.6&nbsp;million,
respectively. Calpine guarantees $3.0&nbsp;billion of the total
future minimum lease payments of its consolidated subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The King City operating lease commitment is
supported by $88.5&nbsp;million of collateral securities
consisting of investment grade and U.S.&nbsp;Treasury securities
that mature serially in amounts equal to a portion of the
semi-annual lease payment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Production Royalties and
Leases</FONT></I><FONT size="2">&nbsp;&#151; The Company is
committed under numerous geothermal leases and right-of-way,
easement and surface agreements. The geothermal leases generally
provide for royalties based on production revenue with
reductions for property taxes paid. The right-of-way, easement
and surface agreements are based on flat rates and are not
material. Under the terms of certain geothermal leases, prior to
May 1999, when the Company consolidated the steam field and
power plant operations in Lake and Sonoma Counties in northern
California (&#147;The Geysers&#148;), royalties accrued at rates
ranging from 3% to 14% of steam and effluent revenue. Following
the consolidation of operations, the royalties began to accrue
as a percentage of electrical revenues. Certain properties also
have net profits and overriding royalty interests ranging from
approximately 1% to 28%, which are in addition to the land
royalties. Most lease agreements contain clauses providing for
minimum lease payments to lessors if production temporarily
ceases or if production falls below a specified level.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Production royalties for the years ended
December&nbsp;31, 2001, 2000, and 1999 are $27.5&nbsp;million,
$32.3&nbsp;million and $13.8&nbsp;million, respectively.
</FONT>

<P align="center"><FONT size="2">F-103
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Office and Equipment
Leases</FONT></I><FONT size="2">&nbsp;&#151; The Company leases
its corporate and regional offices as well as some of its office
equipment under noncancellable operating leases expiring through
2013. Future minimum lease payments under these leases are as
follows (in thousands):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="83%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,532</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,853</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,843</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,152</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94,422</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">210,771</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Lease payments are subject to adjustments for the
Company&#146;s pro rata portion of annual increases or decreases
in building operating costs. In 2001, 2000, and 1999 rent
expense for noncancellable operating leases amounted to
$16.2&nbsp;million, $6.3&nbsp;million, and $4.0&nbsp;million,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Natural Gas
Purchases</FONT></I><FONT size="2">&nbsp;&#151; The Company
enters into gas purchase contracts of various terms with third
parties to supply gas to its gas-fired cogeneration projects.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oil &#38; Gas Pipeline Transportation in
Canada</FONT></I><FONT size="2">&nbsp;&#151; To support
production and marketing operations, Calpine has firm
commitments in the ordinary course of business for gathering,
processing and transmission services that require the Company to
deliver certain minimum quantities of crude oil and liquids and
natural gas to third parties or pay the corresponding tariffs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Letter of Credit
Facilities</FONT></I><FONT size="2">&nbsp;&#151; In addition to
the letters of credit referred to in Notes&nbsp;5, 8 and 11, the
Company has issued letters of credit with certain financial
institutions to guarantee the Company&#146;s performance under
certain long-term contracts of $125.1&nbsp;million and
$11.0&nbsp;million as of December&nbsp;31, 2001 and 2000,
respectively. This brings the total outstanding letters of
credit to $642.5&nbsp;million and $346.9&nbsp;million as of
December&nbsp;31, 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001 we entered into a
$300&nbsp;million Master Reimbursement Agreement for Letters of
Credit with Credit Suisse First Boston. This facility, which was
used to provide credit support to CES in connection with its
trading operations, expired pursuant to its terms on
December&nbsp;31, 2001, and we replaced the credit support that
it had provided with direct cash deposits.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Litigation</FONT></I></B>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ben Johnson vs.
Peter Cartwright, et al.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;17, 2001, a shareholder filed a
derivative lawsuit on behalf of Calpine against its directors
and one of its senior officers. This lawsuit is styled
<I>Johnson&nbsp;vs. Cartwright, et al.</I> (No.&nbsp;CV803872),
and is pending in the California Superior Court,
Santa&nbsp;Clara County. Calpine is a nominal defendant in this
lawsuit, which alleges claims relating to purportedly misleading
statements about Calpine and stock sales by certain of the
director defendants and the officer defendant. Calpine has filed
a demurrer asking the court to dismiss the complaint on the
ground that the shareholder plaintiff lacks standing to pursue
claims on behalf of Calpine. The individual defendants have
filed a demurrer asking the court to dismiss the complaint on
the ground that it fails to state any claims against them.
</FONT>

<P align="center"><FONT size="2">F-104
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<I><FONT size="2">Lockport Energy Associates, L.P. and the
	New&nbsp;York Public Service Commission v. New&nbsp;York State
	Electricity and Gas Company</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An action was filed against Lockport Energy
Associates, L.P. and the New&nbsp;York Public Service Commission
(&#147;NYPSC&#148;) in August 1997 by New York State Electricity
and Gas Company (&#147;NYSEG&#148;) in the Federal District
Court for the Northern District of New&nbsp;York. NYSEG
requested the Court to direct NYPSC and FERC to modify contract
rates to be paid to the Lockport Power Plant. In October 1997
NYPSC filed a cross-claim alleging that the FERC violated the
Public Utility Regulatory Policies Act of 1978, as amended
(&#147;PURPA&#148;), and the Federal Power Act by failing to
reform the NYSEG contract that was previously approved by the
NYPSC. On September&nbsp;29, 2000, the New&nbsp;York Federal
District Court dismissed NYSEG&#146;s complaint and NYPSC&#146;s
cross-claim. The Court stated that FERC has no authority to
alter or waive its regulations or exemptions to alter the terms
of the applicable power purchase agreements and that Qualifying
Facilities are entitled to the benefit of their bargain, even if
at the expense of NYSEG and its ratepayers. On October&nbsp;5,
2001, the United States Court of Appeals affirmed the judgment
of the federal district court and dismissed all of the claims
raised by NYSEG against Lockport.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is involved in various other claims
and legal actions arising out of the normal course of business.
The Company does not expect that the outcome of these
proceedings will have a material adverse effect on the
Company&#146;s financial position or results of operations.
</FONT>

<P align="left">
<B><FONT size="2">22. Operating Segments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is first and foremost an electric
generating company. In pursuing this single business strategy,
it is the Company&#146;s objective to provide approximately 25%
of its fuel consumption from its own natural gas production
(&#147;equity gas&#148;). Since the Company&#146;s oil and gas
production and marketing activity has reached the quantitative
criteria to be considered a reportable segment under SFAS
No.&nbsp;131, &#147;Disclosures about Segments of an Enterprise
and Related Information,&#148; the following represents
reportable segments and their defining criteria. The
Company&#146;s segments are electric generation and marketing;
oil and gas production and marketing; and corporate and other
activities. Electric generation and marketing includes the
development, acquisition, ownership and operation of power
production facilities, the sale of electricity and steam and
electricity hedging, balancing, optimization, and trading
activity. Oil and gas production includes the ownership and
operation of gas fields, gathering systems and gas pipelines for
internal gas consumption, third party sales and oil and gas
hedging, balancing, optimization, and trading activity.
Corporate activities and other consists primarily of financing
activities and general and administrative costs. Certain costs
related to company-wide functions are allocated to each segment.
However, interest on corporate debt is maintained at Corporate
and is not allocated to the segments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company evaluates performance based upon
several criteria including profits before tax. The accounting
policies of the operating segments are the same as those
described in Note&nbsp;2 to the Consolidated Financial
Statements, &#147;Summary of Significant Accounting
Policies.&#148; The financial results for the Company&#146;s
operating segments have been prepared on a basis consistent with
the manner in which the Company&#146;s management internally
disaggregates financial information for the purposes of
assisting in making internal operating decisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the integrated nature of the business
segments, estimates and judgments have been made in allocating
certain revenue and expense items.
</FONT>

<P align="center"><FONT size="2">F-105
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Electric</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Oil and Gas</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Generation</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Production</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Other and</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">and Marketing</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">and Marketing</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Eliminations</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,602,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,072,022</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,284</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174,757</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,352</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,135</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">338,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,941</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,262</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(51,843</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,681</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65,314</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(28,387</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,608</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">931,791</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(125,952</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">986,323</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,763</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,526,523</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,503,075</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,279,697</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,309,295</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,811,838</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">889,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,740,460</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Merger costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,103,729</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">509,697</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,325</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,270</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,787</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,196</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">771</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,104</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,901</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">581,794</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,117</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(61,265</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">638,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,928</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,289</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,639</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,834,591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,033,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,455,319</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,323,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,167,551</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,911</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,238</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,861,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">821,191</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">159,827</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,466</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,907</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,048</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,381</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,819</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,248</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,829</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,106</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">259,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,407</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(103,395</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,020,146</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">610,684</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,770,072</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,400,902</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,487,781</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">387,877</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,883,798</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the years ended December&nbsp;31, 2001, 2000,
and 1999, there were intersegment revenues of approximately
$123.8&nbsp;million, $66.5&nbsp;million and $3.7&nbsp;million,
primarily relating to the use of internally procured gas for the
Company&#146;s power plants. These intersegment revenues have
been included in Total Revenue and Income before taxes in the
oil and gas production and marketing reporting segment and
eliminated in the corporate and other reporting segment.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Geographic
Area Information</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the Company owned
interests in 59 operating power plants in the United States, one
operating power plant in Canada and one operating power plant in
the United Kingdom. In
</FONT>

<P align="center"><FONT size="2">F-106
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">addition, the Company had oil and gas interests
in the United States and Canada. Geographic revenue and
property, plant and equipment information is based on physical
location of the assets at the end of each period.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United Kingdom</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,159,079</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">334,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,065</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,589,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,355,856</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,099,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">929,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,384,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,254,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">292,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,547,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,213,444</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">765,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,979,160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">1999</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">847,735</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135,749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,912,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">363,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,276,180</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">23.&nbsp;California Power Market</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">California Power
Market</FONT></I><FONT size="2">&nbsp;&#151; The deregulation of
the California power market has produced significant
unanticipated results in the past two years. The deregulation
froze the rates that utilities can charge their retail and
business customers in California, until rate increases were
approved by the California Public Utilities Commission
(&#147;CPUC&#148;) in 2001, and prohibited the utilities from
buying power on a forward basis, while wholesale power prices
were not subjected to limits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A series of factors reduced the supply of power
to California from mid 2000 through the spring 2001, which
resulted in wholesale power prices for that period that were
significantly higher than historical levels. Several factors
contributed to this increase. These included:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">significantly increased volatility in prices and
	supplies of natural gas;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">an unusually dry fall and winter in the Pacific
	Northwest during 2000, which reduced the amount of available
	hydroelectric power from that region (typically, California
	imports a portion of its power from this source);
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the large number of power generating facilities
	in California nearing the end of their useful lives, resulting
	in increased downtime (either for repairs or because they had
	exhausted their air pollution credits and replacement credits
	had become too costly to acquire on the secondary market); and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">continued obstacles to new power plant
	construction in California, which deprived the market of new
	power sources that could have, in part, ameliorated the adverse
	effects of the foregoing factors.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the period of higher wholesale prices,
there was significant under-recovery of costs by two of the
major California utilities. As a consequence, these two
utilities defaulted under a variety of contractual obligations,
including payment obligations to power generators. PG&#38;E
defaulted on payment obligations to the Company under its
long-term QF&nbsp;contracts, which are subject to federal
regulation under the Public Utility Regulatory Policies Act of
1978, as amended (&#147;PURPA&#148;). The PG&#38;E QF contracts
are in place at eleven of the Company&#146;s facilities and
represent nearly 600 megawatts of electricity for Northern
California customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing in the second half of 2001, the
supply/ demand imbalance for electric power has been
substantially reduced in the short term, resulting in
significantly lower power prices than were seen in the
</FONT>

<P align="center"><FONT size="2">F-107
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">earlier part of the year. These reductions may be
attributed to milder than expected summer and fall in California
and the western United States, a reduction in the demand for
power as a result of the economic downturn in the region and
greater consumer conservation, changes in the power market,
including a greater portion of power sold on a long-term,
forward basis, than on a short-term spot basis, reduction in
natural gas prices, and the introduction of new supplies of
power.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">PG&#38;E Bankruptcy
Proceedings</FONT></I><FONT size="2">&nbsp;&#151; On
April&nbsp;6, 2001, PG&#38;E filed for bankruptcy protection
under Chapter&nbsp;11 of the United States Bankruptcy Code. As
of April&nbsp;6, 2001, the Company had recorded approximately
$265.6&nbsp;million in accounts receivable with PG&#38;E under
the QF&nbsp;contracts, plus $68.7&nbsp;million in notes
receivable not yet due and payable. Since April&nbsp;6, 2001,
PG&#38;E has made payment for capacity and energy deliveries
under the QF&nbsp;contracts. On July&nbsp;6, 2001, the Company
announced that it had entered into a binding agreement with
PG&#38;E to modify all of its QF&nbsp;contracts with PG&#38;E
and that, based upon such modification, PG&#38;E had agreed to
assume all of the QF&nbsp;contracts. Under the terms of this
agreement, the Company continues to receive its contractual
capacity payments under the QF&nbsp;contracts, plus a five-year
fixed energy price component that averages 5.37&nbsp;cents per
kilowatt-hour in lieu of the short run avoided cost. In
addition, all past due receivables under the QF contracts were
elevated to administrative priority status in the PG&#38;E
bankruptcy proceeding to be paid to the Company, with interest,
upon the effective date of a confirmed plan of reorganization.
Administrative claims enjoy priority over payments made to the
general unsecured creditors in bankruptcy. The bankruptcy court
approved the agreement on July&nbsp;12, 2001. On
December&nbsp;6, 2001, Calpine and PG&#38;E executed a
supplement agreement to the July&nbsp;6, 2001, agreement whereby
PG&#38;E agreed to commence paying Calpine all pre-petition
receivables due under the QF contracts with interest at a rate
of 5% per annum. The payments were scheduled to be made in
twelve monthly installments with the first payment of principal
made on December&nbsp;31, 2001, including all accrued interest
from the initial default dates, and the last payment of
principal and interest on November&nbsp;30, 2002. In the event
that the effective date of a confirmed plan of reorganization
occurs sooner than the payment dates, PG&#38;E is required to
make all payments owed to Calpine, including interest thereon
accruing at 5%, as of such effective date. However, under the
terms of the supplemental agreement, PG&#38;E&#146;s obligation
to make such payments is separate from and not dependent upon
the confirmation of a plan of reorganization. The bankruptcy
court approved the supplemental agreement on December&nbsp;21,
2001. There has been no final plan of reorganization approved by
the bankruptcy court. After receiving the first of twelve
payments, including accrued interest through December&nbsp;31,
2001, the Company sold the remaining receivable on
December&nbsp;31, 2001, for 96.125% of its face value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CPUC Proceeding Regarding QF Contract Pricing
for Past Periods</FONT></I><FONT size="2">&nbsp;&#151; The
Company&#146;s QF contracts with PG&#38;E provide that the CPUC
has the authority to determine the appropriate utility
&#147;avoided cost&#148; to be used to set energy payments for
certain QF&nbsp;contracts by determining the short run avoided
cost (&#147;SRAC&#148;) energy price formula. In mid 2000, the
Company&#146;s QF&nbsp;facilities elected the option set forth
in Section&nbsp;390 of the California Public Utility Code, which
provides QFs the right to elect to receive energy payments based
on the California Power Exchange (&#147;PX&#148;) market
clearing price instead of the price determined by SRAC. Having
elected such option, Calpine was paid based upon the PX zonal
day ahead clearing price (&#147;PX Price&#148;) from summer 2000
until January&nbsp;19, 2001, when the PX ceased operating a day
ahead market. The CPUC has conducted proceedings (R.99-11-022)
to determine whether the PX Price was the appropriate price for
the energy component upon which to base payments to QFs which
had elected the PX-based pricing option. The CPUC at one point
issued a proposed decision to the effect that the PX&nbsp;Price
was the appropriate price for energy payments under the
California Public Utility Code but tabled it and a final
decision has not been issued to date. Therefore, it is possible
that the CPUC could order a payment adjustment based on a
different energy price determination. The Company believes that
the PX&nbsp;Price was the appropriate price for energy payments
but there can be no assurance that this will be the outcome of
the CPUC proceedings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Current California QF Contract
Pricing</FONT></I><FONT size="2">&nbsp;&#151; When the PX ceased
operation on January&nbsp;19, 2001, the CPUC ordered that the
QFs that had previously switched to the PX Price be switched
back to the applicable
</FONT>

<P align="center"><FONT size="2">F-108
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">SRAC energy price formula. On June&nbsp;14, 2001,
however, the CPUC issued an order (Decision&nbsp;01-06-015) (the
&#147;June 2001 Decision&#148;) that authorized the California
utilities, including PG&#38;E, to amend QF&nbsp;contracts to
elect a fixed energy price component that averages
5.37&nbsp;cents per kilowatt-hour for a five-year term under
those contracts in lieu of using the SRAC energy price formula.
By this order, the CPUC authorized the QF contract energy price
amendments without further CPUC concurrence. As part of the
agreement the Company entered into with PG&#38;E pursuant to
which PG&#38;E, in bankruptcy, agreed to assume its
QF&nbsp;contracts with Calpine, PG&#38;E agreed with Calpine to
amend these contracts to adopt the fixed price component that
averages 5.37&nbsp;cents pursuant to the June 2001 Decision.
This election became effective as of July&nbsp;16, 2001. As a
result of the June 2001 Decision and the Company&#146;s
agreement with PG&#38;E to amend the QF contracts to adopt the
fixed price energy component, the energy price component in the
Company&#146;s QF&nbsp;contracts is now fixed for five years. As
of July&nbsp;1, 2006, the energy payment under the
QF&nbsp;contracts with PG&#38;E will be determined by the CPUC
in accordance with its determination of the SRAC energy price
formula.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">California Long-Term Supply
Contracts</FONT></I><FONT size="2">&nbsp;&#151; California has
adopted legislation permitting it to issue long-term revenue
bonds to provide funding for wholesale purchases of power. The
bonds will be repaid with the proceeds of payments by retail
customers over time. The California Department of Water
Resources (&#147;DWR&#148;) sought bids for long-term power
supply contracts in a publicly announced auction. Calpine
successfully bid in that auction and signed several long-term
power supply contracts with DWR.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;7, 2001, the Company announced
the signing of a 10-year, $4.6&nbsp;billion fixed price contract
with DWR to provide electricity to the State of California. The
Company committed to sell up to 1,000&nbsp;megawatts of
electricity, with initial deliveries of 200 megawatts starting
October&nbsp;1, 2001, which increases to 1,000&nbsp;megawatts by
January&nbsp;1, 2004. The electricity will be sold directly to
DWR on a 24&nbsp;hours-a-day, 7&nbsp;days-a-week basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2001, the Company announced
the signing of two long-term power sales contracts with DWR.
Under the terms of the first contract, a 10-year,
$5.2&nbsp;billion fixed price contract, the Company committed to
sell up to 1,000 megawatts of generation. Initial deliveries
began July&nbsp;1, 2001, with 200&nbsp;megawatts and increase to
1,000 megawatts by as early as July 2002. Under the terms of the
second contract, a 20-year contract totaling up to
$3.1&nbsp;billion, the Company will supply DWR with up to
495&nbsp;megawatts of peaking generation, beginning with 90
megawatts in August 2001 and increasing up to 495&nbsp;megawatts
as early as August 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;11, 2001, the Company announced the
signing of a three-year peaking contract to supply DWR with up
to 225&nbsp;megawatts of peaking generation beginning in the
summer of 2002 through April&nbsp;30, 2005, from the Los Esteros
Critical Energy Facility currently under development in San
Jose, California. In the event that the Los Esteros Critical
Energy Facility has not achieved commercial operation by
October&nbsp;1, 2002, DWR would have the right to terminate the
contract.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;11, 2001, the Company announced
that it was meeting with officials from the State of California
at their request to discuss whether, and if so how, the
long-term contracts with DWR could be modified. No definitive
modifications have been agreed to and the discussions have been
ongoing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, we currently have a dispute with DWR
concerning payment of the capacity payment on the 495-megawatt
Peaking Contract dated February 28, 2001. The contract provides
that CES may earn a capacity payment by committing to supply
electricity to DWR from a source other than the peaker units
designated in the contract either through substitution of those
designated units or by providing replacement energy. DWR has
made certain assertions challenging CES&#146; right to
substitute units or provide replacement energy and has withheld
capacity payments in the amount of $9.5&nbsp;million since
December&nbsp;2001. The resolution of this dispute is part of
the ongoing discussions regarding modifications to the contracts.
</FONT>

<P align="center"><FONT size="2">F-109
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;25, 2002, both the CPUC and the
California Electric Oversight Board each filed complaints under
Section&nbsp;206 of the Federal Power Act with the FERC
(EL02-60-000 and EL02-62-000, respectively) alleging that the
prices and terms of the long-term contracts with DWR are unjust
and unreasonable and counter to the public interest. The Company
is a respondent and the four long-term contracts entered into by
the Company are subject to the complaint. The FERC has noticed
this proceeding and responsive filings were due from the
respondents on or before March&nbsp;22, 2002. Calpine believes
that the complaints are without merit and intends to defend its
position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2002, in accordance with the
state legislation that authorized DWR to enter into the
long-term power contracts, the CPUC issued a Rate Agreement,
which dedicates a portion of the retail rate paid by electricity
customers of the California investor-owned utilities to a fund
to pay bondholders of bonds to be issued by DWR and to a fund to
pay electricity suppliers such as Calpine. The proceeds from
those bonds will be used in part to fund the Electric Power Fund
established by the state legislation authorizing DWR to enter
into long-term power contracts with the power suppliers whose
recourse in the event of a default by DWR is to the Electric
Power Fund. Proceeds from the bonds will also be used to repay
the state of California General Fund. The bonds have not been
issued, but representatives of the State have indicated that the
bonds should be issued in the near future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">FERC Investigation into California Wholesale
Markets.</FONT></I><FONT size="2"> In August 2000 FERC initiated
an investigation of the California power markets. In November
2000 FERC found that the California power market structure and
market rules were seriously flawed, and that these flaws,
together with short supply relative to demand, resulted in
unusually high energy prices. FERC proposed specific remedies to
the identified market flaws that included the potential refund
of rates charged for service determined by FERC not to be just
and reasonable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through a series of orders most recently
culminating in its order of December&nbsp;19, 2001, FERC has
prescribed a methodology for determining potential refunds in
the California wholesale electric markets. The key elements of
this methodology are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the refund period runs from October&nbsp;2, 2000,
	through June&nbsp;19, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the only sales subject to price mitigation and
	potential refund are spot market transactions (sales entered
	into 24&nbsp;hours or less in advance of the delivery of power).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the methodology for determining refunds is based
	upon the costs associated with the least efficient generating
	unit needed to meet system requirements during any relevant
	pricing interval.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">any refunds calculated under this methodology are
	to be offset by amounts owed to the seller from various entities
	purchasing power in California.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">actual application of the methodology and
	calculations of any refunds remain subject to ongoing
	proceedings before the FERC which are scheduled to conclude
	during the latter half of 2002.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The scope of the ongoing FERC investigation is
limited to spot market sales made to the ISO and PX during the
October&nbsp;2, 2000, to June&nbsp;19, 2001, time period, and so
Calpine&#146;s forward long-term contracts (including its
QF&nbsp;contracts) are not subject to this investigation. Due to
the ongoing nature of this investigation and ambiguities
concerning how the refund methodology is to be applied, it is
not possible at this time to predict the amount of any potential
refunds that Calpine ultimately may be required to pay. However,
based on the information available at this time, we do not
believe that the proceeding will result in a material adverse
effect on our financial conditions or results of operations. It
also should be noted that all of FERC orders issued in these
proceedings to date are subject to judicial review sought by
various parties. The outcome of these judicial proceedings
cannot be determined at this time.
</FONT>

<P align="center"><FONT size="2">F-110
</FONT>

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<P><HR noshade><P>
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<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;19, 2001, FERC ordered price
mitigation in 11&nbsp;states in the western United States in an
attempt to reduce the dependence of the California market on
spot markets in favor of longer-term committed energy supplies.
The order provides for price mitigation in the spot market
throughout the 11&nbsp;state western region during &#147;reserve
deficiency hours,&#148; which is when operating reserves in
California fall below seven percent. This price will be a single
market clearing price based upon the marginal operating cost of
the last unit dispatched by the California ISO. In addition,
FERC implemented price mitigation in non-reserve deficiency
hours, which will be set at 85% of the market clearing price
during the last reserve deficiency period. These price
mitigation procedures went into effect on June&nbsp;20, 2001,
and will remain in effect until September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The retention by FERC of a market-based, rather
than a cost-of-service-based, rate structure will enable the
Company to continue to realize benefits from its efficient,
modern power plants. The Company believes that its marginal
costs will continue to be below any price cap imposed by FERC,
whether during reserve deficiency hours or at other times.
Therefore, the Company believes that FERC&#146;s mitigation plan
will not have a material adverse effect on its financial
condition or results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">FERC also ordered all sellers and buyers in
wholesale power markets administered by the California ISO, as
well as representatives of the State of California, to
participate in a settlement conference before a FERC
administrative law judge. The settlement discussions were
intended to resolve all issues that remain outstanding to
resolve past accounts, including sellers&#146; claims for unpaid
invoices, and buyers&#146; claims for refunds of alleged
overcharges, for past periods. The settlement discussions began
on June&nbsp;25, 2001, and ended on July&nbsp;9, 2001. The Chief
Administrative Law Judge issued his report and recommendations
to FERC on July&nbsp;12, 2001. On July&nbsp;25, 2001, FERC
ordered an expedited fact-finding hearing to calculate refunds
for spot market transactions in California. The hearing has been
delayed pending the submission by the California ISO and the PX
of data for the purpose of developing the factual basis needed
to implement the refund methodology and order refunds, and at
this time it is not possible to determine when the proceeding
will conclude. While it is not possible to predict the amount of
any refunds until the hearings take place, based upon the
information available at this time, the Company does not believe
that this proceeding will result in a material adverse effect on
the Company&#146;s financial condition or results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;13, 2002, FERC initiated an
investigation of potential manipulation of electric and natural
gas prices in the western United States. This investigation was
initiated as a result of allegations that Enron Corp. through
its affiliates used its market position to distort electric and
natural gas markets in the West. The scope of the investigation
is to consider whether, as a result of any manipulation in the
short-term markets for electric energy or natural gas or other
undue influence on the wholesale markets by any party since
January&nbsp;1, 2000, the rates of the long-term contracts
subsequently entered into in the West are potentially unjust and
unreasonable. FERC has stated that it may use the information
gathered in connection with the investigation to determine how
to proceed on any existing or future complaint brought under
Section&nbsp;206 of the Federal Power Act involving long-term
power contracts entered into in the West since January&nbsp;1,
2000, or to initiate a Federal Power Act Section&nbsp;206 or
Natural Gas Act Section&nbsp;5 proceeding on its own initiative.
</FONT>

<P align="left">
<B><FONT size="2">24. Subsequent Events</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following a comprehensive review of our power
plant development program, the Company recently announced the
adoption of a revised capital expenditure program, which
contemplates the completion of 27&nbsp;power projects
(representing 15,200&nbsp;MW) currently under construction
during 2002 and 2003. Three of these projects have subsequently
achieved full or partial commercial operations (the Magic Valley
Generating Center, the Gilroy Peaking Energy Center and the
Aries Power Project). Construction of an additional
34&nbsp;advanced-stage development projects (representing
15,100&nbsp;MW) will be placed on hold following completion of
advanced development activities pending further review, reducing
previously forecasted 2002 capital spending by as much as
$2&nbsp;billion. Construction of these advanced stage
development projects is
</FONT>

<P align="center"><FONT size="2">F-111
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">expected to proceed when there is an established
marked need for additional generating resources at prices that
will allow the Company to meet its established investment
criteria, and when capital is available to us on attractive
terms. Moreover, our entire development and construction program
is flexible and subject to continuing review and revision based
upon such criteria.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Between January&nbsp;2, 2002, and
February&nbsp;11, 2002, the Company repurchased an additional
$192.5&nbsp;million of its Zero Coupons, bringing total
repurchases to $314.5&nbsp;million, and bringing the amount of
Zero Coupons that remain outstanding to $685.5&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;3, 2002, the Company completed an
offering of $100&nbsp;million in aggregate principal amount of
4% Convertible Senior Notes Due 2006, pursuant to the partial
exercise of the initial purchaser&#146;s $200&nbsp;million
option to purchase additional Convertible Senior Notes. These
securities will be convertible into shares of Calpine common
stock at a price of $18.07. The proceeds from the offerings will
be used for general corporate purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recently met with representatives of
the State of California, DWR, the CPUC and their advisors to
discuss the status of long-term supply contracts signed in 2001.
We believe that these contracts are enforceable as written.
However, the Company is always willing to discuss with its
customers proposals to restructure or otherwise modify existing
contracts to address concerns of its customers if the Company
can do so without adversely affecting its interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2002, both the California Public
Utilities Commission and the California Electric Oversight Board
filed complaints under Section&nbsp;206 of the Federal Power Act
with the Federal Energy Regulatory Commission (FERC)
(EL02-60-000 and EL02-62-000, respectively) alleging that the
prices and terms of Services, L.P.&nbsp;(CES) is a respondent
and the four long-term contracts entered into between CES and
DWR are subject to the complaint. <I>(see Note&nbsp;23)</I> The
FERC has noticed this proceeding and responsive pleadings were
due from the respondents on or before March&nbsp;22, 2002.
Calpine believes that the complaints are without merit and
intends to defend its position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;13, 2002, FERC initiated an
investigation of potential manipulation of electric and natural
gas prices in the western United States. This investigation was
initiated as a result of allegations that Enron Corp. through
its affiliates used its market position to distort electric and
natural gas markets in the West. The scope of the investigation
is to consider whether as a result of any manipulation in the
short-term markets for electric energy or natural gas or other
undue influence on the wholesale markets by any party since
January&nbsp;1, 2000, that the rates of the long-term contracts
subsequently entered into in the West are potentially unjust and
unreasonable. FERC has stated that it may use the information
gathered in connection with the investigation to determine how
to proceed on any existing or future complaint brought under
Section&nbsp;206 of the Federal Power Act involving long-term
power contracts entered into in the West since January&nbsp;1,
2000, or to initiate a Federal Power Act Section&nbsp;206 or
Natural Gas Act Section&nbsp;5 proceeding on its own initiate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;25, 2002, both the CPUC and the
California Electric Oversight Board (&#147;EOB&#148;) each filed
complaints under Section&nbsp;206 of the Federal Power Act with
the FERC (EL02-60-000 and EL02-62-000, respectively) alleging
that the prices and terms of the long-term contracts with DWR
are unjust and unreasonable and counter to the public interest.
Calpine is a respondent and the four long-term contracts entered
into by Calpine are subject to the complaint. The FERC has
noticed this proceeding and responsive filings are due from the
respondents on or before March&nbsp;22, 2002. Calpine believes
that the complaints are without merit and intends to defend its
position vigorously.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2002, in accordance with the
state legislation that authorized DWR to enter into the
long-term power contracts, the CPUC issued a Rate Agreement,
which dedicates a portion of the retail rate paid by electricity
customers of the California investor owned utilities to a fund
to pay bondholders of bonds to be issued by DWR and to a fund to
pay electricity suppliers such as Calpine. The proceeds from
those bonds will be used in part to fund the Electric Power Fund
established by the state legislation authorizing DWR to enter
</FONT>

<P align="center"><FONT size="2">F-112
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">into long-term power contracts with the power
suppliers whose recourse in the event of a default by DWR is to
the Electric Power Fund. Proceeds from the bonds will also be
used to repay the state of California General Fund. The bonds
have not been issued, but representatives of the State have
indicated that the bonds should be issued in the near future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2002 the Company announced that
it had closed a new $1.6-billion secured credit facility. The
$1.6&nbsp;billion includes a new $1.0-billion revolving credit
facility expiring on May&nbsp;24, 2003, and a new two-year
$600&nbsp;million loan that will be available upon satisfaction
of certain conditions. The Company also amended the
$400&nbsp;million revolving credit facility. The security for
these facilities includes Calpine&#146;s interests in its
natural gas properties, the Saltend power plant in the U.K. and
Calpine&#146;s equity investment in nine U.S.&nbsp;power plants.
The proceeds of the borrowings will be used to finance
Calpine&#146;s capital expenditures and, subject to the limits
of Calpine&#146;s existing bond indentures, for other general
corporate purposes. The banks in the new credit facility are The
Bank of Nova Scotia, Citibank, Bank of America, Bayerische
Landesbank Girozentrale, Credit Suisse First Boston, Deutsche
Bank, The Toronto-Dominion Bank and ING Barings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2002, the Company announced a
new turbine program that reduces previously forecasted capital
spending by approximately $1.2&nbsp;billion in 2002 and
$1.8&nbsp;billion in 2003. The revision includes adjusted timing
of turbine delivery and related payment schedules and also
cancellation orders. As a result of the cancellation, the
Company will record a pre-tax charge of $161&nbsp;million in the
first quarter of 2002, which includes financing costs to date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2002, the Company repaid the Michael
Petroleum note payable, which had a balance of
$64.8&nbsp;million at December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2002, the Company became aware that
certain emission reduction credits that were to be purchased
through a broker were not available. The Company purchases such
credits for the purpose of obtaining environmental permits to
build new power plants. The Company is aggressively pursuing
recovery of this loss and has filed civil suit against the
broker. In connection with this issue, the Company recorded a
$17.7&nbsp;million reserve for this amount, which is reflected
in the financial results for the year ended December&nbsp;31,
2001. See Note&nbsp;21 for a further discussion of this matter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Calpine Corporation v. Automated Credit
Exchange (&#147;ACE&#148;).</FONT></I><FONT size="2"> On
March&nbsp;5, 2002, Calpine sued ACE in the Superior Court of
the State of California for the County of Alameda for negligence
and breach of contract to recover reclaim trading credits, a
form of emission reduction credits that should have been held in
Calpine&#146;s account with U.S.&nbsp;Trust Company
(US&nbsp;Trust). ACE is a broker in emission reduction credits
based in Pasadena, California. Calpine had paid ACE for Nitrogen
oxide (NOx) coastal credits that were to be purchased by ACE and
held by US&nbsp;Trust. The credits were to be held by
US&nbsp;Trust pursuant to a Credit Holding Agreement, which
provided, among other things, that US&nbsp;Trust was to hold the
credits until receiving instructions from ACE to disburse the
credits. ACE had agreed that (i)&nbsp;upon prior written
instruction from Calpine, to instruct US&nbsp;Trust to take such
actions as may be directed by Calpine to disburse the credits
held in escrow pursuant to the Credit Holding Agreement and
(ii)&nbsp;not to take any action, or otherwise instruct
US&nbsp;Trust to take any action, concerning the credits held in
escrow pursuant to the Credit Holding Agreement without prior
written instruction from Calpine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Securities Class Action
Lawsuits.</FONT></I><FONT size="2"> Over the past several weeks,
five similar or identical shareholder lawsuits have been filed
against Calpine and certain of its officers in the United States
District Court, Northern District of California. The action
captioned <I>Weisz vs. Calpine Corp., et&nbsp;al.</I>, filed
March&nbsp;11, 2002, is a purported class action on behalf of
purchasers of Calpine stock between March&nbsp;15, 2001 and
December&nbsp;13, 2001. The four other actions, captioned
<I>Local&nbsp;144 Nursing Home Pension Fund vs. Calpine Corp.,
Lukowski vs. Calpine Corp., Hart vs. Calpine Corp., </I>and
<I>Atchison vs. Calpine Corp.</I>, were filed between
March&nbsp;18, 2002 and March&nbsp;26, 2002. The complaints in
these four actions are virtually identical, and each was filed
by the
</FONT>

<P align="center"><FONT size="2">F-113
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">same law firm, in conjunction with other law
firms as co-counsel. All four lawsuits are purported class
actions on behalf of purchasers of Calpine&#146;s securities
between January&nbsp;5, 2001 and December&nbsp;13, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The complaints in these five actions allege that,
during the purported class periods, certain senior executives
issued false and misleading statements about Calpine&#146;s
financial condition in violation of Sections&nbsp;10(b) and
20(a) of the Securities Exchange Act of 1934, as well as
Rule&nbsp;10b-5. These actions seek an unspecified amount of
damages, in addition to other forms of relief. The Company
expects that these actions, as well as any related actions that
may be filed in the future, will be consolidated by the court
into a single securities class action. The Company considers the
lawsuits to be without merit, and the Company intends to defend
vigorously against these allegations.
</FONT>

<P align="left">
<B><FONT size="2">25. Quarterly Consolidated Financial Data
(unaudited)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s quarterly operating results
have fluctuated in the past and may continue to do so in the
future as a result of a number of factors, including, but not
limited to, the timing and size of acquisitions, the completion
of development projects, the timing and amount of curtailment of
operations under the terms of certain power sales agreements,
the degree of risk management and trading activity, and
variations in levels of production. Furthermore, the majority of
the dollar value of capacity payments under certain of the
Company&#146;s power sales agreements are received during the
months of May through October.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s common stock has been traded
on the New York Stock Exchange since September&nbsp;19, 1996.
There were 1,085 common stockholders of record at
December&nbsp;31, 2001. No dividends were paid for the years
ended December&nbsp;31, 2001 and 2000. All share data has been
adjusted to reflect the two-for-one stock split effective
June&nbsp;8, 2000, and the two-for-one stock split effective
November&nbsp;14, 2000.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">Quarter Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2001</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,721,249</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,916,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,612,873</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,339,751</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">535,891</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">304,225</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">275,568</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">501,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213,710</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,623</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">92,671</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">320,799</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,965</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,627</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge), net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,307</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,300</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">320,799</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107,665</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,663</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.05</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.03</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.05</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-114
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CALPINE CORPORATION AND SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">Quarter Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before dilutive effect of certain
	convertible securities, extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.01</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilutive effect of certain convertible securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.02</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary gain/(charge) and
	cumulative effect of a change in accounting principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.88</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary gain/(charge)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.02</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cumulative effect of a change in accounting
	principle
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.88</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock price per share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">High
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28.85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.04</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Low
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.90</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.00</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2000</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,099,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744,814</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">417,155</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">285,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross profit
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">302,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">326,259</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146,632</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,150</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245,188</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">292,021</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,896</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,545</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,235</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,683</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,310</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.08</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.55</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.08</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Diluted earnings per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary charge and dilutive
	effect of certain trust preferred securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.43</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.52</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilutive effect of certain trust preferred
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.03</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.03</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.49</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extraordinary charge
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock price per share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">High
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.97</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30.75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Low
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.09</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-115
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
SCHEDULE</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">and Stockholders of Calpine Corporation:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited, in accordance with generally
accepted auditing standards in the United States, the
consolidated financial statements of Calpine Corporation
included in this Annual Report on Form&nbsp;10-K and have issued
our report thereon dated February&nbsp;6, 2002 (except for
Note&nbsp;24 as to which the date is March&nbsp;22, 2002). Our
audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in the
accompanying index is the responsibility of the Company&#146;s
management, is presented for the purposes of complying with the
Securities and Exchange Commission&#146;s rules, and is not part
of the basic financial statements. The schedule has been
subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="38%"></TD>
	<TD width="62%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">/s/ ARTHUR ANDERSEN LLP
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">San Jose, California
</FONT>

<DIV align="left">
<FONT size="2">March&nbsp;22, 2002
</FONT>
</DIV>

<P align="center"><FONT size="2">F-116
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="right">
<B><FONT size="2">SCHEDULE II</FONT></B>

<P align="center">
<B><FONT size="2">SCHEDULE II VALUATION AND QUALIFYING
ACCOUNTS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Charged to</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reserved</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Beginning of Year</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Expense</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gain</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reductions(1)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">End of Year</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year Ended December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for Doubtful Accounts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,539</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,672</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,422</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reserve for Notes Receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,513</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,920</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gain reserved on certain Enron transactions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,091</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,091</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reserve for third-party default on emission
	reduction credits
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year Ended December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for Doubtful Accounts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,545</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reserve for Notes Receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,513</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,513</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Year Ended December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for Doubtful Accounts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">634</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(93</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents write-off of accounts considered to be
	uncollectible, less recoveries of amounts previously written off.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-117
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)" -->
<DIV align="left"><A NAME="027"></A></DIV>

<P align="center">
<B><FONT size="2">SUPPLEMENTAL OIL AND GAS DISCLOSURES</FONT></B>

<DIV align="center">
<B><FONT size="2">(Unaudited)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Oil and Gas Producing Activities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following disclosures for Calpine Corporation
(&#147;the Company&#148;) are made in accordance with Statement
of Financial Accounting Standards (SFAS) No.&nbsp;69,
&#147;Disclosures About Oil and Gas Producing Activities (An
Amendment of FASB Statements&nbsp;19, 25, 33 and&nbsp;39)&#148;.
Users of this information should be aware that the process of
estimating quantities of proved, proved developed and proved
undeveloped crude oil and natural gas reserves is very complex,
requiring significant subjective decisions in the evaluation of
all available geological, engineering and economic data for each
reservoir. The data for a given reservoir may also change
substantially over time as a result of numerous factors
including, but not limited to, additional development activity,
evolving production history and continual reassessment of the
viability of production under varying economic conditions.
Consequently, material revisions to existing reserve estimates
occur from time to time. Although every reasonable effort is
made to ensure that reserve estimates reported represent the
most accurate assessments possible, the significance of the
subjective decisions required and variances in available data
for various reservoirs make these estimates generally less
precise than other estimates presented in connection with
financial statement disclosures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proved reserves represent estimated quantities of
natural gas and crude oil that geological and engineering data
demonstrate, with reasonable certainty, to be recoverable in
future years from known reservoirs under economic and operating
conditions existing at the time the estimates were made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proved developed reserves are proved reserves
expected to be recovered, through wells and equipment in place
and under operating methods being utilized at the time the
estimates were made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proved undeveloped reserves are reserves that are
expected to be recovered from new wells on undrilled acreage or
from existing wells where a relatively major expenditure is
required for recompletion. Reserves on undrilled acreage are
limited to those drilling units offsetting productive units that
are reasonably certain of production when drilled. Proved
reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of
production from the existing productive formation. Estimates for
proved undeveloped reserves are not attributed to any acreage
for which an application of fluid injection or other improved
recovery technique is contemplated, unless such techniques have
been proved effective by actual tests in the area and in the
same reservoir.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimates of proved and proved developed reserves
as of December&nbsp;31, 2001, were based on estimates made by
Netherland, Sewell&nbsp;&#38; Associates Inc. (NS&#38;A),
independent petroleum consultants, for reserves in the United
States; and Gilbert Laustsen Jung Associates, Ltd. (GLJA)
independent petroleum consultants, for reserves in Canada.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimates of proved and proved developed reserves
as of December&nbsp;31, 2000 and 1999, were based on estimates
made by Netherland, Sewell &#38; Associates Inc. (NS&#38;A),
independent petroleum consultants, for reserves in the United
States; and Gilbert Laustsen Jung Associates, Ltd. (GLJA), and
McDaniel &#38; Associates Consultants, Ltd., both independent
petroleum consultants, for reserves in Canada.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Market prices as of each year-end were used for
future sales of natural gas and crude oil. Future operating
costs, production and ad valorem taxes and capital costs were
based on current costs as of each year-end, with no escalation.
There are numerous uncertainties inherent in estimating
quantities of proved reserves and in projecting the future rates
of production and timing of development expenditures. Reserve
data represent estimates only and should not be construed as
being exact. Moreover, the standardized measure should not be
construed as the current market value of the proved oil and gas
reserves or the costs that would be incurred to obtain
equivalent reserves. A market value determination would include
many additional factors including (a)&nbsp;anticipated future
changes in natural gas and crude oil prices, production and
development costs, (b)&nbsp;an allowance for return on
investment, (c)&nbsp;the value of additional reserves, not
considered proved at present, which may be recovered as a result
of further exploration and development activities, and
(d)&nbsp;other business risk.
</FONT>

<P align="center"><FONT size="2">F-118
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
Costs Relating to Oil and Gas Producing Activities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the capitalized
costs relating to the Company&#146;s natural gas and crude oil
producing activities (excluding pipeline and related assets) at
December&nbsp;31, 2001 and 2000, (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved properties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,913,025</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331,572</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unproved properties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">322,735</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76,075</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,235,760</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,407,647</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less- Accumulated depreciation, depletion and
	amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(519,747</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(338,475</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net capitalized costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,716,013</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,069,172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs
Incurred in Oil and Gas Property Acquisition, Exploration and
Development Activities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The acquisition, exploration and development
costs disclosed in the following tables are in accordance with
definitions in SFAS No.&nbsp;19, &#147;Financial Accounting and
Reporting by Oil and Gas Producing Companies.&#148; Acquisition
costs include costs incurred to purchase, lease or otherwise
acquire property. Exploration costs include exploration expenses
and additions to exploration wells, including those in progress.
Development costs include additions to production facilities and
equipment, as well as additions to development wells, including
those in progress. The following table sets forth costs incurred
related to the Company&#146;s oil and gas activities for the
years ended December&nbsp;31, 2001, 2000, and 1999, (in
thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs of properties&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">342,941</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,762</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">349,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unproved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">234,789</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,780</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,569</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">577,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,542</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">602,272</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,495</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,970</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,465</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86,311</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,343</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">248,654</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684,536</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">204,855</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">889,391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs of properties-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">307,356</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">410,496</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unproved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,141</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,260</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,259</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378,497</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">482,756</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,469</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,689</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,820</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,509</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">133,125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531,786</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,911</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs of properties-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">216,242</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unproved
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">216,242</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">250,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,860</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,960</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">975</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">82,775</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">387,877</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-119
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Results of
Operations for Oil and Gas Producing Activities</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth results of
operations for oil and gas producing activities (excluding
pipeline and related operations) for the years ended
December&nbsp;31, 2001, 2000, and 1999 (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production revenues-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third-party
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,788</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">330,420</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">427,208</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intercompany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,584</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,314</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">210,372</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">334,150</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">544,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration expenses, including dry hole
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,314</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,250</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,042</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,819</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">161,084</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,989</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">159,590</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">276,579</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax provision
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,997</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76,061</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Results of operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">83,529</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158,521</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production revenues-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third-party
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,685</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">308,359</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">351,044</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intercompany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,494</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">308,359</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">413,853</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration expenses, including dry hole
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,895</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,157</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,969</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87,271</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,794</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,783</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">207,577</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax provision
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,540</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,612</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91,152</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Results of operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,254</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,425</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Oil and gas production revenues-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Third-party
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,299</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,899</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Intercompany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,734</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,734</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149,633</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exploration expenses, including dry hole
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,378</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,293</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation, depletion and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,047</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,147</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,015</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax provision
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,176</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,276</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Results of operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,839</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,539</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The results of operations for oil and gas
producing activities exclude interest charges and general
corporate expenses.
</FONT>

<P align="center"><FONT size="2">F-120
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Proved
and Proved Developed Reserve Summary</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the Company&#146;s
net proved and proved developed reserves at December&nbsp;31 for
each of the three years in the period ended December&nbsp;31,
2001, and the changes in the net proved reserves for each of the
three years in the period then ended as estimated by the
independent petroleum consultants.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas (Bcf)(1)-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1998
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">376</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(16</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(49</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">652</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(38</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(52</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(77</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">333</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">537</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">870</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(49</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">208</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">208</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(41</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(61</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(102</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">590</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,035</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-121
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas liquids and crude oil (MBbl)(2)(3)-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1998
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,895</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,095</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(600</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(600</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,900</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,935</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,860</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,400</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,260</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(81</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,732</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,865</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,708</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(240</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,202</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,442</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,539</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,661</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,492</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,730</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,116</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,566</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,914</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(80</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,054</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,134</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(434</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,192</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,626</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,574</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,616</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,190</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">(Bcfe)(1) equivalent(4)-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1998
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">539</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(38</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(111</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">816</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous estimates
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(83</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries and other additions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(32</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Production
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(44</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(97</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(141</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved reserves at December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">617</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,294</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-122
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net proved developed reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas (Bcf)(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">315</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">659</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">378</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">772</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Natural gas liquids and crude oil (MBbl)(2)(3)-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,904</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,567</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,929</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,496</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,719</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34,131</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,850</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bcf(1) equivalents(4)-
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">463</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">283</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">993</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Billion cubic feet or billion cubic feet
	equivalent, as applicable.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Thousand barrels.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Includes crude oil, condensate and natural gas
	liquids.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Natural gas liquids and crude oil volumes have
	been converted to equivalent gas volumes using a conversion
	factor of six cubic feet of gas to one barrel of natural gas
	liquids and crude oil.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Standardized
Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following information has been developed
utilizing procedures prescribed by SFAS No.&nbsp;69 and based on
natural gas and crude oil reserve and production volumes
estimated by the independent petroleum consultants. This
information may be useful for certain comparison purposes but
should not be solely relied upon in evaluating the Company or
its performance. Further, information contained in the following
table should not be considered as representative of realistic
assessments of future cash flows, nor should the standardized
measure of discounted future net cash flows be viewed as
representative of the current value of the Company&#146;s oil
and gas assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The future cash flows presented below are based
on sales prices, cost rates and statutory income tax rates in
existence as of the date of the projections. It is expected that
material revisions to some estimates of natural gas and crude
oil reserves may occur in the future, development and production
of the reserves may occur in periods other than those assumed,
and actual prices realized and costs incurred may vary
significantly from those used. Income tax expense, for both the
United States and Canada, has been computed using expected
future tax rates and giving effect to tax deductions and credits
available, under current laws, and which relate to oil and gas
producing activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management does not rely upon the following
information in making investment and operating decisions. Such
decisions are based upon a wide range of factors, including
estimates of probable as well as proved reserves and varying
price and cost assumptions considered more representative of a
range of possible economic conditions that may be anticipated.
</FONT>

<P align="center"><FONT size="2">F-123
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the standardized
measure of discounted future net cash flows from projected
production of the Company&#146;s natural gas and crude oil
reserves for the years ended December&nbsp;31, 2001, 2000, and
1999 (in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2001&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future cash inflows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,609</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,230</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future production and development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(602</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(569</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,171</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,059</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(217</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(245</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(462</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">790</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">807</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,597</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Discount to present value at 10% annual rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(349</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(269</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(618</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Standardized measure of discounted future net
	cash flows relating to proved gas, natural gas liquids and crude
	oil reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">441</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 2000&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future cash inflows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future production and development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(475</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(759</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,234</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(970</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,808</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,778</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,362</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Discount to present value at 10% annual rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,172</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,112</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,284</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Standardized measure of discounted future net
	cash flows relating to proved gas, natural gas liquids and crude
	oil reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,880</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,078</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">December&nbsp;31, 1999&nbsp;&#151;
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future cash inflows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">485</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,084</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future production and development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(137</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(436</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(573</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">348</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,163</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(56</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(350</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(406</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Future net cash flows
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">292</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">813</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Discount to present value at 10% annual rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(139</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(263</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(402</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Standardized measure of discounted future net
	cash flows relating to proved gas, natural gas liquids and crude
	oil reserves
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-124
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in
Standardized Measure of Discounted Future Net Cash
Flows</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the changes in the
standardized measure of discounted future net cash flows at
December&nbsp;31, 2001, 2000, and 1999 (in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Canada</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 1998.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">326</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales and transfers of gas, natural gas liquids
	and crude oil produced, net of production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(98</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(105</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net changes in prices and production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries, additions and improved
	recovery, net of related costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous quantity estimates and
	development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accretion of discount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net change in income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(127</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(156</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">185</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">219</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in timing and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 1999.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales and transfers of gas, natural gas liquids
	and crude oil produced, net of production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(91</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(245</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(336</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net changes in prices and production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,717</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries, additions and improved
	recovery, net of related costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous quantity estimates and
	development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(215</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accretion of discount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net change in income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(462</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(938</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,400</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">603</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,095</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in timing and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(176</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(114</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(290</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 2000.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,880</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,078</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales and transfers of gas, natural gas liquids
	and crude oil produced, net of production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(273</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(454</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net changes in prices and production costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,312</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,733</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,045</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Extensions, discoveries, additions and improved
	recovery, net of related costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">235</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Development costs incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revisions of previous quantity estimates and
	development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(298</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(408</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accretion of discount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net change in income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">869</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,239</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sales of reserves in place
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(48</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in timing and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;31, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">441</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">979</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-125
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="028"></A></DIV>

<P align="center">
<B><FONT size="2">EXHIBIT INDEX</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Certificate of Incorporation
	of Calpine Corporation.(a)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Correction of Calpine
	Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Amendment of Amended and Restated
	Certificate of Incorporation of Calpine Corporation.(c)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Designation of Series&nbsp;A
	Participating Preferred Stock of Calpine Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment to Certificate of Designation of
	Series&nbsp;A Participating Preferred Stock of Calpine
	Corporation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment to Certificate of Designation of
	Series&nbsp;A Participating Preferred Stock of Calpine
	Corporation.(c)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Designation of Special Voting
	Preferred Stock of Calpine Corporation.(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated By-laws of Calpine
	Corporation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of May&nbsp;16, 1996, between
	the Company and Fleet National Bank, as Trustee, including form
	of&nbsp;Notes.(f)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	August&nbsp;1, 2000, between the Company and State Street Bank
	and Trust Company (successor trustee to Fleet National Bank),
	as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of July&nbsp;8, 1997, between
	the Company and The Bank of New&nbsp;York, as Trustee, including
	form of&nbsp;Notes.(g)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Supplemental Indenture dated as of
	September&nbsp;10, 1997, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(h)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.2.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;31, 1998,
	between the Company and The Bank of New&nbsp;York, as Trustee,
	including form of&nbsp;Notes.(i)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Supplemental Indenture dated as of July&nbsp;24,
	1998, between the Company and The Bank of New&nbsp;York,
	as&nbsp;Trustee.(i)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.3.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of
	New&nbsp;York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;29, 1999,
	between the Company and The Bank of New York, as Trustee,
	including form of&nbsp;Notes.(j)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of New
	York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.5.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of March&nbsp;29, 1999,
	between the Company and The Bank of New York, as Trustee,
	including form of&nbsp;Notes.(j)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.5.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	July&nbsp;31, 2000, between the Company and The Bank of New
	York, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.6.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of August&nbsp;10, 2000,
	between the Company and Wilmington Trust Company, as Trustee.(k)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.6.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture dated as of
	September&nbsp;28, 2000, between the Company and Wilmington
	Trust Company, as&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of April&nbsp;30, 2001,
	between the Company and Wilmington Trust Company, as Trustee.(m)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Indenture dated as of
	October&nbsp;16, 2001, between Calpine Canada Energy Finance ULC
	and Wilmington Trust Company, as&nbsp;Trustee.(1)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee Agreement dated as of April&nbsp;25,
	2001, between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(o)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment, dated as of October&nbsp;16,
	2001, to Guarantee Agreement dated as of April&nbsp;25, 2001,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of October&nbsp;18, 2001,
	between Calpine Canada Energy Finance II ULC and Wilmington
	Trust Company, as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Supplemental Indenture, dated as of
	October&nbsp;18, 2001, between Calpine Canada Energy
	Finance&nbsp;II ULC and Wilmington Trust Company,
	as&nbsp;Trustee.(1)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee Agreement dated as of October&nbsp;18,
	2001, between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment, dated as of October&nbsp;18,
	2001, to Guarantee Agreement dated as of October&nbsp;18, 2001,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(l)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Rights Agreement, dated as
	of September&nbsp;19, 2001, between Calpine Corporation and
	Equiserve Trust Company,&nbsp;N.A., as Rights&nbsp;Agent.(n)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Exchangeable Share Provisions and Other
	Provisions to Be Included in the Articles of Calpine Canada
	Holdings Ltd. (included as Exhibit&nbsp;B to
	Exhibit&nbsp;10.1.2).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Support Agreement between the Company and
	Calpine Canada Holdings Ltd. (included as Exhibit&nbsp;C to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;I.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Trust of Calpine Capital Trust, a
	Delaware statutory trust, dated September&nbsp;29, 1999.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Corrected Certificate of Certificate of Trust of
	Calpine Capital Trust, a Delaware statutory trust, filed
	October&nbsp;4,&nbsp;1999.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital Trust,
	dated as of October&nbsp;4, 1999, among Calpine Corporation, as
	Depositor, The Bank of New&nbsp;York (Delaware), as Delaware
	Trustee, The Bank of New&nbsp;York, as Property Trustee, and the
	Administrative Trustees named&nbsp;therein.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of November&nbsp;2, 1999,
	between Calpine Corporation and The Bank of New&nbsp;York, as
	Trustee, including form of&nbsp;Debenture.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement, dated November&nbsp;2,
	1999, among Calpine Corporation, Calpine Capital Trust, The Bank
	of New&nbsp;York, as Tender Agent, and Credit Suisse First
	Boston Corporation, as Remarketing Agent.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust, dated as of November&nbsp;2, 1999, among
	Calpine Corporation, as Depositor and Debenture Issuer, The Bank
	of New&nbsp;York (Delaware), as Delaware Trustee, and The Bank
	of New York, as Property Trustee, and the Administrative
	Trustees named therein, including form of Preferred Security and
	form of Common Security.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.18.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement, dated
	as of November&nbsp;2, 1999, between Calpine Corporation and The
	Bank of New York, as Guarantee Trustee.(p)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;II.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Certificate of Trust of Calpine Capital Trust II,
	a Delaware statutory trust, filed January&nbsp;25, 2000.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital Trust II,
	dated as of January&nbsp;24, 2000, among Calpine Corporation, as
	Depositor and Debenture Issuer, The Bank of New York (Delaware),
	as Delaware Trustee, The Bank of New York, as Property Trustee,
	and the Administrative Trustees named therein.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture, dated as of January&nbsp;31, 2000,
	between Calpine Corporation and The Bank of New York, as
	Trustee, including form of&nbsp;Debenture.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement, dated as of
	January&nbsp;31, 2000, among Calpine Corporation, Calpine
	Capital Trust&nbsp;II, The Bank of New York, as Tender Agent,
	and Credit Suisse First Boston Corporation, as Remarketing
	Agent.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Registration Rights Agreement, dated
	January&nbsp;31, 2000, among Calpine Corporation, Calpine
	Capital Trust&nbsp;II, Credit Suisse First Boston Corporation
	and ING Barings&nbsp;LLC.(q)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust II, dated as of January&nbsp;31, 2000,
	among Calpine Corporation, as Depositor and Debenture Issuer,
	The Bank of New York (Delaware), as Delaware Trustee, The Bank
	of New York, as Property Trustee, and the Administrative
	Trustees named therein, including form of Preferred Security and
	form of Common Security.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.19.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement, dated
	as of January&nbsp;31, 2000, between Calpine Corporation and The
	Bank of New&nbsp;York, as Guarantee Trustee.(q)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">HIGH TIDES&nbsp;III.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Certificate of Trust of
	Calpine Capital Trust&nbsp;III, a Delaware statutory trust,
	filed July&nbsp;19,&nbsp;2000.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Declaration of Trust of Calpine Capital
	Trust&nbsp;III dated June&nbsp;28, 2000, among the Company, as
	Depositor and Debenture Issuer, The Bank of New York (Delaware),
	as Delaware Trustee, The Bank of New York, as Property Trustee
	and the Administrative Trustees named therein.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amendment No.&nbsp;1 to the Declaration of Trust
	of Calpine Capital Trust III dated July&nbsp;19, 2000, among the
	Company, as Depositor and Debenture Issuer, Wilmington Trust
	Company, as Delaware Trustee, Wilmington Trust Company, as
	Property Trustee, and the Administrative Trustees named
	therein.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture dated as of August&nbsp;9, 2000,
	between the Company and Wilmington Trust Company,
	as&nbsp;Trustee.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Remarketing Agreement dated as of August&nbsp;9,
	2000, among the Company, Calpine Capital Trust III, Wilmington
	Trust Company, as Tender Agent, and Credit Suisse First Boston
	Corporation, as Remarketing Agent.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Registration Rights Agreement dated as
	August&nbsp;9, 2000, between the Company, Calpine Capital
	Trust&nbsp;III, Credit Suisse First Boston Corporation, ING
	Barings&nbsp;LLC and CIBC&nbsp;World Markets&nbsp;Corp.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Declaration of Trust of
	Calpine Capital Trust&nbsp;III dated as of August&nbsp;9, 2000,
	the Company, as Depositor and Debenture Issuer, Wilmington Trust
	Company, as Delaware Trustee, Wilmington Trust Company, as
	Property Trustee, and the Administrative Trustees named therein,
	including the form of Preferred Security and form of Common
	Security.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.20.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Preferred Securities Guarantee Agreement dated as
	of August&nbsp;9, 2000, between the Company, as Guarantor, and
	Wilmington Trust Company, as Guarantee Trustee.(r)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">PASS THROUGH CERTIFICATES (TIVERTON
	AND&nbsp;RUMFORD).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement dated as of
	December&nbsp;19, 2000, among Tiverton Power Associates Limited
	Partnership, Rumford Power Associates Limited Partnership and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including the form
	of&nbsp;Certificate.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement dated as of
	December&nbsp;19, 2000, among the Company, Tiverton Power
	Associates Limited Partnership, Rumford Power Associates Limited
	Partnership, PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, National Association, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	National Association, as Pass Through Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of December&nbsp;19, 2000, between
	PMCC&nbsp;Calpine New England Investment LLC and State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, including the forms of Lessor&nbsp;Notes.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Tiverton)
	dated as of December&nbsp;19, 2000, by Calpine, as Guarantor, to
	PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, as Indenture Trustee, and State Street
	Bank and Trust Company of Connecticut, as Pass
	Through&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.21.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Rumford)
	dated as of December&nbsp;19, 2000, by Calpine, as Guarantor, to
	PMCC&nbsp;Calpine New England Investment&nbsp;LLC,
	PMCC&nbsp;Calpine NEIM&nbsp;LLC, State Street Bank and Trust
	Company of Connecticut, as Indenture Trustee, and State Street
	Bank and Trust Company of Connecticut, as Pass
	Through&nbsp;Trustee.(b)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">PASS THROUGH CERTIFICATES (SOUTH POINT, BROAD
	RIVER AND&nbsp;ROCKGEN).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement A dated as of
	October&nbsp;18, 2001, among South Point Energy
	Center,&nbsp;LLC, Broad River Energy&nbsp;LLC, RockGen Energy
	LLC and State Street Bank and Trust Company of Connecticut,
	National Association, as Pass Through Trustee, including the
	form of 8.400% Pass Through Certificate, Series&nbsp;A.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pass Through Trust Agreement&nbsp;B dated as of
	October&nbsp;18, 2001, among South Point Energy
	Center,&nbsp;LLC, Broad River Energy&nbsp;LLC, RockGen
	Energy&nbsp;LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including the form of 9.825% Pass Through Certificate,
	Series&nbsp;B.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-1) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center, LLC, South Point OL-1,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-1, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-2) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point&nbsp;OL-2, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-2, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-3) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point OL-3,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-3, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (SP-4) dated as of
	October&nbsp;18, 2001, among the Company, South Point Energy
	Center,&nbsp;LLC, South Point OL-4,&nbsp;LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-4, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-1) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River&nbsp;OL-1, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-1, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-2) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River&nbsp;OL-2, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-2, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-3) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River OL-3, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-3, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (BR-4) dated as of
	October&nbsp;18, 2001, among the Company, Broad River
	Energy&nbsp;LLC, Broad River OL-4, LLC, Wells Fargo Bank
	Northwest, National Association, as Lessor Manager,
	SBR&nbsp;OP-4, LLC, State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, National
	Association, as Pass Through Trustee, including
	Appendix&nbsp;A&nbsp;&#151; Definitions and Rules
	of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-1) dated as of
	October&nbsp;18, 2001, among the Company, RockGen
	Energy&nbsp;LLC, RockGen OL-1, LLC, Wells Fargo Bank Northwest,
	National Association, as Lessor Manager, SBR&nbsp;OP-1, LLC,
	State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee, and State Street Bank and
	Trust Company of Connecticut, National Association, as Pass
	Through Trustee, including Appendix&nbsp;A&nbsp;&#151;
	Definitions and Rules of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-2) dated as of
	October&nbsp;18, 2001, among the Company, RockGen
	Energy&nbsp;LLC, RockGen OL-2, LLC, Wells Fargo Bank Northwest,
	National Association, as Lessor Manager, SBR&nbsp;OP-2, LLC,
	State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee, and State Street Bank and
	Trust Company of Connecticut, National Association, as Pass
	Through Trustee, including Appendix&nbsp;A&nbsp;&#151;
	Definitions and Rules of&nbsp;Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-3) dated as of
	October&nbsp;18, 2001, among the Company, RockGen Energy LLC,
	RockGen OL-3, LLC, Wells Fargo Bank Northwest, National
	Association, as Lessor Manager, SBR&nbsp;OP-3, LLC, State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
	Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.14</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Participation Agreement (RG-4) dated as of
	October&nbsp;18, 2001, among the Company, RockGen Energy LLC,
	RockGen OL-4, LLC, Wells Fargo Bank Northwest, National
	Association, as Lessor Manager, SBR&nbsp;OP-4, LLC, State Street
	Bank and Trust Company of Connecticut, National Association, as
	Indenture Trustee, and State Street Bank and Trust Company of
	Connecticut, National Association, as Pass Through Trustee,
	including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
	Interpretation.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-1, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-2, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-3, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Deed of Trust, Assignment of
	Rents and Leases, Security Agreement and Financing Statement,
	dated as of October&nbsp;18, 2001, between South Point OL-4, LLC
	and State Street Bank and Trust Company of Connecticut, National
	Association, as Indenture Trustee and Account Bank, including
	the form of South Point Lessor Notes.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-1, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-2, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-3, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage, Security Agreement
	and Fixture Filing, dated as of October&nbsp;18, 2001, between
	Broad River OL-4, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee,
	Mortgagee and Account Bank, including the form of Broad River
	Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-1, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-2, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-3, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Indenture of Trust, Mortgage and Security
	Agreement, dated as of October&nbsp;18, 2001, between RockGen
	OL-4, LLC and State Street Bank and Trust Company of
	Connecticut, National Association, as Indenture Trustee and
	Account Bank, including the form of RockGen Lessor Notes.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-1, LLC, SBR OP-1, LLC, State Street
	Bank and Trust Company of Connecticut, as Indenture Trustee, and
	State Street Bank and Trust Company of Connecticut, as Pass
	Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.30</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (South
	Point SP-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to South Point OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.31</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-1, LLC, SBR&nbsp;OP-1, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.32</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.33</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (Broad
	River BR-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to Broad River OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.35</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-1) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-1, LLC, SBR&nbsp;OP-1, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.36</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-2) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-2, LLC, SBR&nbsp;OP-2, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-3) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-3, LLC, SBR&nbsp;OP-3, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.22.38</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Guaranty and Payment Agreement (RockGen
	RG-4) dated as of October&nbsp;18, 2001, by Calpine, as
	Guarantor, to RockGen OL-4, LLC, SBR&nbsp;OP-4, LLC, State
	Street Bank and Trust Company of Connecticut, as Indenture
	Trustee, and State Street Bank and Trust Company of Connecticut,
	as Pass Through Trustee.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">9.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Voting and Exchange Trust Agreement
	between the Company, Calpine Canada Holdings Ltd. and CIBC
	Mellon Trust Company, as Trustee (included as Exhibit&nbsp;D to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Purchase Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Combination Agreement, dated as of
	February&nbsp;7, 2001, by and between the Company and Encal
	Energy Ltd.(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amending Agreement to the Combination Agreement,
	dated as of March&nbsp;16, 2001, between the Company and Encal
	Energy Ltd.(t)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Plan of Arrangement Under
	Section&nbsp;186 of the Business Corporations Act (Alberta)
	Involving and Affecting Encal Energy Ltd. and the Holders of its
	Common Shares and Options (included as Exhibit&nbsp;A to
	Exhibit&nbsp;10.1.1).(d)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Financing Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Calpine Construction Finance
	Company Financing Agreement (&#147;CCFC I&#148;), dated as of
	February&nbsp;15, 2001.(d)(u)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Construction Finance Company Financing
	Agreement (&#147;CCFC II&#148;), dated as of October&nbsp;16,
	2000.(b)(v)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Amended and Restated Credit Agreement,
	dated as of May&nbsp;23, 2000 (&#147;Second Amended and Restated
	Credit Agreement&#148;), among the Company, Bayerische
	Landesbank, as Co-Arranger and Syndication Agent, The Bank of
	Nova Scotia, as Lead Arranger and Administrative Agent, and the
	Lenders named therein.(w)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment and Waiver to Second Amended and
	Restated Credit Agreement, dated as of April&nbsp;19, 2001,
	among the Company, The Bank of Nova Scotia, as Administrative
	Agent, and the Lenders named therein.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Second Amendment to Second Amended and Restated
	Credit Agreement, dated as of March&nbsp;8, 2002, among the
	Company, The Bank of Nova Scotia, as Administrative Agent, and
	the Lenders named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Credit Agreement, dated as of March&nbsp;8, 2002,
	among the Company, the Lenders named therein, The Bank of Nova
	Scotia and Bayerische Landesbank Girozentrale, as lead arrangers
	and bookrunners, Salomon Smith Barney Inc. and Deutsche Banc
	Alex. Brown Inc., as lead arrangers and bookrunners, Bank of
	America, National Association, and Credit Suisse First Boston,
	Cayman Islands Branch, as lead arrangers and syndication agents,
	TD Securities (USA)&nbsp;Inc., as lead arranger, The Bank of
	Nova Scotia, as joint administrative agent and funding agent,
	and Citicorp USA, Inc., as joint administrative agent.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Assignment and Security Agreement, dated as of
	March&nbsp;8, 2002, by the Company in favor of The Bank of Nova
	Scotia, as administrative agent for each of the Lender Parties
	named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pledge Agreement, dated as of March&nbsp;8, 2002,
	by the Company in favor of The Bank of Nova Scotia, as Agent for
	the Lender Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Pledge Agreement, dated as of March&nbsp;8, 2002,
	by Quintana Minerals (USA), Inc., JOQ Canada, Inc. and Quintana
	Canada Holdings, LLC in favor of The Bank of Nova Scotia, as
	Agent for the Lender Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Guarantee, dated as of March&nbsp;8, 2002, by
	Quintana Minerals (USA), Inc., JOQ&nbsp;Canada, Inc. and
	Quintana Canada Holdings, LLC, in favor of each of the Lender
	Parties named therein.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Other Agreements.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation Stock Option Program and
	forms of agreements there under.(x)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation 1996 Stock Incentive Plan and
	forms of agreements there under.(y)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Peter
	Cartwright.(q)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Ms.&nbsp;Ann&nbsp;B.
	Curtis.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Ron&nbsp;A.
	Walter.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Robert&nbsp;D.
	Kelly.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Employment Agreement, dated as of January&nbsp;1,
	2000, between Calpine Corporation and Mr.&nbsp;Thomas&nbsp;R.
	Mason.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Calpine Corporation Annual Management Incentive
	Plan.(s)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">$500,000 Promissory Note Secured by Deed of Trust
	made by Thomas R. Mason and Debra J. Mason in favor of Calpine
	Corporation.(s)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Indemnification Agreement for directors
	and officers.(y)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Form of Indemnification Agreement for directors
	and officers.(*)(z)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">12.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Statement on Computation of Ratio of Earnings to
	Fixed Charges.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">16.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Letter re Change in Certifying Public
	Accountant.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Subsidiaries of the Company.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Arthur Andersen LLP, Independent
	Public Accountants.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Ernst &#38; Young LLP, Independent
	Chartered Accountants.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Netherland, Sewell &#38; Associates,
	Inc., independent engineer.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Consent of Gilbert Laustsen Jung Associates,
	Ltd., independent engineer.(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">24.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Power of Attorney of Officers and Directors of
	Calpine Corporation (set forth on the signature pages of this
	report).(*)
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Letter pursuant to Temporary Note 3T to
	Article&nbsp;3 of Regulation&nbsp;S-X.(*)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD></TD>
	<TD align="left">
	<FONT size="2">(*)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filed
	herewith.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(a)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3
	(Registration No.&nbsp;333-40652) filed with the SEC on
	June&nbsp;30, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(b)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Annual Report on Form 10-K for the year ended
	December&nbsp;31, 2000, filed with the SEC on March&nbsp;15,
	2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(c)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3
	(Registration No.&nbsp;333-66078) filed with the SEC on
	July&nbsp;27, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(d)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Quarterly Report on Form&nbsp;10-Q dated
	March&nbsp;31, 2001, filed with the SEC on May&nbsp;15, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(e)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3/A
	(Registration No.&nbsp;333-67446) filed with the SEC on
	September&nbsp;20, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(f)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-4
	(Registration Statement No.&nbsp;333-06259) filed with the SEC
	on June&nbsp;19, 1996.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(g)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Quarterly Report on Form&nbsp;10-Q dated
	June&nbsp;30, 1997, filed with the SEC on August&nbsp;14, 1997.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(h)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-4
	(Registration Statement No.&nbsp;333-41261) filed with the SEC
	on November&nbsp;28, 1997.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(i)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-4
	(Registration Statement No.&nbsp;333-61047) filed with the SEC
	on August&nbsp;10, 1998.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(j)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3/A
	(Registration Statement No.&nbsp;333-72583) filed with the SEC
	on March&nbsp;8, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(k)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3
	(Registration No.&nbsp;333-76880) filed with the SEC on
	January&nbsp;17, 2002.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(l)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Current Report on Form&nbsp;8-K dated
	October&nbsp;16, 2001, filed with the SEC on November&nbsp;13,
	2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(m)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Current Report on Form&nbsp;8-K dated
	October&nbsp;16, 2001, filed with the SEC on November&nbsp;13,
	2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(n)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;8-A/A
	(Registration No.&nbsp;001-12079) filed with the SEC on
	September&nbsp;28, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(o)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3/A
	(Registration No.&nbsp;333-57338) filed with the SEC on
	April&nbsp;19, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(p)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3/A
	(Registration Statement No.&nbsp;333-87427) filed with the SEC
	on October&nbsp;26, 1999.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(q)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Annual Report on Form&nbsp;10-K for the year
	ended December&nbsp;31, 1999, filed with the SEC on
	February&nbsp;29, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(r)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3
	(Registration Statement No.&nbsp;333-47068) filed with the SEC
	on September&nbsp;29, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(s)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Current Report on Form&nbsp;8-K dated
	March&nbsp;30, 2000, filed with the SEC on April&nbsp;3, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(t)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-3/A
	(Registration Statement No.&nbsp;333-56712) filed with the SEC
	on April&nbsp;17, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(u)</FONT></TD>
	<TD align="left">
	<FONT size="2">Approximately 24&nbsp;pages of this exhibit have
	been omitted pursuant to a request for confidential treatment.
	The omitted language has been filed separately with the&nbsp;SEC.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(v)</FONT></TD>
	<TD align="left">
	<FONT size="2">Approximately 71&nbsp;pages of this exhibit have
	been omitted pursuant to a request for confidential treatment.
	The omitted language has been filed separately with the SEC.
	</FONT></TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(w)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Current Report on Form&nbsp;8-K dated
	July&nbsp;25, 2000, filed with the SEC on August&nbsp;9, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(x)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-1
	(Registration Statement No.&nbsp;33-73160) filed with the SEC on
	December&nbsp;20, 1993.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(y)</FONT></TD>
	<TD align="left">
	<FONT size="2">Incorporated by reference to Calpine
	Corporation&#146;s Registration Statement on Form&nbsp;S-1/A
	(Registration Statement No.&nbsp;333-07497) filed with the SEC
	on August&nbsp;22, 1996.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(z)</FONT></TD>
	<TD align="left">
	<FONT size="2">Management contract or compensatory plan or
	arrangement.
	</FONT></TD>
</TR>

</TABLE>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1.8
<SEQUENCE>3
<FILENAME>f80168ex3-1_8.txt
<DESCRIPTION>EXHIBIT 3.1.8
<TEXT>
<PAGE>
                                                                   Exhibit 3.1.8


                                     BYLAWS

                                       OF

                               CALPINE CORPORATION

                            (A Delaware Corporation)
<PAGE>
                                Table of Contents
<TABLE>
<CAPTION>
                                                                                                   Page
<S>                                                                                                <C>
ARTICLE I - OFFICES                                                                                  1
         Section 1.        Registered Office                                                         1
         Section 2.        Other Offices                                                             1

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

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

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

ARTICLE V - OFFICERS                                                                                 11
         Section 35.       Officers                                                                  11
         Section 36.       Appointment                                                               11
</TABLE>
<PAGE>
<TABLE>
<S>                                                                                                <C>
         Section 37.       Inability to Act                                                          11
         Section 38.       Resignation                                                               11
         Section 39.       Removal                                                                   11
         Section 40.       Vacancies                                                                 11
         Section 41.       Chairman of the Board                                                     11
         Section 42.       President                                                                 12
         Section 43.       Vice Presidents                                                           12
         Section 44.       Secretary and Assistant Secretary                                         12
         Section 45.       Chief Financial Officer                                                   13
         Section 46.       Compensation                                                              13

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

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

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

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

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

                           Agents                                                                    18

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

                                       OF

                               CALPINE CORPORATION
                            (A Delaware Corporation)

                                    ARTICLE I
                                     OFFICES

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

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

                                   ARTICLE II
                                 CORPORATE SEAL

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

                                   ARTICLE III
                   MEETINGS OF STOCKHOLDERS AND VOTING RIGHTS

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

                  SECTION 5. ANNUAL MEETING. Annual meetings of stockholders
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting. At such annual
meeting, directors shall be elected and any other business may be transacted
which may properly come before the meeting.
<PAGE>
                  SECTION 6. POSTPONEMENT OF ANNUAL MEETING. The Board of
Directors shall have the authority to postpone to a later date and/or time the
annual meeting of stockholders.

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

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

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

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

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

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

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

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


                                       2
<PAGE>
                  An affidavit of executed by the Secretary, Assistant Secretary
or any transfer agent, or other agent of the corporation that notice has been
given in a form permitted by this Section 9 shall be prima facie evidence of the
giving of the notice.

                  SECTION 10. QUORUM AND TRANSACTION OF BUSINESS.

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

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

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

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

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


                                       3
<PAGE>
procedures prescribed by this Section 10(b), and any such business not properly
brought before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Section 10(b), a stockholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this Section 10(b).

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

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

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

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

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

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

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

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

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


                                       4
<PAGE>
holders may be deemed to be present in person and vote at such adjourned
meetings are not made at the original meeting at which adjournment is taken;

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

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

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

                  SECTION 12. WAIVER OF NOTICE.

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

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

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

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

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

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

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


                                       5
<PAGE>
                  Any stockholder may vote part of such stockholder's shares in
favor of a proposal and refrain from voting the remaining shares or vote them
against the proposal, other than elections to office, but, if the stockholder
fails to specify the number of shares such stockholder is voting affirmatively,
it will be conclusively presumed that the stockholder's approving vote is with
respect to all shares such stockholder is entitled to vote.

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

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

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

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


                                       6
<PAGE>
                                   ARTICLE IV
                               BOARD OF DIRECTORS

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

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

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

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

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

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

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


                                       7
<PAGE>
                  (d) a description of any arrangement or understanding of each
proposed nominee and of each such person with each other or any other person
regarding future employment or any future transaction to which the corporation
will or may be a party.

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

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

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

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

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

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

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

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


                                       8
<PAGE>
                  SECTION 27. NOTICE OF MEETINGS. Notice of the date, time and
place of all meetings of the Board of Directors, or a committee thereof, shall
be delivered personally, orally or in writing, or by telephone, facsimile
telecommunication, or electronic transmission to each director, at least 48
hours before the meeting, or sent in writing to each director by first-class
mail, charges prepaid, at least four days before the meeting. Such notice may be
given by the Secretary of the corporation or by the person or persons who called
such meeting. Notice of any meeting of the Board of Directors, or a committee
thereof, need not be given to any director who signs a waiver of notice of such
meeting, either before or after the meeting, or who attends the meeting without
protesting prior thereto or at its commencement such director's lack of notice.
All such waivers shall be filed with the corporate records or made a part of the
minutes of the meeting.

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

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

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

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


                                       9
<PAGE>
                  SECTION 32. ORGANIZATION. The Chairman of the Board, if
present, shall preside at every meeting of the Board of Directors. If there is
no Chairman of the Board or if the Chairman is not present, a director chosen by
a majority of the directors present shall act as chairman. The Secretary of the
corporation or, in the absence of the Secretary, any person appointed by the
Chairman shall act as secretary of the meeting.

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

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

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

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

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

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


                                       10
<PAGE>
                                    ARTICLE V
                                    OFFICERS

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

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

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

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

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

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

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


                                       11
<PAGE>
Directors and of the stockholders at which he shall be present. The Chairman of
the Board shall have and may exercise such powers as are, from time to time,
assigned by the Board and as may be provided by law.

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

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

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

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

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

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

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

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


                                       12
<PAGE>
                  (f) Exercise such powers and perform such duties as are
usually vested in the office of secretary of a corporation and exercise such
other powers and perform such other duties as may be prescribed from time to
time by the Board of Directors or these bylaws.

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

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

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

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

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

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

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

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

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

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


                                       13
<PAGE>
                                   ARTICLE VI
               CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS

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

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

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

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


                                       14
<PAGE>
                                   ARTICLE VII
                    CERTIFICATES FOR STOCK AND THEIR TRANSFER

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

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

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

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

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


                                       15
<PAGE>
certificate for shares in the place of any certificate previously issued by the
corporation and which is alleged to have been lost, destroyed or stolen.
However, the Board of Directors or such authorized committee or officer or
officers may require the owner of the allegedly lost, destroyed or stolen
certificate, or such owner's legal representative, to give the corporation a
bond or other adequate security sufficient to indemnify the corporation and its
transfer agent and/or registrar, if any, against any claim that may be made
against it or them on account of such allegedly lost, destroyed or stolen
certificate or the replacement thereof. Said bond or other security shall be in
such amount, on such terms and conditions and, in the case of a bond, with such
surety or sureties as may be acceptable to the Board of Directors or to its duly
appointed and authorized committee or any officer or officers authorized by the
Board of Directors to determine the sufficiency thereof. The requirement of a
bond or other security may be waived in particular cases at the discretion of
the Board of Directors or its duly appointed and authorized committee or any
officer or officers authorized by the Board of Directors so to do.

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

                                  ARTICLE VIII
                         INSPECTION OF CORPORATE RECORDS

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

                  SECTION 56. INSPECTION BY STOCKHOLDERS.

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

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


                                       16
<PAGE>
stockholders at all reasonable times during office hours. A current copy of
these bylaws shall be furnished to any stockholder upon written request.

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

                                   ARTICLE IX
                                  MISCELLANEOUS

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

                  SECTION 59. ANNUAL REPORT.

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

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

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

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


                                       17
<PAGE>
                  SECTION 61. BYLAW AMENDMENTS. These bylaws may be altered,
amended or repealed, and new bylaws made, by the Board of Directors or the
stockholders as provided in Article Fifth of the Certificate of Incorporation.

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

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

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

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

                                    ARTICLE X
                                 INDEMNIFICATION

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


                                       18
<PAGE>
person who has ceased to be a director, and (iii) inure to the benefit of the
heirs, executors and administrators of such a person. The corporation's
obligation to provide indemnification under this Section 65 shall be offset to
the extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the corporation or any other
person.

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

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

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

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


                                       19
<PAGE>
or participants or beneficiaries of the plan; (iii) "fines" shall be deemed to
include any excise taxes assessed on a person with respect to an employee
benefit plan.

                                   ARTICLE XI
                          LOANS OF OFFICERS AND OTHERS

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



                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.1
<SEQUENCE>4
<FILENAME>f80168ex4-22_1.txt
<DESCRIPTION>EXHIBIT 4.22.1
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.1

===============================================================================

                         PASS THROUGH TRUST AGREEMENT A

                          Dated as of October 18, 2001

                                     between

                         SOUTH POINT ENERGY CENTER, LLC,

                             BROAD RIVER ENERGY LLC,

                               ROCKGEN ENERGY LLC,

                                       and

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                   ASSOCIATION,
                   not in its individual capacity, but solely
                             as Pass Through Trustee

        South Point, Broad River and RockGen Series A Pass Through Trust

                   8.400% Pass Through Certificates, Series A

===============================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                <C>                                                                                      <C>
SECTION 1.         DEFINITIONS...........................................................................    2

  Section 1.1            Definitions.....................................................................    2

  Section 1.2            Compliance Certificates and Opinions............................................    9

  Section 1.3            Form of Documents Delivered to Pass Through Trustee.............................   10

  Section 1.4            Acts of Holders.................................................................   11

  Section 1.5            Conflict with Trust Indenture Act...............................................   12

SECTION 2.         ACQUISITION OF LESSOR NOTES; ORIGINAL ISSUANCE OF CERTIFICATES........................   12

  Section 2.1            Issuance of Certificates; Acquisition of Lessor Notes...........................   12

  Section 2.2            Acceptance by Pass Through Trustee..............................................   14

  Section 2.3            Limitation of Powers............................................................   14

SECTION 3.         THE CERTIFICATES.....................................................................    15

  Section 3.1            Form, Denomination and Execution of Certificates................................   15

  Section 3.2            Authentication of Certificates..................................................   15

  Section 3.3            Temporary Certificates..........................................................   16

  Section 3.4            Registration of Transfer and Exchange of Certificates...........................   16

  Section 3.5            Mutilated, Destroyed, Lost or Stolen Certificates...............................   18

  Section 3.6            Persons Deemed Owners...........................................................   18

  Section 3.7            Cancellation....................................................................   18

  Section 3.8            Limitation of Liability for Payments............................................   19

  Section 3.9            Book-Entry and Definitive Certificates..........................................   19

  Section 3.10           Form of Certification...........................................................   22

SECTION 4.         DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS.......................................   22

  Section 4.1            Certificate Account and Special Payments Account................................   22

  Section 4.2            Distributions from Certificate Account and Special Payments Account.............   23

  Section 4.3            Statements to Certificateholders................................................   25

  Section 4.4            Investment of Special Payment Moneys............................................   25

SECTION 5.         FINANCIAL STATEMENTS AND OTHER REPORTS................................................   26

SECTION 6.         DEFAULT...............................................................................   26
</TABLE>
                                        i

<PAGE>

<TABLE>
<S>                <C>                                                                                      <C>
  Section 6.1            Events of Default...............................................................   26

  Section 6.2            Incidents of Sale of Lessor Notes...............................................   27

  Section 6.3            Judicial Proceedings Instituted by Pass Through Trustee.........................   28

  Section 6.4            Control by Certificateholders...................................................   29

  Section 6.5            Waiver of Defaults..............................................................   29

  Section 6.6            Undertaking to Pay Court Costs..................................................   30

  Section 6.7            Right of Certificateholders to Receive Payments Not to Be Impaired..............   30

  Section 6.8            Certificateholders May Not Bring Suit Except Under Certain Conditions...........   31

  Section 6.9            Remedies Cumulative.............................................................   31

SECTION 7.         THE PASS THROUGH TRUSTEE..............................................................   31

  Section 7.1            Certain Duties and Responsibilities.............................................   31

  Section 7.2            Notice of Defaults..............................................................   32

  Section 7.3            Certain Rights of Pass Through Trustee..........................................   33

  Section 7.4            Not Responsible for Recitals; Issuance of Certificates..........................   34

  Section 7.5            May Hold Certificates...........................................................   34

  Section 7.6            Money Held in Pass Through Trust................................................   34

  Section 7.7            Compensation, Reimbursement and Indemnification.................................   34

  Section 7.8            Corporate Trustee Required; Eligibility.........................................   35

  Section 7.9            Resignation and Removal: Appointment of Successor...............................   35

  Section 7.10           Acceptance of Appointment by Successor..........................................   37

  Section 7.11           Merger, Conversion, Consolidation or Succession to Business.....................   37

  Section 7.12           Maintenance of Agencies.........................................................   38

  Section 7.13           Money for Certificate Payments to Be Held in Trust..............................   39

  Section 7.14           Registration of Lessor Notes in Pass Through Trustee's Name.....................   40

  Section 7.15           Withholding Taxes; Information Reporting........................................   40

  Section 7.16           Pass Through Trustee's Liens....................................................   40

SECTION 8.         CERTIFICATEHOLDERS' LISTS AND REPORTS.................................................   40

  Section 8.1            The Facility Lessees to Furnish Pass Through Trustee
                         with Names and Addresses of Certificateholder...................................   40

  Section 8.2            Preservation of Information.....................................................   41

  Section 8.3            Reports by the Facility Lessees.................................................   41
</TABLE>
                                       ii

<PAGE>

<TABLE>
<S>                <C>                                                                                      <C>
  Section 8.4            Reports by the Pass Through Trustee.............................................   41

SECTION 9.         SUPPLEMENTAL TRUST AGREEMENTS.........................................................   41

  Section 9.1            Supplemental Trust Agreement Without Consent of Certificateholders..............   41

  Section 9.2            Supplemental Trust Agreements with Consent of Certificateholders................   42

  Section 9.3            Documents Affecting Immunity or Indemnity.......................................   43

  Section 9.4            Execution of Supplemental Trust Agreements......................................   44

  Section 9.5            Effect of Supplemental Trust Agreements.........................................   44

  Section 9.6            Reference in Certificates to Supplemental Trust Agreements......................   44

  Section 9.7            Conformity with Trust Indenture Act.............................................   44

SECTION 10.        AMENDMENTS AND CONSENTS TO COLLATERAL TRUST INDENTURE AND OTHER OPERATIVE DOCUMENTS...   44

SECTION 11.        TERMINATION OF PASS THROUGH TRUST.....................................................   45

  Section 11.1           Termination of the Pass Through Trust...........................................   45

SECTION 12.        MISCELLANEOUS PROVISIONS..............................................................   46

  Section 12.1           Limitation on Rights of Certificateholders......................................   46

  Section 12.2           Certificates Nonassessable and Fully Paid.......................................   46

  Section 12.3           Notices.........................................................................   46

  Section 12.4           Successors and Assigns..........................................................   48

  Section 12.5           Business Day....................................................................   48

  Section 12.6           GOVERNING LAW...................................................................   48

  Section 12.7           Severability....................................................................   48

  Section 12.8           Benefits of Pass Through Trust Agreement........................................   48

  Section 12.9           Counterparts....................................................................   48

  Section 12.10          Headings and Table of Contents..................................................   48

  Section 12.11          Further Assurances..............................................................   49

  Section 12.12          Statement of Intent.............................................................   49
</TABLE>

                                      iii

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                         PASS THROUGH TRUST AGREEMENT A

         This PASS THROUGH TRUST AGREEMENT A, dated as of October 18, 2001
(this "Pass Through Trust Agreement"), with respect to the formation of the
South Point, Broad River and RockGen Series A Pass Through Trust (the "Pass
Through Trust"), between SOUTH POINT ENERGY CENTER, LLC, a Delaware limited
liability company ("South Point"), BROAD RIVER ENERGY LLC, a Delaware limited
liability company ("Broad River"), ROCKGEN ENERGY LLC, a Wisconsin limited
liability company ("RockGen," and together with South Point and Broad River,
the "Facility Lessees" and individually each a "Facility Lessee"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association, as Pass Through Trustee (the "Pass Through Trustee").

                              W I T N E S S E T H :

         WHEREAS, the Facilities Lessees, the Pass Through Trustee, and
certain other parties named therein have entered into the Participation
Agreements referred to on Schedule 1 hereto, pursuant to which the Facilities
Lessees and, in the case of the South Point Facility, CCFC (as defined below)
have agreed to sell, assign or otherwise transfer to the Owner Lessors certain
Undivided Interests in the South Point facility, the Broad River facility and
the RockGen facility (each, a "Facility" and together, the "Facilities"), and
the Facility Lessees have agreed to lease or sublease from the Owner Lessors
such Undivided Interests in the Facilities;

         WHEREAS, the Facilities Lessees, the Pass Through Trustee, and
certain other parties named therein have entered into the Participation
Agreements referred to on Schedule 1 hereto, pursuant to which the Facilities
Lessees and, in the case of the South Point Facility, CCFC (as defined below)
have agreed to lease, assign or otherwise transfer to the Owner Lessors certain
Ground Interests in the South Point Site, the Broad River Site and the RockGen
Site (together, the "Facility Sites"), and the Facility Lessees have agreed to
lease or sublease from the Owner Lessors such Ground Interests;

         WHEREAS, CCFC, South Point, Broad River and RockGen will consummate
the sale or assignment to and lease or sublease from the Owner Lessors of the
Undivided Interests in Facilities and the Ground Interests in the Facility
Sites on the Closing Date;

         WHEREAS, on the Closing Date, each Owner Lessor will enter into a
Collateral Trust Indenture and issue, on a non-recourse basis, Lessor Notes
thereunder to finance a portion of the purchase price for the related Undivided
Interests purchased or assumed by such Owner Lessor;

         WHEREAS, subject to the terms and conditions of this Pass Through
Trust Agreement, the Pass Through Trust will purchase Lessor Notes issued in
connection with the purchase or assumption of the Undivided Interests in the
Facilities from South Point, Broad River and RockGen on the Closing Date and
will hold all such Lessor Notes in trust for the benefit of the
Certificateholders;

<PAGE>

         WHEREAS, the Pass Through Trustee, upon the execution and delivery
of this Pass Through Trust Agreement, hereby declares the creation of this Pass
Through Trust for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the Pass Through Trust and by their
respective acceptances of the Certificates join in the creation of this Pass
Through Trust with the Pass Through Trustee; and

         WHEREAS, to facilitate the sale of Lessor Notes to the Pass Through
Trust and the purchase of Lessor Notes by the Pass Through Trust, the Facility
Lessees are, on a joint and several basis, undertaking to perform certain
administrative and ministerial duties hereunder and are also undertaking to pay
the fees and expenses of the Pass Through Trustee.

         NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained, and of the other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.    DEFINITIONS

     Section 1.1   Definitions.

              (a)  Unless the context hereof otherwise requires, capitalized
terms used in this Pass Through Trust Agreement, including those in the
recitals, and not otherwise defined herein shall have the respective meanings
set forth in Appendix A to the applicable Participation Agreement. The general
provisions of Appendix A to such Participation Agreement shall apply to the
terms used in this Pass Through Trust Agreement and specifically defined herein.

              (b)  As used in this Pass Through Trust Agreement, the following
terms shall have the respective meanings assigned thereto as follows:

                   "Act", when used with respect to any Holder, shall have the
          meaning specified in Section 1.4.

                   "Authorized Agent" shall mean any Paying Agent or Registrar.

                   "Avoidable Tax" shall have the meaning specified in Section
          7.9(e).

                   "Book-Entry Certificate" shall mean a beneficial interest in
          the Certificates, ownership and transfers of which shall be made
          through book entries by a Clearing Agency as described in Section
          3.9.

                   "CCFC" shall mean Calpine Construction Finance Company, L.P.

                   "Certificate" shall mean any one of the certificates executed
          and authenticated by the Pass Through Trustee, substantially in the
          form of Exhibit A hereto.

                   "Certificate Account" shall mean that account or accounts
          created and maintained pursuant to Section 4.1(a).

                                        2

<PAGE>

                   "Certificate Owner" shall mean, when used in Section 3.9, the
          Person for whom a Clearing Agency Participant acts.

                   "Certificate Owner Request" shall mean a request to the Pass
          Through Trustee to receive the reports and other information the
          Facility Lessees or any other Person is required to furnish to the
          Pass Through Trustee pursuant to the Operative Documents, which
          request certifies that the Person making the request is a
          Certificateholder or Certificate Owner. Any Certificateholder or
          Certificate Owner making a Certificate Owner Request may specify its
          election to receive such information from the Pass Through Trustee on
          an ongoing basis.

                   "Certificateholder" or "Holder" shall mean the Person in
          whose name a Certificate is registered in the Register, except that,
          when used in Section 3.9, such term means the Certificate Owners.

                   "Clearing Agency" shall mean an organization registered as a
          "clearing agency" pursuant to Section 17A of the Exchange Act.

                   "Clearing Agency Participant" shall mean a broker, dealer,
          bank, other financial institution or other Person for whom from
          time to time a Clearing Agency effects, directly or indirectly,
          book-entry transfers and pledges of securities deposited with the
          Clearing Agency.

                   "Clearstream" shall have the meaning specified in
          Section 3.9.

                   "Collateral Trust Indenture" shall mean (i) an Indenture of
          Trust, Mortgage and Security Agreement between an Owner Lessor and
          the Indenture Trustee, entered into pursuant to the Participation
          Agreement, as the same may be amended or supplemented in accordance
          with its terms and (ii) any Indenture of Trust, Mortgage and
          Security Agreement, or analogous document, between a Facility Lessee
          and an Indenture Trustee, entered into in connection with the
          assumption by such Facility Lessee of the indebtedness evidenced by
          any Lessor Note, as the same may be amended or supplemented in
          accordance with its terms.

                   "Consideration" shall have the meaning specified in Section
          2.1.

                   "Corporate Trust Office" shall mean, with respect to the Pass
          Through Trustee, any Lessor Manager or any Indenture Trustee, the
          office of such trustee or manager, as the case may be, in the city
          in which at any particular time its corporate trust business shall
          be principally administered.

                   "Cut-Off Date" shall mean December 1, 2001.

                   "Default" shall mean any event which is or, after notice or
          lapse of time or both would become, an Event of Default.

                   "Definitive Certificates" shall have the meaning specified in
          Section 3.9.

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<PAGE>

                   "Direction" shall have the meaning specified in Section
          1.4(c).

                   "Distribution Date" shall mean, with respect to distributions
          of Scheduled Payments, each May 30 and November 30 until payment of
          all the Scheduled Payments to be made under the Lessor Notes have
          been made, commencing on May 30, 2002.

                   "DTC" shall mean The Depository Trust Company and any
          successor that is a Clearing Agency.

                   "Escrow Account" shall have the meaning specified in Section
          2.1(b).

                   "Escrowed Funds" shall have the meaning specified in Section
          2.1(b).

                   "Euroclear" shall have the meaning specified in Section 3.9.

                   "Event of Default" shall have the meaning specified in
          Section 6.1(a).

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

                   "Facility Lessee" or "Facility Lessees" shall have the
          meaning specified in the preamble hereto.

                   "Fractional Undivided Interest" shall mean the fractional
          undivided interest in the Pass Through Trust that is evidenced by a
          Certificate.

                   "Holder" shall have the meaning set forth in the definition
          of "Certificateholder".

                   "Indenture Trustee" shall mean a bank or trust company
          acting as indenture trustee under an applicable Collateral Trust
          Indenture, and any successor to such Indenture Trustee as such
          trustee. The term "Indenture Trustee" refers to any one or all of
          such Indenture Trustees, as the context requires.

                   "Institutional Accredited Investor" shall mean an
          institutional "accredited investor", as such term is defined in
          Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

                   "Issuance Date" shall mean October 18, 2001.

                   "Lease" shall mean a facility lease or sublease agreement
          between an Owner Lessor, as the lessor or sublessor (as applicable),
          and a Facility Lessee, as the lessee or sublessee (as applicable),
          entered into pursuant to the Participation Agreement, as such
          facility lease agreement may be amended or supplemented in
          accordance with its terms. The term "Lease" refers to any one or all
          of such facility lease or sublease agreements, as the context
          requires.

                                        4

<PAGE>

                   "Lease Event of Default" shall mean any Lease Event of
          Default (as such term is defined in a Lease).

                   "Lease Indenture Default" shall mean any event which is, or
          after notice or lapse of time or both would become, a Lease
          Indenture Event of Default.

                   "Lease Indenture Event of Default" shall mean any Lease
          Indenture Event of Default (as such term is defined in the
          applicable Collateral Trust Indenture).

                   "Lease Transaction" shall mean a lease transaction in respect
          of an Undivided Interest between a Facility Lessee and an Owner
          Lessor that is financed in part by the issuance of Lessor Notes to
          the Pass Through Trust, as contemplated by the Participation
          Agreement and the agreements and instruments referred to therein.

                   "Lessor Manager" shall mean Wells Fargo Bank Northwest,
          National Association, not in its individual capacity, but solely as
          Lessor Manager under the LLC Agreement, and each other Person which
          may from time to time be acting as Lessor Manager in accordance with
          the provisions of the LLC Agreement.

                   "Lessor Note" shall mean any one of the Series A Lessor Notes
          (as defined in the Collateral Trust Indenture) issued under a
          Collateral Trust Indenture, including any Lessor Note (as so
          defined) issued under the Collateral Trust Indenture in replacement
          or substitution therefor, held by the Pass Through Trustee.

                   "Letter of Representations" shall mean the letter of
          representations among the Facility Lessees, the Pass Through
          Trustee and the initial Clearing Agency.

                   "Operative Documents" shall mean, as the context may require,
          the South Point Operative Documents, the Broad River Operative
          Documents and the RockGen Operative Documents.

                   "Other Certificates" shall mean the pass through trust
          certificates issued pursuant to the Other Pass Through Trust
          Agreement.

                   "Other Pass Through Trustee" shall mean the Pass Through
          Trustee pursuant to the Other Pass Through Trust Agreement.

                   "Other Pass Through Trust Agreement" shall mean the Pass
          Through Trust Agreement B, dated as of date hereof.

                   "Outstanding" shall mean, when used with respect to
          Certificates, as of the date of determination, and subject to
          Section 1.4(c), all Certificates theretofore authenticated and
          delivered under this Pass Through Trust Agreement, except:

                   (i)     Certificates theretofore canceled by the Registrar or
          delivered to the Pass Through Trustee or the Registrar for
          cancellation;

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<PAGE>

                   (ii)     Certificates for which money in the full
          amount thereof has been theretofore deposited with the Pass
          Through Trustee or any Paying Agent in trust for the
          holders of such Certificates as provided in Section 4.1
          pending distribution of such money to the
          Certificateholders pursuant to the final distribution
          payment to be made pursuant to Section 11.1; and

                   (iii)    Certificates in exchange for or in lieu of which
          other Certificates have been authenticated and delivered pursuant to
          this Pass Through Trust Agreement.

                   "Owner Lessor" shall mean one or more, as the context may
          require, of the South Point Owner Lessors, the Broad River Owner
          Lessors or the RockGen Owner Lessors.

                   "Owner Participant" shall mean one or more, as the context
          may require, of the South Point Owner Participants, the Broad River
          Owner Participants or the RockGen Owner Participants.

                   "Participation Agreement" shall mean one or more, as the
          context may require, of the Participation Agreements enumerated on
          Schedule I hereto among a Facility Lessee, an Owner Participant, an
          Owner Lessor, a Lessor Manager, an Indenture Trustee and the Pass
          Through Trustee, providing for the Lease Transaction.

                   "Pass Through Trust" shall mean the trust created by this
          Pass Through Trust Agreement, the estate of which consists of the
          Trust Property.

                   "Pass Through Trustee" shall mean the Pass Through Trustee
          referred to in the preamble hereto and the Other Pass Through
          Trustee, and each other Person that may be acting as a pass through
          trustee in accordance with the provisions provided herein or in the
          Other Pass Through Trust Agreement.

                   "Paying Agent" shall mean the paying agent maintained and
          appointed pursuant to Section 7.12.

                   "Permanent Regulation S Global Certificate" shall have the
          meaning specified in Section 3.9.

                   "Permitted Government Investment" shall mean the direct
          obligations of the United States of America for the payment of which
          the full faith and credit of the United States of America is pledged,
          maturing in not more than 60 days or such lesser time as is necessary
          for payment of any Special Payments on a Special Distribution Date.

                   "Postponement Notice" shall mean an Officer's Certificate of
          the Facility Lessees (1) requesting that the Pass Through Trustee
          temporarily postpone the purchase of the Lessor Notes to a date
          later than the Issuance Date, (2) identifying the amount of the
          purchase price of each Lessor Note and the aggregate purchase

                                        6

<PAGE>

          price of the Lessor Notes, (3) setting forth the reasons for such
          postponement, and (4) either (a) setting a Transfer Date (which
          shall be on or prior to the Cut-off Date) for payment by the Pass
          Through Trustee of such purchase price and the issuance of the
          Lessor Notes, or (b) indicating that the Transfer Date (which shall
          be on or prior to the Cut-off Date) will be set by subsequent
          written notice not less than one Business Day prior to such Transfer
          Date.

                   "Record Date" shall mean (i) for Scheduled Payments to be
          distributed on any Distribution Date, other than the final
          distribution, the day (whether or not a Business Day) which is
          fifteen days preceding such Distribution Date, and (ii) for Special
          Payments to be distributed on any Special Distribution Date, other
          than the final distribution, the day (whether or not a Business Day)
          which is fifteen days preceding such Special Distribution Date.

                   "Register" and "Registrar" shall mean the register maintained
          and the registrar appointed pursuant to Sections 3.4 and 7.12.

                   "Regulation S Global Certificate" shall have the meaning
          specified in Section 3.9.

                   "Request" shall mean a request by a Facility Lessee, an Owner
          Lessor, or any Indenture Trustee setting forth the subject matter
          of the request accompanied by an Officer's Certificate and an
          Opinion of Counsel as provided in Section 1.2.

                   "Responsible Officer" shall mean, when used with respect to
          the initial Pass Through Trustee, any initial Indenture Trustee or
          any Lessor Manager, means any officer in the Corporate Trust Office
          having direct responsibility for the administration of the Operative
          Documents; when used with respect to any successor Pass Through
          Trustee, or successor Indenture Trustee, means the chairman or
          vice-chairman of the board of directors or trustees, the chairman or
          vice-chairman of the executive or standing committee of the board of
          directors or trustees, the president, the chairman of the committee
          on trust matters, any vice-president, any second vice-president, the
          secretary, any assistant secretary, the treasurer, any assistant
          treasurer, the cashier, any assistant cashier, any trust officer or
          assistant trust officer, the comptroller and any assistant
          comptroller, and, when used with respect to the Pass Through Trustee
          and any Indenture Trustee, also means any other officer of the Pass
          Through Trustee or any Indenture Trustee customarily performing
          functions similar to those performed by any of the above designated
          officers and also means, when used with respect to the Pass Through
          Trustee, any Indenture Trustee or any Lessor Manager with respect to
          a particular corporate trust matter, or any other officer to whom
          such matter is referred because of his knowledge of and familiarity
          with the particular subject.

                   "Restricted Certificate" shall have the meaning specified in
          Section 3.1.

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<PAGE>

                   "Restricted Global Certificate" shall have the meaning
          specified in Section 3.9.

                   "Scheduled Payment" shall mean, with respect to a
          Distribution Date, any payment (other than a Special Payment) of
          principal and interest on a Lessor Note, due from the applicable
          Owner Lessor, which payment represents the payment of a regularly
          scheduled installment of principal then due on such Lessor Note, or
          the payment of regularly scheduled interest accrued on such Lessor
          Note.

                   "SEC" shall mean the Securities and Exchange Commission, as
          from time to time constituted, created under the Exchange Act.

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

                   "Special Distribution Date" shall mean (i) with respect to
          the prepayment of any Lessor Notes, the day on which such prepayment
          is scheduled to occur pursuant to the terms of the applicable
          Collateral Trust Indenture and (ii) with respect to any Special
          Payment relating to a Lessor Note other than as described in clause
          (i) of the definition of Special Payment, the earliest second day of
          a month for which it is practicable for the Pass Through Trustee to
          give notice pursuant to Section 4.2(c).

                   "Special Payment" shall mean (i) any payment of principal,
          premium, if any, and interest on a Lessor Note resulting from the
          prepayment or redemption of such Lessor Note pursuant to the
          applicable provisions of the applicable Collateral Trust Indenture,
          (ii) any payment of principal and interest (including any interest
          accruing upon default) on, or any other amount in respect of, such
          Lessor Note upon a Lease Indenture Event of Default in respect
          thereof or upon the exercise of remedies under the applicable
          Collateral Trust Indenture, (iii) any Special Payment referred to in
          clause (i) of this definition or any Scheduled Payment which is not
          in fact paid within five days of the Special Distribution Date or
          Distribution Date applicable thereto, or (iv) any proceeds from the
          sale of any Lessor Note by the Pass Through Trustee pursuant to
          Section 6 hereof.

                   "Special Payments Account" shall mean the account or accounts
          created and maintained pursuant to Section 4.1(b).

                   "Specified Investments" shall mean with respect to the Pass
          Through Trust (i) obligations of, or guaranteed by, the United
          States Government or agencies thereof, (ii) open market commercial
          paper of any corporation incorporated under the laws of the United
          States of America or any State thereof rated at least P-2 or its
          equivalent by Moody's or a least A-2 or its equivalent by S&P, (iii)
          certificates of deposit issued by commercial banks organized under
          the laws of the United States or of any political subdivision
          thereof having a combined capital and surplus in excess of
          $100,000,000 which banks or their holding companies have a rating of
          A or its equivalent by Moody's or S& P; provided, that the aggregate
          amount at any one time so invested in certificates of deposit issued
          by any one

                                        8

<PAGE>

          bank shall not exceed 5% of such bank's capital and surplus, (iv)
          U.S. dollar-denominated offshore certificates of deposit issued by,
          or offshore time deposits with, any commercial bank described in
          clause (iii) above or any subsidiary thereof and (v) repurchase
          agreements with any financial institution having combined capital
          and surplus of at least $100,000,000 with any of the obligations
          described in clauses (i) through (iv) above as collateral; provided,
          that if all of the above investments are unavailable, the entire
          amounts to be invested may be used to purchase federal funds from an
          entity described in clause (iii) above.

                   "Temporary Regulation S Global Certificate" shall have the
          meaning specified in Section 3.9.

                   "Transfer Date" shall have the meaning assigned to the term
          "Closing Date" in the Participation Agreement, and in any event
          refers to such date as it may be changed from time to time in
          accordance with the terms of the Participation Agreement.

                   "Trust Indenture Act" shall mean the Trust Indenture Act of
          1939, as amended and as in force on the date on which this Pass
          Through Trust Agreement was executed and delivered, except as
          provided in Section 9.7; provided, however, that in the event the
          Trust Indenture Act of 1939 is amended after such date, "Trust
          Indenture Act" shall mean, to the extent required by any such
          amendment, the Trust Indenture Act of 1939 as so amended.

                   "Trust Property" shall mean the Lessor Notes held as the
          property of the Pass Through Trust created hereby and all monies at
          any time paid thereon and all monies due and to become due
          thereunder, funds from time to time deposited in the Escrow Account,
          the Certificate Account and the Special Payments Account and any
          proceeds from the sale by the Pass Through Trustee pursuant to
          Section 6 hereof of any Lessor Note.

                   "Undivided Interest" shall mean, as the context
          may require, a South Point Undivided Interest, a Broad
          River Undivided Interest or a RockGen Undivided Interest.

  Section 1.2   Compliance Certificates and Opinions.

          (a)      Upon any application or request by a Facility Lessee, an
Owner Lessor or any Indenture Trustee to the Pass Through Trustee to take any
action under any provision of this Pass Through Trust Agreement, such Facility
Lessee, such Owner Lessor or such Indenture Trustee, as the case may be, shall
furnish to the Pass Through Trustee an Officer's Certificate stating that, in
the opinion of the signers, all conditions precedent, if any, provided for in
this Pass Through Trust Agreement relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Pass

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<PAGE>

Through Trust Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.

          (b)      Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Pass Through Trust Agreement shall
include:

          (1)      a statement that each individual signing such certificate or
     opinion has read such covenant or condition and the definitions herein
     relating thereto;

          (2)      a brief statement as to the nature and scope of the
     examination or investigation upon which the statements or opinions
     contained in such certificate or opinion are based;

          (3)      a statement that, in the opinion of each such individual, he
     has made such examination or investigation as is necessary to enable him
     to express an informed opinion as to whether or not such covenant or
     condition has been complied with; and

          (4)      a statement as to whether, in the opinion of each such
     individual, such condition or covenant has been complied with.

  Section 1.3   Form of Documents Delivered to Pass Through Trustee.

          (a)      In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters and any
such Person may certify or give an opinion as to such matters in one or several
documents.

          (b)      Any Officer's Certificate may be based, insofar as it relates
to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless the signer of such Officer's Certificate knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon an Officer's Certificate stating that the information with respect to such
factual matters is in the possession of the signer of such Officer's
Certificate, unless such counsel knows that the certificate or opinions or
representations with respect to such matters are erroneous.

          (c)      Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.

          (d)      Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Pass Through Trust Agreement, they may, but need
not, be consolidated and form one instrument.

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<PAGE>

  Section 1.4 Acts of Holders.

          (a)      Any direction, consent, waiver, demand, authorization,
request, approval or other action provided by this Pass Through Trust Agreement
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent or agents duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Pass Through Trustee and, where
it is hereby expressly required, to any Facility Lessee, any Owner Lessor or
any Indenture Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Pass Through Trust Agreement and (subject to Section
7.1) conclusive in favor of the Pass Through Trustee, the related Facility
Lessee, the related Owner Lessor and any related Indenture Trustee, if made in
the manner provided in this Section.

          (b)      The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Pass
Through Trustee deems sufficient.

          (c)      In determining whether the Holders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent, waiver or other action (a "Direction"), under this Pass
Through Trust Agreement, Certificates owned by any Facility Lessee, any Owner
Lessor, any Owner Participant or any Affiliate of any such Person shall be
disregarded and deemed not to be Outstanding under this Pass Through Trust
Agreement for purposes of any such determination. In determining whether the
Pass Through Trustee shall be protected in relying upon any such Direction,
only Certificates which the Pass Through Trustee knows to be so owned shall be
so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100%
of the Certificates Outstanding, such Certificates shall not be so disregarded
as aforesaid, and (ii) if any amount of Certificates so owned by any such
Person have been pledged in good faith, such Certificates shall not be
disregarded as aforesaid if the pledgee establishes to the satisfaction of the
Pass Through Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not one of the Facility Lessees, an Owner
Lessor, an Owner Participant or any Affiliate of any such Person.

          (d)      Any Act by the Holder of any Certificate shall bind the
Holder of every Certificate issued upon the transfer thereof or in exchange
therefor or in lieu thereof, whether or not notation of such Act is made upon
such Certificate.

          (e)      Except as otherwise provided in Section 1.4(c), Certificates
owned by or pledged to any Person shall have an equal and proportionate benefit
under the provisions of this Pass Through Trust Agreement, without preference,
priority or distinction as among all of the Certificates.

          (f)      Notwithstanding anything herein to the contrary, the
Certificates will vote and consent together on all matters as one class and
will not have the right to vote or consent as a separate class on any matter.

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<PAGE>

          (g)      The Pass Through Trustee may fix in advance a record date
for the determination of the Holders entitled to give any request, demand,
authorization, direction, notice, consent, waiver or other Act solicited by a
Facility Lessee, but the Pass Through Trustee shall not have any obligation to
do so.

     Section 1.5   Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required or deemed under such Act to be a part of and govern this Pass
Through Trust Agreement, such required or deemed provision shall, so long as
the Certificates shall be subject to the Trust Indenture Act, control. If any
provision of this Pass Through Trust Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
to be excluded, as the case may be.

SECTION 2.    ACQUISITION OF LESSOR NOTES; ORIGINAL ISSUANCE OF CERTIFICATES

  Section 2.1 Issuance of Certificates; Acquisition of Lessor Notes.

          (a)      Pass Through Trustee, at or promptly following the execution
and delivery of this Pass Through Trust Agreement, shall also execute and
deliver Participation Agreements, in the form delivered to the Pass Through
Trustee on or prior to the date of the execution and delivery hereof. Upon
delivery of an authentication order by each of the Facility Lessees and the
satisfaction of the closing conditions with respect to the Lessor Notes in
Section 4 of the Participation Agreement, the Pass Through Trustee shall
execute, deliver and authenticate, on behalf of the Pass Through Trust,
Certificates equaling in the aggregate the total principal amount of the Lessor
Notes deposited into the Pass Through Trust on the Issuance Date. The
Certificates so executed, delivered and authenticated on the Transfer Date
shall evidence the entire ownership of the Pass Through Trust. The Pass Through
Trust shall issue such Certificates on the Issuance Date, in authorized
denominations and in such Fractional Undivided Interests, so as to result in
the receipt of consideration (the "Consideration") in an amount equal to the
aggregate principal amount of such Lessor Notes referred to in the second
preceding sentence. The Pass Through Trust shall purchase Lessor Notes on the
Transfer Date at an aggregate purchase price equal to the amount of the
Consideration so received. Except as provided in Sections 3.4 and 3.5 hereof,
the Pass Through Trustee shall not execute or deliver Certificates in excess of
the aggregate amount specified in this paragraph. The aggregate Fractional
Undivided Interest of Certificates shall not at any time exceed $454,500,000

          (b)      If, on or prior to the Issuance Date, the Facility Lessees
shall deliver to the Pass Through Trustee a Postponement Notice relating to all
of the Lessor Notes related to any Facility, the Pass Through Trustee shall
postpone the purchase of all of the Lessor Notes related to such Facility and
shall deposit into an escrow account (the "Escrow Account") to be maintained as
part of the Pass Through Trust an amount equal to the purchase price of such
Lessor Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be
invested by the Pass Through Trustee at the written direction and risk of, and
for the benefit of, the Facility Lessees in Specified Investments (i) maturing
no later than the scheduled Transfer Date or (ii) if no such Transfer Date has
been scheduled, maturing on the next Business Day, or (iii) if the Facility
Lessees have given notice to the Pass Through Trustee that the Lessor Notes
will not be

                                       12

<PAGE>

issued, maturing on the next Special Distribution Date but in no event later
than December 1, 2001, if such investments are reasonably available for
purchase. The Pass Through Trustee shall make a withdrawal from the Escrow
Account only as provided in this Pass Through Trust Agreement. Upon request of
the Facility Lessees on the satisfaction or waiver of the closing conditions
specified in the Participation Agreements on or prior to the Cut-off Date, the
Pass Through Trustee shall purchase all of the Lessor Notes related to any
Facility with the Escrowed Funds withdrawn from the Escrow Account. The
purchase price shall equal the principal amount of such Lessor Notes.

          The Pass Through Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer Specified
Investments. If Specified Investments held in the Escrow Account mature prior
to the Transfer Date, any proceeds received on the maturity of such Specified
Investments shall be reinvested by the Pass Through Trustee at the written
direction and risk of, and for the benefit of, the Facility Lessees in
Specified Investments maturing as provided in the preceding paragraph.

          Any earnings on Specified Investments received from time to time by
the Pass Through Trustee shall be promptly deposited and held in the Escrow
Account by the Pass Through Trustee. The Facility Lessees shall pay to the Pass
Through Trustee for deposit to the Escrow Account an amount equal to any losses
on such Specified Investments as incurred. On the initial regular Distribution
Date, the Facility Lessees will pay (in immediately available funds) to the
Pass Through Trustee an amount equal to the negative difference between the
amount of earnings received by the Pass Through Trustee on the Specified
Investments in the Escrow Account and the amount of interest that would have
accrued on the Lessor Notes, if any, purchased after the Issuance Date if the
Lessor Notes had been purchased on the Issuance Date to, from the Issuance Date
to, but not including, the date of the purchase of the Lessor Notes by the Pass
Through Trustee.

          If the Facility Lessees notify the Pass Through Trustee prior to
the Cut-off Date that the Lessor Notes or any portion thereof will not be
issued on or prior to the Cut-off Date for any reason (it being understood that
if any Lessor Notes related to one Facility are issued, then all Lessor Notes
related to such Facility shall be issued), on the next Special Distribution
Date occurring not less than 20 days following the date of such notice, (i) the
Facility Lessees shall pay to the Pass Through Trustee for deposit in the
Special Payments Account, in immediately available funds, an amount equal to
the sum of (x) the negative difference between the amount of earnings received
by the Pass Through Trustee on Specified Investments in the Escrow Account and
the amount of interest that would have accrued on the Lessor Notes at a rate
equal to the interest rate applicable to the Certificates from the Issuance
Date to, but not including, such Special Distribution Date and (y) the
Make-Whole Amount and (ii) the Pass Through Trustee shall transfer an amount
equal to that amount of Escrowed Funds that would have been used to purchase
the Lessor Notes designated in such notice and the amount paid by the Facility
Lessees pursuant to the immediately preceding clause (i) to the Special
Payments Account for distribution as a Special Payment in accordance with the
provisions hereof. Any earnings received by the Pass Through Trustee on
Specified Investments in the Escrow Account in excess of the amounts payable
pursuant to the preceding sentence shall be refunded to the Facility Lessee
following the payment of all amounts due hereunder.

                                       13

<PAGE>

          (c)      The Facility Lessees' Assumption of Lessor Notes. If a
Facility Lessee shall assume the obligations of the applicable Owner Lessor
under its Lessor Note pursuant to the Collateral Trust Indenture, the Pass
Through Trustee shall, upon its receipt of written instructions from such
Facility Lessee, surrender the applicable Lessor Notes issued pursuant to the
Collateral Trust Indenture to the Indenture Trustee in exchange for new Lessor
Notes of the same aggregate outstanding principal amount as the Lessor Notes so
surrendered, bearing interest at the same rate, and having the same maturity
and amortization schedule, and otherwise of similar tenor, issued under the
Collateral Trust Indenture and any new Collateral Trust Indenture entered into
by such Facility Lessee and the Indenture Trustee in connection with such
assumption, and thereafter each reference to such Lessor Notes in this Pass
Through Trust Agreement shall be deemed to mean a reference to such new Lessor
Notes or the existing Lessor Notes as assumed by such Facility Lessee.

          (d)      Authentication. Any authentication order delivered by any of
the Facility Lessees hereunder shall be signed by one of such Facility Lessee's
authorized signatories and shall specify the amount and maturity of the
Certificates to be authenticated and the date on which the original issue of
Certificates is to be authenticated. The Pass Through Trustee may appoint an
authenticating agent to authenticate the Certificates. Unless limited by the
terms of such appointment, an authenticating agent may authenticate the
Certificates whenever the Pass Through Trustee may do so. Each reference in
this Pass Through Trust Agreement to authentication by the Pass Through Trustee
includes authentication by such agent. An authenticating agent has the same
rights as any Registrar, Paying Agent or agent for service of notices and
demands.

      Section 2.2  Acceptance by Pass Through Trustee. The Pass Through
Trustee, upon the execution and delivery of this Pass Through Trust Agreement,
acknowledges on behalf of the Pass Through Trust its acceptance of all right,
title, and interest in and to the Lessor Notes acquired pursuant to Section 2.1
hereof and declares that the Pass Through Trustee holds and will hold such
right, title, and interest, together with all other property constituting the
Trust Property, for the benefit of all present and future Certificateholders,
upon the trusts herein set forth. By its payment for and acceptance of each
Certificate issued to it hereunder, each initial Certificateholder as grantor
of the Pass Through Trust thereby joins in the creation and declaration of the
Pass Through Trust. The Pass Through Trustee shall be under no duty or
obligation to inspect, review or examine the Lessor Notes to determine that
they are genuine, valid, binding, enforceable or appropriate for the
represented purpose or that they are other than what they purport to be on
their face.

     Section 2.3   Limitation of Powers. The Pass Through Trust is constituted
solely for the purpose of making the investment in the Lessor Notes, and,
except as set forth herein, the Pass Through Trustee is not authorized or
empowered to acquire any other investments or engage in any other activities
and, in particular, the Pass Through Trustee is not authorized or empowered to
do anything that would cause the Pass Through Trust to fail to qualify as a
pass through entity for federal income tax purposes (including, as subject to
this restriction, acquiring any Undivided Interest or any portion thereof by
bidding the Lessor Notes or otherwise, or taking any action with respect to any
Undivided Interest or any portion thereof once acquired).

                                       14

<PAGE>

SECTION 3.    THE CERTIFICATES

     Section 3.1   Form, Denomination and Execution of Certificates. The
Certificates shall be known as the "8.400% Pass Through Certificates, Series A"
of the Pass Through Trust and shall each represent a Fractional Undivided
Interest. The Certificates shall be issued in registered form without coupons
and shall be substantially in the form attached hereto as Exhibit A, with such
omissions, variations and insertions as are permitted by this Pass Through
Trust Agreement, and may have such letters, numbers or other marks of
identification and such legends or endorsements printed, lithographed or
engraved thereon, as may be required to comply with the rules of any securities
exchange on which such Certificates may be listed or to conform to any usage in
respect thereof, or as may, consistently herewith, be prescribed by the Pass
Through Trustee or by the officer executing such Certificates, such
determination by said officer to be evidenced by such officer signing the
Certificates. Except as provided in Section 3.9, definitive Certificates
shall be printed, lithographed or engraved or produced by any combination of
these methods, all as determined by the officer executing such Certificates, as
evidenced by such officer's execution of such Certificates.

          (c)      During the period beginning on the Issuance Date and ending
on the expiration of the applicable holding period in Rule 144(k) of the
Securities Act, all Certificates issued on the Issuance Date, and all
Certificates issued upon registration of transfer of, or in exchange for, such
Certificates, shall be "Restricted Certificates" and shall be subject to the
restrictions on transfer provided in the legend set forth on the face of the
form of certificate in Exhibit A; provided, however, that the term "Restricted
Certificates" shall not include Certificates as to which such restrictions on
transfer have been terminated in accordance with Section 3.4. All Restricted
Certificates shall bear the legend set forth on the face of the Certificate in
Exhibit A. Certificates which are not Restricted Certificates shall not bear
such legend.

          (d)      The Certificates shall be issued in minimum denominations of
$100,000 or integral multiples of $1,000 in excess thereof.

          (e)      The Certificates shall be executed on behalf of the Pass
Through Trust by manual or facsimile signature of a Responsible Officer of the
Pass Through Trustee. Certificates bearing the manual or facsimile signature of
an individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Pass Through Trustee shall be valid and binding
obligations of the Pass Through Trust, notwithstanding that such individual has
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such office at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Pass Through Trust
Agreement, or be valid for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form set forth in Exhibit
B hereto executed by the Pass Through Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.

  Section 3.2      Authentication of Certificates. Upon delivery of an
authentication order by the Facility Lessees, the Pass Through Trustee shall
cause to be delivered Certificates duly

                                       15

<PAGE>

authenticated by the Pass Through Trustee, in authorized denominations equaling
in the aggregate the aggregate principal amount set forth in the authentication
order evidencing the entire ownership of the Pass Through Trust.

     Section 3.3   Temporary Certificates. Pending the preparation of definitive
Certificates, the Pass Through Trustee may execute, authenticate and deliver
temporary Certificates which are printed, lithographed, typewritten, or
otherwise produced, in any denomination, containing substantially the same
terms and provisions as set forth in Exhibit A, except for such appropriate
insertions, omissions, substitutions and other variations relating to their
temporary nature as the officer executing such temporary Certificates may
determine, as evidenced by his or her execution of such temporary Certificates.

          If temporary Certificates are issued, the Facility Lessees will
cause definitive Certificates to be prepared without unreasonable delay. After
the preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the Corporate Trust Office of the Pass Through Trustee, or at
the office or agency of the Pass Through Trustee maintained in accordance with
Section 7.12, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Certificates, the Pass Through Trustee shall execute,
authenticate and deliver in exchange therefor definitive Certificates of
authorized denominations of a like aggregate Fractional Undivided Interest.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits under this Pass Through Trust Agreement as
definitive Certificates.

  Section 3.4 Registration of Transfer and Exchange of Certificates.

          (a)      The Pass Through Trustee shall cause to be kept, at the
office or agency to be maintained by it in accordance with the provisions of
Section 7.12, a register (the "Register") in which, subject to the provisions
of this Section 3.4, Section 3.9 and the Certificates, the Pass Through Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Pass Through Trustee shall
initially be the registrar (the "Registrar") for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
The Facility Lessees may, upon notice to the Pass Through Trustee, change the
Registrar at any time.

          (b)      Every Restricted Certificate shall be subject to the
restrictions on transfer provided in the legend required to be set forth on the
face of each Restricted Certificate pursuant to Section 3.1, and the Holder of
each Restricted Certificate, by such Holder's acceptance thereof, agrees to be
bound by such restrictions on transfer. Whenever any Restricted Certificate is
presented or surrendered for registration of transfer or for exchange for a
Certificate registered in a name other than that of the Holder, such Restricted
Certificate must be accompanied by a certificate in substantially the form set
forth in Exhibit C hereto, dated the date of such surrender and signed by the
Holder of such Restricted Certificate, or such Holder's attorney duly
authorized in writing, as to compliance with such restrictions on transfer.
Neither the Pass Through Trustee nor any Registrar shall be required to accept
for such registration of transfer or exchange any Restricted Certificate not so
accompanied by a properly completed certificate. Notwithstanding the preceding
two sentences, a properly completed certificate shall not be

                                       16

<PAGE>

required in connection with any transfer of any Restricted Certificate through
the facilities of DTC or any other United States securities clearance and
settlement organization; provided, that such transfer does not require a change
in the name (other than to another nominee of DTC or such other securities
clearance and settlement organization) in which such Restricted Certificate is
then registered.

          Whenever any Restricted Certificate is proposed to be transferred
by a Holder to an Institutional Accredited Investor, the Pass Through Trustee
shall have received from such Institutional Accredited Investor, prior to such
transfer, a signed letter substantially in the form of Exhibit D relating to
certain representations and agreements regarding restrictions on transfer of
such Restricted Certificate. In addition, the Holder of the Restricted
Certificate proposed to be transferred must, prior to such transfer, furnish to
the Registrar such certifications (as required by, and in the form set forth
in, this Pass Through Trust Agreement, opinions of counsel or other information
as the Registrar may reasonably request to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.

          The restrictions imposed by this Section 3.4 and Section 3.1 upon
the transferability of any particular Restricted Certificate shall cease and
terminate if and when such Restricted Certificate has been (i) sold pursuant to
an effective registration statement under the Securities Act, or (ii)
transferred pursuant to Rule 144 under the Securities Act (or any successor
provision thereto), unless the Holder thereof is an affiliate of any Facility
Lessee within the meaning of Rule 144 (or such successor provision). Any
Restricted Certificate as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon
surrender of such Restricted Certificate for exchange to the Pass Through
Trustee or any Registrar in accordance with the provisions of this Section 3.4
(accompanied, in the event that such restrictions on transfer have terminated
by reason of a transfer pursuant to Rule 144 or any successor provision, by an
Opinion of Counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to each of the Facility
Lessees, addressed to each of the Facility Lessees and the Pass Through Trustee
and in form acceptable to each of the Facility Lessees, to the effect that the
transfer of such Restricted Certificate has been made in compliance with Rule
144 or such successor provision), be exchanged for a new Certificate, of
authorized denominations of a like aggregate Fractional Undivided Interest,
which shall not bear the restrictive legend required by Section 3.1. The Pass
Through Trustee shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the aforementioned Opinion of Counsel.

          (c)      Upon surrender for registration of transfer of any
Certificate that is not a Restricted Certificate at the Corporate Trust Office,
or such other office or agency, the Pass Through Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates, in authorized denominations of a
like aggregate Fractional Undivided Interest if its requirements for such
transaction are met.

          (d)      At the option of a Certificateholder, Certificates may be
exchanged for other Certificates, in authorized denominations and of a like
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; provided, that a Restricted
Certificate may only be exchanged for another Restricted Certificate,

                                       17

<PAGE>

until such restrictions on such Restricted Certificate shall cease and
terminate in accordance with the terms of this Section 3.4. Whenever any
Certificates are so surrendered for exchange, the Pass Through Trustee shall
execute, authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to each of
the Facility Lessees and the Pass Through Trustee and the Registrar duly
executed by the Certificateholder thereof or its attorney duly authorized in
writing.

          (e)      No service charge shall be made to a Certificateholder for
any registration of transfer or exchange of Certificates, but the Pass Through
Trustee shall require payment of a sum sufficient to cover any tax or charge
that may be imposed in connection with any transfer or exchange of Certificates.

          (f)      All Certificates surrendered for registration of transfer
and exchange shall be canceled and disposed of in accordance with the usual
practices of the Pass Through Trustee.

  Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If any
mutilated Certificate is surrendered to the Registrar, or the Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and in the case of such destruction, loss or theft, there is
delivered to the Registrar, the Pass Through Trustee, the Facility Lessees and
the applicable Owner Lessor such security, indemnity or bond as may be required
by them to protect each of them and the Pass Through Trust from any loss that
any of them may suffer if a Certificate is replaced, then, in the absence of
notice to the Registrar or the Pass Through Trustee that such Certificate has
been acquired by a bona fide purchaser, the Pass Through Trustee, on behalf of
the Pass Through Trust, shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Fractional Undivided Interest with the same final
Distribution Date. In connection with the issuance of any new Certificate under
this Section 3.5, the Pass Through Trustee shall require the payment of a sum
sufficient to cover any tax or other charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of the appropriate Fractional Undivided Interest in the Pass Through
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

  Section 3.6 Persons Deemed Owners. Prior to due presentation of a Certificate
for registration of transfer, the Pass Through Trustee, the Facility Lessees,
the applicable Owner Lessor, the Registrar and any Paying Agent may treat the
person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.2
and for all other purposes whatsoever, and neither the Pass Through Trustee, any
Facility Lessee, the applicable Owner Lessor, the Registrar nor any Paying Agent
shall be affected by any notice to the contrary.

  Section 3.7 Cancellation. All Certificates surrendered for payment, transfer
or exchange shall, if surrendered to any Person a party hereto other than the
Registrar, be delivered by such Person to the Registrar for cancellation. No
Certificates shall be authenticated in lieu of

                                       18

<PAGE>

or in exchange for any Certificates canceled as provided in this Section 3.7,
except as expressly permitted by this Pass Through Trust Agreement. All
canceled Certificates held by the Registrar shall be disposed of in accordance
with the usual practice of the Pass Through Trustee and, if destroyed, a
certification of their destruction shall be delivered to the Pass Through
Trustee.

  Section 3.8 Limitation of Liability for Payments. All payments or
distributions made to Certificateholders under this Pass Through Trust Agreement
shall be made only from the Trust Property and only to the extent that the Pass
Through Trustee shall have received sufficient income or proceeds from the Trust
Property to make such payments in accordance with the terms of Section 4 of this
Pass Through Trust Agreement. Each Holder of a Certificate, by its acceptance of
such Certificate, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to the Holder
thereof as provided in this Pass Through Trust Agreement. Nothing in this Pass
Through Trust Agreement shall be construed as an agreement, or otherwise
creating an obligation, of (a) any Facility Lessee, the Pass Through Trust or
the Pass Through Trustee to pay any of the principal, premium, if any, or
interest due from time to time under the Lessor Notes, or (b) any Facility
Lessee, the Pass Through Trust or the Pass Through Trustee to pay any amount due
from time to time in respect of the Certificates. The liability of an Owner
Lessor under the applicable Lessor Notes shall be limited as set forth therein
and in the applicable Collateral Trust Indenture.

  Section 3.9 Book-Entry and Definitive Certificates.

          (a)      Except for Certificates issued to Institutional Accredited
Investors which must be issued in the form of definitive, fully registered
Certificates ("Definitive Certificates"), the Certificates may be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Pass Through Trustee. In such case, the Certificates delivered
to DTC shall initially be registered on the Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Certificates, except as provided above and in subsection (d) below. As
to the Book-Entry Certificates, unless and until Definitive Certificates have
been issued pursuant to subsection (d) below:

                   (i)      the provisions of this Section 3.9 shall be in full
          force and effect;

                   (ii)     the Facility Lessees, any Owner Lessor, the Paying
          Agent, the Registrar and the Pass Through Trustee may deal with the
          Clearing Agency for all purposes (including the making of
          distributions on the Certificates) as the authorized representative
          of the Certificate Owners;

                   (iii)    to the extent that the provisions of this Section
          3.9 conflict with any other provisions of this Pass Through Trust
          Agreement (other than the provisions of any supplemental agreement
          amending this Section 3.9 as permitted by this Pass Through Trust
          Agreement), the provisions of this Section 3.9 shall control;

                                       19

<PAGE>

                   (iv)      the rights of Certificate Owners shall be
          exercised only through the Clearing Agency and shall be limited to
          those established by law and agreements between such Certificate
          Owners and the Clearing Agency Participants; and until Definitive
          Certificates are issued pursuant to subsection (d) below, the
          Clearing Agency will make book-entry transfers among the Clearing
          Agency Participants and receive and transmit distributions of
          principal and interest and premium, if any, on the Certificates to
          such Clearing Agency Participants; and

                   (v)      whenever this Pass Through Trust Agreement requires
          or permits actions to be taken based upon instructions or directions
          of Certificateholders holding Certificates evidencing a specified
          percentage of the Fractional Undivided Interests in the Pass Through
          Trust, the Clearing Agency shall be deemed to represent such
          percentage only to the extent that it has received instructions to
          such effect from Certificate Owners and/or Clearing Agency
          Participants owning or representing, respectively, such required
          percentage of the beneficial interest in Certificates and has
          delivered such instructions to the Pass Through Trustee.  The Pass
          Through Trustee shall have no obligation to determine (and shall
          incur no liability in connection with any determination of) whether
          the Clearing Agency has in fact received any such instructions.

          (b)      With respect to Book-Entry Certificates, whenever notice or
other communication to the Certificateholders is required under this Pass
Through Trust Agreement, unless and until Definitive Certificates shall have
been issued pursuant to subsection (d) below, the Pass Through Trustee shall
give all such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency and/or the Clearing Agency
Participants (and, upon receipt of a valid Certificate Owner Request, to the
Certificateholder or Certificate Owner making such request), and shall make
available additional copies as reasonably requested by such Clearing Agency
Participants.

          (c)      Unless and until Definitive Certificates are issued pursuant
to subsection (d) below, on the Record Date prior to each applicable
Distribution Date and S pecial Distribution Date, the Pass Through Trustee will
request from the Clearing Agency a "Securities Position Listing" setting forth
the names of all Clearing Agency Participants reflected on the Clearing
Agency's books as holding interests in the Certificates on such Record Date.
The Pass Through Trustee shall mail to each such Clearing Agency Participant
the statements described in Section 4.3 hereof.

          (d)      If with respect to the Certificates (i) any Facility Lessee
advises the Pass Through Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities and the
Facility Lessees are unable to locate a qualified successor within 90 days,
(ii) the Facility Lessees (or, following the occurrence of a Lease Event of
Default, the applicable Owner Lessors) at their option, advise the Pass Through
Trustee in writing that they elect to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default,
Certificate Owners of Book-Entry Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust, by Act of said Certificate Owners delivered to the Facility Lessees and
the

                                       20

<PAGE>

Pass Through Trustee, advise the Facility Lessees, the Owner Lessors, the Pass
Through Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interests of the Certificate
Owners, then the Pass Through Trustee shall notify all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates. Upon surrender to the Pass Through
Trustee of all the Certificates held by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration of
Definitive Certificates in the names of Certificate Owners, the Pass Through
Trust shall issue and deliver the Definitive Certificates in accordance with
the instructions of the Clearing Agency. None of the Facility Lessees, the
Owner Lessors, the Registrar, the Paying Agent or the Pass Through Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such registration
instructions. Upon the issuance of Definitive Certificates, the Pass Through
Trustee shall recognize the Person in whose name the Definitive Certificates
are registered in the Register as Certificateholder hereunder. None of the
Facility Lessees nor the Pass Through Trustee shall be liable if the Facility
Lessees are unable to locate a qualified successor Clearing Agency.

          (e)      The Certificates sold in offshore transactions in reliance
on Regulation S under the Securities Act will be represented initially by one
or more temporary Book-Entry Certificates, in definitive, fully registered form
without interest coupons (collectively, the "Temporary Regulation S Global
Certificate") and will be deposited with the Pass Through Trustee as custodian
for DTC and registered in the name of a nominee of DTC for the accounts of the
Euroclear System ("Euroclear") and Clearstream Banking, S.A. ("Clearstream").
Each Temporary Regulation S Global Certificate will be exchangeable for one or
more permanent Book-Entry Certificate (collectively, the "Permanent Regulation
S Global Certificate," and together with the Temporary Regulation S Global
Certificate, the "Regulation S Global Certificate") on or after 40 days after
the later of the commencement of the offering of the Certificates and the
Issuance Date upon certification that the beneficial interests in such
Book-Entry Certificate are owned by persons who are not U.S. persons as defined
in Regulation S. Prior to the expiration of such 40-day period, beneficial
interests in the Temporary Regulation S Global Certificate may be held only
through Euroclear or Clearstream, and any resale or other transfer of such
interests to U.S. persons shall not be permitted during such period unless such
resale or transfer is made pursuant to Rule 144A or Regulation S under the
Securities Act and in accordance with the certification requirements specified
in Section 3.9(f) below. The aggregate original principal amount of the
Regulation S Global Certificate may from time to time be increased or decreased
by adjustments made on the records of the Pass Through Trustee, as custodian
for DTC, in connection with a corresponding decrease or increase in the
aggregate original principal amount of a Definitive Certificate or the
Restricted Global Certificate, as hereinafter provided.

          (f)      The Certificates sold in reliance on Rule 144A under the
Securities Act will be represented by a one or more permanent Book-Entry
Certificate, in definitive, fully registered form without interest coupons
(collectively, the "Restricted Global Certificate"), which will be deposited
with the Pass Through Trustee as custodian for DTC and registered in the name
of a nominee of DTC. Prior to the 40th day after the later of the commencement
of the offering of the Certificates and the Issuance Date, a beneficial
interest in the Temporary Regulation S Global Certificate may be transferred to
a person who takes delivery in the form of

                                       21

<PAGE>

an interest in the Restricted Global Certificate only upon receipt by the Pass
Through Trustee of a written certification from the transferor (in the form of
Exhibit C hereto) to the effect that such transfer is being made to a person
who the transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and in accordance with any applicable securities laws of any state of
the United States or any other jurisdiction. Beneficial interests in the
Restricted Global Certificate may be transferred to a person who takes delivery
in the form of an interest in the Regulation S Global Certificate whether
before, on or after such 40th day, only upon receipt by the Pass Through
Trustee of a written certification (in the form of Exhibit C hereto) to the
effect that such transfer is being made in accordance with Regulation S under
the Securities Act and, if such transfer occurs prior to such 40th day, the
interest will be held immediately thereafter only through Euroclear or
Clearstream. The aggregate initial principal amount of the Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Pass Through Trustee, as custodian for DTC, in connection
with a corresponding decrease or increase in the aggregate initial principal
amount of a Definitive Certificate or a Regulation S Global Certificate, as
hereinafter provided.

          (g)      Any beneficial interest in one of the Book-Entry
Certificates that is transferred to a person who takes delivery in the form of
an interest in another Book-Entry Certificate will, upon transfer, cease to be
an interest in such first Book-Entry Certificate and become an interest in such
other Book-Entry Certificate and, accordingly, will thereafter be subject to
all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Book-Entry Certificate for so long as it
remains such an interest. Upon the transfer of Definitive Certificates to a
qualified institutional buyer or in accordance with Regulation S, such
Definitive Certificates will be exchanged for an interest in a Book-Entry
Certificate.

          (h)      The Facility Lessees and the Pass Through Trustee, if
necessary, shall each enter into the Letter of Representations with respect to
the Certificates and fulfill its responsibilities thereunder.

     Section 3.10  Form of Certification. In connection with any certification
contemplated by Section 3.4, relating to compliance with certain restrictions
relating to transfers of Restricted Certificates, such certification shall be
provided substantially in the form of Exhibit C hereto, with only such changes
as shall be reasonably approved by the Facility Lessees and reasonably
acceptable to the Pass Through Trustee.

SECTION 4.    DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

  Section 4.1 Certificate Account and Special Payments Account.

          (a)      The Pass Through Trust shall establish and maintain on
behalf of the Certificateholders the Certificate Account with the Pass Through
Trustee as one or more non-interest bearing accounts. The Pass Through Trustee
shall hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Pass Through Trust Agreement. On each day when a Scheduled
Payment is made under a Lease to the Pass Through Trustee, as holder of the
Lessor Notes issued under the related Collateral Trust Indenture, the Pass
Through Trustee upon receipt of

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such scheduled payment shall immediately deposit the aggregate amount of such
Scheduled Payment in the Certificate Account.

          (b)      The Pass Through Trust shall establish and maintain on
behalf of the Certificateholders the Special Payments Account with the Pass
Through Trustee as one or more accounts, which shall be non-interest bearing
except as provided in Section 4.4. The Pass Through Trustee shall hold the
Special Payments Account in trust for the benefit of the Certificateholders,
and shall make or permit withdrawals therefrom only as provided in this Pass
Through Trust Agreement. On each day when a Special Payment is made to the Pass
Through Trustee, as holder of the Lessor Notes issued under the applicable
Collateral Trust Indenture, the Pass Through Trustee upon receipt shall
immediately deposit the aggregate amounts of such Special Payments in the
Special Payments Account.

          (c)      The Pass Through Trustee shall present to the applicable
Indenture Trustee each Lessor Note on the date of its stated final maturity, or
in the case of any Lessor Note which is to be redeemed or otherwise prepaid in
whole pursuant to the Collateral Trust Indenture, on the applicable redemption
on or other prepayment date under the Collateral Trust Indenture.

  Section 4.2 Distributions from Certificate Account and Special Payments
              Account.

          (a)      On each Distribution Date if the Pass Through Trustee
receives payment of the Scheduled Payments due on any Lessor Notes on such date
by 12:00 noon, New York time, on such date, the Pass Through Trustee shall
distribute out of the Certificate Account the entire amount deposited therein
pursuant to Section 4.1(a). If a Scheduled Payment is received by the Pass
Through Trustee after 12:00 noon, New York time, on a Distribution Date, such
payment shall be distributed on the next Business Day. If a Scheduled Payment
is not received by the Pass Through Trustee on a Distribution Date but is
received prior to the time such payment would become a Special Payment, such
payment shall be distributed (i) on the date received, if received by 12:00
noon, New York time, on such date or (ii) on the next Business Day, if received
after 12:00 noon, New York time, on such date. There shall be so distributed to
each Certificateholder of record on the Record Date with respect to such
Distribution Date (other than as provided in Section 11.1 concerning the final
distribution) (i) if (A) DTC is the Certificateholder of record, or (B) a
Certificateholder holds a Certificate or Certificates in an aggregate amount
greater than $10,000,000 or (C) a Certificateholder holds a Certificate or
Certificates in an aggregate amount greater than $1,000,000 and so requests to
the Pass Through Trustee, by wire transfer in immediately available funds to an
account maintained by such Certificateholder with a bank, or (ii) if none of
the above apply, by check mailed to such Certificateholder at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the aggregate Fractional Undivided Interest held by such Certificateholder) of
the aggregate amount in the Certificate Account.

          (b)      On each Special Distribution Date with respect to any Special
Payment, if the Pass Through Trustee receives the Special Payments due on the
required date by 12:00 noon, New York time, on such date, the Pass Through
Trustee shall distribute out of the Special Payments Account the entire amount
deposited therein with respect to such Special Payment pursuant to this Section
4.2(b). The Pass Through Trustee shall make such distribution on a pro rata
basis among the Certificateholders. If a Special Payment is received by the
Pass Through

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<PAGE>

Trustee after 12:00 noon, New York time, on a Special Distribution Date, such
payment shall be distributed on the next Business Day. If a Special Payment is
not received by the Pass Through Trustee on a Special Distribution Date, such
payment shall be distributed (i) on the date received, if received by 12:00
noon, New York time, on such date or (ii) on the next Business Day, if received
after 12:00 noon, New York time, on such date. There shall be so distributed to
each Certificateholder of record on the Record Date with respect to such
Special Distribution Date (other than as provided in Section 11.1 concerning
the final distribution) (i) if (A) DTC is the Certificateholder of record, or
(B) a Certificateholder holds a Certificate or Certificates in an aggregate
amount greater than $10,000,000 or (C) a Certificateholder holds a Certificate
or Certificates in an aggregate amount greater than $1,000,000 and so requests
to the Pass Through Trustee, by wire transfer in immediately available funds to
an account maintained by the Certificateholder with a bank, or (ii) if none of
the above apply, by check mailed to such Certificateholder at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the aggregate Fractional Undivided Interest held by such Certificateholder) of
the aggregate amount in the Special Payments Account on account of such Special
Payment.

          (c)      The Pass Through Trustee shall, at the expense of the
Facility Lessees, cause notice of each Special Payment to be mailed to (i) each
Certificateholder, at the address of such Certificateholder as it appears in
the Register and (ii) any Certificate Owner who has made a valid Certificate
Owner Request, at the address specified in such Certificate Owner Request. In
the event of prepayment of any Lessor Notes, such notice shall be mailed not
less than 20 days prior to the date any such Special Payment is scheduled to be
distributed. In the case of any other Special Payments, such notice shall be
mailed as soon as practicable after the Pass Through Trustee has confirmed that
it has received funds for such Special Payment. Notices mailed by the Pass
Through Trustee shall set forth:

                   (i)      the Special Distribution Date and the Record Date
          therefor (except as otherwise provided in Section 11.1);

                   (ii)     the amount of the Special Payment per $1,000 of face
          amount of Certificates and the amount thereof constituting principal,
          premium, if any, and interest;

                   (iii)    the reason for the Special Payment; and

                   (iv)     if the Special Distribution Date is the same date
          as a Distribution Date, the total amount to be received on such date
          per $1,000 of face amount of Certificates.

If the amount of premium payable upon the prepayment of a Lessor Note has not
been calculated at the time that the Pass Through Trustee mails notice of a
Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed. If a Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day.

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<PAGE>

  Section 4.3 Statements to Certificateholders.

          (a)      On each Distribution Date and Special Distribution Date, the
Pass Through Trustee will include with each distribution to Certificateholders
and any Certificate Owner who has made a valid Certificate Owner Request a
statement, giving effect to such distribution to be made on such date, setting
forth the following information (per a $1,000 face amount Certificate):

                   (i)      the amount of such distribution allocable to
          principal and the amount allocable to premium, if any; and

                   (ii)      the amount of such distribution allocable to
          interest.

          (b)      Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Pass
Through Trustee shall furnish (i) to each Person who at any time during such
calendar year was a Certificateholder of record and (ii) to any Person who at
any time during such calendar year was a Certificate Owner who has made a valid
Certificate Owner Request and provided the Pass Through Trustee with such
pertinent information as the Pass Through Trustee shall reasonably request, a
statement containing the sum of the amounts determined pursuant to clauses
(a)(i) and (a)(ii) with respect to the Pass Through Trust for such calendar
year or, in the event such Person was a Certificateholder of record or
Certificate Owner during a portion of such calendar year, for the applicable
portion of such year, and such other items as are readily available to the Pass
Through Trustee and which a Certificateholder or Certificate Owner shall
reasonably request as necessary for the purpose of such Certificateholder's or
Certificate Owner's preparation of its Federal income tax returns.

          (c)      Based on information provided by the Facility Lessees, if
there shall occur any change in the principal amortization schedule of the
Lessor Notes resulting in a change in the schedule of expected distributions on
the Certificates from that set forth on page 31 of the Offering Circular, the
Pass Through Trustee shall promptly furnish to the Certificateholders a
statement setting forth the revised principal amortization schedule of the
Lessor Notes and the resulting revised schedule of expected distributions on
the Certificates.

  Section 4.4 Investment of Special Payment Moneys. Any money received by the
Pass Through Trustee pursuant to Section 4.1(b) representing a Special Payment
which is not to be promptly distributed shall, to the extent practicable, be
invested in Permitted Government Investments by the Pass Through Trustee pending
distribution of such Special Payment pursuant to Section 4.2. Any investment
made pursuant to this Section 4.4 shall be in such Permitted Government
Investments having maturities not later than the date that such moneys are
required to be paid to make the payment required under Section 4.2 on the
applicable Special Distribution Date and the Pass Through Trustee shall hold any
such Permitted Government Investments until maturity. The Pass Through Trustee
shall have no liability with respect to any investment made pursuant to this
Section 4.4, other than by reason of the willful misconduct or negligence of the
Pass Through Trustee. All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such Special Payment.

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<PAGE>

SECTION 5.    FINANCIAL STATEMENTS AND OTHER REPORTS

     For so long as any Certificates remain Outstanding, the Facility
Lessees shall furnish:

          (a)      to Certificateholders, Certificate Owners and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act so long as the
Certificates are not freely transferable under the Securities Act; and

          (b)      to the Pass Through Trustee, who in turn shall provide such
information, upon a Certificate Owner Request, to Certificateholders and
Certificate Owners:

                   (i)      within 60 days following the end of each of the
          first three fiscal quarters of the Facility Lessees during each
          fiscal year, a copy of Form 10-Q (or any successor form) filed by the
          Facility Lessees with the SEC for such fiscal quarter, or if the
          Facility Lessees are not then subject to the reporting requirements
          of the Exchange Act, unaudited consolidated quarterly financial
          statements for the Facility Lessees for such fiscal quarter;

                   (ii)     within 120 days following the end of the fiscal
          year of the Facility Lessees, a copy of the Form 10-K (or any
          successor form) filed by the Facility Lessees with the SEC for such
          fiscal year, or, if the Facility Lessees are not then subject to the
          reporting requirements of the Exchange Act, audited consolidated
          annual financial statements; and

                   (iii)    within 20 days after the occurrence thereof, (A) a
          copy of any current report on Form 8-K (or any successor form) filed
          by the Facility Lessees with the SEC, if any, and (B) notice of the
          following events (1) a Change of Control; (2) any litigation or claim
          against the Facility Lessees, or the South Point, Broad River and
          RockGen which could reasonably be expected to have a Material Adverse
          Effect; (3) the appointment of a receiver over any of the Facility
          Lessees or the confirmation of a plan of reorganization or
          liquidation for any of the Facility Lessees; or (4) the resignation
          or dismissal of the independent accountants engaged by the Facility
          Lessees.

SECTION 6.   DEFAULT

  Section 6.1 Events of Default.

          (a)      With respect to any Lessor Note, if any Lease Indenture
Event of Default under the applicable Collateral Trust Indenture (an "Event of
Default") shall occur and be continuing, then, and in each and every case, so
long as such Lease Indenture Event of Default shall be continuing, the Pass
Through Trustee may vote all of the Lessor Notes issued under the Collateral
Trust Indenture held in the Pass Through Trust, and upon the Direction of the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest of the Fractional Undivided Interests
evidenced by all Certificates at the time Outstanding (determined as provided
in Section 1.4(c)), the Pass Through Trustee shall vote all of such Lessor
Notes, in favor of directing the applicable Indenture Trustee to declare the
unpaid principal amount of such Lessor Notes then outstanding and accrued
interest thereon to be due

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<PAGE>

and payable under, and to the extent permitted by and in accordance with, the
provisions of such Collateral Trust Indenture. In addition, with respect to any
Lessor Note, if a Lease Indenture Event of Default shall have occurred and be
continuing under the related Lease Indenture, the Pass Through Trustee may in
its discretion, and upon the Direction of the Holders of Certificates
evidencing Fractional Undivided Interest aggregating not less than a majority
in interest of the Fractional Undivided Interests evidenced by all Certificates
at the time Outstanding (determined as provided in Section 1.4(c)) as provided
in Section 6.4 shall, in accordance with such Collateral Trust Indenture vote
the applicable Lessor Notes issued thereunder held in the Pass Through Trust to
direct the applicable Indenture Trustee regarding the exercise of remedies
provided in such Collateral Trust Indenture and consistent with the terms
thereof. Notwithstanding the foregoing, no Lease Indenture Event of Default
under a given Collateral Trust Indenture shall give rise to a Lease Indenture
Event of Default under any other Collateral Trust Indenture.

          In addition, after an Event of Default shall have occurred and be
continuing, the Pass Through Trustee may in its discretion, and upon the
Direction of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest of the Fractional
Undivided Interests evidenced by all Certificates at the time Outstanding
(determined as provided in Section 1.4(c)) shall, by such officer or agent as
it may appoint, sell, convey, transfer and deliver all or a portion of such
Lessor Note or Lessor Notes issued under the Collateral Trust Indenture with
respect to which the Event of Default has occurred, without recourse to or
warranty by the Pass Through Trustee or any Certificateholders to any Person.
In any such case, the Pass Through Trustee shall sell, assign, contract to sell
or otherwise dispose of and deliver such Lessor Note or Lessor Notes in one or
more parcels at public or private sale or sales, at any location or locations
at the option of the Pass Through Trustee, all upon such terms and conditions
as it may reasonably deem advisable and at such prices as it may reasonably
deem advisable, for cash. The Pass Through Trustee shall give notice to the
applicable Facility Lessee and Owner Lessor promptly after any such sale.

          In the event that the Pass Through Trustee shall deem it advisable
to sell any or all of the Lessor Notes in accordance with the provisions of
this Section, the parties agree that if registration of any such Lessor Notes
shall be required, in the opinion of counsel for the Pass Through Trustee under
the Securities Act of 1933, as amended, or other applicable law, and
regulations promulgated thereunder, and if the Facility Lessees shall not
effect, or cause to be effected, such registration promptly, the Pass Through
Trustee may sell any such Lessor Notes at a private sale, and no Person shall
attempt to maintain that the prices at which such Lessor Notes are sold are
inadequate by reason of the failure to sell at public sale, or hold the Pass
Through Trustee liable thereafter.

     Section 6.2   Incidents of Sale of Lessor Notes. Upon any sale of all or
any part of the Lessor Notes made either under the power of sale given under
this Pass Through Trust Agreement or otherwise for the enforcement of this Pass
Through Trust Agreement, the following shall be applicable:

          (1)      Certificateholders and Pass Through Trustee May Purchase
     Lessor Notes. Any Certificateholder, the Pass Through Trustee in its
     individual or any other capacity or any other Person may bid for and
     purchase any of the Lessor Notes and, upon compliance

                                       27

<PAGE>

     with the terms of sale, may hold, retain, possess and dispose of such
     Lessor Notes in their or its or his own absolute right without further
     accountability.

          (2)      Receipt of Pass Through Trustee Shall Discharge Purchaser.
     The receipt of immediately available funds by the Pass Through Trustee or
     the officer or agent appointed by the Pass Through Trustee shall be a
     sufficient discharge to any purchaser for his purchase money, and, after
     paying such purchase money and receiving such receipt, such purchaser or
     his personal representative or assigns shall not be obliged to see to the
     application of such purchase money, or be in any way answerable for any
     loss, misapplication or non-application thereof.

          (3)      Application of Moneys Received upon Sale. Any moneys
     collected by the Pass Through Trustee, upon any sale made either under the
     power of sale given by this Pass Through Trust Agreement or otherwise for
     the enforcement of this Pass Through Trust Agreement, shall be applied as
     provided in Section 4.2.

     Section 6.3   Judicial Proceedings Instituted by Pass Through Trustee.

             (a) Pass Through Trustee May Bring Suit. If there shall be a
failure to make payment of the principal of, premium, if any, or interest on any
Lessor Note, or if there shall be any failure to pay Rent (as defined in a
Lease) under the Lease related to any Lessor Note when due and payable, then the
Pass Through Trustee, in its own name, and as trustee of an express trust, as
holder of such Lessor Notes shall be, to the extent permitted by and in
accordance with the terms of the Operative Documents, entitled and empowered
(but not obligated) to institute any suits, actions or proceedings at law, in
equity or otherwise, for the collection of the sums so due and unpaid on such
Lessor Notes or under such Lease and may prosecute any such claim or proceeding
to judgment or final decree with respect to the whole amount of any such sums so
due and unpaid; subject, however, to the limitations of liability set forth in
the Lessor Notes and the Operative Documents.

             (b) Pass Through Trustee May File Proofs of Claim; Appointment of
Pass Through Trustee as Attorney-in-Fact in Judicial Proceedings. The Pass
Through Trustee in its own name, or as trustee of an express trust, or as
attorney-in-fact for the Certificateholders, or in any one or more of such
capacities (irrespective of whether distributions on the Certificates shall then
be due and payable, or the payment of the principal on any Lessor Notes shall
then be due and payable, as therein expressed or by declaration or otherwise and
irrespective of whether the Pass Through Trustee shall have made any demand to
the applicable Indenture Trustee for the payment of overdue principal, premium
(if any) or interest on any Lessor Notes), shall, subject to the terms of the
Operative Documents, be entitled and empowered to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Pass Through Trustee and of the Certificateholders allowed in any
receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization
or any other judicial proceedings relative to any Facility Lessee, any Owner
Lessor, any Lessor Manager or any Owner Participant, or their respective
creditors or property. Subject to the terms of the Operative Documents, any
receiver, assignee, trustee, liquidator or sequestrator (or similar official) in
any such judicial proceeding is hereby authorized by each Certificateholder to
make payments in respect of such claim to the Pass Through Trustee, and in the
event that the Pass Through Trustee shall consent to the making

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<PAGE>

of such payments directly to the Certificateholders, to pay to the Pass Through
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Pass Through Trustee, its agents and counsel
and any other amounts due the Pass Through Trustee under Section 7.7. Subject
to Section 6.4, nothing contained in this Pass Through Trust Agreement shall be
deemed to give to the Pass Through Trustee any right to accept or consent to
any plan of reorganization or otherwise by action of any character in any such
proceeding to waive or change in any way any right of any Certificateholder.

     Section 6.4   Control by Certificateholders. The Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest of the Fractional Undivided Interests evidenced by all Certificates
at the time Outstanding (determined as provided in Section 1.4(c)) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Pass Through Trustee, or exercising any trust or
power conferred upon the Pass Through Trustee, under this Pass Through Trust
Agreement, including any right of the Pass Through Trustee as holder of the
Lessor Notes, provided that:

             (1) such Direction shall not be in conflict with any rule of law or
     with this Pass Through Trust Agreement and would not involve the Pass
     Through Trustee in personal liability or expense;

             (2) the Pass Through Trustee shall not determine that the action so
     directed would expose it to personal liability or be unjustly prejudicial
     to the Certificateholders not taking part in such Direction;

             (3) the Pass Through Trustee may take any other action deemed
     proper by the Pass Through Trustee which is not inconsistent with such
     Direction;

             (4) such Holders shall have offered to the Pass Through Trustee
     security or indemnity against the costs, expenses or liabilities which may
     be incurred thereby; and

             (5) if a Lease Indenture Event of Default shall have occurred and
     be continuing, such Direction shall not obligate the Pass Through Trustee
     to vote more than a corresponding majority of the related Lessor Notes held
     by the Pass Through Trust in favor of directing any action by the
     applicable Indenture Trustee with respect to such Lease Indenture Event of
     Default.

     Section 6.5   Waiver of Defaults. The Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
of the Fractional Undivided Interests evidenced by all Certificates at the time
Outstanding (determined as provided in Section 1.4(c)) may on behalf of the
Certificateholders of all the Certificates waive any Default hereunder and its
consequences or may instruct the Pass Through Trustee to waive any default
under a Collateral Trust Indenture and its consequences, except:

             (1) a default in the deposit of any Scheduled Payment or Special
     Payment under Section 4.1 or in the distribution of any payment under
     Section 4.2 on the Certificates; or

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<PAGE>

          (2) a default in the payment of the principal of, premium, if any, or
     interest on any Lessor Notes; or

          (3) a default in respect of a covenant or provision hereof which under
     Section 9 hereof cannot be modified or amended without the consent of the
     Holder of each Outstanding Certificate affected.

          Upon any such waiver, such Default shall cease to exist with
respect to this Pass Through Trust Agreement, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Pass
Through Trust Agreement and any direction given by the Pass Through Trustee on
behalf of such Holders to the applicable Indenture Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. Upon
any such waiver with respect to a Default under a Collateral Trust Indenture,
the Pass Through Trustee shall vote a corresponding majority of the Lessor
Notes issued under the applicable Collateral Trust Indenture to waive the
corresponding Lease Indenture Default or Lease Indenture Event of Default.

          With respect to consents, approvals, waivers and authorizations
which under the terms of Section 9 of a Collateral Trust Indenture may be given
by the applicable Indenture Trustee without the necessity of the consent of any
of the holders of Lessor Notes issued with respect to such Collateral Trust
Indenture, no consent, approval, waiver or authorization shall be required
hereunder on the part of the Pass Through Trustee or the Certificateholders.

     Section 6.6 Undertaking to Pay Court Costs. All parties to this Pass
Through Trust Agreement, and each Certificateholder by his acceptance of a
Certificate, shall be deemed to have agreed that any court may in its discretion
require, in any suit, action or proceeding for the enforcement of any right or
remedy under this Pass Through Trust Agreement, or in any suit, action or
proceeding against the Pass Through Trustee for any action taken or omitted by
it as Pass Through Trustee hereunder, the filing by any party litigant in such
suit, action or proceeding of an undertaking to pay the costs of such suit,
action or proceeding, and that such court may, in its discretion, assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, action or proceeding, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section 6.6 shall not apply to (a) any
suit, action or proceeding instituted by any Holder, or group of Holders,
holding in the aggregate Certificates evidencing Fractional Undivided Interests
aggregating more than 10% of the Pass Through Trust, (b) any suit, action or
proceeding instituted by any Certificateholder for the enforcement of the
distribution of payments pursuant to Section 4.2 hereof on or after the
respective due dates expressed herein or (c) any suit, action or proceeding
instituted by the Pass Through Trustee.

     Section 6.7 Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Pass Through Trust Agreement to the contrary
notwithstanding, but subject to Section 3.8 hereof, the right of any
Certificateholder to receive distributions of payments required pursuant to
Section 4.2 hereof on the Certificates when due, or to institute suit for the
enforcement of any such payment on or after the applicable Distribution Date or
Special Distribution Date, shall not be impaired or affected without the consent
of such Certificateholder.

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<PAGE>

  Section 6.8 Certificateholders May Not Bring Suit Except Under Certain
Conditions. A Certificateholder shall not have the right to institute any suit,
action or proceeding at law or in equity or otherwise with respect to this Pass
Through Trust Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Pass Through Trust Agreement, unless:

          (1)      such Certificateholder previously shall have given written
      notice to the Pass Through Trustee of a continuing Event of Default;

          (2)      the Holders of Certificates evidencing Fractional Undivided
     Interests aggregating not less than a majority in interest of the
     Fractional Undivided Interests evidenced by all Certificates at the time
     Outstanding (determined as provided in Section 1.4(c)) shall have
     requested the Pass Through Trustee in writing to institute such suit,
     action or proceeding and shall have offered to the Pass Through Trustee
     indemnity as provided in Section 7.3(e);

          (3)      the Pass Through Trustee shall have refused or neglected to
     institute any such suit, action or proceeding for 60 days after receipt
     of such notice, request and offer of indemnity; and

          (4)      no Direction inconsistent with such written request has been
     given to the Pass Through Trustee during such 60-day period by the
     Holders of Certificates evidencing Fractional Undivided Interests
     aggregating not less than a majority in interest of the Fractional
     Undivided Interests evidenced by all Certificates at the time Outstanding
     (determined as provided in Section 1.4(c)).

          It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Collateral
Trust Indenture on any property subject thereto, or the rights of the
Certificateholders or the holders of the Lessor Notes, (ii) obtain or seek to
obtain priority over or preference to any other such Holder, or (iii) enforce
any right under this Pass Through Trust Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all the
Certificateholders subject to the provisions of this Pass Through Trust
Agreement.

     Section 6.9   Remedies Cumulative. Every remedy given hereunder to the Pass
Through Trustee or to any of the Certificateholders shall not be exclusive of
any other remedy or remedies, and every such remedy shall be cumulative and in
addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.

SECTION 7.   THE PASS THROUGH TRUSTEE

  Section 7.1 Certain Duties and Responsibilities.

          (a)      Prior to an Event of Default of which a Responsible Officer
of the Pass Through Trustee has actual knowledge:

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<PAGE>

          (1)      the Pass Through Trustee shall not be liable except for the
     performance of such duties as are specifically set out in this Pass
     Through Trust Agreement; and

          (2)      the Pass Through Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, in the absence of bad faith on the part of the Pass Through
     Trustee, upon Officer's Certificates or Opinions of Counsel conforming to
     the requirements of this Pass Through Trust Agreement;

but the Pass Through Trustee shall, at any time that the Certificates shall be
subject to the Trust Indenture Act, examine any evidence furnished to it
pursuant to this Pass Through Trust Agreement or Section 314 of the Trust
Indenture Act to determine whether or not such evidence conforms to the
requirements of this Pass Through Trust Agreement; provided, however, that the
Pass Through Trustee shall not be responsible for the accuracy or content of
such evidence.

          (b)      In case an Event of Default has occurred and is continuing,
the Pass Through Trustee shall exercise each of the rights and powers vested in
it by this Pass Through Trust Agreement and use the same degree of care and
skill in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.

          (c)      No provision of this Pass Through Trust Agreement shall be
construed to relieve the Pass Through Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

          (1)      this paragraph (c) shall not be construed to limit the
     effect of paragraph (a) of this Section 7.1;

          (2)      the Pass Through Trustee shall not be liable in its
     individual capacity for any error of judgment made in good faith by a
     Responsible Officer of the Pass Through Trustee, unless it shall be proved
     that the Pass Through Trustee was negligent in ascertaining the pertinent
     facts; and

          (3)      the Pass Through Trustee shall not be liable with respect to
     any action taken or omitted to be taken by it in good faith in accordance
     with the Direction of the Holders of Certificates evidencing Fractional
     Undivided Interests aggregating not less than a majority in interest of
     the Fractional Undivided Interests evidenced by all Certificates at the
     time Outstanding (determined as provided in Section 1.4(c)) (A) relating
     to the time, method and place of conducting any proceeding for any remedy
     available to the Pass Through Trustee, or (B) exercising any trust or
     power conferred upon the Pass Through Trustee, under this Pass Through
     Trust Agreement.

          (d)      Whether or not herein expressly so provided, every provision
of this Pass Through Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Pass Through Trustee shall be
subject to the provisions of this Section 7.1.

  Section 7.2 Notice of Defaults. The Pass Through Trustee shall give to the
Certificateholders, at any time that the Certificates shall be subject to the
Trust Indenture Act, in the manner and to the extent required by Section 313(c)
of the Trust Indenture Act, and to each of the Facility Lessees, the applicable
Owner Lessor and the applicable Indenture Trustee in

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accordance with Section 12.3, notice of all Defaults actually known to a
Responsible Officer of the Pass Through Trustee within 90 days after the
occurrence thereof; provided, however, that, except in the case of a Default in
the payment of the principal of, premium, if any, or interest on any Lessor
Note, the Pass Through Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors or Responsible Officers of the Pass Through Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders.

  Section 7.3 Certain Rights of Pass Through Trustee. Except as otherwise
provided in Section 7.1:

          (a)      the Pass Through Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any Act, Direction,
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

          (b)      any request or direction of any of the Facility Lessees, an
Owner Lessor or any Indenture Trustee mentioned herein shall be sufficiently
evidenced by a Request;

          (c)      whenever in the administration of this Pass Through Trust
Agreement the Pass Through Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, the Pass Through Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officer's Certificate of any Facility Lessee, an Owner Lessor or the
applicable Indenture Trustee;

          (d)      the Pass Through Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

          (e)      the Pass Through Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Pass Through Trust
Agreement at the request or direction of any of the Certificateholders pursuant
to this Pass Through Trust Agreement, unless such Certificateholders shall have
offered to the Pass Through Trustee reasonable security or indemnity against
the cost, expenses and liabilities which might be incurred by it in compliance
with such request or direction;

          (f)      the Pass Through Trustee shall not be bound to make any
investigation into the facts or matters stated in any Act, Direction,
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document;

          (g)      the Pass Through Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Pass Through Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it hereunder with due care;

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<PAGE>

          (h)      the Pass Through Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion of rights or powers conferred upon it by
this Pass Through Trust Agreement;

          (i)      the right of the Pass Through Trustee to perform any
discretionary act enumerated in this Pass Through Trust Agreement shall not be
construed as a duty, and the Pass Through Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of such act;

          (j)      the Pass Through Trustee shall not be required to give any
bond or surety in respect of the execution of the trust fund created hereby or
the powers granted hereunder; and

          (k)      the Pass Through Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or to otherwise perfect or maintain the perfection of any security interest or
lien granted to it hereunder or to record this Pass Through Trust Agreement.

  Section 7.4 Not Responsible for Recitals; Issuance of Certificates. The
recitals contained herein and in the Certificates, except the certificates of
authentication, shall not be taken as the statements of the Pass Through
Trustee, and the Pass Through Trustee assumes no responsibility for their
correctness. The Pass Through Trustee makes no representations as to the
validity or sufficiency of this Pass Through Trust Agreement, the Lessor Notes,
the Operative Documents, or the Certificates, or the collateral securing the
Lessor Notes, except that the Pass Through Trustee hereby represents and
warrants that this Pass Through Trust Agreement has been, and each Certificate
will be, executed and delivered by one of its officers who is duly authorized to
execute and deliver such document on its behalf.

  Section 7.5 May Hold Certificates. The Pass Through Trustee, any Paying Agent,
Registrar or any other agent, in their respective individual or any other
capacity, may become the owner or pledgee of Certificates and may otherwise deal
with any Facility Lessee, any Owner Lessor, any Owner Participant or any
Indenture Trustee with the same rights it would have if it were not the Pass
Through Trustee, Paying Agent, Registrar or such other agent, subject to Section
7.8 in the case of the Pass Through Trustee.

  Section 7.6 Money Held in Pass Through Trust. Money held by the Pass Through
Trustee or the Paying Agent in trust hereunder need not be segregated from other
funds except to the extent required herein or by law and neither the Pass
Through Trustee nor the Paying Agent shall have any liability for interest upon
any such moneys except as provided for herein.

  Section 7.7 Compensation, Reimbursement and Indemnification. The Facility
Lessees agree on a joint and severable basis:

          (1)      to pay, or cause to be paid, to the Pass Through Trustee from
     time to time the compensation separately agreed to by the Pass Through
     Trustee and any Facility Lessee for all services rendered by it hereunder
     (which compensation shall not be limited by any provision of law in
     regard to the compensation of a trustee of an express trust); and

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<PAGE>

          (2)      except as otherwise expressly provided herein, to reimburse,
     or cause to be reimbursed, the Pass Through Trustee upon its request for
     all reasonable out-of-pocket expenses, disbursements and advances incurred
     or made by the Pass Through Trustee in accordance with any provision of
     this Pass Through Trust Agreement (including the reasonable compensation
     and the expenses and disbursements of its agents and counsel), except any
     such expense, disbursement or advance as may be attributable to its
     negligence, willful misconduct or bad faith.

          In addition, the Pass Through Trustee shall be entitled to
reimbursement from, and shall have a lien prior to the Certificates upon, all
property and funds held or collected by the Pass Through Trustee in its
capacity as Pass Through Trustee for any tax incurred without negligence, bad
faith or willful misconduct, on its part, arising out of or in connection with
the acceptance or administration of this Pass Through Trust (other than any tax
attributable to the Pass Through Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Pass Through Trustee reimburses itself for any such tax, it
will within 30 days mail a brief report setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.

  Section 7.8 Corporate Trustee Required; Eligibility. There shall at all times
be a Pass Through Trustee hereunder which (a) shall be, at any time that the
Certificates shall be subject to the Trust Indenture Act, a Person eligible to
act as a trustee under Section 310(a) of the Trust Indenture Act and (b) shall
be a corporation organized and doing business under the laws of the United
States of America or of any state, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$150,000,000, and subject to supervision or examination by Federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.8, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Pass Through Trustee shall cease to be eligible in accordance with
the provisions of clause (a) of this Section 7.8 at a time when it is required
to be so qualified, it shall resign immediately in the manner and with the
effect hereinafter specified in this Section 7.

  Section 7.9 Resignation and Removal: Appointment of Successor.

          (a)      No resignation or removal of the Pass Through Trustee and no
appointment of a successor Pass Through Trustee pursuant to this Section 7.9
shall become effective until the acceptance of appointment by the successor
Pass Through Trustee under Section 7.10.

          (b)      The Pass Through Trustee may resign at any time by giving
written notice thereof to the Facility Lessees, the Authorized Agents, the
Owner Lessors, the Owner Participants and each Indenture Trustee. If an
instrument of acceptance by a successor Pass Through Trustee shall not have
been delivered to the Facility Lessees, the Owner Lessors, the Owner
Participants and each Indenture Trustee within 30 days after the giving of such
notice of resignation, the resigning Pass Through Trustee may petition any
court of competent jurisdiction for the appointment of a successor Pass Through
Trustee.

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<PAGE>

          (c)      The Pass Through Trustee may be removed at any time by Act of
the Holders holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Pass Through Trust
delivered to the Pass Through Trustee and to the Facility Lessees, the Owner
Lessors and each Indenture Trustee.

          (d)      If at any time:

                   (1)      the Pass Through Trustee fails to, at any time that
          the Certificates shall be subject to the Trust Indenture Act, comply
          with the requirements of Section 310 of the Trust Indenture Act after
          written request for such compliance by a Certificateholder that has
          been a bona fide Certificateholder for at least six months; or

                   (2)      the Pass Through Trustee shall cease to be eligible
          under Section 7.8 hereof and shall fail to resign after written
          request therefor by the Facility Lessees (or, following the
          occurrence and during the continuation of a Lease Event of Default,
          the applicable Owner Lessor) or by any such Certificateholder; or

                   (3)      the Pass Through Trustee shall become incapable of
          acting or shall be adjudged bankrupt or insolvent or a receiver of
          the Pass Through Trustee or of its property shall be appointed or any
          public officer shall take charge or control of the Pass Through
          Trustee or of its property or affairs for the purpose of
          rehabilitation, conservation or liquidation;

then, in any case, (i) the Facility Lessees (or, following the occurrence and
during the continuation of a Lease Event of Default, the applicable Owner
Lessor) may remove the Pass Through Trustee or (ii) subject to Section 6.6
hereof, any Certificateholder who has been a bona fide Holder of a Certificate
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Pass Through Trustee and the appointment of a successor Pass Through Trustee.

          (e)      If a Responsible Officer of the Pass Through Trustee shall
obtain Actual Knowledge of an Avoidable Tax (as hereinafter defined) which has
been or is likely to be asserted, the Pass Through Trustee shall promptly
notify the Facility Lessees and the applicable Owner Lessor thereof and shall,
within 30 days of such notification, resign hereunder unless within such 30-day
period the Pass Through Trustee shall have received notice that the Facility
Lessees or the applicable Owner Lessor has agreed to pay such tax. The Facility
Lessees shall promptly appoint a successor Pass Through Trustee in a
jurisdiction where there are no Avoidable Taxes. As used herein an "Avoidable
Tax" means a state or local tax: (i) upon (w) the Pass Through Trust, (x) the
Trust Property, (y) Holders of the Certificates or (z) the Pass Through Trustee
for which the Pass Through Trustee is entitled to seek reimbursement from the
Trust Property, and (ii) that would be avoided if the Pass Through Trustee were
located in another state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Facility Lessees or the
Owner Lessors shall agree to pay, and shall pay, such tax.

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<PAGE>

          (f)      If the Pass Through Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Pass Through Trustee for any cause, the Facility Lessees (or, following the
occurrence of a Lease Event of Default, the applicable Owner Lessor) shall
promptly appoint a successor Pass Through Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Pass Through Trustee shall be appointed by Act of the Holders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Pass Through Trust, delivered to the
Facility Lessees, the Owner Lessors, the Owner Participants, the Indenture
Trustees and the retiring Pass Through Trustee, the successor Pass Through
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Pass Through Trustee and supersede the successor Pass
Through Trustee appointed as provided above. If no successor Pass Through
Trustee shall have been so appointed as provided above and accepted such
appointment in the manner hereinafter provided, any Certificateholder who has
been a bona fide Holder of a Certificate for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Pass Through Trustee.

          (g)      The successor Pass Through Trustee shall give notice of the
resignation and removal of the Pass Through Trustee and appointment of the
successor Pass Through Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Certificates as their
names and addresses appear in the Register. Each notice shall include the name
of such successor trustee and the address of its Corporate Trust Office.

  Section 7.10 Acceptance of Appointment by Successor. Every successor Pass
Through Trustee appointed hereunder shall execute, acknowledge and deliver to
the Facility Lessees, the Owner Lessors and to the retiring Pass Through Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Pass Through Trustee shall become effective and such
successor Pass Through Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Pass Through Trustee; but, on request of any Facility Lessee (or,
following the occurrence of a Lease Event of Default, the applicable Owner
Lessor) to the successor Pass Through Trustee, such retiring Pass Through
Trustee shall execute and deliver an instrument transferring to such successor
Pass Through Trustee all the rights, powers and trusts of the retiring Pass
Through Trustee and shall duly assign, transfer and deliver to such successor
Pass Through Trustee all property and money held by such retiring Pass Through
Trustee hereunder, subject nevertheless to its lien, if any, provided for in
Section 7.7. Upon request of any such successor Pass Through Trustee, the
Facility Lessees, the Owner Lessors, the retiring Pass Through Trustee and such
successor Pass Through Trustee shall execute and deliver any and all instruments
containing such provisions as shall be necessary or desirable to transfer and
confirm to, and for more fully and certainly vesting in, such successor Pass
Through Trustee all such rights, powers and trusts.

          No successor Pass Through Trustee shall accept its appointment
unless at the time of such acceptance such successor Pass Through Trustee shall
be qualified and eligible under this Section 7.

  Section 7.11 Merger, Conversion, Consolidation or Succession to Business. Any
Person into which the Pass Through Trustee may be merged or converted or with
which it may

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<PAGE>

be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Pass Through Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Pass Through Trustee, shall be the successor of the Pass Through Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Section 7, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Certificates shall have
been authenticated, but not delivered, by the Pass Through Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Pass Through Trustee may adopt such authentication and deliver
the Certificates so authenticated with the same effect as if such successor
Pass Through Trustee had itself authenticated such Certificates.

  Section 7.12 Maintenance of Agencies.

          (a)      There shall at all times be maintained in the Borough of
Manhattan, The City of New York, an office or agency where Certificates may be
presented or surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the Pass Through
Trustee in respect of the Certificates or of this Pass Through Trust Agreement
may be served. Written notice of the location of each such other office or
agency and of any change of location thereof shall be given by the Pass Through
Trustee to the Facility Lessees, the Owner Lessors, the Owner Participants,
each Indenture Trustee and the Certificateholders. In the event that no such
office or agency shall be maintained or no such notice of location or of change
of location shall be given, presentations and demands may be made and notices
may be served at the Corporate Trust Office of the Pass Through Trustee.

          (b)      There shall at all times be a Registrar and a Paying Agent
hereunder. Each such Authorized Agent shall be a bank or trust company, shall
be a corporation organized and doing business under the laws of the United
States or any state, with a combined capital and surplus of at least
$150,000,000, and shall be authorized under such laws to exercise corporate
trust powers, subject to supervision by Federal or state authorities. The Pass
Through Trustee shall initially be the Paying Agent and, as provided in Section
3.4, Registrar hereunder. Each Registrar shall furnish to the Pass Through
Trustee (unless they are the same entity), at stated intervals of not more than
six months, and at such other times as the Pass Through Trustee may request in
writing, a copy of the Register.

          (c)      Any Person into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, consolidation or conversion to which any Authorized Agent shall be
a party, or any Person succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor Person is otherwise eligible under this Section 7.12, without
the execution or filing of any paper or any further act on the part of the
parties hereto or such Authorized Agent or such successor Person.

          (d)      Any Authorized Agent may at any time resign by giving written
notice of resignation to the Pass Through Trustee, the Facility Lessees, the
Owner Lessors, the Owner Participants and each Indenture Trustee. The Facility
Lessees (or, following the occurrence of a Lease Event of Default, the Owner
Lessor) may, and at the request of the Pass Through Trustee shall, at any time
terminate the agency of any Authorized Agent by giving written notice of

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<PAGE>

termination to such Authorized Agent and to the Pass Through Trustee. Upon the
resignation or termination of an Authorized Agent or in case at any time any
such Authorized Agent shall cease to be eligible under this Section 7.12 (when,
in either case, no other Authorized Agent performing the functions of such
Authorized Agent shall have been appointed), the Facility Lessees (or,
following the occurrence of a Lease Event of Default, the applicable Owner
Lessor) shall promptly appoint one or more qualified successor Authorized
Agents reasonably satisfactory to the Pass Through Trustee, to perform the
functions of the Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this Section 7.12. The
Facility Lessees (or, following the occurrence of a Lease Event of Default, the
applicable Owner Lessor) shall give written notice of any such appointment made
by it to the Pass Through Trustee, the Facility Lessees, the Owner Lessors and
each Indenture Trustee; and in each case the Pass Through Trustee shall mail
notice of such appointment to all Holders as their names and addresses appear
on the Register.

          (e)      Each Facility Lessee agrees to pay, or cause to be paid, from
time to time to each Authorized Agent the compensation as set forth in the
schedule agreed to by each Authorized Agent and such Facility Lessee for its
services and to reimburse it for its reasonable expenses.

  Section 7.13 Money for Certificate Payments to Be Held in Trust. All moneys
deposited with any Paying Agent for the purpose of any payment on Certificates
shall be deposited in a non interest bearing account and held in trust for the
benefit of the Holders of the Certificates entitled to such payment, subject to
the provisions of this Section 7.13. Moneys so deposited and held in trust shall
constitute a separate trust fund for the benefit of the Holders of the
Certificates with respect to which such money was deposited.

          The Pass Through Trustee will cause each Paying Agent other than
the Pass Through Trustee to execute and deliver to it an instrument in which
such Paying Agent shall agree with the Pass Through Trustee, subject to the
provisions of this Section 7.13, that such Paying Agent will:

          (1)      hold all sums held by it for payments on
     Certificates in trust for the benefit of the Persons entitled
     thereto until such sums shall be paid to such Persons or
     otherwise disposed of as herein provided;

          (2)   give the Pass Through Trustee notice in writing of any default
     by any obligor upon the Certificates in the making of any such payment;
     and

          (3)   at any time during the continuance of any such default, upon the
     written request of the Pass Through Trustee, forthwith pay to the Pass
     Through Trustee all sums so held in trust by such Paying Agent.

          The Pass Through Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Pass Through Trust Agreement
or for any other purpose, direct any Paying Agent to pay to the Pass Through
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Pass Through Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any Paying Agent

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<PAGE>

to the Pass Through Trustee, such Paying Agent shall be released from all
further liability with respect to such money.

     Section 7.14  Registration of Lessor Notes in Pass Through Trustee's Name
The Pass Through Trustee agrees that all Lessor Notes and Permitted Government
Investments, if any, shall be issued in the name of the Pass Through Trustee or
its nominee and held by the Pass Through Trustee, or, if not so held, the Pass
Through Trustee or its nominee shall be reflected as the owner of such Lessor
Notes or Permitted Government Investments, as the case may be, in the register
of the issuer of such Lessor Notes or Permitted Government Investments under
the applicable provisions of the Uniform Commercial Code in effect where the
Pass Through Trustee holds such Lessor Notes or Permitted Government
Investments, or other applicable law then in effect.

     Section 7.15  Withholding Taxes; Information Reporting. The Pass Through
Trustee, as trustee, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due hereunder or
under the Certificates any and all withholding taxes applicable thereto as
required by law. The Pass Through Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders
of the Certificates, (ii) that it will file any necessary withholding tax
returns or statements when due, and (iii) that, as promptly as possible after
the payment thereof, it will deliver to each Holder of a Certificate
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holders may reasonably request from
time to time. The Pass Through Trustee agrees to file any other information
reports as it may be required to file under United States law. Any amounts
withheld and paid to a relevant taxing authority pursuant to this Section 7.15
shall be deemed to have been paid to the related Certificateholders for all
purposes under the Operative Documents.

     Section 7.16  Pass Through Trustee's Liens. The Pass Through Trustee, in
its individual capacity, agrees that it will at its own cost and expense
promptly take any action as may be necessary to duly discharge and satisfy in
full any mortgage, pledge, lien, charge, encumbrance, security interest or
claim on or with respect to the Trust Property which is either (i) attributable
to the Pass Through Trustee in its individual capacity and which is unrelated
to the transactions contemplated by this Pass Through Trust Agreement or any
other applicable Operative Document, or (ii) which is attributable to the Pass
Through Trustee as trustee hereunder or in its individual capacity and which
arise out of acts or omissions which are prohibited by this Pass Through Trust
Agreement.

SECTION 8.   CERTIFICATEHOLDERS' LISTS AND REPORTS

     Section 8.1   The Facility Lessees to Furnish Pass Through Trustee with
Names and Addresses of Certificateholder. Each Facility Lessees will furnish to
the Pass Through Trustee within fifteen days after each Record Date with
respect to a Scheduled Payment, and at such other times as the Pass Through
Trustee may request in writing, a list, in such form as the Pass Through
Trustee may reasonably require, of all information in the possession or control
of such Facility Lessee as to the names and addresses of the Holders of
Certificates, in each case as of a

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<PAGE>

date not more than sixty days prior to the time such list is furnished;
provided, however, that so long as the Pass Through Trustee is the sole
Registrar, no such list need be furnished; and provided, further, however, that
no such list need be furnished for so long as a copy of the Register is being
furnished to the Pass Through Trustee pursuant to Section 7.12(b).

     Section 8.2   Preservation of Information. The Pass Through Trustee shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders of Certificates contained in the most recent list
furnished to the Pass Through Trustee as provided in Section 7.12(b) or Section
8.1, as the case may be, and the names and addresses of Holders of Certificates
received by the Pass Through Trustee in its capacity as Registrar, if so
acting. The Pass Through Trustee may destroy any list furnished to it as
provided in Section 7.12(b) or Section 8.1, as the case may be, upon receipt of
a new list so furnished.

     Section 8.3   Reports by the Facility Lessees. Each Facility Lessee shall,
at any time that the Certificates shall be subject to the Trust Indenture Act,
comply with Section 314 of the Trust Indenture Act and shall file, furnish and
deliver the reports, information, documents, certificates and opinions required
thereunder, and, at any time that the Certificates shall be subject to the
Trust Indenture Act, acknowledge and agree that, for purposes of Section 314 of
the Trust Indenture Act, each Facility Lessee shall be considered to be the
"obligor" upon the Certificates. Without limiting the generality of the
foregoing, at any time that the Certificates shall be subject to the Trust
Indenture Act, each Facility Lessee shall deliver to the Pass Through Trustee
the annual certificate required under clause (4) of Section 314(a) of the Trust
Indenture Act within 120 days following the end of each fiscal year of such
Facility Lessee (which ends on December 31) ending after the date hereof. The
provisions of this Section 8.3 shall not be construed to impose any obligation
or liability on the Facility Lessees to pay any of the principal, premium, if
any, or interest in respect of the Lessor Notes or the Certificates.

     Section 8.4   Reports by the Pass Through Trustee. At any time that the
Certificates shall be subject to the Trust Indenture Act, the Pass Through
Trustee shall transmit, on or before May 15 of each year, reports with respect
to events described in Section 313(a) of the Trust Indenture Act in accordance
with and to the extent required under Section 313(a) of the Trust Indenture
Act. Additionally, the Pass Through Trustee shall comply with the reporting
requirements imposed under Treasury Regulation 1.67.

SECTION 9.   SUPPLEMENTAL TRUST AGREEMENTS

     Section 9.1   Supplemental Trust Agreement Without Consent of
Certificateholders. Without the consent of the Holder of any Certificates, the
Facility Lessees may, and the Pass Through Trustee (subject to Section 9.3)
shall, at any time and from time to time enter into one or more agreements
supplemental hereto, in form satisfactory to the Pass Through Trustee, for any
of the following purposes:

             (1) to evidence the succession of another Person to any Facility
     Lessee and the assumption by any such successor of the obligations of such
     Facility Lessee herein contained;

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<PAGE>

             (2) to add to the covenants of the Facility Lessees, for the
     protection of the Holders of the Certificates;

             (3) to surrender any right or power herein conferred upon the
     Facility Lessees;

             (4) to cure any ambiguity, to correct or supplement any provision
     herein which may be defective or inconsistent with any other provision
     herein or to make any other provisions with respect to matters or questions
     arising under this Pass Through Trust Agreement; provided that any such
     action will not adversely affect in any material respect the interests of
     the Holders of the Certificates;

             (5) to correct or amplify the description of property that
     constitutes Trust Property or the conveyance of such property to the Pass
     Through Trustee;

             (6) to evidence and provide for a successor Pass Through Trustee;

             (7) to comply with requirements of the SEC, any applicable law,
     rules or regulations of any exchange or quotation system on which the
     Certificates are listed, or any regulatory body;

             (8) at any time that the Certificates shall be subject to the Trust
     Indenture Act, to modify, eliminate or add to the provisions of this Pass
     Through Trust Agreement to the extent as shall be necessary to qualify or
     continue the qualification of this Pass Through Trust Agreement (including
     any supplemental agreement) under the Trust Indenture Act (if such
     qualification is required) or under any similar Federal statute hereafter
     enacted, or to add to this Pass Through Trust Agreement such other
     provisions as may be expressly permitted by the Trust Indenture Act,
     excluding, however, the provisions referred to in Section 316(a)(2) of the
     Trust Indenture Act as in effect at the date as of which this instrument
     was executed or any corresponding provision in any similar Federal statute
     hereafter enacted;

             (9) to modify, amend or supplement any provision herein to reflect
     changes relating to the assumption and substitution of any Lessor Note
     pursuant to Section 2.10(b) of the Collateral Trust Indenture; or

             (10) to add, eliminate, or change any provision under this Pass
     Through Trust Agreement that will not adversely affect the interests of the
     Certificateholders in any material respect;

provided that in each case the Pass Through Trustee shall have received an
opinion of counsel, which may be counsel to the Facility Lessees, to the effect
that such supplemental agreement does not cause the Pass Through Trust to become
taxable as an "association" within the meaning of Treasury Regulation Section
301.7701-4 or to be taxable as other than a pass through entity for Federal
income tax purposes.

     Section 9.2   Supplemental Trust Agreements with Consent of
Certificateholders. With the consent of the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
of the Fractional Undivided Interests evidenced by all

                                       42

<PAGE>

Certificates at the time Outstanding (determined as provided in Section 1.4(c)
hereof), by Act of said Holders delivered to the Facility Lessees and the Pass
Through Trustee, the Facility Lessees may (with the consent of the Owner
Lessors, such consent not to be unreasonably withheld), and the Pass Through
Trustee (subject to Section 9.3 hereof) shall, enter into an agreement or
agreements supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Pass
Through Trust Agreement or of modifying in any manner the rights and
obligations of the Holders of the Certificates under this Pass Through Trust
Agreement; provided, however, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Certificate affected
thereby:

          (1)      reduce in any manner the amount of, or delay the timing of,
     any receipt by the Pass Through Trustee of payments on the Lessor Notes
     held in the Pass Through Trust, or distributions that are required to be
     made herein on any Certificate of such Pass Through Trust, or change any
     date of payment on any such Certificate, or change the place of payment
     where, or the coin or currency in which, any such Certificate is payable,
     or impair the right of any Holder of any such Certificate to institute
     suit for the enforcement of any such payment or distribution on or after
     the Distribution Date or Special Distribution Date applicable thereto; or

          (2)      except as provided in this Pass Through Trust Agreement,
     permit the disposition of any Lessor Note in the Trust Property, or permit
     the creation of any lien on the Trust Property, or otherwise deprive any
     Certificateholder of the benefit of the ownership of the Lessor Notes held
     in the Pass Through Trust or the lien of the related Collateral Trust
     Indenture; or

          (3)      reduce the percentage of the aggregate Fractional Undivided
     Interests which is required to approve any such supplemental agreement, or
     reduce such percentage required for any waiver provided for in this Pass
     Through Trust Agreement.

Notwithstanding the foregoing, no such supplemental agreement shall be entered
into unless the Pass Through Trustee shall have received an opinion of counsel,
which may be counsel to the Facility Lessees or any of them, to the effect that
such supplemental agreement does not cause the Pass Through Trust to become
taxable as an "association", within the meaning of Treasury Regulation Section
301.7701-4 or to be taxable as other than a pass through entity for Federal
income tax purposes.

          It shall not be necessary for any Act of Certificateholders under
this Section 9.2 to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof.

  Section 9.3 Documents Affecting Immunity or Indemnity. If in the opinion of
the Pass Through Trustee any document required to be executed by it pursuant to
the terms of Section 9.1 or 9.2 affects any interest, right, duty, immunity or
indemnity in favor of the Pass Through Trustee under this Pass Through Trust
Agreement, the Pass Through Trustee may in its discretion decline to execute
such document.

                                       43

<PAGE>

     Section 9.4   Execution of Supplemental Trust Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement
permitted by this Section 9 or the modification thereby of the trusts created
by this Pass Through Trust Agreement, the Pass Through Trustee shall be
entitled to receive, and (subject to Section 7.1) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Pass Through Trust
Agreement.

     Section 9.5   Effect of Supplemental Trust Agreements. Upon the execution
of any supplemental agreement under this Section 9, this Pass Through Trust
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Pass Through Trust Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

     Section 9.6   Reference in Certificates to Supplemental Trust Agreements.
Certificates authenticated and delivered after the execution of any
supplemental agreement pursuant to this Section 9 may bear a notation in form
approved by the Pass Through Trustee as to any matter provided for in such
supplemental agreement; and, in such case, suitable notation may be made upon
Outstanding Certificates after proper presentation and demand.

     Section 9.7   Conformity with Trust Indenture Act. Every supplemental
agreement under this Section 9 executed at a time that the Certificates shall
be subject to the Trust Indenture Act, shall conform to requirements of the
Trust Indenture Act as in effect on the date such supplemental agreement is
executed.

SECTION 10.   AMENDMENTS AND CONSENTS TO COLLATERAL TRUST INDENTURE AND OTHER
              OPERATIVE DOCUMENTS

              (a)      In the event that the Pass Through Trustee, as holder of
any Lessor Note in trust for the benefit of the Certificateholders, receives a
request for a consent to any amendment, modification, waiver or supplement
under the Collateral Trust Indenture or other Operative Document that requires
the consent of the holder of such Lessor Note, the Pass Through Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register as of such
date. Any such notice shall describe the proposed amendment, modification,
waiver or supplement (or attach a copy thereof). The Pass Through Trustee shall
request from the Certificateholders Directions as to (i) whether or not to
direct the applicable Indenture Trustee to take or refrain from taking any
action which a holder of such Lessor Note has the option to direct, (ii)
whether or not to give or execute any waivers, consents, amendments,
modifications or supplements as a holder of such Lessor Note and (iii) how to
vote any Lessor Note if a vote has been called for with respect thereto. Any
such request shall specify a date by which Certificateholders are requested to
respond. Provided such a request for Certificateholder Direction shall have
been made, in directing any action or casting any vote or giving any consent as
the holder of any Lessor Note, the Pass Through Trustee shall vote or consent
with respect to such Lessor Note in the same proportion as the Certificates
were actually voted by Acts of Holders delivered to the Pass Through Trustee at
least two Business Days before the Pass Through Trustee directs such action or
casts such vote or gives such consent. Notwithstanding the foregoing, but
subject to Section 6.4, in the case that an Event of Default hereunder shall
have occurred and be

                                       44

<PAGE>

continuing, the Pass Through Trustee may, in its own discretion and at its own
direction, consent and notify the applicable Indenture Trustee of such consent
to any amendment, modification, waiver or supplement under the applicable
Collateral Trust Indenture or other Operative Document.

              (b)      With respect to consents, approvals, waivers and
authorizations which under the terms of Section 8 of the applicable Collateral
Trust Indenture may be given by the applicable Indenture Trustee without the
necessity of the consent of any of the holders of Lessor Notes, no consent,
approval, waiver or authorization shall be required hereunder on the part of
the Pass Through Trustee or the Certificateholders.

SECTION 11.   TERMINATION OF PASS THROUGH TRUST

     Section 11.1  Termination of the Pass Through Trust. The respective
obligations and responsibilities of the Facility Lessees and the Pass Through
Trustee created hereby and the Pass Through Trust created hereby shall
terminate upon the distribution to all Certificateholders of all amounts
required to be distributed to them pursuant to this Pass Through Trust
Agreement and the disposition of all property held as part of the Trust
Property; provided, however, that if and to the extent that any of the options,
rights and privileges granted under this Pass Through Trust Agreement, would,
in the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule or law relating to the vesting of interest in property or the
suspension of the power of alienation of property, then it is agreed that
notwithstanding any other provision of this Pass Through Trust Agreement, such
options, rights and privileges, subject to the respective conditions hereof
governing the exercise of such options, rights and privileges, will be
exercisable only during (a) the longer of (i) a period which will end
twenty-one (21) years after the death of the last survivor of the descendants
living on the date of the execution of this Pass Through Trust Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Pass Through Trust Agreement, whichever of (a)
or (b) is shorter.

          Notice of any termination, specifying the Distribution Date (or
Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Pass Through Trustee
for payment of the final distribution and cancellation (at maturity, redemption
or otherwise), shall be mailed promptly by the Pass Through Trustee to
Certificateholders not earlier than the 60th day and not later than the 20th
day next preceding such final distribution specifying (A) the Distribution Date
(or Special Distribution Date, as the case may be) upon which final payment of
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Pass Through Trustee therein specified, (B) the
amount of any such final payment, and (C) that the Record Date otherwise
applicable to such Distribution Date (or Special Distribution Date, as the case
may be) is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office or agency of the Pass Through
Trustee therein specified. The Pass Through Trustee shall give such notice to
the Registrar at the time such notice is given to Certificateholders. Upon
presentation

                                       45

<PAGE>

and surrender of the Certificates, the Pass Through Trustee shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date or Special Distribution Date, as the case may be, pursuant to Section 4.2
hereof.

          In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Pass Through Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. In the event that any money held by the Pass Through Trustee for the
payment of distributions on the Certificates shall remain unclaimed for two
years (or such lesser time as the Pass Through Trustee shall be satisfied,
after sixty days' written notice from the Facility Lessees, is one month prior
to the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Pass Through Trustee shall pay to
each Indenture Trustee the appropriate amount of money relating to such
Indenture Trustee and shall give written notice thereof to the Owner Lessors,
the Owner Participants and the Facility Lessees.

SECTION 12.   MISCELLANEOUS PROVISIONS

     Section 12.1  Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this Pass
Through Trust Agreement or the Pass Through Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Pass Through Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

     Section 12.2  Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Pass
Through Trust, the Fractional Undivided Interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Pass
Through Trust or for any reason whatsoever, and Certificates (upon
authentication thereof by the Pass Through Trustee pursuant to Section 3.2
hereof) are and shall be deemed fully paid. No Certificateholder shall have any
right (except as expressly provided herein) to vote or in any manner otherwise
control the operation and management of the Trust Property, the Pass Through
Trust established hereunder, or the obligations of the parties hereto, nor
shall anything set forth herein, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association.

     Section 12.3  Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all communications and notices provided for herein to a
party hereto shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including by overnight mail or courier service, (b)
in the case of notice by United States mail, certified or registered, postage
prepaid, return receipt requested, upon receipt thereof, or (c) in the case of
notice by such a telecommunications device, upon transmission thereof, provided
such transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to such party and copy party
at its address set forth below or at such other address as such party or copy
party may from time to time designate by written notice to the other party:

                                       46

<PAGE>

          If to South Point:

               South Point Energy Center, LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:   Senior Counsel
               Telephone:   (847) 559-9800
               Facsimile:   (847) 559-1805


          If to Broad River:

               Broad River Energy LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:   Senior Counsel
               Telephone:   (847) 559-9800
               Facsimile:   (847) 559-1805


          If to RockGen:

               RockGen Energy LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:   Senior Counsel
               Telephone:   (847) 559-9800
               Facsimile:   (847) 559-1805


          If to the Pass Through Trustee:

               State Street Bank and Trust Company of Connecticut,
               National Association
               225 Asylum Street, Goodwin Square
               Hartford, CT 06103
               Attention:   Corporate Trust Department
               Telephone:   (860) 244-1822
               Facsimile:   (860) 244-1889

                                       47

<PAGE>

  Section 12.4 Successors and Assigns.

          (a)      This Pass Through Trust Agreement shall be binding upon and
shall inure to the benefit of, and shall be enforceable by, the parties hereto
and their respective successors and assigns as permitted by and in accordance
with the terms hereof.

          (b)      Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests or transfer its obligations
herein without the consent of the other parties hereto.

  Section 12.5 Business Day. In any case where any Distribution Date or Special
Distribution Date relating to any Certificate is not a Business Day, then
(notwithstanding any other provision of this Pass Through Trust Agreement) the
payment otherwise payable on such date shall be payable on the next succeeding
Business Day with the same force and effect as if made on such Distribution Date
or Special Distribution Date and, provided that such payment is made on such
succeeding Business Day, no interest shall accrue on the amount of such payment
from and after such scheduled date to the time of such payment on such next
succeeding Business Day.

  Section 12.6 GOVERNING LAW. THIS PASS THROUGH TRUST AGREEMENT, THE
CERTIFICATES AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE IN ALL RESPECTS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF,
OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401).

  Section 12.7 Severability. Any provision of this Pass Through Trust Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

  Section 12.8 Benefits of Pass Through Trust Agreement. Nothing in this Pass
Through Trust Agreement or in the Certificates, express or implied, shall give
to any person, other than the Facility Lessees, the Pass Through Trustee, the
Owner Lessors and each Indenture Trustee, and their respective successors, and
the Holders of Certificates as expressly provided herein, any benefit or any
legal or equitable right, remedy or claim under this Pass Through Trust
Agreement.

  Section 12.9 Counterparts. This Pass Through Trust Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

  Section 12.10 Headings and Table of Contents. The headings of the sections of
this Pass Through Trust Agreement and the Table of Contents are inserted for
purposes of convenience

                                       48

<PAGE>

only and shall not be construed to affect the meaning or construction of any of
the provisions hereof.

     Section 12.11  Further Assurances. Each party hereto will promptly and
duly execute and deliver such further documents and assurances for and take
such further action reasonably requested by the other party, all as may be
reasonably necessary to carry out more effectively the intent and purpose of
this Pass Through Trust Agreement.

     Section 12.12  Statement of Intent. It is intended that, if the Pass
Through Trust were ever to be classified as a partnership for Federal income
tax purposes, that the Pass Through Trust be excluded from the application of
Subchapter K of the Internal Revenue Code, in accordance with Treasury
Regulation 1.761-2(b)(2)(ii).

                                       49

<PAGE>

          IN WITNESS WHEREOF, the Facility Lessees and the Pass Through
Trustee have caused this Pass Through Trust Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized.

                    SOUTH POINT ENERGY CENTER, LLC

                    By:  ______________________________________________
                         Name:
                         Title:


                    BROAD RIVER ENERGY LLC

                    By:  ______________________________________________
                         Name:
                         Title:


                    ROCKGEN ENERGY LLC

                    By:  ______________________________________________
                         Name:
                         Title:

                    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION,
                    as Pass Through Trustee

                    By:  ______________________________________________
                         Name:
                         Title:

<PAGE>
                                                                      SCHEDULE 1


                            Participation Agreements

          The Participation Agreement providing for Lease Transactions to be
financed by the purchase of Lessor Notes hereunder, and the parties thereto,
are as follows:

South Point

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-1, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-1, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-2, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-2, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-3, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-3, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-4, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-4, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

                                    SCH 1-1

<PAGE>

Broad River

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-1, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-1, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-2, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-2, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-3, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-3, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-4, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-4, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

RockGen

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-1, LLC, as Owner Lessor, Wells Fargo
Bank Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-1, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust

                                    SCH. 1-2

<PAGE>

Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-2 LLC, as Owner Lessor, Wells Fargo Bank
Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-2 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-3 LLC, as Owner Lessor, Wells Fargo Bank
Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-3 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-4 LLC, as Owner Lessor, Wells Fargo Bank
Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-4 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

                                    SCH. 1-3

<PAGE>

                                                                       EXHIBIT A

                               FORM OF CERTIFICATE

              [LEGEND IF CERTIFICATE IS A RESTRICTED CERTIFICATE]

          THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTION WHICH IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(L), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT, RESELL OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO THE FACILITY LESSEES OR ANY
OF THEM OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE PASS THROUGH TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE PASS THROUGH
TRUSTEE) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE FACILITY LESSEES THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS CERTIFICATE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE PASS THROUGH
TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST

                                    EXH A-1

<PAGE>

AGREEMENT CONTAINS A PROVISION REQUIRING THE PASS THROUGH TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.

          BY ITS ACQUISITION OF ANY CERTIFICATE, THE HOLDER THEREOF WILL BE
DEEMED TO HAVE REPRESENTED AND WARRANTED, ON EACH DAY FROM THE DATE ON WHICH
THE HOLDER ACQUIRES THE CERTIFICATE THROUGH AND INCLUDING THE DATE ON WHICH THE
HOLDER DISPOSES OF ITS INTEREST IN SUCH CERTIFICATE, EITHER THAT (A) IT IS NOT
A PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR OTHER PLAN, AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE
ASSETS OF ANY PLAN SUBJECT TO ERISA OR OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH
IS SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO
THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) ITS PURCHASE, HOLDING AND
DISPOSITION OF SUCH CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A
GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) FOR
WHICH AN EXEMPTION IS NOT AVAILABLE, ALL THE CONDITIONS OF WHICH ARE SATISFIED.

                                    EXH A-2

<PAGE>

        SOUTH POINT, BROAD RIVER AND ROCKGEN SERIES A PASS THROUGH TRUST

                    8.400% Pass Through Certificate, Series A

                               CUSIP: 839521 AA 9

                               ISIN: US839521AA90

                      Final Distribution Date: May 30, 2012

                    evidencing a fractional undivided interest in a
                    trust, the property of which includes certain notes
                    secured by certain property leased or subleased to
                    South Point Energy Center, LLC, Broad River Energy
                    LLC and RockGen Energy LLC

Certificate No._______                   $[      ] Fractional Undivided Interest

          THIS CERTIFIES THAT _________________, for value received, is the
registered owner of a $______________ (__________ dollars) Fractional Undivided
Interest in the South Point, Broad River and RockGen Series A Pass Through
Trust (the "Pass Through Trust") created pursuant to a Pass Through Trust
Agreement, dated as of October 18, 2001 (the "Agreement") among South Point
Energy Center, LLC, a Delaware limited liability company, Broad River Energy
LLC, a Delaware limited liability company, RockGen Energy LLC, a Wisconsin
limited liability company (individually, a "Facility Lessee" and collectively,
the "Facility Lessees") and State Street Bank and Trust Company of Connecticut,
National Association, as trustee (the "Pass Through Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. The initial
Fractional Undivided Interest evidenced hereby may change from time to time in
accordance with the terms of the Agreement, such changes as evidenced by the
records of the Pass Through Trustee, which shall be conclusive absent manifest
error. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "8.400% Pass Through
Certificates, Series A" (herein called the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The property of
the Pass Through Trust includes certain Lessor Notes (the "Trust Property").
Each Lessor Note is secured by a security interest and lien over the Undivided
Interest subject to the Lease relating to the Collateral Trust Indenture under
which such Lessor Note was issued and certain other related property described
in such Collateral Trust Indenture, and liability thereunder is limited to the
income and proceeds of such security.

          Subject to and in accordance with the terms of the Agreement, from
funds then available to the Pass Through Trustee, there will be distributed on
each May 30 and November 30 (a "Distribution Date"), commencing on May 30,
2002, to the person in whose name this

                                    EXH A-3

<PAGE>

Certificate is registered at the close of business on the day of the month
which is fifteen days preceding the Distribution Date, an amount in respect of
the Scheduled Payments on the Lessor Notes due on such Distribution Date, the
receipt of which has been confirmed by the Pass Through Trustee, equal to the
product of the percentage interest in the Pass Through Trust evidenced by this
Certificate and an amount equal to the sum of such Scheduled Payments. Subject
to and in accordance with the terms of the Agreement, in the event that Special
Payments on the Lessor Notes are received by the Pass Through Trustee, from
funds then available to the Pass Through Trustee, there shall be distributed on
the applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the day of the month
which is fifteen days preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Lessor Notes, the receipt of which has
been confirmed by the Pass Through Trustee, equal to the product of the
percentage interest in the Pass Through Trust evidenced by this Certificate and
an amount equal to the sum of such Special Payments so received. The Special
Distribution Date shall be determined as provided in the Agreement. If a
Distribution Date or Special Distribution Date is not a Business Day,
distribution shall be made on the immediately following Business Day with the
same effect as if made on the date on which such payment was due. The Pass
Through Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Holders of the Certificates.

          Distributions on this Certificate will be made by the Pass Through
Trustee (i) if (A) The Depository Trust Company ("DTC") or its nominee is the
Certificateholder of record of this Certificate, or (B) a Certificateholder
holds a Certificate or Certificates in an aggregate amount greater than
$10,000,000, or (C) a Certificateholder holds a Certificate or Certificates in
an aggregate amount greater than $1,000,000 and so requests to the Pass Through
Trustee, by wire transfer in immediately available funds to an account
maintained by such Certificateholder with a bank, or (ii) if none of the above
apply, by check mailed to such Certificateholder at the address appearing in
the Register, without the presentation or surrender of this Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made after notice mailed by the Pass Through Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at
the office or agency of the Pass Through Trustee specified in such notice.

          [Unless this Certificate is presented by an authorized
representative of DTC to the Facility Lessees or its agent for registration of
transfer, exchange or payment, and any Certificate issued is registered in the
name of Cede & Co., or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co., or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest
herein.]*

          Each Person who acquires or accepts this Certificate or an interest
herein will be deemed by such acquisition or acceptance to have represented and
warranted that either: (i) no

__________________________

* This legend to appear on Book-Entry Certificates to be deposited with The
Depository Trust Company.

                                    EXH A-4

<PAGE>

Plan assets have been used to purchase this Certificate or an interest herein
or (ii) the purchase and holding of this Certificate or interest herein are
either exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more prohibited transaction statutory or administrative
exemptions or do not constitute a prohibited transaction under such
restrictions of ERISA and the Code.

          This Certificate shall be governed by and construed in accordance
with the law of the State of New York.

          Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed
by the Pass Through Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

          IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Certificate to be duly executed.

                    SOUTH POINT, BROAD RIVER AND ROCKGEN SERIES A PASS THROUGH
                    TRUST

                    By:  STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                         NATIONAL ASSOCIATION,
                         as Pass Through Trustee

                    By:
                         _________________________________
                         Name:
                         Title:

                                    EXH A-5

<PAGE>

                            [Reverse Of Certificate]

          The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Facility Lessees, the Pass
Through Company or the Pass Through Trustee or any affiliate thereof. The
Certificates are limited in right of payment, all as more specifically set
forth in the Agreement. All payments or distributions made to
Certificateholders under the Agreement shall be made only from the Trust
Property and only to the extent that the Pass Through Trustee shall have
received sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Holder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Holder as provided in the Agreement. This Certificate does
not purport to summarize the Agreement and reference is made to the Agreement
for information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Pass Through
Trustee, and at such other places, if any, designated by the Pass Through
Trustee, by any Certificateholder upon request.

          The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Facility Lessees and the rights of the Certificateholders under the Agreement
at any time by the Facility Lessees and the Pass Through Trustee with the
consent of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest of the Fractional
Undivided Interests evidenced by all Certificates at the time Outstanding. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Pass Through Trustee in its capacity as
Registrar, or by any successor Registrar, duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Pass Through Trustee
and the Registrar duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.

          The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and any integral multiples of $1,000 in excess thereof. As provided in
the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations

                                    EXH A-6

<PAGE>

evidencing the same aggregate Fractional Undivided Interest in the Pass Through
Trust, as requested by the Holder surrendering the same.

          No service charge will be made for any such registration of
transfer or exchange, but the Pass Through Trustee shall require payment of an
amount sufficient to cover any tax or charge payable in connection therewith.

          The Pass Through Trustee, the Facility Lessees, the Owner Lessors,
the Registrar and any agent of the Pass Through Trustee or the Registrar may
treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Pass Through Trustee, the Facility
Lessees, the Owner Lessors, the Registrar nor any such agent shall be affected
by any notice to the contrary.

          The obligations and responsibilities created by the Agreement and
the Pass Through Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to the Agreement and the disposition of all property held as part of the Trust
Property.

                                    EXH A-7

<PAGE>

                                                                       EXHIBIT B

FORM OF PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
      Agreement.

                    STATE STREET BANK AND TRUST
                    COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION,
                    as Pass Through Trustee

                    By:_________________________________________
                       Name:
                       Title:

                                    EXH B-1

<PAGE>

                                                                       EXHIBIT C

                          FORM OF TRANSFER CERTIFICATE

        SOUTH POINT, BROAD RIVER AND ROCKGEN SERIES A PASS THROUGH TRUST

                       PASS THROUGH CERTIFICATES SERIES A

          This is to certify that as of the date hereof with respect to
$__________ (__________ dollars) Fractional Undivided Interest of the
above-captioned securities presented or surrendered on the date hereof (the
"Surrendered Certificates") for registration of transfer, or for exchange where
the securities issuable upon such exchange are to be registered in a name other
than that of the undersigned Holder (each such transaction being a "transfer"),
the undersigned Holder (as defined in the Pass Through Trust Agreement)
certifies that the transfer of Surrendered Certificates associated with such
transfer complies with the restrictive legend set forth on the face of the
Surrendered Certificates for the reason checked below:

[ ]   Transfer to South Point, Broad River and RockGen Series A Pass Through
      Trust.

[ ]   Transfer inside the United States to a Qualified Institutional Buyer in
      compliance with Rule 144A under the Securities Act.

[ ]   Transfer pursuant to an exemption from, or in a transaction not subject
      to, the registration requirements of the Securities Act (if available).

[ ]   Transfer outside the United States in compliance with Rule 904 of the
      Securities Act.

[ ]   Transfer inside the United States (i) to an Institutional Accredited
      Investor that has previously furnished to the Pass Through Trustee a
      signed letter containing certain representations and agreements relating
      to restrictions on transfer and (ii) by a Holder that has previously
      furnished to the Facility Lessees and the Registrar such certifications,
      legal opinions or other information requested to confirm that such
      transfer is in compliance with the Securities Act.

                                [Name of Holder]

                                _________________

Dated: _____________, _____*

*To be dated the date of presentation or surrender

                                    EXH C-1

<PAGE>

                                                                       EXHIBIT D

                          FORM OF PURCHASE LETTER FOR
                       INSTITUTIONAL ACCREDITED INVESTORS

_______________________

_______________________

_______________________

As Initial Purchasers in connection
with the Offering Memorandum referred
to below

c/o _____________
[Address]
[City, State, Zip]

Ladies and Gentlemen:

          In connection with our proposed purchase of Pass Through
Certificates, Series A (the "Certificates") evidencing a fractional undivided
interest in one of two pass through trusts, the property of which consists of
certain notes secured by certain property leased to South Point Energy Center,
LLC, Broad River Energy LLC and RockGen Energy LLC (collectively, the "Facility
Lessees"), we confirm that:

          1.      We have received a copy of the Offering Memorandum (the
     "Offering Memorandum") relating to the Certificates and such other
     information as we deem necessary in order to make our investment
     decision. We acknowledge that we have read and agree to the matters
     stated under the captions "Notice to Investors" and "Plan of
     Distribution" in such Offering Memorandum, and the restrictions on
     duplication and circulation of such Offering Memorandum.

          2.      We understand that any subsequent transfer of the Certificates
     is subject to certain restrictions and conditions set forth in the Pass
     Through Trust Agreement (the "Pass Through Trust Agreement") relating to
     the Certificates and conditions set forth under "Notice to Investors" and
     "Plan of Distribution" and we agree to be bound by, and not to resell,
     pledge or otherwise transfer the Certificates except in compliance with
     such restrictions and conditions and the Securities Act of 1933, as
     amended (the "Securities Act").

          3.      We understand that the offer and sale of the Certificates has
     not been registered under the Securities Act, and that the Certificates
     may not be offered or sold except as permitted in the following sentence.
     We agree, on our own behalf and on behalf

                                    EXH D-1

<PAGE>

     of any accounts for which we are acting as hereinafter stated, that if
     we should sell any Certificates within the time period referred to in
     Rule 144(k) of the Securities Act, we will do so only (A) to the Facility
     Lessees or any subsidiary thereof, (B) in accordance with Rule 144A under
     the Securities Act to a "qualified institutional buyer" (as defined
     therein), (C) to an institutional "accredited investor" (as defined
     below) that, prior to such transfer, furnishes to the Pass Through
     Trustee under the Pass Through Trust Agreement, a signed letter
     containing certain representations and agreements relating to the
     restrictions on transfer of the Certificates (the form of which letter
     can be obtained from the Pass Through Trustee) and an opinion of counsel
     acceptable to the Facility Lessees that such transfer is in compliance
     with the Securities Act, (D) outside the United States in accordance with
     Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
     exemption from registration provided by Rule 144 under the Securities Act
     (if available), or (F) pursuant to an effective registration statement
     under the Securities Act, and we further agree to provide to any person
     purchasing any of the Certificates from us a notice advising such
     purchaser that resales of the Certificates are restricted as stated
     herein.

          4.      We are an institutional "accredited investor" (as defined in
     Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
     Act) and have such knowledge and experience in financial and business
     matters as to be capable of evaluating the merits and risks of our
     investment in the Certificates, and we and any accounts for which we are
     acting are each able to bear the economic risk of our or its investment.

          5.      We are acquiring the Certificates purchased by us for our own
     account or for one or more accounts (each of which is an institutional
     "accredited investor") as to each of which we exercise sole investment
     discretion.

          6.      We are not acquiring the Certificates with a view to
     distribution thereof or with any present intention of offering or
     selling any Certificates, except as permitted above; provided, that the
     disposition of our property and property of any accounts for which we are
     acting as fiduciary will remain at all times within our control.

                                    EXH D-2

<PAGE>

          You, the Facility Lessees and the Pass Through Trustee are entitled
to rely on this letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.

                    Very truly yours,

                    By: _______________________
                        Name:
                        Title:
                        Date:

                                    EXH D-3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.2
<SEQUENCE>5
<FILENAME>f80168ex4-22_2.txt
<DESCRIPTION>EXHIBIT 4.22.2
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.2
===============================================================================


                         PASS THROUGH TRUST AGREEMENT B

                          Dated as of October 18, 2001

                                    between

                        SOUTH POINT ENERGY CENTER, LLC,

                            BROAD RIVER ENERGY LLC,

                              ROCKGEN ENERGY LLC,

                                      and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,

                   not in its individual capacity, but solely
                            as Pass Through Trustee

        South Point, Broad River and RockGen Series B Pass Through Trust

                   9.825% Pass Through Certificates, Series B


===============================================================================

<PAGE>

                                              TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----

<S>                                                                                                            <C>
SECTION 1.   DEFINITIONS.......... ..........................................................................    2

     Section 1.1   Definitions...............................................................................    2

     Section 1.2   Compliance Certificates and Opinions......................................................    9

     Section 1.3   Form of Documents Delivered to Pass Through Trustee.......................................   10

     Section 1.4   Acts of Holders...........................................................................   11

     Section 1.5   Conflict with Trust Indenture Act.........................................................   12

SECTION 2.   ACQUISITION OF LESSOR NOTES; ORIGINAL ISSUANCE OF CERTIFICATES..................................   12

     Section 2.1   Issuance of Certificates; Acquisition of Lessor Notes.....................................   12

     Section 2.2   Acceptance by Pass Through Trustee........................................................   14

     Section 2.3   Limitation of Powers......................................................................   14

SECTION 3.   THE CERTIFICATES................................................................................   15

     Section 3.1   Form, Denomination and Execution of Certificates..........................................   15

     Section 3.2   Authentication of Certificates............................................................   15

     Section 3.3   Temporary Certificates....................................................................   16

     Section 3.4   Registration of Transfer and Exchange of Certificates.....................................   16

     Section 3.5   Mutilated, Destroyed, Lost or Stolen Certificates.........................................   18

     Section 3.6   Persons Deemed Owners.....................................................................   18

     Section 3.7   Cancellation..............................................................................   18

     Section 3.8   Limitation of Liability for Payments......................................................   19

     Section 3.9   Book-Entry and Definitive Certificates....................................................   19

     Section 3.10   Form of Certification....................................................................   22

SECTION 4.   DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS.................................................   22

     Section 4.1   Certificate Account and Special Payments Account..........................................   22

     Section 4.2   Distributions from Certificate Account and Special Payments Account.......................   23

     Section 4.3   Statements to Certificateholders..........................................................   25

     Section 4.4   Investment of Special Payment Moneys......................................................   25

SECTION 5.   FINANCIAL STATEMENTS AND OTHER REPORTS..........................................................   26

SECTION 6.   DEFAULT.........................................................................................   26
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                             <C>
     Section 6.1   Events of Default.........................................................................   26

     Section 6.2   Incidents of Sale of Lessor Notes.........................................................   27

     Section 6.3   Judicial Proceedings Instituted by Pass Through Trustee...................................   28

     Section 6.4   Control by Certificateholders.............................................................   29

     Section 6.5   Waiver of Defaults........................................................................   29

     Section 6.6   Undertaking to Pay Court Costs............................................................   30

     Section 6.7   Right of Certificateholders to Receive Payments Not to Be Impaired........................   30

     Section 6.8   Certificateholders May Not Bring Suit Except Under Certain Conditions.....................   31

     Section 6.9   Remedies Cumulative.......................................................................   31

SECTION 7.   THE PASS THROUGH TRUSTEE........................................................................   31

     Section 7.1   Certain Duties and Responsibilities.......................................................   31

     Section 7.2   Notice of Defaults........................................................................   32

     Section 7.3   Certain Rights of Pass Through Trustee....................................................   33

     Section 7.4   Not Responsible for Recitals; Issuance of Certificates....................................   34

     Section 7.5   May Hold Certificates.....................................................................   34

     Section 7.6   Money Held in Pass Through Trust..........................................................   34

     Section 7.7   Compensation, Reimbursement and Indemnification...........................................   34

     Section 7.8   Corporate Trustee Required; Eligibility...................................................   35

     Section 7.9   Resignation and Removal: Appointment of Successor.........................................   35

     Section 7.10  Acceptance of Appointment by Successor....................................................   37

     Section 7.11  Merger, Conversion, Consolidation or Succession to Business...............................   37

     Section 7.12  Maintenance of Agencies...................................................................   38

     Section 7.13  Money for Certificate Payments to Be Held in Trust........................................   39

     Section 7.14  Registration of Lessor Notes in Pass Through Trustee's Name...............................   40

     Section 7.15  Withholding Taxes; Information Reporting..................................................   40

     Section 7.16  Pass Through Trustee's Liens..............................................................   40

SECTION 8.   CERTIFICATEHOLDERS' LISTS AND REPORTS...........................................................   40

     Section 8.1   The Facility Lessees to Furnish Pass Through Trustee with
                   Names and Addresses of Certificateholder..................................................   40

     Section 8.2   Preservation of Information...............................................................   41

     Section 8.3   Reports by the Facility Lessees...........................................................   41
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                             <C>
     Section 8.4   Reports by the Pass Through Trustee.......................................................   41

SECTION 9.   SUPPLEMENTAL TRUST AGREEMENTS...................................................................   41

     Section 9.1   Supplemental Trust Agreement Without Consent of Certificateholders........................   41

     Section 9.2   Supplemental Trust Agreements with Consent of Certificateholders..........................   42

     Section 9.3   Documents Affecting Immunity or Indemnity.................................................   43

     Section 9.4   Execution of Supplemental Trust Agreements................................................   44

     Section 9.5   Effect of Supplemental Trust Agreements...................................................   44

     Section 9.6   Reference in Certificates to Supplemental Trust Agreements................................   44

     Section 9.7   Conformity with Trust Indenture Act.......................................................   44

SECTION 10.   AMENDMENTS AND CONSENTS TO COLLATERAL TRUST INDENTURE AND OTHER OPERATIVE DOCUMENTS............   44

SECTION 11.   TERMINATION OF PASS THROUGH TRUST..............................................................   45

     Section 11.1   Termination of the Pass Through Trust....................................................   45

SECTION 12.   MISCELLANEOUS PROVISIONS.......................................................................   46

     Section 12.1   Limitation on Rights of Certificateholders...............................................   46

     Section 12.2   Certificates Nonassessable and Fully Paid................................................   46

     Section 12.3   Notices..................................................................................   46

     Section 12.4   Successors and Assigns...................................................................   48

     Section 12.5   Business Day.............................................................................   48

     Section 12.6   GOVERNING LAW............................................................................   48

     Section 12.7   Severability.............................................................................   48

     Section 12.8   Benefits of Pass Through Trust Agreement.................................................   48

     Section 12.9   Counterparts.............................................................................   48

     Section 12.10  Headings and Table of Contents...........................................................   48

     Section 12.11  Further Assurances.......................................................................   49

     Section 12.12  Statement of Intent......................................................................   49

     Section 12.13  RockGen..................................................................................   49

</TABLE>

                                       iii

<PAGE>

                         PASS THROUGH TRUST AGREEMENT B

          This PASS THROUGH TRUST AGREEMENT B, dated as of October 18, 2001
(this "Pass Through Trust Agreement"), with respect to the formation of the
South Point, Broad River and RockGen Series B Pass Through Trust (the "Pass
Through Trust"), between SOUTH POINT ENERGY CENTER, LLC, a Delaware limited
liability company ("South Point"), BROAD RIVER ENERGY LLC, a Delaware limited
liability company ("Broad River"), ROCKGEN ENERGY LLC (subject to Section
12.13), a Wisconsin limited liability company ("RockGen," and together with
South Point and Broad River, the "Facility Lessees" and individually each a
"Facility Lessee"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, as Pass Through Trustee
(the "Pass Through Trustee").

                              W I T N E S S E T H :

          WHEREAS, the Facilities Lessees, the Pass Through Trustee, and
certain other parties named therein have entered into the Participation
Agreements referred to on Schedule 1 hereto, pursuant to which the Facilities
Lessees and, in the case of the South Point Facility, CCFC (as defined below)
have agreed to sell, assign or otherwise transfer to the Owner Lessors certain
Undivided Interests in the South Point facility, the Broad River facility and
the RockGen facility (each, a "Facility" and together, the "Facilities"), and
the Facility Lessees have agreed to lease or sublease from the Owner Lessors
such Undivided Interests in the Facilities;

          WHEREAS, the Facilities Lessees, the Pass Through Trustee, and
certain other parties named therein have entered into the Participation
Agreements referred to on Schedule 1 hereto, pursuant to which the Facilities
Lessees and, in the case of the South Point Facility, CCFC (as defined below)
have agreed to lease, assign or otherwise transfer to the Owner Lessors certain
Ground Interests in the South Point Site, the Broad River Site and the RockGen
Site (together, the "Facility Sites"), and the Facility Lessees have agreed to
lease or sublease from the Owner Lessors such Ground Interests;

          WHEREAS, CCFC, South Point, Broad River and RockGen will consummate
the sale or assignment to and lease or sublease from the Owner Lessors of the
Undivided Interests in Facilities and the Ground Interests in the Facility
Sites on the Closing Date;

          WHEREAS, on the Closing Date, each Owner Lessor will enter into a
Collateral Trust Indenture and issue, on a non-recourse basis, Lessor Notes
thereunder to finance a portion of the purchase price for the related Undivided
Interests purchased or assumed by such Owner Lessor;

          WHEREAS, subject to the terms and conditions of this Pass Through
Trust Agreement, the Pass Through Trust will purchase Lessor Notes issued in
connection with the purchase or assumption of the Undivided Interests in the
Facilities from South Point and Broad River on the Closing Date and will hold
all such Lessor Notes in trust for the benefit of the Certificateholders;

<PAGE>

          WHEREAS, the Pass Through Trustee, upon the execution and delivery of
this Pass Through Trust Agreement, hereby declares the creation of this Pass
Through Trust for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the Pass Through Trust and by their
respective acceptances of the Certificates join in the creation of this Pass
Through Trust with the Pass Through Trustee; and

          WHEREAS, to facilitate the sale of Lessor Notes to the Pass Through
Trust and the purchase of Lessor Notes by the Pass Through Trust, the Facility
Lessees are, on a joint and several basis, undertaking to perform certain
administrative and ministerial duties hereunder and are also undertaking to pay
the fees and expenses of the Pass Through Trustee.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained, and of the other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.  DEFINITIONS

     Section 1.1   Definitions.

          (a)   Unless the context hereof otherwise requires, capitalized terms
used in this Pass Through Trust Agreement, including those in the recitals, and
not otherwise defined herein shall have the respective meanings set forth in
Appendix A to the applicable Participation Agreement. The general provisions of
Appendix A to such Participation Agreement shall apply to the terms used in
this Pass Through Trust Agreement and specifically defined herein.

          (b)   As used in this Pass Through Trust Agreement, the following
terms shall have the respective meanings assigned thereto as follows:

               "Act", when used with respect to any Holder, shall have the
          meaning specified in Section 1.4.
               "Authorized Agent" shall mean any Paying Agent or Registrar.

               "Avoidable Tax" shall have the meaning specified in Section
          7.9(e).

               "Book-Entry Certificate" shall mean a beneficial interest in the
          Certificates, ownership and transfers of which shall be made through
          book entries by a Clearing Agency as described in Section 3.9.

               "CCFC" shall mean Calpine Construction Finance Company, L.P.

               "Certificate" shall mean any one of the certificates executed and
          authenticated by the Pass Through Trustee, substantially in the form
          of Exhibit A hereto.

               "Certificate Account" shall mean that account or accounts created
          and maintained pursuant to Section 4.1(a).

                                      2

<PAGE>

               "Certificate Owner" shall mean, when used in Section 3.9, the
          Person for whom a Clearing Agency Participant acts.

               "Certificate Owner Request" shall mean a request to the Pass
          Through Trustee to receive the reports and other information the
          Facility Lessees or any other Person is required to furnish to the
          Pass Through Trustee pursuant to the Operative Documents, which
          request certifies that the Person making the request is a
          Certificateholder or Certificate Owner.  Any Certificateholder or
          Certificate Owner making a Certificate Owner Request may specify its
          election to receive such information from the Pass Through Trustee on
          an ongoing basis.

               "Certificateholder" or "Holder" shall mean the Person in whose
          name a Certificate is registered in the Register, except that, when
          used in Section 3.9, such term means the Certificate Owners.

               "Clearing Agency" shall mean an organization registered as a
          "clearing agency" pursuant to Section 17A of the Exchange Act.

               "Clearing Agency Participant" shall mean a broker, dealer, bank,
          other financial institution or other Person for whom from time to
          time a Clearing Agency effects, directly or indirectly, book-entry
          transfers and pledges of securities deposited with the Clearing
          Agency.

               "Clearstream" shall have the meaning specified in Section 3.9.

               "Collateral Trust Indenture" shall mean (i) an Indenture of
          Trust, Mortgage and Security Agreement between an Owner Lessor and
          the Indenture Trustee, entered into pursuant to the Participation
          Agreement, as the same may be amended or supplemented in accordance
          with its terms and (ii) any Indenture of Trust, Mortgage and Security
          Agreement, or analogous document, between a Facility Lessee and an
          Indenture Trustee, entered into in connection with the assumption by
          such Facility Lessee of the indebtedness evidenced by any Lessor
          Note, as the same may be amended or supplemented in accordance with
          its terms.

               "Consideration" shall have the meaning specified in Section 2.1.

               "Corporate Trust Office" shall mean, with respect to the Pass
          Through Trustee, any Lessor Manager or any Indenture Trustee, the
          office of such trustee or manager, as the case may be, in the city in
          which at any particular time its corporate trust business shall be
          principally administered.

               "Cut-Off Date" shall mean December 1, 2001.

               "Default" shall mean any event which is or, after notice or lapse
          of time or both would become, an Event of Default.

               "Definitive Certificates" shall have the meaning specified in
          Section 3.9.

                                      3

<PAGE>

               "Direction" shall have the meaning specified in Section 1.4(c).

               "Distribution Date" shall mean, with respect to distributions of
          Scheduled Payments, each May 30 and November 30 until payment of all
          the Scheduled Payments to be made under the Lessor Notes have been
          made, commencing on May 30, 2002.

               "DTC" shall mean The Depository Trust Company and any successor
          that is a Clearing Agency.

               "Escrow Account" shall have the meaning specified in Section
          2.1(b).

               "Escrowed Funds" shall have the meaning specified in Section
          2.1(b).

               "Euroclear" shall have the meaning specified in Section
          3.9.

               "Event of Default" shall have the meaning specified in Section
          6.1(a).

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

               "Facility Lessee" or "Facility Lessees" shall have the meaning
          specified in the preamble hereto.

               "Fractional Undivided Interest" shall mean the fractional
          undivided interest in the Pass Through Trust that is evidenced by a
          Certificate.

               "Holder" shall have the meaning set forth in the definition of
          "Certificateholder".

               "Indenture Trustee" shall mean a bank or trust company acting as
          indenture trustee under an applicable Collateral Trust Indenture, and
          any successor to such Indenture Trustee as such trustee. The term
          "Indenture Trustee" refers to any one or all of such Indenture
          Trustees, as the context requires.

               "Institutional Accredited Investor" shall mean an institutional
          "accredited investor", as such term is defined in Rule 501(a)(1),
          (2), (3) or (7) under the Securities Act.

               "Issuance Date" shall mean October 18, 2001.

               "Lease" shall mean a facility lease or sublease agreement between
          an Owner Lessor, as the lessor or sublessor (as applicable), and a
          Facility Lessee, as the lessee or sublessee (as applicable), entered
          into pursuant to the Participation Agreement, as such facility lease
          agreement may be amended or supplemented in accordance with its
          terms. The term "Lease" refers to any one or all of such facility
          lease or sublease agreements, as the context requires.

                                      4

<PAGE>

               "Lease Event of Default" shall mean any Lease Event of Default
          (as such term is defined in a Lease).

               "Lease Indenture Default" shall mean any event which is, or after
          notice or lapse of time or both would become, a Lease Indenture Event
          of Default.

               "Lease Indenture Event of Default" shall mean any Lease Indenture
          Event of Default (as such term is defined in the applicable
          Collateral Trust Indenture).

               "Lease Transaction" shall mean a lease transaction in respect of
          an Undivided Interest between a Facility Lessee and an Owner Lessor
          that is financed in part by the issuance of Lessor Notes to the Pass
          Through Trust, as contemplated by the Participation Agreement and the
          agreements and instruments referred to therein.

               "Lessor Manager" shall mean Wells Fargo Bank Northwest, National
          Association, not in its individual capacity, but solely as Lessor
          Manager under the LLC Agreement, and each other Person which may from
          time to time be acting as Lessor Manager in accordance with the
          provisions of the LLC Agreement.

               "Lessor Note" shall mean any one of the Series B Lessor Notes (as
          defined in the Collateral Trust Indenture) issued under a Collateral
          Trust Indenture, including any Lessor Note (as so defined) issued
          under the Collateral Trust Indenture in replacement or substitution
          therefor, held by the Pass Through Trustee.

               "Letter of Representations" shall mean the letter of
          representations among the Facility Lessees, the Pass Through Trustee
          and the initial Clearing Agency.

               "Operative Documents" shall mean, as the context may require, the
          South Point Operative Documents, the Broad River Operative Documents
          and the RockGen Operative Documents.

               "Other Certificates" shall mean the pass through trust
          certificates issued pursuant to the Other Pass Through Trust
          Agreement.

               "Other Pass Through Trustee" shall mean the Pass Through Trustee
          pursuant to the Other Pass Through Trust Agreement.

               "Other Pass Through Trust Agreement" shall mean the Pass Through
          Trust Agreement A, dated as of date hereof.

               "Outstanding" shall mean, when used with respect to Certificates,
          as of the date of determination, and subject to Section 1.4(c), all
          Certificates theretofore authenticated and delivered under this Pass
          Through Trust Agreement, except:

               (i)   Certificates  theretofore  canceled by the  Registrar  or
          delivered to the Pass Through Trustee or the Registrar for
          cancellation;

                                      5

<PAGE>

               (ii)   Certificates for which money in the full amount thereof
          has been theretofore deposited with the Pass Through Trustee or any
          Paying Agent in trust for the holders of such Certificates as
          provided in Section 4.1 pending distribution of such money to the
          Certificateholders pursuant to the final distribution payment to be
          made pursuant to Section 11.1; and

               (iii)   Certificates in exchange for or in lieu of which other
          Certificates have been authenticated and delivered pursuant to this
          Pass Through Trust Agreement.

               "Owner Lessor" shall mean one or more, as the context may
          require, of the South Point Owner Lessors, the Broad River Owner
          Lessors or the RockGen Owner Lessors.

               "Owner Participant" shall mean one or more, as the context may
          require, of the South Point Owner Participants, the Broad River Owner
          Participants or the RockGen Owner Participants.

               "Participation Agreement" shall mean one or more, as the context
          may require, of the Participation Agreements enumerated on Schedule I
          hereto among a Facility Lessee, an Owner Participant, an Owner
          Lessor, a Lessor Manager, an Indenture Trustee and the Pass Through
          Trustee, providing for the Lease Transaction.

               "Pass Through Trust" shall mean the trust created by this Pass
          Through Trust Agreement, the estate of which consists of the Trust
          Property.

               "Pass Through Trustee" shall mean the Pass Through Trustee
          referred to in the preamble hereto and the Other Pass Through
          Trustee, and each other Person that may be acting as a pass through
          trustee in accordance with the provisions provided herein or in the
          Other Pass Through Trust Agreement.

               "Paying Agent" shall mean the paying agent maintained and
          appointed pursuant to Section 7.12.

               "Permanent Regulation S Global Certificate" shall have the
          meaning specified in Section 3.9.

               "Permitted Government Investment" shall mean the direct
          obligations of the United States of America for the payment of which
          the full faith and credit of the United States of America is pledged,
          maturing in not more than 60 days or such lesser time as is necessary
          for payment of any Special Payments on a Special Distribution Date.

               "Postponement Notice" shall mean an Officer's Certificate of the
          Facility Lessees (1) requesting that the Pass Through Trustee
          temporarily postpone the purchase of the Lessor Notes to a date later
          than the Issuance Date, (2) identifying the amount of the purchase
          price of each Lessor Note and the aggregate purchase

                                      6

<PAGE>

          price of the Lessor Notes, (3) setting forth the reasons for such
          postponement, and (4) either (a) setting a Transfer Date (which shall
          be on or prior to the Cut-off Date) for payment by the Pass Through
          Trustee of such purchase price and the issuance of the Lessor Notes,
          or (b) indicating that the Transfer Date (which shall be on or prior
          to the Cut-off Date) will be set by subsequent written notice not
          less than one Business Day prior to such Transfer Date.

               "Record Date" shall mean (i) for Scheduled Payments to be
          distributed on any Distribution Date, other than the final
          distribution, the day (whether or not a Business Day) which is
          fifteen days preceding such Distribution Date, and (ii) for Special
          Payments to be distributed on any Special Distribution Date, other
          than the final distribution, the day (whether or not a Business Day)
          which is fifteen days preceding such Special Distribution Date.

               "Register" and "Registrar" shall mean the register maintained and
          the registrar appointed pursuant to Sections 3.4 and 7.12.

               "Regulation S Global Certificate" shall have the meaning
          specified in Section 3.9.

               "Request" shall mean a request by a Facility Lessee, an Owner
          Lessor, or any Indenture Trustee setting forth the subject matter of
          the request accompanied by an Officer's Certificate and an Opinion of
          Counsel as provided in Section 1.2.

               "Responsible Officer" shall mean, when used with respect to the
          initial Pass Through Trustee, any initial Indenture Trustee or any
          Lessor Manager, means any officer in the Corporate Trust Office
          having direct responsibility for the administration of the Operative
          Documents; when used with respect to any successor Pass Through
          Trustee, or successor Indenture Trustee, means the chairman or
          vice-chairman of the board of directors or trustees, the chairman or
          vice-chairman of the executive or standing committee of the board of
          directors or trustees, the president, the chairman of the committee
          on trust matters, any vice-president, any second vice-president, the
          secretary, any assistant secretary, the treasurer, any assistant
          treasurer, the cashier, any assistant cashier, any trust officer or
          assistant trust officer, the comptroller and any assistant
          comptroller, and, when used with respect to the Pass Through Trustee
          and any Indenture Trustee, also means any other officer of the Pass
          Through Trustee or any Indenture Trustee customarily performing
          functions similar to those performed by any of the above designated
          officers and also means, when used with respect to the Pass Through
          Trustee, any Indenture Trustee or any Lessor Manager with respect to
          a particular corporate trust matter, or any other officer to whom
          such matter is referred because of his knowledge of and familiarity
          with the particular subject.

               "Restricted Certificate" shall have the meaning specified in
          Section 3.1.

                                      7

<PAGE>

               "Restricted Global Certificate" shall have the meaning specified
          in Section 3.9.

               "Scheduled Payment" shall mean, with respect to a Distribution
          Date, any payment (other than a Special Payment) of principal and
          interest on a Lessor Note, due from the applicable Owner Lessor,
          which payment represents the payment of a regularly scheduled
          installment of principal then due on such Lessor Note, or the payment
          of regularly scheduled interest accrued on such Lessor Note.

               "SEC" shall mean the Securities and Exchange Commission, as from
          time to time constituted, created under the Exchange Act.

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

               "Special Distribution Date" shall mean (i) with respect to the
          prepayment of any Lessor Notes, the day on which such prepayment is
          scheduled to occur pursuant to the terms of the applicable Collateral
          Trust Indenture and (ii) with respect to any Special Payment relating
          to a Lessor Note other than as described in clause (i) of the
          definition of Special Payment, the earliest second day of a month for
          which it is practicable for the Pass Through Trustee to give notice
          pursuant to Section 4.2(c).

               "Special Payment" shall mean (i) any payment of principal,
          premium, if any, and interest on a Lessor Note resulting from the
          prepayment or redemption of such Lessor Note pursuant to the
          applicable provisions of the applicable Collateral Trust Indenture,
          (ii) any payment of principal and interest (including any interest
          accruing upon default) on, or any other amount in respect of, such
          Lessor Note upon a Lease Indenture Event of Default in respect
          thereof or upon the exercise of remedies under the applicable
          Collateral Trust Indenture, (iii) any Special Payment referred to in
          clause (i) of this definition or any Scheduled Payment which is not
          in fact paid within five days of the Special Distribution Date or
          Distribution Date applicable thereto, or (iv) any proceeds from the
          sale of any Lessor Note by the Pass Through Trustee pursuant to
          Section 6 hereof.

               "Special Payments Account" shall mean the account or accounts
          created and maintained pursuant to Section 4.1(b).

               "Specified Investments" shall mean with respect to the Pass
          Through Trust (i) obligations of, or guaranteed by, the United States
          Government or agencies thereof, (ii) open market commercial paper of
          any corporation incorporated under the laws of the United States of
          America or any State thereof rated at least P-2 or its equivalent by
          Moody's or a least A-2 or its equivalent by S&P, (iii) certificates
          of deposit issued by commercial banks organized under the laws of the
          United States or of any political subdivision thereof having a
          combined capital and surplus in excess of $100,000,000 which banks or
          their holding companies have a rating of A or its equivalent by
          Moody's or S& P; provided, that the aggregate amount at any one time
          so invested in certificates of deposit issued by any one

                                      8

<PAGE>

          bank shall not exceed 5% of such bank's capital and surplus, (iv)
          U.S. dollar-denominated offshore certificates of deposit issued by,
          or offshore time deposits with, any commercial bank described in
          clause (iii) above or any subsidiary thereof and (v) repurchase
          agreements with any financial institution having combined capital and
          surplus of at least $100,000,000 with any of the obligations
          described in clauses (i) through (iv) above as collateral; provided,
          that if all of the above investments are unavailable, the entire
          amounts to be invested may be used to purchase federal funds from an
          entity described in clause (iii) above.

               "Temporary Regulation S Global Certificate" shall have the
          meaning specified in Section 3.9.

               "Transfer Date" shall have the meaning assigned to the term
          "Closing Date" in the Participation Agreement, and in any event
          refers to such date as it may be changed from time to time in
          accordance with the terms of the Participation Agreement.

               "Trust Indenture Act" shall mean the Trust Indenture Act of 1939,
          as amended and as in force on the date on which this Pass Through
          Trust Agreement was executed and delivered, except as provided in
          Section 9.7; provided, however, that in the event the Trust Indenture
          Act of 1939 is amended after such date, "Trust Indenture Act" shall
          mean, to the extent required by any such amendment, the Trust
          Indenture Act of 1939 as so amended.

               "Trust Property" shall mean the Lessor Notes held as the property
          of the Pass Through Trust created hereby and all monies at any time
          paid thereon and all monies due and to become due thereunder, funds
          from time to time deposited in the Escrow Account, the Certificate
          Account and the Special Payments Account and any proceeds from the
          sale by the Pass Through Trustee pursuant to Section 6 hereof of any
          Lessor Note.

               "Undivided Interest" shall mean, as the context may require, a
          South Point Undivided Interest, a Broad River Undivided Interest or a
          RockGen Undivided Interest.

     Section 1.2   Compliance Certificates and Opinions.

          (a)   Upon any application or request by a Facility Lessee, an Owner
Lessor or any Indenture Trustee to the Pass Through Trustee to take any action
under any provision of this Pass Through Trust Agreement, such Facility Lessee,
such Owner Lessor or such Indenture Trustee, as the case may be, shall furnish
to the Pass Through Trustee an Officer's Certificate stating that, in the
opinion of the signers, all conditions precedent, if any, provided for in this
Pass Through Trust Agreement relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Pass

                                      9

<PAGE>

Through Trust Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.

          (b)   Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Pass Through Trust Agreement shall
include:

          (1)   a statement that each individual signing such certificate
     or opinion has read such covenant or condition and the definitions herein
     relating thereto;

          (2)   a brief statement as to the nature and scope of the
     examination or investigation upon which the statements or opinions
     contained in such certificate or opinion are based;

          (3)   a statement that, in the opinion of each such individual,
     he has made such examination or investigation as is necessary to enable
     him to express an informed opinion as to whether or not such covenant or
     condition has been complied with; and

          (4)   a statement as to whether, in the opinion of each such
     individual, such condition or covenant has been complied with.

     Section 1.3   Form of Documents Delivered to Pass Through Trustee.

          (a)   In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters and any such Person may certify
or give an opinion as to such matters in one or several documents.

          (b)   Any Officer's Certificate may be based, insofar as it relates
to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless the signer of such Officer's Certificate knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon an Officer's Certificate stating that the information with respect to such
factual matters is in the possession of the signer of such Officer's
Certificate, unless such counsel knows that the certificate or opinions or
representations with respect to such matters are erroneous.

          (c)   Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.

          (d)   Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Pass Through Trust Agreement, they may, but need
not, be consolidated and form one instrument.

                                      10

<PAGE>

  Section 1.4 Acts of Holders.

          (a)   Any direction, consent, waiver, demand, authorization, request,
approval or other action provided by this Pass Through Trust Agreement to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent or agents duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Pass Through Trustee and, where
it is hereby expressly required, to any Facility Lessee, any Owner Lessor or
any Indenture Trustee.  Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Pass Through Trust Agreement and (subject to Section
7.1) conclusive in favor of the Pass Through Trustee, the related Facility
Lessee, the related Owner Lessor and any related Indenture Trustee, if made in
the manner provided in this Section.

          (b)   The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Pass
Through Trustee deems sufficient.

          (c)   In determining whether the Holders of the requisite Fractional
Undivided Interests of Certificates Outstanding have given any direction,
consent, waiver or other action (a "Direction"), under this Pass Through Trust
Agreement, Certificates owned by any Facility Lessee, any Owner Lessor, any
Owner Participant or any Affiliate of any such Person shall be disregarded and
deemed not to be Outstanding under this Pass Through Trust Agreement for
purposes of any such determination. In determining whether the Pass Through
Trustee shall be protected in relying upon any such Direction, only
Certificates which the Pass Through Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of
the Certificates Outstanding, such Certificates shall not be so disregarded as
aforesaid, and (ii) if any amount of Certificates so owned by any such Person
have been pledged in good faith, such Certificates shall not be disregarded as
aforesaid if the pledgee establishes to the satisfaction of the Pass Through
Trustee the pledgee's right so to act with respect to such Certificates and
that the pledgee is not one of the Facility Lessees, an Owner Lessor, an Owner
Participant or any Affiliate of any such Person.

          (d)   Any Act by the Holder of any Certificate shall bind the Holder
of every Certificate issued upon the transfer thereof or in exchange therefor
or in lieu thereof, whether or not notation of such Act is made upon such
Certificate.

          (e)   Except as otherwise provided in Section 1.4(c), Certificates
owned by or pledged to any Person shall have an equal and proportionate benefit
under the provisions of this Pass Through Trust Agreement, without preference,
priority or distinction as among all of the Certificates.

          (f)   Notwithstanding anything herein to the contrary, the
Certificates will vote and consent together on all matters as one class and
will not have the right to vote or consent as a separate class on any matter.

                                      11

<PAGE>

          (g)   The Pass Through Trustee may fix in advance a record date for
the determination of the Holders entitled to give any request, demand,
authorization, direction, notice, consent, waiver or other Act solicited by a
Facility Lessee, but the Pass Through Trustee shall not have any obligation to
do so.

     Section 1.5   Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required or deemed under such Act to be a part of and govern this Pass
Through Trust Agreement, such required or deemed provision shall, so long as
the Certificates shall be subject to the Trust Indenture Act, control. If any
provision of this Pass Through Trust Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
to be excluded, as the case may be.

SECTION 2.   ACQUISITION OF LESSOR NOTES; ORIGINAL ISSUANCE OF CERTIFICATES

  Section 2.1 Issuance of Certificates; Acquisition of Lessor Notes.

          (a)   Pass Through Trustee, at or promptly following the execution
and delivery of this Pass Through Trust Agreement, shall also execute and
deliver Participation Agreements, in the form delivered to the Pass Through
Trustee on or prior to the date of the execution and delivery hereof. Upon
delivery of an authentication order by each of the Facility Lessees and the
satisfaction of the closing conditions with respect to the Lessor Notes in
Section 4 of the Participation Agreement, the Pass Through Trustee shall
execute, deliver and authenticate, on behalf of the Pass Through Trust,
Certificates equaling in the aggregate the total principal amount of the Lessor
Notes deposited into the Pass Through Trust on the Issuance Date. The
Certificates so executed, delivered and authenticated on the Transfer Date
shall evidence the entire ownership of the Pass Through Trust. The Pass Through
Trust shall issue such Certificates on the Issuance Date, in authorized
denominations and in such Fractional Undivided Interests, so as to result in
the receipt of consideration (the "Consideration") in an amount equal to the
aggregate principal amount of such Lessor Notes referred to in the second
preceding sentence. The Pass Through Trust shall purchase Lessor Notes on the
Transfer Date at an aggregate purchase price equal to the amount of the
Consideration so received. Except as provided in Sections 3.4 and 3.5 hereof,
the Pass Through Trustee shall not execute or deliver Certificates in excess of
the aggregate amount specified in this paragraph. The aggregate Fractional
Undivided Interest of Certificates shall not at any time exceed $200,000,000

          (b)   If, on or prior to the Issuance Date, the Facility Lessees
shall deliver to the Pass Through Trustee a Postponement Notice relating to all
of the Lessor Notes related to any Facility, the Pass Through Trustee shall
postpone the purchase of all of the Lessor Notes related to such Facility and
shall deposit into an escrow account (the "Escrow Account") to be maintained as
part of the Pass Through Trust an amount equal to the purchase price of such
Lessor Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be
invested by the Pass Through Trustee at the written direction and risk of, and
for the benefit of, the Facility Lessees in Specified Investments (i) maturing
no later than the scheduled Transfer Date or (ii) if no such Transfer Date has
been scheduled, maturing on the next Business Day, or (iii) if the Facility
Lessees have given notice to the Pass Through Trustee that the Lessor Notes
will not be

                                      12

<PAGE>

issued, maturing on the next Special Distribution Date but in no event later
than December 1, 2001, if such investments are reasonably available for
purchase. The Pass Through Trustee shall make a withdrawal from the Escrow
Account only as provided in this Pass Through Trust Agreement. Upon request of
the Facility Lessees on the satisfaction or waiver of the closing conditions
specified in the Participation Agreements on or prior to the Cut-off Date, the
Pass Through Trustee shall purchase all of the Lessor Notes related to any
Facility with the Escrowed Funds withdrawn from the Escrow Account. The
purchase price shall equal the principal amount of such Lessor Notes.

          The Pass Through Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer Specified
Investments. If Specified Investments held in the Escrow Account mature prior
to the Transfer Date, any proceeds received on the maturity of such Specified
Investments shall be reinvested by the Pass Through Trustee at the written
direction and risk of, and for the benefit of, the Facility Lessees in
Specified Investments maturing as provided in the preceding paragraph.

          Any earnings on Specified Investments received from time to time by
the Pass Through Trustee shall be promptly deposited and held in the Escrow
Account by the Pass Through Trustee. The Facility Lessees shall pay to the Pass
Through Trustee for deposit to the Escrow Account an amount equal to any losses
on such Specified Investments as incurred. On the initial regular Distribution
Date, the Facility Lessees will pay (in immediately available funds) to the
Pass Through Trustee an amount equal to the negative difference between the
amount of earnings received by the Pass Through Trustee on the Specified
Investments in the Escrow Account and the amount of interest that would have
accrued on the Lessor Notes, if any, purchased after the Issuance Date if the
Lessor Notes had been purchased on the Issuance Date to, from the Issuance Date
to, but not including, the date of the purchase of the Lessor Notes by the Pass
Through Trustee.

          If the Facility Lessees notify the Pass Through Trustee prior to the
Cut-off Date that the Lessor Notes or any portion thereof will not be issued on
or prior to the Cut-off Date for any reason (it being understood that if any
Lessor Notes related to one Facility are issued, then all Lessor Notes related
to such Facility shall be issued), on the next Special Distribution Date
occurring not less than 20 days following the date of such notice, (i) the
Facility Lessees shall pay to the Pass Through Trustee for deposit in the
Special Payments Account, in immediately available funds, an amount equal to
the sum of (x) the negative difference between the amount of earnings received
by the Pass Through Trustee on Specified Investments in the Escrow Account and
the amount of interest that would have accrued on the Lessor Notes at a rate
equal to the interest rate applicable to the Certificates from the Issuance
Date to, but not including, such Special Distribution Date and (y) the
Make-Whole Amount and (ii) the Pass Through Trustee shall transfer an amount
equal to that amount of Escrowed Funds that would have been used to purchase
the Lessor Notes designated in such notice and the amount paid by the Facility
Lessees pursuant to the immediately preceding clause (i) to the Special
Payments Account for distribution as a Special Payment in accordance with the
provisions hereof. Any earnings received by the Pass Through Trustee on
Specified Investments in the Escrow Account in excess of the amounts payable
pursuant to the preceding sentence shall be refunded to the Facility Lessee
following the payment of all amounts due hereunder.

                                      13

<PAGE>

          (c)   The Facility Lessees' Assumption of Lessor Notes. If a Facility
Lessee shall assume the obligations of the applicable Owner Lessor under its
Lessor Note pursuant to the Collateral Trust Indenture, the Pass Through
Trustee shall, upon its receipt of written instructions from such Facility
Lessee, surrender the applicable Lessor Notes issued pursuant to the Collateral
Trust Indenture to the Indenture Trustee in exchange for new Lessor Notes of
the same aggregate outstanding principal amount as the Lessor Notes so
surrendered, bearing interest at the same rate, and having the same maturity
and amortization schedule, and otherwise of similar tenor, issued under the
Collateral Trust Indenture and any new Collateral Trust Indenture entered into
by such Facility Lessee and the Indenture Trustee in connection with such
assumption, and thereafter each reference to such Lessor Notes in this Pass
Through Trust Agreement shall be deemed to mean a reference to such new Lessor
Notes or the existing Lessor Notes as assumed by such Facility Lessee.

          (d)   Authentication. Any authentication order delivered by any of
the Facility Lessees hereunder shall be signed by one of such Facility Lessee's
authorized signatories and shall specify the amount and maturity of the
Certificates to be authenticated and the date on which the original issue of
Certificates is to be authenticated. The Pass Through Trustee may appoint an
authenticating agent to authenticate the Certificates. Unless limited by the
terms of such appointment, an authenticating agent may authenticate the
Certificates whenever the Pass Through Trustee may do so. Each reference in
this Pass Through Trust Agreement to authentication by the Pass Through Trustee
includes authentication by such agent. An authenticating agent has the same
rights as any Registrar, Paying Agent or agent for service of notices and
demands.

  Section 2.2 Acceptance by Pass Through Trustee. The Pass Through Trustee, upon
the execution and delivery of this Pass Through Trust Agreement, acknowledges on
behalf of the Pass Through Trust its acceptance of all right, title, and
interest in and to the Lessor Notes acquired pursuant to Section 2.1 hereof and
declares that the Pass Through Trustee holds and will hold such right, title,
and interest, together with all other property constituting the Trust Property,
for the benefit of all present and future Certificateholders, upon the trusts
herein set forth. By its payment for and acceptance of each Certificate issued
to it hereunder, each initial Certificateholder as grantor of the Pass Through
Trust thereby joins in the creation and declaration of the Pass Through Trust.
The Pass Through Trustee shall be under no duty or obligation to inspect, review
or examine the Lessor Notes to determine that they are genuine, valid, binding,
enforceable or appropriate for the represented purpose or that they are other
than what they purport to be on their face.

  Section 2.3 Limitation of Powers. The Pass Through Trust is constituted solely
for the purpose of making the investment in the Lessor Notes, and, except as set
forth herein, the Pass Through Trustee is not authorized or empowered to acquire
any other investments or engage in any other activities and, in particular, the
Pass Through Trustee is not authorized or empowered to do anything that would
cause the Pass Through Trust to fail to qualify as a pass through entity for
federal income tax purposes (including, as subject to this restriction,
acquiring any Undivided Interest or any portion thereof by bidding the Lessor
Notes or otherwise, or taking any action with respect to any Undivided Interest
or any portion thereof once acquired).

                                       14

<PAGE>

SECTION 3.   THE CERTIFICATES

     Section 3.1   Form, Denomination and Execution of Certificates. The
Certificates shall be known as the "9.825% Pass Through Certificates, Series B"
of the Pass Through Trust and shall each represent a Fractional Undivided
Interest. The Certificates shall be issued in registered form without coupons
and shall be substantially in the form attached hereto as Exhibit A, with such
omissions, variations and insertions as are permitted by this Pass Through
Trust Agreement, and may have such letters, numbers or other marks of
identification and such legends or endorsements printed, lithographed or
engraved thereon, as may be required to comply with the rules of any securities
exchange on which such Certificates may be listed or to conform to any usage in
respect thereof, or as may, consistently herewith, be prescribed by the Pass
Through Trustee or by the officer executing such Certificates, such
determination by said officer to be evidenced by such officer signing the
Certificates. Except as provided in Section 3.9, definitive Certificates
shall be printed, lithographed or engraved or produced by any combination of
these methods, all as determined by the officer executing such Certificates, as
evidenced by such officer's execution of such Certificates.

          (c)   During the period beginning on the Issuance Date and ending on
the expiration of the applicable holding period in Rule 144(k) of the
Securities Act, all Certificates issued on the Issuance Date, and all
Certificates issued upon registration of transfer of, or in exchange for, such
Certificates, shall be "Restricted Certificates" and shall be subject to the
restrictions on transfer provided in the legend set forth on the face of the
form of certificate in Exhibit A; provided, however, that the term "Restricted
Certificates" shall not include Certificates as to which such restrictions on
transfer have been terminated in accordance with Section 3.4. All Restricted
Certificates shall bear the legend set forth on the face of the Certificate in
Exhibit A.  Certificates which are not Restricted Certificates shall not bear
such legend.

          (d)   The Certificates shall be issued in minimum denominations of
$100,000 or integral multiples of $1,000 in excess thereof.

          (e)   The Certificates shall be executed on behalf of the Pass
Through Trust by manual or facsimile signature of a Responsible Officer of the
Pass Through Trustee. Certificates bearing the manual or facsimile signature of
an individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Pass Through Trustee shall be valid and binding
obligations of the Pass Through Trust, notwithstanding that such individual has
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such office at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Pass Through Trust
Agreement, or be valid for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form set forth in Exhibit
B hereto executed by the Pass Through Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.

  Section 3.2 Authentication of Certificates. Upon delivery of an authentication
order by the Facility Lessees, the Pass Through Trustee shall cause to be
delivered Certificates duly

                                      15

<PAGE>

authenticated by the Pass Through Trustee, in authorized denominations equaling
in the aggregate the aggregate principal amount set forth in the authentication
order evidencing the entire ownership of the Pass Through Trust.

  Section 3.3 Temporary Certificates. Pending the preparation of definitive
Certificates, the Pass Through Trustee may execute, authenticate and deliver
temporary Certificates which are printed, lithographed, typewritten, or
otherwise produced, in any denomination, containing substantially the same terms
and provisions as set forth in Exhibit A, except for such appropriate
insertions, omissions, substitutions and other variations relating to their
temporary nature as the officer executing such temporary Certificates may
determine, as evidenced by his or her execution of such temporary Certificates.

          If temporary Certificates are issued, the Facility Lessees will cause
definitive Certificates to be prepared without unreasonable delay.  After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the Corporate Trust Office of the Pass Through Trustee, or at
the office or agency of the Pass Through Trustee maintained in accordance with
Section 7.12, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Certificates, the Pass Through Trustee shall execute,
authenticate and deliver in exchange therefor definitive Certificates of
authorized denominations of a like aggregate Fractional Undivided Interest.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits under this Pass Through Trust Agreement as
definitive Certificates.

  Section 3.4 Registration of Transfer and Exchange of Certificates.

          (a)   The Pass Through Trustee shall cause to be kept, at the office
or agency to be maintained by it in accordance with the provisions of Section
7.12, a register (the "Register") in which, subject to the provisions of this
Section 3.4, Section 3.9 and the Certificates, the Pass Through Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Pass Through Trustee shall initially be
the registrar (the "Registrar") for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Facility
Lessees may, upon notice to the Pass Through Trustee, change the Registrar at
any time.

          (b)   Every Restricted Certificate shall be subject to the
restrictions on transfer provided in the legend required to be set forth on the
face of each Restricted Certificate pursuant to Section 3.1, and the Holder of
each Restricted Certificate, by such Holder's acceptance thereof, agrees to be
bound by such restrictions on transfer. Whenever any Restricted Certificate is
presented or surrendered for registration of transfer or for exchange for a
Certificate registered in a name other than that of the Holder, such Restricted
Certificate must be accompanied by a certificate in substantially the form set
forth in Exhibit C hereto, dated the date of such surrender and signed by the
Holder of such Restricted Certificate, or such Holder's attorney duly
authorized in writing, as to compliance with such restrictions on transfer.
Neither the Pass Through Trustee nor any Registrar shall be required to accept
for such registration of transfer or exchange any Restricted Certificate not so
accompanied by a properly completed certificate. Notwithstanding the preceding
two sentences, a properly completed certificate shall not be

                                      16

<PAGE>

required in connection with any transfer of any Restricted Certificate through
the facilities of DTC or any other United States securities clearance and
settlement organization; provided, that such transfer does not require a change
in the name (other than to another nominee of DTC or such other securities
clearance and settlement organization) in which such Restricted Certificate is
then registered.

          Whenever any Restricted Certificate is proposed to be transferred by
a Holder to an Institutional Accredited Investor, the Pass Through Trustee
shall have received from such Institutional Accredited Investor, prior to such
transfer, a signed letter substantially in the form of Exhibit D relating to
certain representations and agreements regarding restrictions on transfer of
such Restricted Certificate. In addition, the Holder of the Restricted
Certificate proposed to be transferred must, prior to such transfer, furnish to
the Registrar such certifications (as required by, and in the form set forth
in, this Pass Through Trust Agreement, opinions of counsel or other information
as the Registrar may reasonably request to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.

          The restrictions imposed by this Section 3.4 and Section 3.1 upon the
transferability of any particular Restricted Certificate shall cease and
terminate if and when such Restricted Certificate has been (i) sold pursuant to
an effective registration statement under the Securities Act, or (ii)
transferred pursuant to Rule 144 under the Securities Act (or any successor
provision thereto), unless the Holder thereof is an affiliate of any Facility
Lessee within the meaning of Rule 144 (or such successor provision). Any
Restricted Certificate as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon
surrender of such Restricted Certificate for exchange to the Pass Through
Trustee or any Registrar in accordance with the provisions of this Section 3.4
(accompanied, in the event that such restrictions on transfer have terminated
by reason of a transfer pursuant to Rule 144 or any successor provision, by an
Opinion of Counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to each of the Facility
Lessees, addressed to each of the Facility Lessees and the Pass Through Trustee
and in form acceptable to each of the Facility Lessees, to the effect that the
transfer of such Restricted Certificate has been made in compliance with Rule
144 or such successor provision), be exchanged for a new Certificate, of
authorized denominations of a like aggregate Fractional Undivided Interest,
which shall not bear the restrictive legend required by Section 3.1. The Pass
Through Trustee shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the aforementioned Opinion of Counsel.

          (c)   Upon surrender for registration of transfer of any Certificate
that is not a Restricted Certificate at the Corporate Trust Office, or such
other office or agency, the Pass Through Trustee shall execute, authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates, in authorized denominations of a like aggregate
Fractional Undivided Interest if its requirements for such transaction are met.

          (d)   At the option of a Certificateholder, Certificates may be
exchanged for other Certificates, in authorized denominations and of a like
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; provided, that a Restricted
Certificate may only be exchanged for another Restricted Certificate,

                                      17

<PAGE>

until such restrictions on such Restricted Certificate shall cease and
terminate in accordance with the terms of this Section 3.4. Whenever any
Certificates are so surrendered for exchange, the Pass Through Trustee shall
execute, authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to each of
the Facility Lessees and the Pass Through Trustee and the Registrar duly
executed by the Certificateholder thereof or its attorney duly authorized in
writing.

          (e)   No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Pass Through
Trustee shall require payment of a sum sufficient to cover any tax or charge
that may be imposed in connection with any transfer or exchange of Certificates.

          (f)   All Certificates surrendered for registration of transfer and
exchange shall be canceled and disposed of in accordance with the usual
practices of the Pass Through Trustee.

     Section 3.5   Mutilated, Destroyed, Lost or Stolen Certificates. If any
mutilated Certificate is surrendered to the Registrar, or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and in the case of such destruction, loss or theft, there is
delivered to the Registrar, the Pass Through Trustee, the Facility Lessees and
the applicable Owner Lessor such security, indemnity or bond as may be required
by them to protect each of them and the Pass Through Trust from any loss that
any of them may suffer if a Certificate is replaced, then, in the absence of
notice to the Registrar or the Pass Through Trustee that such Certificate has
been acquired by a bona fide purchaser, the Pass Through Trustee, on behalf of
the Pass Through Trust, shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like Fractional Undivided Interest with the same final
Distribution Date. In connection with the issuance of any new Certificate under
this Section 3.5, the Pass Through Trustee shall require the payment of a sum
sufficient to cover any tax or other charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of the appropriate Fractional Undivided Interest in the Pass Through
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

     Section 3.6   Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Pass Through Trustee, the
Facility Lessees, the applicable Owner Lessor, the Registrar and any Paying
Agent may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 4.2 and for all other purposes whatsoever, and neither the Pass
Through Trustee, any Facility Lessee, the applicable Owner Lessor, the
Registrar nor any Paying Agent shall be affected by any notice to the contrary.

     Section 3.7   Cancellation. All Certificates surrendered for payment,
transfer or exchange shall, if surrendered to any Person a party hereto other
than the Registrar, be delivered by such Person to the Registrar for
cancellation. No Certificates shall be authenticated in lieu of

                                      18

<PAGE>

or in exchange for any Certificates canceled as provided in this Section 3.7,
except as expressly permitted by this Pass Through Trust Agreement. All
canceled Certificates held by the Registrar shall be disposed of in accordance
with the usual practice of the Pass Through Trustee and, if destroyed, a
certification of their destruction shall be delivered to the Pass Through
Trustee.

     Section 3.8   Limitation of Liability for Payments. All payments or
distributions made to Certificateholders under this Pass Through Trust
Agreement shall be made only from the Trust Property and only to the extent
that the Pass Through Trustee shall have received sufficient income or proceeds
from the Trust Property to make such payments in accordance with the terms of
Section 4 of this Pass Through Trust Agreement. Each Holder of a Certificate,
by its acceptance of such Certificate, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to the Holder thereof as provided in this Pass Through Trust
Agreement. Nothing in this Pass Through Trust Agreement shall be construed as
an agreement, or otherwise creating an obligation, of (a) any Facility Lessee,
the Pass Through Trust or the Pass Through Trustee to pay any of the principal,
premium, if any, or interest due from time to time under the Lessor Notes, or
(b) any Facility Lessee, the Pass Through Trust or the Pass Through Trustee to
pay any amount due from time to time in respect of the Certificates. The
liability of an Owner Lessor under the applicable Lessor Notes shall be limited
as set forth therein and in the applicable Collateral Trust Indenture.

  Section 3.9 Book-Entry and Definitive Certificates.

          (a)   Except for Certificates issued to Institutional Accredited
Investors which must be issued in the form of definitive, fully registered
Certificates ("Definitive Certificates"), the Certificates may be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Pass Through Trustee. In such case, the Certificates delivered
to DTC shall initially be registered on the Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Certificates, except as provided above and in subsection (d) below. As
to the Book-Entry Certificates, unless and until Definitive Certificates have
been issued pursuant to subsection (d) below:

               (i)   the provisions of this Section 3.9 shall be in full force
          and effect;

               (ii)  the Facility Lessees, any Owner Lessor, the Paying Agent,
          the Registrar and the Pass Through Trustee may deal with the Clearing
          Agency for all purposes (including the making of distributions on the
          Certificates) as the authorized representative of the Certificate
          Owners;

               (iii) to the extent that the provisions of this Section 3.9
          conflict with any other provisions of this Pass Through Trust
          Agreement (other than the provisions of any supplemental agreement
          amending this Section 3.9 as permitted by this Pass Through Trust
          Agreement), the provisions of this Section 3.9 shall control;

                                      19

<PAGE>

               (iv)  the rights of Certificate Owners shall be exercised only
          through the Clearing Agency and shall be limited to those established
          by law and agreements between such Certificate Owners and the
          Clearing Agency Participants; and until Definitive Certificates are
          issued pursuant to subsection (d) below, the Clearing Agency will
          make book-entry transfers among the Clearing Agency Participants and
          receive and transmit distributions of principal and interest and
          premium, if any, on the Certificates to such Clearing Agency
          Participants; and

               (v)   whenever  this  Pass  Through  Trust  Agreement  requires
          or permits actions to be taken based upon instructions or directions
          of Certificateholders holding Certificates evidencing a specified
          percentage of the Fractional Undivided Interests in the Pass Through
          Trust, the Clearing Agency shall be deemed to represent such
          percentage only to the extent that it has received instructions to
          such effect from Certificate Owners and/or Clearing Agency
          Participants owning or representing,respectively,such required
          percentage of the beneficial interest in Certificates and has
          delivered such instructions to the Pass Through Trustee.  The Pass
          Through Trustee shall have no obligation to determine (and shall
          incur no liability in connection with any determination of) whether
          the Clearing Agency has in fact received any such instructions.

          (b)   With respect to Book-Entry Certificates, whenever notice or
other communication to the Certificateholders is required under this Pass
Through Trust Agreement, unless and until Definitive Certificates shall have
been issued pursuant to subsection (d) below, the Pass Through Trustee shall
give all such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency and/or the Clearing Agency
Participants (and, upon receipt of a valid Certificate Owner Request, to the
Certificateholder or Certificate Owner making such request), and shall make
available additional copies as reasonably requested by such Clearing Agency
Participants.

          (c)   Unless and until Definitive Certificates are issued pursuant to
subsection (d) below, on the Record Date prior to each applicable Distribution
Date and Special Distribution Date, the Pass Through Trustee will request from
the Clearing Agency a "Securities Position Listing" setting forth the names of
all Clearing Agency Participants reflected on the Clearing Agency's books as
holding interests in the Certificates on such Record Date. The Pass Through
Trustee shall mail to each such Clearing Agency Participant the statements
described in Section 4.3 hereof.

          (d)   If with respect to the Certificates (i) any Facility Lessee
advises the Pass Through Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities and the
Facility Lessees are unable to locate a qualified successor within 90 days,
(ii) the Facility Lessees (or, following the occurrence of a Lease Event of
Default, the applicable Owner Lessors) at their option, advise the Pass Through
Trustee in writing that they elect to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default,
Certificate Owners of Book-Entry Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust, by Act of said Certificate Owners delivered to the Facility Lessees and
the

                                      20

<PAGE>

Pass Through Trustee, advise the Facility Lessees, the Owner Lessors, the Pass
Through Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interests of the Certificate
Owners, then the Pass Through Trustee shall notify all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates.  Upon surrender to the Pass Through
Trustee of all the Certificates held by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration of
Definitive Certificates in the names of Certificate Owners, the Pass Through
Trust shall issue and deliver the Definitive Certificates in accordance with
the instructions of the Clearing Agency. None of the Facility Lessees, the
Owner Lessors, the Registrar, the Paying Agent or the Pass Through Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such registration
instructions. Upon the issuance of Definitive Certificates, the Pass Through
Trustee shall recognize the Person in whose name the Definitive Certificates
are registered in the Register as Certificateholder hereunder. None of the
Facility Lessees nor the Pass Through Trustee shall be liable if the Facility
Lessees are unable to locate a qualified successor Clearing Agency.

          (e)   The Certificates sold in offshore transactions in reliance on
Regulation S under the Securities Act will be represented initially by one or
more temporary Book-Entry Certificates, in definitive, fully registered form
without interest coupons (collectively, the "Temporary Regulation S Global
Certificate") and will be deposited with the Pass Through Trustee as custodian
for DTC and registered in the name of a nominee of DTC for the accounts of the
Euroclear System ("Euroclear") and Clearstream Banking, S.A. ("Clearstream").
Each Temporary Regulation S Global Certificate will be exchangeable for one or
more permanent Book-Entry Certificate (collectively, the "Permanent Regulation
S Global Certificate," and together with the Temporary Regulation S Global
Certificate, the "Regulation S Global Certificate") on or after 40 days after
the later of the commencement of the offering of the Certificates and the
Issuance Date upon certification that the beneficial interests in such
Book-Entry Certificate are owned by persons who are not U.S. persons as defined
in Regulation S. Prior to the expiration of such 40-day period, beneficial
interests in the Temporary Regulation S Global Certificate may be held only
through Euroclear or Clearstream, and any resale or other transfer of such
interests to U.S. persons shall not be permitted during such period unless such
resale or transfer is made pursuant to Rule 144A or Regulation S under the
Securities Act and in accordance with the certification requirements specified
in Section 3.9(f) below. The aggregate original principal amount of the
Regulation S Global Certificate may from time to time be increased or decreased
by adjustments made on the records of the Pass Through Trustee, as custodian
for DTC, in connection with a corresponding decrease or increase in the
aggregate original principal amount of a Definitive Certificate or the
Restricted Global Certificate, as hereinafter provided.

          (f)   The Certificates sold in reliance on Rule 144A under the
Securities Act will be represented by a one or more permanent Book-Entry
Certificate, in definitive, fully registered form without interest coupons
(collectively, the "Restricted Global Certificate"), which will be deposited
with the Pass Through Trustee as custodian for DTC and registered in the name
of a nominee of DTC. Prior to the 40th day after the later of the commencement
of the offering of the Certificates and the Issuance Date, a beneficial
interest in the Temporary Regulation S Global Certificate may be transferred to
a person who takes delivery in the form of

                                      21

<PAGE>

an interest in the Restricted Global Certificate only upon receipt by the Pass
Through Trustee of a written certification from the transferor (in the form of
Exhibit C hereto) to the effect that such transfer is being made to a person
who the transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and in accordance with any applicable securities laws of any state of
the United States or any other jurisdiction. Beneficial interests in the
Restricted Global Certificate may be transferred to a person who takes delivery
in the form of an interest in the Regulation S Global Certificate whether
before, on or after such 40th day, only upon receipt by the Pass Through
Trustee of a written certification (in the form of Exhibit C hereto) to the
effect that such transfer is being made in accordance with Regulation S under
the Securities Act and, if such transfer occurs prior to such 40th day, the
interest will be held immediately thereafter only through Euroclear or
Clearstream. The aggregate initial principal amount of the Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Pass Through Trustee, as custodian for DTC, in connection
with a corresponding decrease or increase in the aggregate initial principal
amount of a Definitive Certificate or a Regulation S Global Certificate, as
hereinafter provided.

          (g)   Any beneficial interest in one of the Book-Entry Certificates
that is transferred to a person who takes delivery in the form of an interest
in another Book-Entry Certificate will, upon transfer, cease to be an interest
in such first Book-Entry Certificate and become an interest in such other
Book-Entry Certificate and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to beneficial
interests in such other Book-Entry Certificate for so long as it remains such
an interest.  Upon the transfer of Definitive Certificates to a qualified
institutional buyer or in accordance with Regulation S, such Definitive
Certificates will be exchanged for an interest in a Book-Entry Certificate.

          (h)   The Facility Lessees and the Pass Through Trustee, if
necessary, shall each enter into the Letter of Representations with respect to
the Certificates and fulfill its responsibilities thereunder.

     Section 3.10   Form of Certification. In connection with any certification
contemplated by Section 3.4, relating to compliance with certain restrictions
relating to transfers of Restricted Certificates, such certification shall be
provided substantially in the form of Exhibit C hereto, with only such changes
as shall be reasonably approved by the Facility Lessees and reasonably
acceptable to the Pass Through Trustee.

SECTION 4.   DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

  Section 4.1 Certificate Account and Special Payments Account.

          (a)   The Pass Through Trust shall establish and maintain on behalf
of the Certificateholders the Certificate Account with the Pass Through Trustee
as one or more non-interest bearing accounts. The Pass Through Trustee shall
hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Pass Through Trust Agreement. On each day when a Scheduled
Payment is made under a Lease to the Pass Through Trustee, as holder of the
Lessor Notes issued under the related Collateral Trust Indenture, the Pass
Through Trustee upon receipt of

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<PAGE>

such scheduled payment shall immediately deposit the aggregate amount of such
Scheduled Payment in the Certificate Account.

          (b)   The Pass Through Trust shall establish and maintain on behalf
of the Certificateholders the Special Payments Account with the Pass Through
Trustee as one or more accounts, which shall be non-interest bearing except as
provided in Section 4.4. The Pass Through Trustee shall hold the Special
Payments Account in trust for the benefit of the Certificateholders, and shall
make or permit withdrawals therefrom only as provided in this Pass Through
Trust Agreement. On each day when a Special Payment is made to the Pass Through
Trustee, as holder of the Lessor Notes issued under the applicable Collateral
Trust Indenture, the Pass Through Trustee upon receipt shall immediately
deposit the aggregate amounts of such Special Payments in the Special Payments
Account.

          (c)   The Pass Through Trustee shall present to the applicable
Indenture Trustee each Lessor Note on the date of its stated final maturity, or
in the case of any Lessor Note which is to be redeemed or otherwise prepaid in
whole pursuant to the Collateral Trust Indenture, on the applicable redemption
on or other prepayment date under the Collateral Trust Indenture.

  Section 4.2 Distributions from Certificate Account and Special Payments
              Account.

          (a)   On each Distribution Date if the Pass Through Trustee receives
payment of the Scheduled Payments due on any Lessor Notes on such date by 12:00
noon, New York time, on such date, the Pass Through Trustee shall distribute
out of the Certificate Account the entire amount deposited therein pursuant to
Section 4.1(a). If a Scheduled Payment is received by the Pass Through Trustee
after 12:00 noon, New York time, on a Distribution Date, such payment shall be
distributed on the next Business Day. If a Scheduled Payment is not received by
the Pass Through Trustee on a Distribution Date but is received prior to the
time such payment would become a Special Payment, such payment shall be
distributed (i) on the date received, if received by 12:00 noon, New York time,
on such date or (ii) on the next Business Day, if received after 12:00 noon,
New York time, on such date. There shall be so distributed to each
Certificateholder of record on the Record Date with respect to such
Distribution Date (other than as provided in Section 11.1 concerning the final
distribution) (i) if (A) DTC is the Certificateholder of record, or (B) a
Certificateholder holds a Certificate or Certificates in an aggregate amount
greater than $10,000,000 or (C) a Certificateholder holds a Certificate or
Certificates in an aggregate amount greater than $1,000,000 and so requests to
the Pass Through Trustee, by wire transfer in immediately available funds to an
account maintained by such Certificateholder with a bank, or (ii) if none of
the above apply, by check mailed to such Certificateholder at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the aggregate Fractional Undivided Interest held by such Certificateholder) of
the aggregate amount in the Certificate Account.

          (b)   On each Special Distribution Date with respect to any Special
Payment, if the Pass Through Trustee receives the Special Payments due on the
required date by 12:00 noon, New York time, on such date, the Pass Through
Trustee shall distribute out of the Special Payments Account the entire amount
deposited therein with respect to such Special Payment pursuant to this Section
4.2(b).  The Pass Through Trustee shall make such distribution on a pro rata
basis among the Certificateholders. If a Special Payment is received by the
Pass Through

                                      23

<PAGE>

Trustee after 12:00 noon, New York time, on a Special Distribution Date, such
payment shall be distributed on the next Business Day. If a Special Payment is
not received by the Pass Through Trustee on a Special Distribution Date, such
payment shall be distributed (i) on the date received, if received by 12:00
noon, New York time, on such date or (ii) on the next Business Day, if received
after 12:00 noon, New York time, on such date. There shall be so distributed to
each Certificateholder of record on the Record Date with respect to such
Special Distribution Date (other than as provided in Section 11.1 concerning
the final distribution) (i) if (A) DTC is the Certificateholder of record, or
(B) a Certificateholder holds a Certificate or Certificates in an aggregate
amount greater than $10,000,000 or (C) a Certificateholder holds a Certificate
or Certificates in an aggregate amount greater than $1,000,000 and so requests
to the Pass Through Trustee, by wire transfer in immediately available funds to
an account maintained by the Certificateholder with a bank, or (ii) if none of
the above apply, by check mailed to such Certificateholder at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the aggregate Fractional Undivided Interest held by such Certificateholder) of
the aggregate amount in the Special Payments Account on account of such Special
Payment.

          (c)   The Pass Through Trustee shall, at the expense of the Facility
Lessees, cause notice of each Special Payment to be mailed to (i) each
Certificateholder, at the address of such Certificateholder as it appears in
the Register and (ii) any Certificate Owner who has made a valid Certificate
Owner Request, at the address specified in such Certificate Owner Request. In
the event of prepayment of any Lessor Notes, such notice shall be mailed not
less than 20 days prior to the date any such Special Payment is scheduled to be
distributed. In the case of any other Special Payments, such notice shall be
mailed as soon as practicable after the Pass Through Trustee has confirmed that
it has received funds for such Special Payment. Notices mailed by the Pass
Through Trustee shall set forth:

               (i)   the  Special Distribution  Date  and  the  Record  Date
          therefor  (except  as  otherwise provided  in Section 11.1);

               (ii)  the  amount of the  Special  Payment  per $1,000 of face
          amount of  Certificates  and the amount  thereof constituting
          principal, premium, if any, and interest;

               (iii) the reason for the Special Payment; and

               (iv)  if the Special Distribution Date is the same date as a
          Distribution Date, the total amount to be received on such date per
          $1,000 of face amount of Certificates.

If the amount of premium payable upon the prepayment of a Lessor Note has not
been calculated at the time that the Pass Through Trustee mails notice of a
Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed. If a Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day.

                                      24

<PAGE>

  Section 4.3 Statements to Certificateholders.

          (a)   On each Distribution Date and Special Distribution Date, the
Pass Through Trustee will include with each distribution to Certificateholders
and any Certificate Owner who has made a valid Certificate Owner Request a
statement, giving effect to such distribution to be made on such date, setting
forth the following information (per a $1,000 face amount Certificate):

               (i)   the amount of such distribution allocable to principal and
          the amount allocable to premium, if any; and

  (ii) the amount of such distribution allocable to interest. (b) Within a
reasonable period of time after the end of each calendar year but not later than
the latest date permitted by law, the Pass Through Trustee shall furnish (i) to
each Person who at any time during such calendar year was a Certificateholder of
record and (ii) to any Person who at any time during such calendar year was a
Certificate Owner who has made a valid Certificate Owner Request and provided
the Pass Through Trustee with such pertinent information as the Pass Through
Trustee shall reasonably request, a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) with respect to the Pass
Through Trust for such calendar year or, in the event such Person was a
Certificateholder of record or Certificate Owner during a portion of such
calendar year, for the applicable portion of such year, and such other items as
are readily available to the Pass Through Trustee and which a Certificateholder
or Certificate Owner shall reasonably request as necessary for the purpose of
such Certificateholder's or Certificate Owner's preparation of its Federal
income tax returns.

          (c)   Based on information provided by the Facility Lessees, if there
shall occur any change in the principal amortization schedule of the Lessor
Notes resulting in a change in the schedule of expected distributions on the
Certificates from that set forth on page 31 of the Offering Circular, the Pass
Through Trustee shall promptly furnish to the Certificateholders a statement
setting forth the revised principal amortization schedule of the Lessor Notes
and the resulting revised schedule of expected distributions on the
Certificates.

  Section 4.4 Investment of Special Payment Moneys. Any money received by the
Pass Through Trustee pursuant to Section 4.1(b) representing a Special Payment
which is not to be promptly distributed shall, to the extent practicable, be
invested in Permitted Government Investments by the Pass Through Trustee pending
distribution of such Special Payment pursuant to Section 4.2. Any investment
made pursuant to this Section 4.4 shall be in such Permitted Government
Investments having maturities not later than the date that such moneys are
required to be paid to make the payment required under Section 4.2 on the
applicable Special Distribution Date and the Pass Through Trustee shall hold any
such Permitted Government Investments until maturity. The Pass Through Trustee
shall have no liability with respect to any investment made pursuant to this
Section 4.4, other than by reason of the willful misconduct or negligence of the
Pass Through Trustee. All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such Special Payment.

                                      25

<PAGE>

SECTION 5. FINANCIAL STATEMENTS AND OTHER REPORTS

     For so long as any Certificates remain Outstanding, the Facility Lessees
shall furnish:

          (a)   to Certificateholders, Certificate Owners and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act so long as the
Certificates are not freely transferable under the Securities Act; and

          (b)   to the Pass Through Trustee, who in turn shall provide such
information, upon a Certificate Owner Request, to Certificateholders and
Certificate Owners:

               (i)   within 60 days following the end of each of the first three
          fiscal quarters of the Facility Lessees during each fiscal year, a
          copy of Form 10-Q (or any successor form) filed by the Facility
          Lessees with the SEC for such fiscal quarter, or if the Facility
          Lessees are not then subject to the reporting requirements of the
          Exchange Act, unaudited consolidated quarterly financial statements
          for the Facility Lessees for such fiscal quarter;

               (ii)  within 120 days following the end of the fiscal year of
          the Facility Lessees, a copy of the Form 10-K (or any successor form)
          filed by the Facility Lessees with the SEC for such fiscal year, or,
          if the Facility Lessees are not then subject to the reporting
          requirements of the Exchange Act, audited consolidated annual
          financial statements; and

               (iii) within  20 days  after  the  occurrence  thereof,  (A) a
          copy of any current report on Form 8-K (or any successor form) filed
          by the Facility Lessees with the SEC, if any, and (B) notice of the
          following events (1) a Change of Control; (2) any litigation or claim
          against the Facility Lessees, or the South Point, Broad River and
          RockGen which could reasonably be expected to have a Material Adverse
          Effect; (3) the appointment of a receiver over any of the Facility
          Lessees or the confirmation of a plan of reorganization or
          liquidation for any of the Facility Lessees; or (4) the resignation
          or dismissal of the independent accountants engaged by the Facility
          Lessees.

SECTION 6.   DEFAULT

  Section 6.1 Events of Default.

          (a)   With respect to any Lessor Note, if any Lease Indenture Event
of Default under the applicable Collateral Trust Indenture (an "Event of
Default") shall occur and be continuing, then, and in each and every case, so
long as such Lease Indenture Event of Default shall be continuing, the Pass
Through Trustee may vote all of the Lessor Notes issued under the Collateral
Trust Indenture held in the Pass Through Trust, and upon the Direction of the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest of the Fractional Undivided Interests
evidenced by all Certificates at the time Outstanding (determined as provided
in Section 1.4(c)), the Pass Through Trustee shall vote all of such Lessor
Notes, in favor of directing the applicable Indenture Trustee to declare the
unpaid principal amount of such Lessor Notes then outstanding and accrued
interest thereon to be due

                                      26

<PAGE>

and payable under, and to the extent permitted by and in accordance with, the
provisions of such Collateral Trust Indenture. In addition, with respect to any
Lessor Note, if a Lease Indenture Event of Default shall have occurred and be
continuing under the related Lease Indenture, the Pass Through Trustee may in
its discretion, and upon the Direction of the Holders of Certificates
evidencing Fractional Undivided Interest aggregating not less than a majority
in interest of the Fractional Undivided Interests evidenced by all Certificates
at the time Outstanding (determined as provided in Section 1.4(c)) as provided
in Section 6.4 shall, in accordance with such Collateral Trust Indenture vote
the applicable Lessor Notes issued thereunder held in the Pass Through Trust to
direct the applicable Indenture Trustee regarding the exercise of remedies
provided in such Collateral Trust Indenture and consistent with the terms
thereof. Notwithstanding the foregoing, no Lease Indenture Event of Default
under a given Collateral Trust Indenture shall give rise to a Lease Indenture
Event of Default under any other Collateral Trust Indenture.

          In addition, after an Event of Default shall have occurred and be
continuing, the Pass Through Trustee may in its discretion, and upon the
Direction of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest of the Fractional
Undivided Interests evidenced by all Certificates at the time Outstanding
(determined as provided in Section 1.4(c)) shall, by such officer or agent as
it may appoint, sell, convey, transfer and deliver all or a portion of such
Lessor Note or Lessor Notes issued under the Collateral Trust Indenture with
respect to which the Event of Default has occurred, without recourse to or
warranty by the Pass Through Trustee or any Certificateholders to any Person.
In any such case, the Pass Through Trustee shall sell, assign, contract to sell
or otherwise dispose of and deliver such Lessor Note or Lessor Notes in one or
more parcels at public or private sale or sales, at any location or locations
at the option of the Pass Through Trustee, all upon such terms and conditions
as it may reasonably deem advisable and at such prices as it may reasonably
deem advisable, for cash. The Pass Through Trustee shall give notice to the
applicable Facility Lessee and Owner Lessor promptly after any such sale.

          In the event that the Pass Through Trustee shall deem it advisable to
sell any or all of the Lessor Notes in accordance with the provisions of this
Section, the parties agree that if registration of any such Lessor Notes shall
be required, in the opinion of counsel for the Pass Through Trustee under the
Securities Act of 1933, as amended, or other applicable law, and regulations
promulgated thereunder, and if the Facility Lessees shall not effect, or cause
to be effected, such registration promptly, the Pass Through Trustee may sell
any such Lessor Notes at a private sale, and no Person shall attempt to
maintain that the prices at which such Lessor Notes are sold are inadequate by
reason of the failure to sell at public sale, or hold the Pass Through Trustee
liable thereafter.

     Section 6.2   Incidents of Sale of Lessor Notes. Upon any sale of all or
any part of the Lessor Notes made either under the power of sale given under
this Pass Through Trust Agreement or otherwise for the enforcement of this Pass
Through Trust Agreement, the following shall be applicable:

          (1)   Certificateholders and Pass Through Trustee May Purchase
     Lessor Notes.  Any Certificateholder, the Pass Through Trustee in its
     individual or any other capacity or any other Person may bid for and
     purchase any of the Lessor Notes and, upon compliance

                                      27

<PAGE>

     with the terms of sale, may hold, retain, possess and dispose of such
     Lessor Notes in their or its or his own absolute right without further
     accountability.

          (2)   Receipt of Pass Through Trustee Shall Discharge Purchaser.
     The receipt of immediately available funds by the Pass Through Trustee or
     the officer or agent appointed by the Pass Through Trustee shall be a
     sufficient discharge to any purchaser for his purchase money, and, after
     paying such purchase money and receiving such receipt, such purchaser or
     his personal representative or assigns shall not be obliged to see to the
     application of such purchase money, or be in any way answerable for any
     loss, misapplication or non-application thereof.

          (3)   Application of Moneys Received upon Sale. Any moneys
     collected by the Pass Through Trustee, upon any sale made either under the
     power of sale given by this Pass Through Trust Agreement or otherwise for
     the enforcement of this Pass Through Trust Agreement, shall be applied as
     provided in Section 4.2.

     Section 6.3   Judicial Proceedings Instituted by Pass Through Trustee.

          (a)   Pass Through Trustee May Bring Suit. If there shall be a
failure to make payment of the principal of, premium, if any, or interest on
any Lessor Note, or if there shall be any failure to pay Rent (as defined in a
Lease) under the Lease related to any Lessor Note when due and payable, then
the Pass Through Trustee, in its own name, and as trustee of an express trust,
as holder of such Lessor Notes shall be, to the extent permitted by and in
accordance with the terms of the Operative Documents, entitled and empowered
(but not obligated) to institute any suits, actions or proceedings at law, in
equity or otherwise, for the collection of the sums so due and unpaid on such
Lessor Notes or under such Lease and may prosecute any such claim or proceeding
to judgment or final decree with respect to the whole amount of any such sums
so due and unpaid; subject, however, to the limitations of liability set forth
in the Lessor Notes and the Operative Documents.

          (b)   Pass Through Trustee May File Proofs of Claim; Appointment of
Pass Through Trustee as Attorney-in-Fact in Judicial Proceedings. The Pass
Through Trustee in its own name, or as trustee of an express trust, or as
attorney-in-fact for the Certificateholders, or in any one or more of such
capacities (irrespective of whether distributions on the Certificates shall
then be due and payable, or the payment of the principal on any Lessor Notes
shall then be due and payable, as therein expressed or by declaration or
otherwise and irrespective of whether the Pass Through Trustee shall have made
any demand to the applicable Indenture Trustee for the payment of overdue
principal, premium (if any) or interest on any Lessor Notes), shall, subject to
the terms of the Operative Documents, be entitled and empowered to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Pass Through Trustee and of the
Certificateholders allowed in any receivership, insolvency, bankruptcy,
liquidation, readjustment, reorganization or any other judicial proceedings
relative to any Facility Lessee, any Owner Lessor, any Lessor Manager or any
Owner Participant, or their respective creditors or property. Subject to the
terms of the Operative Documents, any receiver, assignee, trustee, liquidator
or sequestrator (or similar official) in any such judicial proceeding is hereby
authorized by each Certificateholder to make payments in respect of such claim
to the Pass Through Trustee, and in the event that the Pass Through Trustee
shall consent to the making

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<PAGE>

of such payments directly to the Certificateholders, to pay to the Pass Through
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Pass Through Trustee, its agents and counsel
and any other amounts due the Pass Through Trustee under Section 7.7. Subject
to Section 6.4, nothing contained in this Pass Through Trust Agreement shall be
deemed to give to the Pass Through Trustee any right to accept or consent to
any plan of reorganization or otherwise by action of any character in any such
proceeding to waive or change in any way any right of any Certificateholder.

     Section 6.4   Control by Certificateholders. The Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest of the Fractional Undivided Interests evidenced by all Certificates
at the time Outstanding (determined as provided in Section 1.4(c)) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Pass Through Trustee, or exercising any trust or
power conferred upon the Pass Through Trustee, under this Pass Through Trust
Agreement, including any right of the Pass Through Trustee as holder of the
Lessor Notes, provided that:

          (1)   such Direction shall not be in conflict with any rule of
     law or with this Pass Through Trust Agreement and would not involve the
     Pass Through Trustee in personal liability or expense;

          (2)   the Pass Through Trustee shall not determine that the
     action so directed would expose it to personal liability or be unjustly
     prejudicial to the Certificateholders not taking part in such Direction;

          (3)   the Pass Through Trustee may take any other action deemed
     proper by the Pass Through Trustee which is not inconsistent with such
     Direction;

          (4)   such Holders shall have offered to the Pass Through
     Trustee security or indemnity against the costs, expenses or liabilities
     which may be incurred thereby; and

          (5)   if a Lease Indenture Event of Default shall have occurred
     and be continuing, such Direction shall not obligate the Pass Through
     Trustee to vote more than a corresponding majority of the related Lessor
     Notes held by the Pass Through Trust in favor of directing any action by
     the applicable Indenture Trustee with respect to such Lease Indenture
     Event of Default.

     Section 6.5   Waiver of Defaults. The Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
of the Fractional Undivided Interests evidenced by all Certificates at the time
Outstanding (determined as provided in Section 1.4(c)) may on behalf of the
Certificateholders of all the Certificates waive any Default hereunder and its
consequences or may instruct the Pass Through Trustee to waive any default
under a Collateral Trust Indenture and its consequences, except:

          (1)   a default in the deposit of any Scheduled Payment or
     Special Payment under Section 4.1 or in the distribution of any payment
     under Section 4.2 on the Certificates; or

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<PAGE>

          (2)   a default in the payment of the principal of, premium, if
     any, or interest on any Lessor Notes; or

          (3)   a default in respect of a covenant or provision hereof
     which under Section 9 hereof cannot be modified or amended without the
     consent of the Holder of each Outstanding Certificate affected.

          Upon any such waiver, such Default shall cease to exist with respect
to this Pass Through Trust Agreement, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Pass
Through Trust Agreement and any direction given by the Pass Through Trustee on
behalf of such Holders to the applicable Indenture Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. Upon
any such waiver with respect to a Default under a Collateral Trust Indenture,
the Pass Through Trustee shall vote a corresponding majority of the Lessor
Notes issued under the applicable Collateral Trust Indenture to waive the
corresponding Lease Indenture Default or Lease Indenture Event of Default.

          With respect to consents, approvals, waivers and authorizations which
under the terms of Section 9 of a Collateral Trust Indenture may be given by
the applicable Indenture Trustee without the necessity of the consent of any of
the holders of Lessor Notes issued with respect to such Collateral Trust
Indenture, no consent, approval, waiver or authorization shall be required
hereunder on the part of the Pass Through Trustee or the Certificateholders.

     Section 6.6   Undertaking to Pay Court Costs. All parties to this Pass
Through Trust Agreement, and each Certificateholder by his acceptance of a
Certificate, shall be deemed to have agreed that any court may in its
discretion require, in any suit, action or proceeding for the enforcement of
any right or remedy under this Pass Through Trust Agreement, or in any suit,
action or proceeding against the Pass Through Trustee for any action taken or
omitted by it as Pass Through Trustee hereunder, the filing by any party
litigant in such suit, action or proceeding of an undertaking to pay the costs
of such suit, action or proceeding, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in such suit, action or proceeding, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section 6.6 shall not apply to
(a) any suit, action or proceeding instituted by any Holder, or group of
Holders, holding in the aggregate Certificates evidencing Fractional Undivided
Interests aggregating more than 10% of the Pass Through Trust, (b) any suit,
action or proceeding instituted by any Certificateholder for the enforcement of
the distribution of payments pursuant to Section 4.2 hereof on or after the
respective due dates expressed herein or (c) any suit, action or proceeding
instituted by the Pass Through Trustee.

     Section 6.7   Right of Certificateholders to Receive Payments Not to Be
Impaired.  Anything in this Pass Through Trust Agreement to the contrary
notwithstanding, but subject to Section 3.8 hereof, the right of any
Certificateholder to receive distributions of payments required pursuant to
Section 4.2 hereof on the Certificates when due, or to institute suit for the
enforcement of any such payment on or after the applicable Distribution Date or
Special Distribution Date, shall not be impaired or affected without the
consent of such Certificateholder.

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<PAGE>

     Section 6.8   Certificateholders May Not Bring Suit Except Under Certain
Conditions. A Certificateholder shall not have the right to institute any suit,
action or proceeding at law or in equity or otherwise with respect to this Pass
Through Trust Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Pass Through Trust Agreement, unless:

          (1)   such Certificateholder previously shall have given written
     notice to the Pass Through Trustee of a continuing Event of Default;

          (2)   the Holders of Certificates evidencing Fractional
     Undivided Interests aggregating not less than a majority in interest of
     the Fractional Undivided Interests evidenced by all Certificates at the
     time Outstanding (determined as provided in Section 1.4(c)) shall have
     requested the Pass Through Trustee in writing to institute such suit,
     action or proceeding and shall have offered to the Pass Through Trustee
     indemnity as provided in Section 7.3(e);

          (3)   the Pass Through Trustee shall have refused or neglected
     to institute any such suit, action or proceeding for 60 days after receipt
     of such notice, request and offer of indemnity; and

          (4)   no Direction inconsistent with such written request has
     been given to the Pass Through Trustee during such 60-day period by the
     Holders of Certificates evidencing Fractional Undivided Interests
     aggregating not less than a majority in interest of the Fractional
     Undivided Interests evidenced by all Certificates at the time Outstanding
     (determined as provided in Section 1.4(c)).

          It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Collateral
Trust Indenture on any property subject thereto, or the rights of the
Certificateholders or the holders of the Lessor Notes, (ii) obtain or seek to
obtain priority over or preference to any other such Holder, or (iii) enforce
any right under this Pass Through Trust Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all the
Certificateholders subject to the provisions of this Pass Through Trust
Agreement.

     Section 6.9   Remedies Cumulative. Every remedy given hereunder to the
Pass Through Trustee or to any of the Certificateholders shall not be exclusive
of any other remedy or remedies, and every such remedy shall be cumulative and
in addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.

SECTION 7.   THE PASS THROUGH TRUSTEE

  Section 7.1 Certain Duties and Responsibilities.

          (a)   Prior to an Event of Default of which a Responsible Officer of
the Pass Through Trustee has actual knowledge:

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<PAGE>

          (1)   the Pass Through Trustee shall not be liable except for
     the performance of such duties as are specifically set out in this Pass
     Through Trust Agreement; and

          (2)   the Pass Through Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, in the absence of bad faith on the part of the Pass Through
     Trustee, upon Officer's Certificates or Opinions of Counsel conforming to
     the requirements of this Pass Through Trust Agreement;

but the Pass Through Trustee shall, at any time that the Certificates shall be
subject to the Trust Indenture Act, examine any evidence furnished to it
pursuant to this Pass Through Trust Agreement or Section 314 of the Trust
Indenture Act to determine whether or not such evidence conforms to the
requirements of this Pass Through Trust Agreement; provided, however, that the
Pass Through Trustee shall not be responsible for the accuracy or content of
such evidence.

          (b)   In case an Event of Default has occurred and is continuing, the
Pass Through Trustee shall exercise each of the rights and powers vested in it
by this Pass Through Trust Agreement and use the same degree of care and skill
in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.

          (c)   No provision of this Pass Through Trust Agreement shall be
construed to relieve the Pass Through Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

          (1)   this paragraph (c) shall not be construed to limit the effect
     of paragraph (a) of this Section 7.1;

          (2)   the Pass Through Trustee shall not be liable in its individual
     capacity for any error of judgment made in good faith by a Responsible
     Officer of the Pass Through Trustee, unless it shall be proved that the
     Pass Through Trustee was negligent in ascertaining the pertinent facts; and

          (3)   the Pass Through Trustee shall not be liable with respect to
     any action taken or omitted to be taken by it in good faith in accordance
     with the Direction of the Holders of Certificates evidencing Fractional
     Undivided Interests aggregating not less than a majority in interest of
     the Fractional Undivided Interests evidenced by all Certificates at the
     time Outstanding (determined as provided in Section 1.4(c)) (A) relating
     to the time, method and place of conducting any proceeding for any remedy
     available to the Pass Through Trustee, or (B) exercising any trust or
     power conferred upon the Pass Through Trustee, under this Pass Through
     Trust Agreement.

          (d)   Whether or not herein expressly so provided, every provision of
this Pass Through Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Pass Through Trustee shall be
subject to the provisions of this Section 7.1.

     Section 7.2   Notice of Defaults. The Pass Through Trustee shall give to
the Certificateholders, at any time that the Certificates shall be subject to
the Trust Indenture Act, in the manner and to the extent required by Section
313(c) of the Trust Indenture Act, and to each of the Facility Lessees, the
applicable Owner Lessor and the applicable Indenture Trustee in

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accordance with Section 12.3, notice of all Defaults actually known to a
Responsible Officer of the Pass Through Trustee within 90 days after the
occurrence thereof; provided, however, that, except in the case of a Default in
the payment of the principal of, premium, if any, or interest on any Lessor
Note, the Pass Through Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors or Responsible Officers of the Pass Through Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders.

     Section 7.3   Certain Rights of Pass Through Trustee.  Except as otherwise
provided in Section 7.1:

          (a)   the Pass Through Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any Act, Direction,
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

          (b)   any request or direction of any of the Facility Lessees, an
Owner Lessor or any Indenture Trustee mentioned herein shall be sufficiently
evidenced by a Request;

          (c)   whenever in the administration of this Pass Through Trust
Agreement the Pass Through Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, the Pass Through Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officer's Certificate of any Facility Lessee, an Owner Lessor or the
applicable Indenture Trustee;

          (d)   the Pass Through Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

          (e)   the Pass Through Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Pass Through Trust
Agreement at the request or direction of any of the Certificateholders pursuant
to this Pass Through Trust Agreement, unless such Certificateholders shall have
offered to the Pass Through Trustee reasonable security or indemnity against
the cost, expenses and liabilities which might be incurred by it in compliance
with such request or direction;

          (f)   the Pass Through Trustee shall not be bound to make any
investigation into the facts or matters stated in any Act, Direction,
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document;

          (g)   the Pass Through Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Pass Through Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it hereunder with due care;

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          (h)   the Pass Through Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion of rights or powers conferred upon it by
this Pass Through Trust Agreement;

          (i)   the right of the Pass Through Trustee to perform any
discretionary act enumerated in this Pass Through Trust Agreement shall not be
construed as a duty, and the Pass Through Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of such act;

          (j)   the Pass Through Trustee shall not be required to give any bond
or surety in respect of the execution of the trust fund created hereby or the
powers granted hereunder; and

          (k)   the Pass Through Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or to otherwise perfect or maintain the perfection of any security interest or
lien granted to it hereunder or to record this Pass Through Trust Agreement.

     Section 7.4   Not Responsible for Recitals; Issuance of Certificates. The
recitals contained herein and in the Certificates, except the certificates of
authentication, shall not be taken as the statements of the Pass Through
Trustee, and the Pass Through Trustee assumes no responsibility for their
correctness. The Pass Through Trustee makes no representations as to the
validity or sufficiency of this Pass Through Trust Agreement, the Lessor Notes,
the Operative Documents, or the Certificates, or the collateral securing the
Lessor Notes, except that the Pass Through Trustee hereby represents and
warrants that this Pass Through Trust Agreement has been, and each Certificate
will be, executed and delivered by one of its officers who is duly authorized
to execute and deliver such document on its behalf.

     Section 7.5   May Hold Certificates. The Pass Through Trustee, any Paying
Agent, Registrar or any other agent, in their respective individual or any
other capacity, may become the owner or pledgee of Certificates and may
otherwise deal with any Facility Lessee, any Owner Lessor, any Owner
Participant or any Indenture Trustee with the same rights it would have if it
were not the Pass Through Trustee, Paying Agent, Registrar or such other agent,
subject to Section 7.8 in the case of the Pass Through Trustee.  Section 7.6
Money Held in Pass Through Trust. Money held by the Pass Through Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Pass Through Trustee
nor the Paying Agent shall have any liability for interest upon any such moneys
except as provided for herein.

     Section 7.7   Compensation, Reimbursement and Indemnification.  The
Facility Lessees agree on a joint and severable basis:

          (1)   to pay, or cause to be paid, to the Pass Through Trustee
     from time to time the compensation separately agreed to by the Pass
     Through Trustee and any Facility Lessee for all services rendered by it
     hereunder (which compensation shall not be limited by any provision of law
     in regard to the compensation of a trustee of an express trust); and

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<PAGE>

          (2)   except as otherwise expressly provided herein, to
     reimburse, or cause to be reimbursed, the Pass Through Trustee upon its
     request for all reasonable out-of-pocket expenses, disbursements and
     advances incurred or made by the Pass Through Trustee in accordance with
     any provision of this Pass Through Trust Agreement (including the
     reasonable compensation and the expenses and disbursements of its agents
     and counsel), except any such expense, disbursement or advance as may be
     attributable to its negligence, willful misconduct or bad faith.

          In addition, the Pass Through Trustee shall be entitled to
reimbursement from, and shall have a lien prior to the Certificates upon, all
property and funds held or collected by the Pass Through Trustee in its
capacity as Pass Through Trustee for any tax incurred without negligence, bad
faith or willful misconduct, on its part, arising out of or in connection with
the acceptance or administration of this Pass Through Trust (other than any tax
attributable to the Pass Through Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Pass Through Trustee reimburses itself for any such tax, it
will within 30 days mail a brief report setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.

     Section 7.8   Corporate Trustee Required; Eligibility. There shall at all
times be a Pass Through Trustee hereunder which (a) shall be, at any time that
the Certificates shall be subject to the Trust Indenture Act, a Person eligible
to act as a trustee under Section 310(a) of the Trust Indenture Act and (b)
shall be a corporation organized and doing business under the laws of the
United States of America or of any state, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $150,000,000, and subject to supervision or examination by Federal or
state authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this Section 7.8, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Pass Through Trustee shall cease to be eligible
in accordance with the provisions of clause (a) of this Section 7.8 at a time
when it is required to be so qualified, it shall resign immediately in the
manner and with the effect hereinafter specified in this Section 7.

     Section 7.9   Resignation and Removal: Appointment of Successor.

          (a)   No resignation or removal of the Pass Through Trustee and no
appointment of a successor Pass Through Trustee pursuant to this Section 7.9
shall become effective until the acceptance of appointment by the successor
Pass Through Trustee under Section 7.10.

          (b)   The Pass Through Trustee may resign at any time by giving
written notice thereof to the Facility Lessees, the Authorized Agents, the
Owner Lessors, the Owner Participants and each Indenture Trustee. If an
instrument of acceptance by a successor Pass Through Trustee shall not have
been delivered to the Facility Lessees, the Owner Lessors, the Owner
Participants and each Indenture Trustee within 30 days after the giving of such
notice of resignation, the resigning Pass Through Trustee may petition any
court of competent jurisdiction for the appointment of a successor Pass Through
Trustee.

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<PAGE>

          (c)   The Pass Through Trustee may be removed at any time by Act of
the Holders holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Pass Through Trust
delivered to the Pass Through Trustee and to the Facility Lessees, the Owner
Lessors and each Indenture Trustee.

          (d)   If at any time:

               (1)    the Pass Through Trustee fails to, at any time that the
          Certificates shall be subject to the Trust Indenture Act, comply with
          the requirements of Section 310 of the Trust Indenture Act after
          written request for such compliance by a Certificateholder that has
          been a bona fide Certificateholder for at least six months; or

               (2)   the Pass Through Trustee shall cease to be eligible under
          Section 7.8 hereof and shall fail to resign after written request
          therefor by the Facility Lessees (or, following the occurrence and
          during the continuation of a Lease Event of Default, the applicable
          Owner Lessor) or by any such Certificateholder; or

               (3)   the Pass Through Trustee shall become incapable of acting
          or shall be adjudged bankrupt or insolvent or a receiver of the Pass
          Through Trustee or of its property shall be appointed or any public
          officer shall take charge or control of the Pass Through Trustee or
          of its property or affairs for the purpose of rehabilitation,
          conservation or liquidation;

then, in any case, (i) the Facility Lessees (or, following the occurrence and
during the continuation of a Lease Event of Default, the applicable Owner
Lessor) may remove the Pass Through Trustee or (ii) subject to Section 6.6
hereof, any Certificateholder who has been a bona fide Holder of a Certificate
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Pass Through Trustee and the appointment of a successor Pass Through Trustee.

          (e)   If a Responsible Officer of the Pass Through Trustee shall
obtain Actual Knowledge of an Avoidable Tax (as hereinafter defined) which has
been or is likely to be asserted, the Pass Through Trustee shall promptly
notify the Facility Lessees and the applicable Owner Lessor thereof and shall,
within 30 days of such notification, resign hereunder unless within such 30-day
period the Pass Through Trustee shall have received notice that the Facility
Lessees or the applicable Owner Lessor has agreed to pay such tax. The Facility
Lessees shall promptly appoint a successor Pass Through Trustee in a
jurisdiction where there are no Avoidable Taxes. As used herein an "Avoidable
Tax" means a state or local tax: (i) upon (w) the Pass Through Trust, (x) the
Trust Property, (y) Holders of the Certificates or (z) the Pass Through Trustee
for which the Pass Through Trustee is entitled to seek reimbursement from the
Trust Property, and (ii) that would be avoided if the Pass Through Trustee were
located in another state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Facility Lessees or the
Owner Lessors shall agree to pay, and shall pay, such tax.

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<PAGE>

          (f)   If the Pass Through Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Pass
Through Trustee for any cause, the Facility Lessees (or, following the
occurrence of a Lease Event of Default, the applicable Owner Lessor) shall
promptly appoint a successor Pass Through Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Pass Through Trustee shall be appointed by Act of the Holders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Pass Through Trust, delivered to the
Facility Lessees, the Owner Lessors, the Owner Participants, the Indenture
Trustees and the retiring Pass Through Trustee, the successor Pass Through
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Pass Through Trustee and supersede the successor Pass
Through Trustee appointed as provided above. If no successor Pass Through
Trustee shall have been so appointed as provided above and accepted such
appointment in the manner hereinafter provided, any Certificateholder who has
been a bona fide Holder of a Certificate for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Pass Through Trustee.

          (g)   The successor Pass Through Trustee shall give notice of the
resignation and removal of the Pass Through Trustee and appointment of the
successor Pass Through Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Certificates as their
names and addresses appear in the Register. Each notice shall include the name
of such successor trustee and the address of its Corporate Trust Office.

     Section 7.10   Acceptance of Appointment by Successor. Every successor
Pass Through Trustee appointed hereunder shall execute, acknowledge and deliver
to the Facility Lessees, the Owner Lessors and to the retiring Pass Through
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Pass Through Trustee shall become effective and such
successor Pass Through Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Pass Through Trustee; but, on request of any Facility Lessee (or,
following the occurrence of a Lease Event of Default, the applicable Owner
Lessor) to the successor Pass Through Trustee, such retiring Pass Through
Trustee shall execute and deliver an instrument transferring to such successor
Pass Through Trustee all the rights, powers and trusts of the retiring Pass
Through Trustee and shall duly assign, transfer and deliver to such successor
Pass Through Trustee all property and money held by such retiring Pass Through
Trustee hereunder, subject nevertheless to its lien, if any, provided for in
Section 7.7. Upon request of any such successor Pass Through Trustee, the
Facility Lessees, the Owner Lessors, the retiring Pass Through Trustee and such
successor Pass Through Trustee shall execute and deliver any and all
instruments containing such provisions as shall be necessary or desirable to
transfer and confirm to, and for more fully and certainly vesting in, such
successor Pass Through Trustee all such rights, powers and trusts.

          No successor Pass Through Trustee shall accept its appointment unless
at the time of such acceptance such successor Pass Through Trustee shall be
qualified and eligible under this Section 7.

     Section 7.11   Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Pass Through Trustee may be merged or
converted or with which it may

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<PAGE>

be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Pass Through Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Pass Through Trustee, shall be the successor of the Pass Through Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Section 7, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Certificates shall have
been authenticated, but not delivered, by the Pass Through Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Pass Through Trustee may adopt such authentication and deliver
the Certificates so authenticated with the same effect as if such successor
Pass Through Trustee had itself authenticated such Certificates.

     Section 7.12   Maintenance of Agencies.

          (a)   There shall at all times be maintained in the Borough of
Manhattan, The City of New York, an office or agency where Certificates may be
presented or surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the Pass Through
Trustee in respect of the Certificates or of this Pass Through Trust Agreement
may be served. Written notice of the location of each such other office or
agency and of any change of location thereof shall be given by the Pass Through
Trustee to the Facility Lessees, the Owner Lessors, the Owner Participants,
each Indenture Trustee and the Certificateholders. In the event that no such
office or agency shall be maintained or no such notice of location or of change
of location shall be given, presentations and demands may be made and notices
may be served at the Corporate Trust Office of the Pass Through Trustee.

          (b)   There shall at all times be a Registrar and a Paying Agent
hereunder. Each such Authorized Agent shall be a bank or trust company, shall
be a corporation organized and doing business under the laws of the United
States or any state, with a combined capital and surplus of at least
$150,000,000, and shall be authorized under such laws to exercise corporate
trust powers, subject to supervision by Federal or state authorities. The Pass
Through Trustee shall initially be the Paying Agent and, as provided in Section
3.4, Registrar hereunder. Each Registrar shall furnish to the Pass Through
Trustee (unless they are the same entity), at stated intervals of not more than
six months, and at such other times as the Pass Through Trustee may request in
writing, a copy of the Register.

          (c)   Any Person into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, consolidation or conversion to which any Authorized Agent shall be
a party, or any Person succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor Person is otherwise eligible under this Section 7.12, without
the execution or filing of any paper or any further act on the part of the
parties hereto or such Authorized Agent or such successor Person.

          (d)   Any Authorized Agent may at any time resign by giving written
notice of resignation to the Pass Through Trustee, the Facility Lessees, the
Owner Lessors, the Owner Participants and each Indenture Trustee. The Facility
Lessees (or, following the occurrence of a Lease Event of Default, the Owner
Lessor) may, and at the request of the Pass Through Trustee shall, at any time
terminate the agency of any Authorized Agent by giving written notice of

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termination to such Authorized Agent and to the Pass Through Trustee. Upon the
resignation or termination of an Authorized Agent or in case at any time any
such Authorized Agent shall cease to be eligible under this Section 7.12 (when,
in either case, no other Authorized Agent performing the functions of such
Authorized Agent shall have been appointed), the Facility Lessees (or,
following the occurrence of a Lease Event of Default, the applicable Owner
Lessor) shall promptly appoint one or more qualified successor Authorized
Agents reasonably satisfactory to the Pass Through Trustee, to perform the
functions of the Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this Section 7.12. The
Facility Lessees (or, following the occurrence of a Lease Event of Default, the
applicable Owner Lessor) shall give written notice of any such appointment made
by it to the Pass Through Trustee, the Facility Lessees, the Owner Lessors and
each Indenture Trustee; and in each case the Pass Through Trustee shall mail
notice of such appointment to all Holders as their names and addresses appear
on the Register.

          (e)   Each Facility Lessee agrees to pay, or cause to be paid, from
time to time to each Authorized Agent the compensation as set forth in the
schedule agreed to by each Authorized Agent and such Facility Lessee for its
services and to reimburse it for its reasonable expenses.

     Section 7.13   Money for Certificate Payments to Be Held in Trust. All
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited in a non interest bearing account and held in
trust for the benefit of the Holders of the Certificates entitled to such
payment, subject to the provisions of this Section 7.13. Moneys so deposited
and held in trust shall constitute a separate trust fund for the benefit of the
Holders of the Certificates with respect to which such money was deposited.

          The Pass Through Trustee will cause each Paying Agent other than the
Pass Through Trustee to execute and deliver to it an instrument in which such
Paying Agent shall agree with the Pass Through Trustee, subject to the
provisions of this Section 7.13, that such Paying Agent will:

          (1)   hold all sums held by it for payments on Certificates in
     trust for the benefit of the Persons entitled thereto until such sums
     shall be paid to such Persons or otherwise disposed of as herein provided;

          (2)   give the Pass Through Trustee notice in writing of any
     default by any obligor upon the Certificates in the making of any such
     payment; and

          (3)   at any time during the continuance of any such default,
     upon the written request of the Pass Through Trustee, forthwith pay to the
     Pass Through Trustee all sums so held in trust by such Paying Agent.

          The Pass Through Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Pass Through Trust Agreement
or for any other purpose, direct any Paying Agent to pay to the Pass Through
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Pass Through Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any Paying Agent

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<PAGE>

to the Pass Through Trustee, such Paying Agent shall be released from all
further liability with respect to such money.

     Section 7.14   Registration of Lessor Notes in Pass Through Trustee's
Name. The Pass Through Trustee agrees that all Lessor Notes and Permitted
Government Investments, if any, shall be issued in the name of the Pass Through
Trustee or its nominee and held by the Pass Through Trustee, or, if not so
held, the Pass Through Trustee or its nominee shall be reflected as the owner
of such Lessor Notes or Permitted Government Investments, as the case may be,
in the register of the issuer of such Lessor Notes or Permitted Government
Investments under the applicable provisions of the Uniform Commercial Code in
effect where the Pass Through Trustee holds such Lessor Notes or Permitted
Government Investments, or other applicable law then in effect.

     Section 7.15   Withholding Taxes; Information Reporting. The Pass Through
Trustee, as trustee, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due hereunder or
under the Certificates any and all withholding taxes applicable thereto as
required by law. The Pass Through Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders
of the Certificates, (ii) that it will file any necessary withholding tax
returns or statements when due, and (iii) that, as promptly as possible after
the payment thereof, it will deliver to each Holder of a Certificate
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holders may reasonably request from
time to time.  The Pass Through Trustee agrees to file any other information
reports as it may be required to file under United States law. Any amounts
withheld and paid to a relevant taxing authority pursuant to this Section 7.15
shall be deemed to have been paid to the related Certificateholders for all
purposes under the Operative Documents.

     Section 7.16   Pass Through Trustee's Liens. The Pass Through Trustee, in
its individual capacity, agrees that it will at its own cost and expense
promptly take any action as may be necessary to duly discharge and satisfy in
full any mortgage, pledge, lien, charge, encumbrance, security interest or
claim on or with respect to the Trust Property which is either (i) attributable
to the Pass Through Trustee in its individual capacity and which is unrelated
to the transactions contemplated by this Pass Through Trust Agreement or any
other applicable Operative Document, or (ii) which is attributable to the Pass
Through Trustee as trustee hereunder or in its individual capacity and which
arise out of acts or omissions which are prohibited by this Pass Through Trust
Agreement.

SECTION 8.   CERTIFICATEHOLDERS' LISTS AND REPORTS

  Section 8.1 The Facility Lessees to Furnish Pass Through Trustee with Names
and Addresses of Certificateholder. Each Facility Lessees will furnish to the
Pass Through Trustee within fifteen days after each Record Date with respect to
a Scheduled Payment, and at such other times as the Pass Through Trustee may
request in writing, a list, in such form as the Pass Through Trustee may
reasonably require, of all information in the possession or control of such
Facility Lessee as to the names and addresses of the Holders of Certificates, in
each case as of a

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<PAGE>

date not more than sixty days prior to the time such list is furnished;
provided, however, that so long as the Pass Through Trustee is the sole
Registrar, no such list need be furnished; and provided, further, however, that
no such list need be furnished for so long as a copy of the Register is being
furnished to the Pass Through Trustee pursuant to Section 7.12(b).

     Section 8.2   Preservation of Information. The Pass Through Trustee shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders of Certificates contained in the most recent list
furnished to the Pass Through Trustee as provided in Section 7.12(b) or Section
8.1, as the case may be, and the names and addresses of Holders of Certificates
received by the Pass Through Trustee in its capacity as Registrar, if so
acting. The Pass Through Trustee may destroy any list furnished to it as
provided in Section 7.12(b) or Section 8.1, as the case may be, upon receipt of
a new list so furnished.

     Section 8.3   Reports by the Facility Lessees. Each Facility Lessee shall,
at any time that the Certificates shall be subject to the Trust Indenture Act,
comply with Section 314 of the Trust Indenture Act and shall file, furnish and
deliver the reports, information, documents, certificates and opinions required
thereunder, and, at any time that the Certificates shall be subject to the
Trust Indenture Act, acknowledge and agree that, for purposes of Section 314 of
the Trust Indenture Act, each Facility Lessee shall be considered to be the
"obligor" upon the Certificates. Without limiting the generality of the
foregoing, at any time that the Certificates shall be subject to the Trust
Indenture Act, each Facility Lessee shall deliver to the Pass Through Trustee
the annual certificate required under clause (4) of Section 314(a) of the Trust
Indenture Act within 120 days following the end of each fiscal year of such
Facility Lessee (which ends on December 31) ending after the date hereof. The
provisions of this Section 8.3 shall not be construed to impose any obligation
or liability on the Facility Lessees to pay any of the principal, premium, if
any, or interest in respect of the Lessor Notes or the Certificates.

     Section 8.4   Reports by the Pass Through Trustee. At any time that the
Certificates shall be subject to the Trust Indenture Act, the Pass Through
Trustee shall transmit, on or before May 15 of each year, reports with respect
to events described in Section 313(a) of the Trust Indenture Act in accordance
with and to the extent required under Section 313(a) of the Trust Indenture
Act.  Additionally, the Pass Through Trustee shall comply with the reporting
requirements imposed under Treasury Regulation 1.67.

SECTION 9.   SUPPLEMENTAL TRUST AGREEMENTS

     Section 9.1   Supplemental Trust Agreement Without Consent of
Certificateholders.  Without the consent of the Holder of any Certificates, the
Facility Lessees may, and the Pass Through Trustee (subject to Section 9.3)
shall, at any time and from time to time enter into one or more agreements
supplemental hereto, in form satisfactory to the Pass Through Trustee, for any
of the following purposes:

          (1)   to evidence the succession of another Person to any
     Facility Lessee and the assumption by any such successor of the
     obligations of such Facility Lessee herein contained;

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<PAGE>

          (2)   to add to the covenants of the Facility Lessees, for the
     protection of the Holders of the Certificates;

          (3)   to surrender any right or power herein conferred upon the
     Facility Lessees;

          (4)   to cure any ambiguity, to correct or supplement any
     provision herein which may be defective or inconsistent with any other
     provision herein or to make any other provisions with respect to matters
     or questions arising under this Pass Through Trust Agreement; provided
     that any such action will not adversely affect in any material respect the
     interests of the Holders of the Certificates;

          (5)   to correct or amplify the description of property that
     constitutes Trust Property or the conveyance of such property to the Pass
     Through Trustee;

          (6)   to evidence and provide for a successor Pass Through
     Trustee;

          (7)   to comply with requirements of the SEC, any applicable
     law, rules or regulations of any exchange or quotation system on which the
     Certificates are listed, or any regulatory body;

          (8)   at any time that the Certificates shall be subject to the
     Trust Indenture Act, to modify, eliminate or add to the provisions of this
     Pass Through Trust Agreement to the extent as shall be necessary to
     qualify or continue the qualification of this Pass Through Trust Agreement
     (including any supplemental agreement) under the Trust Indenture Act (if
     such qualification is required) or under any similar Federal statute
     hereafter enacted, or to add to this Pass Through Trust Agreement such
     other provisions as may be expressly permitted by the Trust Indenture Act,
     excluding, however, the provisions referred to in Section 316(a)(2) of the
     Trust Indenture Act as in effect at the date as of which this instrument
     was executed or any corresponding provision in any similar Federal statute
     hereafter enacted;

          (9)   to modify, amend or supplement any provision herein to
     reflect changes relating to the assumption and substitution of any Lessor
     Note pursuant to Section 2.10(b) of the Collateral Trust Indenture; or

          (10)   to add, eliminate, or change any provision under this
     Pass Through Trust Agreement that will not adversely affect the interests
     of the Certificateholders in any material respect;

provided that in each case the Pass Through Trustee shall have received an
opinion of counsel, which may be counsel to the Facility Lessees, to the effect
that such supplemental agreement does not cause the Pass Through Trust to
become taxable as an "association" within the meaning of Treasury Regulation
Section 301.7701-4 or to be taxable as other than a pass through entity for
Federal income tax purposes.

     Section 9.2   Supplemental Trust Agreements with Consent of
Certificateholders.  With the consent of the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
of the Fractional Undivided Interests evidenced by all

                                      42

<PAGE>

Certificates at the time Outstanding (determined as provided in Section 1.4(c)
hereof), by Act of said Holders delivered to the Facility Lessees and the Pass
Through Trustee, the Facility Lessees may (with the consent of the Owner
Lessors, such consent not to be unreasonably withheld), and the Pass Through
Trustee (subject to Section 9.3 hereof) shall, enter into an agreement or
agreements supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Pass
Through Trust Agreement or of modifying in any manner the rights and
obligations of the Holders of the Certificates under this Pass Through Trust
Agreement; provided, however, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Certificate affected
thereby:

          (1)   reduce in any manner the amount of, or delay the timing of, any
     receipt by the Pass Through Trustee of payments on the Lessor Notes held
     in the Pass Through Trust, or distributions that are required to be made
     herein on any Certificate of such Pass Through Trust, or change any date
     of payment on any such Certificate, or change the place of payment where,
     or the coin or currency in which, any such Certificate is payable, or
     impair the right of any Holder of any such Certificate to institute suit
     for the enforcement of any such payment or distribution on or after the
     Distribution Date or Special Distribution Date applicable thereto; or

          (2)   except as provided in this Pass Through Trust Agreement,
     permit the disposition of any Lessor Note in the Trust Property, or permit
     the creation of any lien on the Trust Property, or otherwise deprive any
     Certificateholder of the benefit of the ownership of the Lessor Notes held
     in the Pass Through Trust or the lien of the related Collateral Trust
     Indenture; or

          (3)   reduce the percentage of the aggregate Fractional
     Undivided Interests which is required to approve any such supplemental
     agreement, or reduce such percentage required for any waiver provided for
     in this Pass Through Trust Agreement.

Notwithstanding the foregoing, no such supplemental agreement shall be entered
into unless the Pass Through Trustee shall have received an opinion of counsel,
which may be counsel to the Facility Lessees or any of them, to the effect that
such supplemental agreement does not cause the Pass Through Trust to become
taxable as an "association", within the meaning of Treasury Regulation Section
301.7701-4 or to be taxable as other than a pass through entity for Federal
income tax purposes.

          It shall not be necessary for any Act of Certificateholders under
this Section 9.2 to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof.

     Section 9.3   Documents Affecting Immunity or Indemnity. If in the opinion
of the Pass Through Trustee any document required to be executed by it pursuant
to the terms of Section 9.1 or 9.2 affects any interest, right, duty, immunity
or indemnity in favor of the Pass Through Trustee under this Pass Through Trust
Agreement, the Pass Through Trustee may in its discretion decline to execute
such document.

                                      43

<PAGE>

     Section 9.4   Execution of Supplemental Trust Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement
permitted by this Section 9 or the modification thereby of the trusts created
by this Pass Through Trust Agreement, the Pass Through Trustee shall be
entitled to receive, and (subject to Section 7.1) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Pass Through Trust
Agreement.

     Section 9.5   Effect of Supplemental Trust Agreements. Upon the execution
of any supplemental agreement under this Section 9, this Pass Through Trust
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Pass Through Trust Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

     Section 9.6   Reference in Certificates to Supplemental Trust Agreements.
Certificates authenticated and delivered after the execution of any
supplemental agreement pursuant to this Section 9 may bear a notation in form
approved by the Pass Through Trustee as to any matter provided for in such
supplemental agreement; and, in such case, suitable notation may be made upon
Outstanding Certificates after proper presentation and demand.

     Section 9.7   Conformity with Trust Indenture Act. Every supplemental
agreement under this Section 9 executed at a time that the Certificates shall
be subject to the Trust Indenture Act, shall conform to requirements of the
Trust Indenture Act as in effect on the date such supplemental agreement is
executed.

SECTION 10. AMENDMENTS AND CONSENTS TO COLLATERAL TRUST INDENTURE AND OTHER
            OPERATIVE DOCUMENTS

          (a)   In the event that the Pass Through Trustee, as holder of any
Lessor Note in trust for the benefit of the Certificateholders, receives a
request for a consent to any amendment, modification, waiver or supplement
under the Collateral Trust Indenture or other Operative Document that requires
the consent of the holder of such Lessor Note, the Pass Through Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register as of such
date. Any such notice shall describe the proposed amendment, modification,
waiver or supplement (or attach a copy thereof). The Pass Through Trustee shall
request from the Certificateholders Directions as to (i) whether or not to
direct the applicable Indenture Trustee to take or refrain from taking any
action which a holder of such Lessor Note has the option to direct, (ii)
whether or not to give or execute any waivers, consents, amendments,
modifications or supplements as a holder of such Lessor Note and (iii) how to
vote any Lessor Note if a vote has been called for with respect thereto. Any
such request shall specify a date by which Certificateholders are requested to
respond. Provided such a request for Certificateholder Direction shall have
been made, in directing any action or casting any vote or giving any consent as
the holder of any Lessor Note, the Pass Through Trustee shall vote or consent
with respect to such Lessor Note in the same proportion as the Certificates
were actually voted by Acts of Holders delivered to the Pass Through Trustee at
least two Business Days before the Pass Through Trustee directs such action or
casts such vote or gives such consent.  Notwithstanding the foregoing, but
subject to Section 6.4, in the case that an Event of Default hereunder shall
have occurred and be

                                      44

<PAGE>

continuing, the Pass Through Trustee may, in its own discretion and at its own
direction, consent and notify the applicable Indenture Trustee of such consent
to any amendment, modification, waiver or supplement under the applicable
Collateral Trust Indenture or other Operative Document.

          (b)   With respect to consents, approvals, waivers and authorizations
which under the terms of Section 8 of the applicable Collateral Trust Indenture
may be given by the applicable Indenture Trustee without the necessity of the
consent of any of the holders of Lessor Notes, no consent, approval, waiver or
authorization shall be required hereunder on the part of the Pass Through
Trustee or the Certificateholders.

SECTION 11.  TERMINATION OF PASS THROUGH TRUST

     Section 11.1   Termination of the Pass Through Trust. The respective
obligations and responsibilities of the Facility Lessees and the Pass Through
Trustee created hereby and the Pass Through Trust created hereby shall
terminate upon the distribution to all Certificateholders of all amounts
required to be distributed to them pursuant to this Pass Through Trust
Agreement and the disposition of all property held as part of the Trust
Property; provided, however, that if and to the extent that any of the options,
rights and privileges granted under this Pass Through Trust Agreement, would,
in the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule or law relating to the vesting of interest in property or the
suspension of the power of alienation of property, then it is agreed that
notwithstanding any other provision of this Pass Through Trust Agreement, such
options, rights and privileges, subject to the respective conditions hereof
governing the exercise of such options, rights and privileges, will be
exercisable only during (a) the longer of (i) a period which will end
twenty-one (21) years after the death of the last survivor of the descendants
living on the date of the execution of this Pass Through Trust Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W.  Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Pass Through Trust Agreement, whichever of (a)
or (b) is shorter.

          Notice of any termination, specifying the Distribution Date (or
Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Pass Through Trustee
for payment of the final distribution and cancellation (at maturity, redemption
or otherwise), shall be mailed promptly by the Pass Through Trustee to
Certificateholders not earlier than the 60th day and not later than the 20th
day next preceding such final distribution specifying (A) the Distribution Date
(or Special Distribution Date, as the case may be) upon which final payment of
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Pass Through Trustee therein specified, (B) the
amount of any such final payment, and (C) that the Record Date otherwise
applicable to such Distribution Date (or Special Distribution Date, as the case
may be) is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office or agency of the Pass Through
Trustee therein specified. The Pass Through Trustee shall give such notice to
the Registrar at the time such notice is given to Certificateholders. Upon
presentation

                                      45

<PAGE>

and surrender of the Certificates, the Pass Through Trustee shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date or Special Distribution Date, as the case may be, pursuant to Section 4.2
hereof.

          In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Pass Through Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. In the event that any money held by the Pass Through Trustee for the
payment of distributions on the Certificates shall remain unclaimed for two
years (or such lesser time as the Pass Through Trustee shall be satisfied,
after sixty days' written notice from the Facility Lessees, is one month prior
to the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Pass Through Trustee shall pay to
each Indenture Trustee the appropriate amount of money relating to such
Indenture Trustee and shall give written notice thereof to the Owner Lessors,
the Owner Participants and the Facility Lessees.

SECTION 12.  MISCELLANEOUS PROVISIONS

     Section 12.1   Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this Pass
Through Trust Agreement or the Pass Through Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Pass Through Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

     Section 12.2   Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Pass
Through Trust, the Fractional Undivided Interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Pass
Through Trust or for any reason whatsoever, and Certificates (upon
authentication thereof by the Pass Through Trustee pursuant to Section 3.2
hereof) are and shall be deemed fully paid. No Certificateholder shall have any
right (except as expressly provided herein) to vote or in any manner otherwise
control the operation and management of the Trust Property, the Pass Through
Trust established hereunder, or the obligations of the parties hereto, nor
shall anything set forth herein, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association.

     Section 12.3   Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all communications and notices provided for herein to a
party hereto shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including by overnight mail or courier service, (b)
in the case of notice by United States mail, certified or registered, postage
prepaid, return receipt requested, upon receipt thereof, or (c) in the case of
notice by such a telecommunications device, upon transmission thereof, provided
such transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to such party and copy party
at its address set forth below or at such other address as such party or copy
party may from time to time designate by written notice to the other party:

                                      46

<PAGE>

          If to South Point:

               South Point Energy Center, LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:  Senior Counsel
               Telephone:  (847) 559-9800
               Facsimile:  (847) 559-1805


          If to Broad River:

               Broad River Energy LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:  Senior Counsel
               Telephone:  (847) 559-9800
               Facsimile:  (847) 559-1805


          If to RockGen:

               RockGen Energy LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL  60062
               Attention:  Senior Counsel
               Telephone:  (847) 559-9800
               Facsimile:  (847) 559-1805


          If to the Pass Through Trustee:

               State Street Bank and Trust Company of Connecticut, National
               Association
               225 Asylum Street, Goodwin Square
               Hartford, CT 06103
               Attention:  Corporate Trust Department
               Telephone:  (860) 244-1822
               Facsimile:  (860) 244-1889

                                      47

<PAGE>

     Section 12.4   Successors and Assigns.

          (a)   This Pass Through Trust Agreement shall be binding upon and
shall inure to the benefit of, and shall be enforceable by, the parties hereto
and their respective successors and assigns as permitted by and in accordance
with the terms hereof.

          (b)   Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests or transfer its obligations
herein without the consent of the other parties hereto.

     Section 12.5   Business Day. In any case where any Distribution Date or
Special Distribution Date relating to any Certificate is not a Business Day,
then (notwithstanding any other provision of this Pass Through Trust Agreement)
the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
Distribution Date or Special Distribution Date and, provided that such payment
is made on such succeeding Business Day, no interest shall accrue on the amount
of such payment from and after such scheduled date to the time of such payment
on such next succeeding Business Day.

     Section 12.6   GOVERNING LAW. THIS PASS THROUGH TRUST AGREEMENT, THE
CERTIFICATES AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE IN ALL RESPECTS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF,
OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401).

     Section 12.7   Severability. Any provision of this Pass Through Trust
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

     Section 12.8   Benefits of Pass Through Trust Agreement. Nothing in this
Pass Through Trust Agreement or in the Certificates, express or implied, shall
give to any person, other than the Facility Lessees, the Pass Through Trustee,
the Owner Lessors and each Indenture Trustee, and their respective successors,
and the Holders of Certificates as expressly provided herein, any benefit or
any legal or equitable right, remedy or claim under this Pass Through Trust
Agreement.

     Section 12.9   Counterparts. This Pass Through Trust Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.

     Section 12.10   Headings and Table of Contents. The headings of the
sections of this Pass Through Trust Agreement and the Table of Contents are
inserted for purposes of convenience

                                      48

<PAGE>

only and shall not be construed to affect the meaning or construction of any of
the provisions hereof.

     Section 12.11   Further Assurances. Each party hereto will promptly and
duly execute and deliver such further documents and assurances for and take
such further action reasonably requested by the other party, all as may be
reasonably necessary to carry out more effectively the intent and purpose of
this Pass Through Trust Agreement.

     Section 12.12   Statement of Intent. It is intended that, if the Pass
Through Trust were ever to be classified as a partnership for Federal income
tax purposes, that the Pass Through Trust be excluded from the application of
Subchapter K of the Internal Revenue Code, in accordance with Treasury
Regulation 1.761-2(b)(2)(ii).

     Section 12.13   RockGen. Notwithstanding anything herein to the contrary,
until such time as one or more of the RockGen Owner Lessors has issued Series B
Lessor Notes pursuant to a Collateral Trust Indenture, RockGen shall have no
obligations or responsibilities under this Pass Through Trust Agreement,
including, without limitation, any obligation to pay any amounts due hereunder.

                                      49

<PAGE>

          IN WITNESS WHEREOF, the Facility Lessees and the Pass Through Trustee
have caused this Pass Through Trust Agreement to be duly executed and delivered
by their respective officers thereunto duly authorized.

                                                SOUTH POINT ENERGY CENTER, LLC


                                                By: ___________________________
                                                    Name:
                                                    Title:


                                                BROAD RIVER ENERGY LLC


                                                By: ___________________________
                                                    Name:
                                                    Title:


                                                ROCKGEN ENERGY LLC


                                                By: ___________________________
                                                    Name:
                                                    Title:


                                                STATE  STREET  BANK  AND  TRUST
                                                COMPANY  OF CONNECTICUT,
                                                NATIONAL ASSOCIATION,
                                                as Pass Through Trustee


                                                By: ___________________________
                                                    Name:
                                                    Title:

<PAGE>

                                                                     SCHEDULE 1

                            Participation Agreements

          The Participation Agreement providing for Lease Transactions to be
financed by the purchase of Lessor Notes hereunder, and the parties thereto,
are as follows:

South Point

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-1, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-1, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-2, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-2, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-3, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-3, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between South Point
Energy Center, LLC, as the Facility Lessee, South Point OL-4, LLC, as Owner
Lessor, Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-4, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

                                    SCH 1-1

<PAGE>

Broad River

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-1, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-1, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-2, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-2, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-3, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-3, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between Broad River
Energy LLC, as the Facility Lessee, Broad River OL-4, LLC, as Owner Lessor,
Wells Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly provided, but solely as Lessor Manager, Calpine
Corporation, as Guarantor, SBR OP-4, LLC, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as expressly provided, but
solely as Pass Through Trustee.

RockGen

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-1, LLC, as Owner Lessor, Wells Fargo
Bank Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-1, LLC, as Owner Participant, State Street Bank and Trust

                                    SCH. 1-2

<PAGE>

Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Pass Through Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-2 LLC, as Owner Lessor, Wells Fargo
Bank Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-2 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-3 LLC, as Owner Lessor, Wells Fargo
Bank Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-3 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

Participation Agreement, dated October 18, 2001, by and between RockGen Energy
LLC, as the Facility Lessee, RockGen OL-4 LLC, as Owner Lessor, Wells Fargo
Bank Northwest, National Association, not in its individual capacity, except as
expressly provided, but solely as Lessor Manager, Calpine Corporation, as
Guarantor, SBR OP-4 LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided, but solely as Indenture Trustee, and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided, but solely as Pass Through
Trustee.

                                    SCH. 1-3

<PAGE>

                                                                      EXHIBIT A

                              FORM OF CERTIFICATE

              [LEGEND IF CERTIFICATE IS A RESTRICTED CERTIFICATE]

          THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.  SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S.  PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTION WHICH IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT, RESELL OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO THE FACILITY LESSEES OR ANY
OF THEM OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE PASS THROUGH TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE PASS THROUGH
TRUSTEE) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE FACILITY LESSEES THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF
THIS CERTIFICATE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE PASS THROUGH
TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST

                                    EXH A-1

<PAGE>

AGREEMENT CONTAINS A PROVISION REQUIRING THE PASS THROUGH TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.

          BY ITS ACQUISITION OF ANY CERTIFICATE, THE HOLDER THEREOF WILL BE
DEEMED TO HAVE REPRESENTED AND WARRANTED, ON EACH DAY FROM THE DATE ON WHICH
THE HOLDER ACQUIRES THE CERTIFICATE THROUGH AND INCLUDING THE DATE ON WHICH THE
HOLDER DISPOSES OF ITS INTEREST IN SUCH CERTIFICATE, EITHER THAT (A) IT IS NOT
A PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR OTHER PLAN, AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE
ASSETS OF ANY PLAN SUBJECT TO ERISA OR OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH
IS SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO
THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) ITS PURCHASE, HOLDING AND
DISPOSITION OF SUCH CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A
GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) FOR
WHICH AN EXEMPTION IS NOT AVAILABLE, ALL THE CONDITIONS OF WHICH ARE SATISFIED.

                                    EXH A-2

<PAGE>

        SOUTH POINT, BROAD RIVER AND ROCKGEN SERIES B PASS THROUGH TRUST

                    9.825% Pass Through Certificate, Series B

                               CUSIP: 839521 AC 5

                               ISIN: US839521AC56

                      Final Distribution Date: May 30, 2019

              evidencing a fractional undivided interest in a
              trust, the property of which includes certain notes
              secured by certain property leased or subleased to
              South Point Energy Center, LLC, Broad River Energy
              LLC and RockGen Energy LLC

Certificate No._______                    $[    ] Fractional Undivided Interest

          THIS CERTIFIES THAT _________________, for value received, is the
registered owner of a $______________ (__________ dollars) Fractional Undivided
Interest in the South Point, Broad River and RockGen Series B Pass Through
Trust (the "Pass Through Trust") created pursuant to a Pass Through Trust
Agreement, dated as of October 18, 2001 (the "Agreement") among South Point
Energy Center, LLC, a Delaware limited liability company, Broad River Energy
LLC, a Delaware limited liability company, RockGen Energy LLC, a Wisconsin
limited liability company (individually, a "Facility Lessee" and collectively,
the "Facility Lessees") and State Street Bank and Trust Company of Connecticut,
National Association, as trustee (the "Pass Through Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. The initial
Fractional Undivided Interest evidenced hereby may change from time to time in
accordance with the terms of the Agreement, such changes as evidenced by the
records of the Pass Through Trustee, which shall be conclusive absent manifest
error. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "9.825% Pass Through
Certificates, Series B" (herein called the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.  The property of
the Pass Through Trust includes certain Lessor Notes (the "Trust Property").
Each Lessor Note is secured by a security interest and lien over the Undivided
Interest subject to the Lease relating to the Collateral Trust Indenture under
which such Lessor Note was issued and certain other related property described
in such Collateral Trust Indenture, and liability thereunder is limited to the
income and proceeds of such security.

          Subject to and in accordance with the terms of the Agreement, from
funds then available to the Pass Through Trustee, there will be distributed on
each May 30 and November 30 (a "Distribution Date"), commencing on May 30,
2002, to the person in whose name this

                                    EXH A-3

<PAGE>

Certificate is registered at the close of business on the day of the month
which is fifteen days preceding the Distribution Date, an amount in respect of
the Scheduled Payments on the Lessor Notes due on such Distribution Date, the
receipt of which has been confirmed by the Pass Through Trustee, equal to the
product of the percentage interest in the Pass Through Trust evidenced by this
Certificate and an amount equal to the sum of such Scheduled Payments. Subject
to and in accordance with the terms of the Agreement, in the event that Special
Payments on the Lessor Notes are received by the Pass Through Trustee, from
funds then available to the Pass Through Trustee, there shall be distributed on
the applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the day of the month
which is fifteen days preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Lessor Notes, the receipt of which has
been confirmed by the Pass Through Trustee, equal to the product of the
percentage interest in the Pass Through Trust evidenced by this Certificate and
an amount equal to the sum of such Special Payments so received. The Special
Distribution Date shall be determined as provided in the Agreement. If a
Distribution Date or Special Distribution Date is not a Business Day,
distribution shall be made on the immediately following Business Day with the
same effect as if made on the date on which such payment was due. The Pass
Through Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Holders of the Certificates.

          Distributions on this Certificate will be made by the Pass Through
Trustee (i) if (A) The Depository Trust Company ("DTC") or its nominee is the
Certificateholder of record of this Certificate, or (B) a Certificateholder
holds a Certificate or Certificates in an aggregate amount greater than
$10,000,000, or (C) a Certificateholder holds a Certificate or Certificates in
an aggregate amount greater than $1,000,000 and so requests to the Pass Through
Trustee, by wire transfer in immediately available funds to an account
maintained by such Certificateholder with a bank, or (ii) if none of the above
apply, by check mailed to such Certificateholder at the address appearing in
the Register, without the presentation or surrender of this Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made after notice mailed by the Pass Through Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at
the office or agency of the Pass Through Trustee specified in such notice.

          [Unless this Certificate is presented by an authorized representative
of DTC to the Facility Lessees or its agent for registration of transfer,
exchange or payment, and any Certificate issued is registered in the name of
Cede & Co., or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co., or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest
herein.]*

          Each Person who acquires or accepts this Certificate or an interest
herein will be deemed by such acquisition or acceptance to have represented and
warranted that either: (i) no

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

* This legend to appear on Book-Entry Certificates to be deposited with The
Depository Trust Company.

                                    EXH A-4

<PAGE>

Plan assets have been used to purchase this Certificate or an interest herein
or (ii) the purchase and holding of this Certificate or interest herein are
either exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more prohibited transaction statutory or administrative
exemptions or do not constitute a prohibited transaction under such
restrictions of ERISA and the Code.

          This Certificate shall be governed by and construed in accordance
with the law of the State of New York.

          Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

          IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Certificate to be duly executed.

                                            SOUTH POINT, BROAD RIVER AND
                                            ROCKGEN SERIES B PASS THROUGH TRUST


                                            By: STATE  STREET  BANK AND  TRUST
                                                COMPANY  OF  CONNECTICUT,
                                                NATIONAL ASSOCIATION,
                                                as Pass Through Trustee


                                                By: ___________________________
                                                    Name:
                                                    Title:

                                    EXH A-5

<PAGE>

                            [Reverse Of Certificate]

          The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Facility Lessees, the Pass
Through Company or the Pass Through Trustee or any affiliate thereof. The
Certificates are limited in right of payment, all as more specifically set
forth in the Agreement. All payments or distributions made to
Certificateholders under the Agreement shall be made only from the Trust
Property and only to the extent that the Pass Through Trustee shall have
received sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Holder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Holder as provided in the Agreement. This Certificate does
not purport to summarize the Agreement and reference is made to the Agreement
for information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby.  A copy of the Agreement may be examined
during normal business hours at the principal office of the Pass Through
Trustee, and at such other places, if any, designated by the Pass Through
Trustee, by any Certificateholder upon request.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Facility Lessees and the rights of the Certificateholders under the Agreement
at any time by the Facility Lessees and the Pass Through Trustee with the
consent of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest of the Fractional
Undivided Interests evidenced by all Certificates at the time Outstanding. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Pass Through Trustee in its capacity as
Registrar, or by any successor Registrar, duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Pass Through Trustee
and the Registrar duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.

          The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $100,000 Fractional Undivided Interest and
any integral multiples of $1,000 in excess thereof. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of authorized denominations

                                    EXH A-6

<PAGE>

evidencing the same aggregate Fractional Undivided Interest in the Pass Through
Trust, as requested by the Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee shall require payment of an amount
sufficient to cover any tax or charge payable in connection therewith.

          The Pass Through Trustee, the Facility Lessees, the Owner Lessors,
the Registrar and any agent of the Pass Through Trustee or the Registrar may
treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Pass Through Trustee, the Facility
Lessees, the Owner Lessors, the Registrar nor any such agent shall be affected
by any notice to the contrary.

          The obligations and responsibilities created by the Agreement and the
Pass Through Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to the Agreement and the disposition of all property held as part of the Trust
Property.

                                    EXH A-7

<PAGE>

                                                                      EXHIBIT B

FORM OF PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Certificates referred to in the within-mentioned
Agreement.




                                            STATE STREET BANK AND TRUST
                                            COMPANY OF CONNECTICUT, NATIONAL
                                            ASSOCIATION
                                            as Pass Through Trustee



                                            By: _______________________________
                                                Name:
                                                Title:

                                    EXH B-1

<PAGE>

                                                                      EXHIBIT C

                          FORM OF TRANSFER CERTIFICATE

        SOUTH POINT, BROAD RIVER AND ROCKGEN SERIES B PASS THROUGH TRUST

                       PASS THROUGH CERTIFICATES SERIES B

          This is to certify that as of the date hereof with respect to
$__________ (__________ dollars) Fractional Undivided Interest of the
above-captioned securities presented or surrendered on the date hereof (the
"Surrendered Certificates") for registration of transfer, or for exchange where
the securities issuable upon such exchange are to be registered in a name other
than that of the undersigned Holder (each such transaction being a "transfer"),
the undersigned Holder (as defined in the Pass Through Trust Agreement)
certifies that the transfer of Surrendered Certificates associated with such
transfer complies with the restrictive legend set forth on the face of the
Surrendered Certificates for the reason checked below:

[ ]  Transfer to South Point, Broad River and RockGen Series B Pass Through
     Trust.

[ ]  Transfer inside the United States to a Qualified Institutional Buyer in
     compliance with Rule 144A under the Securities Act.

[ ]  Transfer pursuant to an exemption from, or in a transaction not subject
     to, the registration requirements of the Securities Act (if available).

[ ]  Transfer outside the United States in compliance with Rule 904 of the
     Securities Act.

[ ]  Transfer inside the United States (i) to an institutional Accredited
     Investor that has previously furnished to the Pass Through Trustee a
     signed letter containing certain representations and agreements relating
     to restrictions on transfer and (ii) by a Holder that has previously
     furnished to the Facility Lessees and the Registrar such certifications,
     legal opinions or other information requested to confirm that such
     transfer is in compliance with the Securities Act.

                                [Name of Holder]

                                ________________

Dated: _____________, _____*

*To be dated the date of presentation or surrender

                                    EXH C-1

<PAGE>

                                                                      EXHIBIT D

                          FORM OF PURCHASE LETTER FOR
                       INSTITUTIONAL ACCREDITED INVESTORS


_______________________

_______________________

_______________________
As Initial Purchasers in connection
with the Offering Memorandum referred
to below


c/o _____________
[Address]
[City, State, Zip]

Ladies and Gentlemen:

          In connection with our proposed purchase of Pass Through
Certificates, Series B (the "Certificates") evidencing a fractional undivided
interest in one of two pass through trusts, the property of which consists of
certain notes secured by certain property leased to South Point Energy Center,
LLC, Broad River Energy LLC and RockGen Energy LLC (collectively, the "Facility
Lessees"), we confirm that:

          1.   We have received a copy of the Offering Memorandum (the
"Offering Memorandum") relating to the Certificates and such other information
as we deem necessary in order to make our investment decision. We acknowledge
that we have read and agree to the matters stated under the captions "Notice to
Investors" and "Plan of Distribution" in such Offering Memorandum, and the
restrictions on duplication and circulation of such Offering Memorandum.

          2.   We understand that any subsequent transfer of the Certificates
is subject to certain restrictions and conditions set forth in the Pass Through
Trust Agreement (the "Pass Through Trust Agreement") relating to the
Certificates and conditions set forth under "Notice to Investors" and "Plan of
Distribution" and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").

          3.   We understand that the offer and sale of the Certificates has
not been registered under the Securities Act, and that the Certificates may not
be offered or sold except as permitted in the following sentence. We agree, on
our own behalf and on behalf

                                    EXH D-1

<PAGE>

of any accounts for which we are acting as hereinafter stated, that if we
should sell any Certificates within the time period referred to in Rule 144(k)
of the Securities Act, we will do so only (A) to the Facility Lessees or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined therein), (C) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to the Pass Through Trustee under the Pass Through Trust
Agreement, a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Certificates (the form of which
letter can be obtained from the Pass Through Trustee) and an opinion of counsel
acceptable to the Facility Lessees that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the
Certificates from us a notice advising such purchaser that resales of the
Certificates are restricted as stated herein.

          4.   We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.

          5.   We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.

          6.   We are not acquiring the Certificates with a view to
distribution thereof or with any present intention of offering or selling any
Certificates, except as permitted above; provided, that the disposition of our
property and property of any accounts for which we are acting as fiduciary will
remain at all times within our control.

                                    EXH D-2

<PAGE>

          You, the Facility Lessees and the Pass Through Trustee are entitled
to rely on this letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.

                                Very truly yours,



                                By: _______________________
                                     Name:
                                     Title:
                                     Date:


                                    EXH D-3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.3
<SEQUENCE>6
<FILENAME>f80168ex4-22_3.txt
<DESCRIPTION>EXHIBIT 4.22.3
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.3

                                                                  EXECUTED COPY


                         PARTICIPATION AGREEMENT (SP-1)

                          Dated as of October 18, 2001

                                      among

              SOUTH POINT ENERGY CENTER, LLC, as Facility Lessee,

                    SOUTH POINT OL-1, LLC, as Owner Lessor,

    WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-1, LLC, as Owner Participant,

   STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                           as Indenture Trustee, and

   STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees


                              SOUTH POINT PROJECT

================================================================================

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                          <C>
SECTION 1.DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ......................................              3

SECTION 2.PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ...................................................              3

     Section 2.1    Agreements to Participate ...............................................................             3

     Section 2.2    Closing Date; Procedure for Participation ...............................................             4

     Section 2.3    Transaction Costs .......................................................................             5

SECTION 3 REPRESENTATIONS AND WARRANTIES ...................................................................              6

     Section 3.1    Representations and Warranties of the Facility Lessee ...................................             6

     Section 3.2    Representations and Warranties of the Owner Lessor ......................................            17

     Section 3.3    Representations and Warranties of the Lessor Manager and the Trust Company ..............            18

     Section 3.4    Representations and Warranties of the Owner Participant .................................            20

     Section 3.5    Representations and Warranties of Indenture Trustee and the Lease Indenture Company .....            22

     Section 3.6.   Representations, Warranties and Covenants of the Pass Through Trustees and the Pass
                    Through Company .........................................................................             23

SECTION 4 CLOSING CONDITIONS ...............................................................................             25

     Section 4.1 Completion of the Facility ................................................................             26

     Section 4.2 Operative Documents .......................................................................             26

     Section 4.3 Certificates and the Lessor Notes .........................................................             26

     Section 4.4 Equity Investment .........................................................................             26

     Section 4.5 Organizational Documents ..................................................................             26

     Section 4.6 Representations and Warranties ............................................................             26

     Section 4.7 Defaults, Events of Default, Events of Loss ...............................................             26

     Section 4.8 Regulatory Approvals ......................................................................             26

     Section 4.9 Consents ..................................................................................             27

     Section 4.10 Governmental Actions .....................................................................             28
</TABLE>


                                       i
<PAGE>


                               TABLE OF CONTENTS  (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>

     Section 4.11 Insurance ................................................................................             28

     Section 4.12 Ratings ..................................................................................             28

     Section 4.13 Environmental Report .....................................................................             28

     Section 4.14 Surveys ..................................................................................             28

     Section 4.15 Appraisal; Condition of the Facility .....................................................             28

     Section 4.16 Letter from the Appraiser ................................................................             28

     Section 4.17 Other Reports ............................................................................             28

     Section 4.18 Opinion with Respect to Certain Tax Aspects ..............................................             29

     Section 4.19 Opinions of Counsel ......................................................................             29

     Section 4.20 Recordings and Filings ...................................................................             29

     Section 4.21 Conditions to Closing ....................................................................             29

     Section 4.22 Taxes ....................................................................................             30

     Section 4.23 No Changes in Applicable Law .............................................................             30

     Section 4.24 Registered Agent for the Facility Lessee and the Owner Lessor ............................             30

     Section 4.25 Operating Lease Treatment ................................................................             30

     Section 4.26 Rent Adjustments .........................................................................             30

     Section 4.27 Title Insurance ..........................................................................             30

     Section 4.28 Parent Guaranty ..........................................................................             30

     Section 4.29  Letter as to Number of Offerees ..........................................................            31

     Section 4.30  Lien Search ..............................................................................            31

     Section 4.31  Litigation ...............................................................................            31

     Section 4.32  No Material Adverse Change ...............................................................            31

     Section 4.33  Private Placement Number .................................................................            31

     Section 4.34  Proceedings and Documents ................................................................            31
</TABLE>


                                       ii
<PAGE>


                               TABLE OF CONTENTS  (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
     Section 4.35  No Proposed Tax Law Change ...............................................................            31

     Section 4.36  Payment of Fees and Expenses .............................................................            32

SECTION 5 COVENANTS OF FACILITY LESSEE AND GUARANTOR .......................................................             32

     Section 5.1   Maintenance of Existence .................................................................            32

     Section 5.2   Merger, Consolidation, Sale of Substantially All Assets ..................................            32

     Section 5.3   Guaranty and Contingent Obligations ......................................................            33

     Section 5.4   Assignment of Rights .....................................................................            33

     Section 5.5   Lessor Manager Fees ......................................................................            33

     Section 5.6   Conduct of Business, Properties, Etc .....................................................            33

     Section 5.7   Obligations ..............................................................................            33

     Section 5.8   Books, Records, Access ...................................................................            33

     Section 5.9  Other Information .........................................................................            34

     Section 5.10  Intentionally Deleted ....................................................................            35

     Section 5.11  ERISA ....................................................................................            35

     Section 5.12  Certain Contracts and Agreements .........................................................            35

     Section 5.13  Certain Costs ............................................................................            35

     Section 5.14  Limitations on Liens .....................................................................            36

     Section 5.15  Investments ..............................................................................            36

     Section 5.16  Intentionally Deleted ....................................................................            36

     Section 5.17  Regulations ..............................................................................            36

     Section 5.18  Partnerships .............................................................................            36

     Section 5.19  Dissolution ..............................................................................            36

     Section 5.20  Termination of Operative Documents; Delegation of Authority ..............................            36

     Section 5.21  Name and Location ........................................................................            38
</TABLE>


                                       iii
<PAGE>


                               TABLE OF CONTENTS  (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
     Section 5.22  Use of Facility Site .....................................................................            38

     Section 5.23  Abandonment of Facility ..................................................................            38

     Section 5.24  Taxes, Other Government Charges and Utility Charges ......................................            38

     Section 5.25  Compliance with Laws, Instruments, Etc ...................................................            38

     Section 5.26  PUHCA ....................................................................................            39

     Section 5.27  Further Assurances .......................................................................            39

     Section 5.28  No Subsidiaries ..........................................................................            40

     Section 5.29  Permitted Business .......................................................................            40

     Section 5.30  Support Arrangements .....................................................................            40

     Section 5.31  Insurance ................................................................................            40

     Section 5.32  Tax Status ...............................................................................            40

SECTION 6 COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER ...........................            40

     Section 6.1.  Compliance with the LLC Agreement ........................................................            41

     Section 6.2.  Owner Lessor's Liens .....................................................................            42

     Section 6.3.  Amendments to Operative Documents ........................................................            42

     Section 6.4.  Transfer of the Owner Lessor's Interest ..................................................            42

     Section 6.5.  Owner Lessor; Lessor Estate ..............................................................            42

     Section 6.6.  Limitation on Indebtedness and Actions ...................................................            42

     Section 6.7.  Change of Location .......................................................................            42

     Section 6.8.  Bankruptcy of Owner Lessor ...............................................................            42

SECTION 7 COVENANTS OF THE OWNER PARTICIPANT ................................................................            43

     Section 7.1   Restrictions on Transfer of Member Interest ..............................................            43

     Section 7.2   Owner Participant's Liens ................................................................            45

     Section 7.3   Amendments or Revocation of LLC Agreement ................................................            45
</TABLE>


                                       iv
<PAGE>


                               TABLE OF CONTENTS  (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>

     Section 7.4   Bankruptcy Filings .......................................................................            45

     Section 7.5   Instructions .............................................................................            46

     Section 7.6   Right of First Refusal ...................................................................            46

     Section 7.7   Prohibition on Fundamental Changes .......................................................            46

     Section 7.8   Appointment of Successor Lessor Manager ..................................................            47

     Section 7.9   Cooperation ..............................................................................            47

SECTION 8 COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ..................................            47

     Section 8.1   Indenture Trustee's Liens ................................................................            48

     Section 8.2   Pass Through Trustees' Covenant Not to Transfer Lessor Notes .............................            48

SECTION 9 INDEMNIFICATION ...................................................................................            48

     Section 9.1   General Indemnity ........................................................................            48

     Section 9.2   General Tax Indemnity ....................................................................            55

SECTION 10 FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT .......................................................            64

SECTION 11 SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS .......................................            65

     Section 11.1  Financing Improvements ...................................................................            65

     Section 11.2  Optional Refinancing of Lease Debt .......................................................            66

     Section 11.3  Cooperation ..............................................................................            67

SECTION 12 CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS ........................            68

SECTION 13 TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS; EXERCISE OF EXTENSION OF
           SOUTH POINT GROUND LEASE ........................................................................             69

     Section 13.1  Transfer of the Facility Lessee Ownership ................................................            69

     Section 13.2  Special Facility Lessee Transfers ........................................................            71

     Section 13.3  Exercise of Extension of South Point Ground Lease ........................................            71

SECTION 14 MISCELLANEOUS ...................................................................................             73
</TABLE>


                                       v
<PAGE>


                               TABLE OF CONTENTS  (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
     Section 14.1  Consents; Cooperation ....................................................................            73

     Section 14.2  Successor Owner Lessor ...................................................................            73

     Section 14.3  Bankruptcy of Lessor Estate ..............................................................            73

     Section 14.4  Amendments and Waivers ...................................................................            73

     Section 14.5  Notices .................................................................................             73

     Section 14.6  Survival ................................................................................             78

     Section 14.7  Successors and Assigns ..................................................................             78

     Section 14.8  Business Day ............................................................................             78

     Section 14.9  Governing Law ...........................................................................             78

     Section 14.10 Severability ............................................................................             78

     Section 14.11 Counterparts ............................................................................             78

     Section 14.12 Headings and Table of Contents ..........................................................             79

     Section 14.13 Limitation of Liability .................................................................             79

     Section 14.14 Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent .........................             80

     Section 14.15 Further Assurances ......................................................................             81

     Section 14.16 Effectiveness ...........................................................................             81

     Section 14.17 Measuring Life ..........................................................................             81

     Section 14.18 No Partnership, Etc .....................................................................             81

     Section 14.19 Entire Agreement ........................................................................             81

     Section 14.20 Public Utility Regulation ...............................................................             82

     Section 14.21 Confidentiality of Information ..........................................................             82

     Section 14.22 Reliance ................................................................................             83

     Section 14.23 Amendments, Etc .........................................................................             83

     Section 14.24 South Point Ground Lease ................................................................             83

</TABLE>

                                          vi

<PAGE>

APPENDICES:

    Appendix A   Definitions and Rules of Interpretation

<TABLE>
<CAPTION>
<S>                      <C>
SCHEDULES:

    Schedule 1-A         Equity Investment
    Schedule 1-B         Indenture Trustee's Account
    Schedule 1-C         Owner Participant's Account
    Schedule 2           Pricing Assumptions
    Schedule 3.1(m)      Environmental Matters - Hazardous Substances
    Schedule 4.20        Recording and Filings
    Schedule 5.31        Maintenance of Insurance


EXHIBITS:

    Exhibit A            Description of Facility
    Exhibit B            Form of Assignment Agreement (SP-1)
    Exhibit C            Form of Facility Lease Agreement
    Exhibit D            Form of Facility Site Lease
    Exhibit E            Intentionally Omitted
    Exhibit F            Form of Pass Through Trust Agreement
    Exhibit G            Form of OP Parent Guaranty
    Exhibit H            Form of Calpine Guaranty
    Exhibit I            Form of Collateral Trust Indenture
    Exhibit J            Form of OP Assignment and Assumption Agreement
    Exhibit K            List of Competitors
    Exhibit L            Form of Guarantor Assignment and Assumption Agreement
    Exhibit M            Form of Consents
</TABLE>

                                      vii

<PAGE>

                             PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) SOUTH POINT ENERGY CENTER, LLC (herein,
     together with its successors and permitted assigns, called the "Facility
     Lessee"), a limited liability company organized under the laws of the
     State of Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as
     Guarantor (together with its successors and permitted assigns, the
     "Guarantor") under the Calpine Guaranty (SP-1), (the "Calpine Guaranty"),
     (iii) SOUTH POINT OL-1, LLC, a Delaware limited liability company (the
     "Owner Lessor"), (iv) SBR OP-1, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its successors
     and permitted assigns, called the "Indenture Trustee", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Lease Indenture Company"), (vi) STATE STREET BANK AND TRUST
     COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
     association organized and existing under the laws of the United States,
     not in its individual capacity, except as expressly provided herein, but
     solely as trustee under each of the Pass Through Trust Agreements (herein
     in its capacity as trustee under the Pass Through Trust Agreements, the
     "Pass Through Trustees", and herein in its individual capacity, together
     with its successors and permitted assigns, the "Pass Through Company"),
     and (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and validly existing under the laws of the
     United States, not in its individual capacity except as expressly provided
     herein, but solely as independent manager under the LLC Agreement (herein
     in its capacity as independent manager under the LLC Agreement, together
     with its successors and permitted assigns, called the "Lessor Manager",
     and herein in its individual capacity, together with its successors and
     permitted assigns, called the "Trust Company").

                                   WITNESSETH:

          WHEREAS, (a) CCFC, an indirect, wholly-owned subsidiary of Calpine,
will, as of the Closing Date, own a 530 MW gas-fired combined cycle merchant
power plant located near Bullhead, Arizona and more fully described in Exhibit
A hereto ("Facility");

          WHEREAS, CCFC desires to assign and transfer to the Owner Lessor the
Undivided Interest and the Ground Interest pursuant to the Assignment Agreement;

<PAGE>

          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
accept such assignment and transfer of the Undivided Interest and the Ground
Interest from CCFC pursuant to the Assignment Agreement, and to lease the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to lease the Undivided Interest
and lease the Ground Interest from the Owner Lessor pursuant to the Facility
Lease and the Facility Site Lease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from CCFC pursuant to the Assignment
Agreement, and lease the Undivided Interest and the Ground Interest to the
Facility Lessee pursuant to the Facility Lease and the Facility Site Lease,
respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed all
of the obligations of the Facility Lessee under the Participation Agreement and
as of the Closing Date shall guarantee all of the obligations of the Facility
Lessee under the other Operative Documents to which the Facility Lessee is a
party; and

                                       2

<PAGE>

          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The rules of interpretation
set forth in Appendix A shall apply to terms used in this Participation
Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

Calpine and the Facility Lessee shall cause CCFC to assign and transfer the
     Undivided Interest and the Ground Interest to the Owner Lessor on the
     terms and conditions set forth in the Assignment Agreement and the Owner
     Lessor agrees to acquire and accept such assignment and transfer of the
     Undivided Interest and the Ground Interest from CCFC, and each agrees to
     execute and deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest and the Ground Interest
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility Lessee agrees to
     lease the Undivided Interest and the Ground Interest from the Owner
     Lessor, and each agrees to execute and deliver the respective Facility
     Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

                                       3

<PAGE>

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the South Point Ground
     Lease pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

                                       4

<PAGE>

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to the
     Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not occur
     on such date and the Owner Lessor has not returned such funds to the Owner
     Participant on or before 1:00 p.m., New York City time, on such date, then
     Calpine shall reimburse the Owner Participant for loss of the use of such
     funds at the Applicable Rate for each day, from and including the day that
     such funds were made available to the Owner Lessor by the Owner
     Participant to, but excluding the earlier of (i) the day that such funds
     have been returned to the Owner Participant pursuant to Section 2.2(c)
     (funds received by the Owner Participant after 1:00 p.m., New York City
     time, of any day shall be deemed to be returned on the next succeeding
     Business Day) and (ii) the Closing Date. Subject to payment for the
     account of the Owner Participant of any reimbursement for loss of use of
     funds due to it at the Applicable Rate, any net gain realized on the
     investment of such funds (including interest) shall be paid to Calpine by
     the Owner Lessor on the earlier of (i) the date such funds are returned to
     the Owner Participant pursuant to Section 2.2(c) and (ii) the Closing
     Date. The Owner Lessor shall not be liable for any interest on or loss
     resulting from such investments and, if such funds are made available to
     the Owner Lessor and utilized to pay the Purchase Price or Transaction
     Costs on the Closing Date, Calpine shall reimburse the Owner Lessor for
     any net loss realized on the investment of such funds. If such funds are
     not so utilized, Calpine shall, in addition to its obligation to reimburse
     the Owner Participant for loss of use as provided above, reimburse the
     Owner Participant on the date such funds are returned to the Owner
     Participant for any net loss realized on the investment of such funds. In
     order to obtain funds for payment of the Purchase Price or Transaction
     Costs or to return funds made available to the Owner Lessor by the Owner
     Participant, the Owner Lessor is authorized to sell any investments or
     obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$2,370,417, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other

                                       5

<PAGE>

     Transaction Costs, fees, costs and expenses incurred by the Facility
     Lessee, the Owner Lessor and the Owner Participant shall be paid by
     Calpine. If the Overall Transaction is not consummated for any reason
     (including as a result of the Facility Lessee terminating this Agreement
     pursuant to Section 12(a)), then Calpine shall bear all Transaction Costs;
     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware and CCFC is a limited partnership duly constituted,
     validly existing, and in good standing under the laws of the State of
     Delaware. Both the Facility Lessee and CCFC are duly licensed or
     qualified and in good standing in each jurisdiction where the character of
     their respective properties or the nature of their activities makes such
     qualification necessary, and each of the Facility Lessee and CCFC has the
     power and authority to (x) own or hold under lease the property it
     purports to own or hold under lease, (y) carry on its business as now
     being conducted and as presently proposed to be conducted and (z) take all
     actions as may be necessary to consummate the transactions contemplated
     hereunder and under the other Operative Documents to which each is a
     party. Each of the Facility Lessee and CCFC is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee or CCFC is or will be a
     party have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee or
     CCFC, as applicable, and, assuming the due authorization, execution and
     delivery by each other party thereto, this Agreement constitutes and, when
     executed and delivered, the other Operative Documents to which the
     Facility Lessee or CCFC is or will be a party will constitute the legal,
     valid and binding obligations of the Facility Lessee or CCFC, as the case
     may be, enforceable against the Facility Lessee or CCFC, as the case may
     be, in accordance with their respective terms, except as the same may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other similar laws affecting the rights of creditors generally and by
     general principles of equity.

          1.   Non-Contravention. (1)  The execution, delivery and performance
               by the Facility Lessee of this Agreement and each of the other
               Operative

                                       6

<PAGE>

               Documents to which it is or will be a party, the consummation by
               the Facility Lessee of the transactions contemplated hereby and
               thereby, and compliance by the Facility Lessee with the terms
               and provisions hereof and thereof, do not and will not (i)
               contravene any Applicable Law binding on the Facility Lessee or
               its property, or its organizational documents, (ii) constitute a
               default by the Facility Lessee under, or result in the creation
               of any Lien upon the property of the Facility Lessee (other than
               pursuant to any Operative Document) under any indenture,
               mortgage or other material contract, agreement or instrument to
               which the Facility Lessee is a party or by which the Facility
               Lessee or any of its property is bound, (iii) contravene any
               Organic Document of the Facility Lessee or (iv) require the
               consent or approval of any Person which has not already been
               obtained, in each case with respect to clauses (i), (ii) and
               (iv) above, which would reasonably be expected to have a
               Material Adverse Effect.

          (2)  The execution, delivery and performance by CCFC of each of the
Operative Documents to which it is or will be a party, the consummation by CCFC
of the transactions contemplated thereby, and compliance by CCFC with the terms
and provisions thereof, do not and will not (i) contravene any Applicable Law
binding on CCFC or its property, or its organizational documents, (ii)
constitute a default by CCFC under, or result in the creation of any Lien upon
the property of CCFC (other than pursuant to any Operative Document) under any
indenture, mortgage or other material contract, agreement or instrument to
which CCFC is a party or by which CCFC or any of its property is bound, (iii)
contravene any Organic Document of CCFC or (iv) require the consent or approval
of any Person which has not already been obtained, in each case with respect to
clauses (i), (ii) and (iv) above, which would reasonably be expected to have a
Material Adverse Effect.

          (3)  Neither the assignment and transfer of the Undivided Interest
and the Ground Interest by CCFC to the Owner Lessor, nor the grant by the Owner
Lessor to the Indenture Trustee of the Liens and security interests in the
Undivided Interest, the Ground Interest and the applicable Operative Documents
executed in connection therewith to secure its obligations thereunder does or
will constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. (1) The Facility Lessee has all Permits with or from any
   Governmental Entity or under any Applicable Law required (x) for the due
   execution, delivery or performance by the Facility Lessee of this Agreement,
   and the other Operative Documents to which the Facility Lessee is or will be
   a party or (y) without regard to any other transactions or other actions of
   the Owner Participant, the Owner Lessor or any Affiliate of any of them or
   any assignee or transferee of any of the Owner Participant, the Owner Lessor
   (or any Affiliate of any transferee or assignee) and assuming that none of
   the Owner Participant, the Owner Lessor or any Affiliate of any of them or
   any assignee or transferee of any of the Owner Participant (or any Affiliate
   of any such transferee or assignee) is an "electric utility" or a "public
   utility" or a "public utility holding company" or any similar entity subject
   to public utility regulation under any Applicable Law immediately prior to
   the Closing, with respect to the participation by the Owner Participant, the
   Owner Lessor in the Overall Transaction, other than (i) any Permit where the
   failure to obtain or maintain such Permit

                                       7

<PAGE>

     would not be reasonably likely to result in a Material Adverse Effect,
     (ii) the FERC Orders, (iii) as may be required under Applicable Law
     providing for the supervision or regulation of the Owner Participant, the
     Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of which
     would not reasonably be expected to have a Material Adverse Effect or
     involve any danger of criminal or material civil liability being incurred
     by the Owner Participant, the Owner Lessor, the Indenture Trustee or the
     Pass Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any relinquishment
     of the use or operation of the Facility by the Facility Lessee, (viii)
     appropriate filing and recording to perfect the Lien of the Collateral
     Trust Indenture, if required, and the ownership and leasehold interests
     conveyed pursuant to this Agreement, or (ix) as may be required under any
     Applicable Law enacted or adopted after the date hereof.

          (2)  CCFC has all Permits with, any Governmental Entity or under any
Applicable Law required for the due execution, delivery or performance by CCFC
of the Operative Documents to which CCFC is or will be a party.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the South
     Point Ground Lease or the ability of the Facility Lessee or such other
     Calpine Party to perform its obligations under the Operative Documents and
     the South Point Ground Lease to which the Facility Lessee or such other
     Calpine Party is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to have a Material Adverse Effect or
     otherwise materially adversely affect the Undivided Interest leased by the
     Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc. (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground

                                       8

<PAGE>

     Interest, the Facility Site and the Operative Documents is located at: c/o
     Calpine Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA
     95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical to the
condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Leasehold Interest; Liens. (1) On and before the Closing Date, CCFC has (i)
     good and valid leasehold interest to the Facility, free and clear of all
     Liens other than Permitted Closing Date Liens, and (ii) good and valid
     leasehold interest to the Facility Site and Easement free and clear of all
     Liens other than Permitted Closing Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid leasehold interest to the Undivided Interest will be duly, validly and
effectively conveyed and transferred to the Owner Lessor free and clear of all
Liens other than Permitted Closing Date Liens, and (B) good and valid leasehold
interest in the Ground Interest will be duly, validly and effectively granted
to the Owner Lessor upon the terms and conditions in the corresponding Facility
Site Lease, free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the South Point Ground Lease) or
the use of or the exercise by the Owner Lessor of its rights under the
Assignment Agreement or the Facility Site Lease, the Facility Lease or the
Easement, in a manner which could reasonably be expected to have a Material
Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party, directly
     or indirectly, for the purpose of buying or carrying any margin stock
     within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

                                       9

<PAGE>

Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the South Point Ground Lease will not subject the Facility
     Lessee to such regulation under the Holding Company Act and do not violate
     any provision of the Holding Company Act or any rule or regulation
     thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same, in any such case, in violation of the registration
     requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)   Neither the Facility Lessee nor CCFC has received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site or any of
the Easement; (ii) the Facility Lessee or any other Calpine Party is or is
asserted to be liable, in whole or in part, for the costs of cleaning up,
remedying or responding at any location (including any location at which any
Hazardous Substances have been generated, stored, treated or disposed by or on
behalf of the Facility Lessee or such other Calpine Party) to a Release or
threatened Release of any Hazardous Substance generated, used or stored at or
Released in, on, under or from the Facility or the Facility Site or any of the
Easement; (iii) the Facility or the Facility Site is subject to a Lien in favor
of any Governmental Entity in response to a Release or threatened Release of
Hazardous Substances or (iv) the Facility or the Facility Site or any of the
Easement is or is asserted to be in violation of or not in compliance with any
Environmental Law, in any case with respect to clauses (ii), (iii) or (iv),
which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's or CCFC's Actual Knowledge, there is
not and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site or any of the Easement, or (B) at, on, under or
from any other location resulting from or arising in connection with the
operation by any Person of the Facility or the Facility Site or any of the
Easement, that in each case could reasonably be expected to have a Material
Adverse Effect or

                                       10

<PAGE>

involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material lien on, such Facility or the Facility Site or any of
such Easement, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or, maintenance of the Facility or the Facility
Site or any of the Easement in any material respect, or (iii) any criminal or
material civil liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility, the Facility Site and the Easement in accordance with
the Operative Documents and the South Point Ground Lease and Environmental Laws
have been obtained on behalf of the Owner Lessor or by the Facility Lessee and
they are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility,
the Facility Site or Easement, (ii) the impairment of the ownership (or
leasehold or easement interest in), use, operation or maintenance of the
Facility, the Facility Site or Easement in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest, the Ground Interest and the Easement and based
     upon the Facility Lessee's reasonable expectations and on Applicable Law
     in effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     South Point Ground Lease and the rights contemplated by the Facility Lease
     to be made available under such Operative Documents and the South Point
     Ground Lease, permit on a commercially practicable basis during the
     Facility Lease Term and the period following the expiration or termination
     of the Facility Lease Term, as applicable, until the end of the Facility's
     useful life as set forth in the Closing Appraisal, (i) the location,
     occupation, interconnection, maintenance and repair of each Facility, (ii)
     the use, operation and possession of the Facility, (iii) as of the Closing
     Date, the use, operation, possession, maintenance, replacement, renewal
     and repair of all Improvements required to be made to the Facility, (iv)
     adequate ingress to and egress from the Facility in connection with the
     ownership, use, operation, possession, maintenance or repair of the
     Facility and (v) the transmission of electricity from the Facility
     substantially in the manner currently transmitted as of the Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns
     or pursuant to any assessment received by it (other than Taxes and
     assessments the payment of which is being contested in good faith by such
     Person and with respect to which appropriate accounting reserves have to
     the extent required by GAAP been set aside) and neither the Facility
     Lessee nor any other Calpine Party has any Actual Knowledge of any actual
     or proposed assessment in connection therewith which,

                                       11

<PAGE>

     either in any case or in the aggregate, would reasonably be expected to
     have a Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State of
     New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility, the Facility Site and the Easement, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility, the Facility
     Site or any such Easement, (ii) the impairment of the ownership (or
     leasehold or easement interest in), use, operation or maintenance of the
     Facility or the Facility Site in any material respect, or (iii) any
     criminal or material civil liability being incurred by the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee or
     the Pass Through Trustees, including subjecting the Owner Participant or
     the Owner Lessor to regulation as a public utility under Applicable Law.
     None of the Calpine Parties is in default of any judgments, orders or
     decrees of any Governmental Entity relating to such Facility, the Facility
     Site or any of the Easement.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists under the Operative Documents
     exists or will exist upon the execution and delivery of the Operative
     Documents. To the Actual Knowledge of the Facility Lessee, no Burdensome
     Buyout Event has occurred under the Operative Documents or will occur upon
     the execution and delivery of the Operative Documents and the Facility
     Lessee does not have Actual Knowledge of any event that could reasonably
     be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's or
     CCFC's Actual Knowledge, threatened by a Governmental Entity or other
     Person to specially assess the Facility or the Facility Site for any
     public improvements constructed or to be constructed which would
     reasonably be expected to have a Material Adverse Effect.

                                       12

<PAGE>

Utility Services. The Facility and the Facility Site have available all services
     of public utilities necessary for use and operation of the Facility as
     currently being used and as contemplated by the applicable Operative
     Documents and the South Point Ground Lease, except where the failure to
     have any such services or public utilities available would not result in a
     material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest, the Facility
     Site or any of the Easement, which would reasonably be expected to have a
     Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any Easement, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility, the Facility Site or any of the Easement, which
     would reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's or CCFC's
     Actual Knowledge, there are no plans of any Governmental Entity to change
     the highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no outstanding
     written notices from any Governmental Entity of any violation of, or that
     the Facility or Facility Site is not in compliance with, any and all
     Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted by CCFC
     with respect to the Facility and the Facility Site and to transfer all such
     rights to the Owner Lessor subsequent to termination of the Facility Lease,
     except to the extent failure to possess such rights would not reasonably be
     likely to result in a Material Adverse Effect.

                                       13

<PAGE>

Land Not in Flood Zone. No portion of the Facility, the Facility Site or the
     Easement includes improved real property that is located in an area that
     has been identified by the Director of the Federal Emergency Management
     Agency as an area having special flood hazards and in which flood insurance
     has been made available under the National Flood Insurance Act of 1968, as
     amended.

No Fraudulent Conveyances. The Facility Lessee and CCFC are consummating the
     transactions contemplated hereby (including with respect to CCFC, the
     transfer of certain of its assets and properties to the Owner Lessor) in
     good faith and without any intent to defraud creditors of the Facility
     Lessee or subsequent purchasers. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not
     render the Facility Lessee insolvent under GAAP or leave the Facility
     Lessee with assets whose present fair valuation of assets is less than the
     present fair valuation of the Facility Lessee's debts. As used in this
     Section 3.1(dd), "debts" includes any and all liabilities, whether matured
     or unmatured, liquidated or unliquidated, absolute, fixed or contingent,
     and whether or not such liabilities are required under GAAP to be shown on
     the Facility Lessee's balance sheet. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not leave
     it with property remaining in its hands which would constitute
     unreasonably small assets or capital, and the Facility Lessee has and,
     after giving effect to such transactions will have, an adequate amount of
     assets and capital to engage in its business now and in the future, based
     on the actual and anticipated needs for capital of the businesses
     anticipated to be conducted by the Facility Lessee, and based upon the
     other information described herein. After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term debt
     as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv) of
     the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the South Point Ground Lease shall be or become (i) subject to
     regulation as a "public utility company," "holding company," an
     "affiliate" of a "holding company" or a "subsidiary company" of a "holding
     company" within the meaning of PUHCA or (ii) a "public utility" (except
     that the Facility Lessee will be a public utility subject to the Federal
     Power Act with authority to sell wholesale electricity at market-based
     rates and with waivers of regulations customarily granted to a public
     utility that sells wholesale power at market-based rates), a "transmitting
     utility," or an "electric utility" within the meaning of the Federal Power
     Act, (iii) subject to state regulation of rates or organizational
     requirements for electric utilities.

                                       14

<PAGE>

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor the
     written information furnished to the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Indenture Trustee and the Pass Through Trustees by
     or on behalf of the Facility Lessee or any of its Affiliates in connection
     with the transactions contemplated hereby contains any untrue statement of
     a material fact or omits to state a material fact necessary in order to
     make the statements contained therein, in light of the circumstances under
     which they were made, not misleading; provided, that no representation or
     warranty is made with regard to (i) any projections or other
     forward-looking statements provided by or on behalf of the Facility Lessee,
     or (ii) the descriptions of the Operative Documents or the tax consequences
     to beneficial owners of Certificates; provided, further, each of the
     Transaction Parties acknowledge and agree that (i) Calpine has heretofore
     provided to the Appraiser, solely in order to assist the Appraiser in
     connection with the preparation of the appraisal to be delivered by the
     Appraiser to certain of the Transaction Parties at the Closing, certain (1)
     general market information, (2) information about the Arizona energy
     markets and (3) information passed along from other Persons and (ii) that
     the Facility Lessee makes no representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Western Area Power Administration and has
     access to transmission services and ancillary services sufficient to sell
     the net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings referenced
     in Section 4.8 and, except with respect to the determination by FERC of EWG
     status and the FERC Order referenced in clause (ii) of the definition of
     "FERC Orders" set forth in Appendix A hereto, received from FERC the orders
     referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to be
     fully taxable at the highest federal tax rate throughout the Facility Lease
     Term; for the avoidance of doubt, this representation is not intended to be
     construed as nor shall it be deemed to be a guaranty as to any such
     Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee or CCFC, the Facility has commenced commercial operations
     and is currently capable of producing at least 530 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

South Point Ground Lease. The South Point Ground Lease is in full force and
     effect and neither CCFC nor, to the Actual Knowledge of the Facility Lessee
     or CCFC, the Tribe is in default thereunder; all of the rights, title and
     interest of CCFC in, to and under the South Point Ground Lease assigned
     pursuant to the Assignment Agreement have been transferred free and clear
     of any and all Liens other than Permitted Liens. Prior to the execution and
     delivery

                                       15

<PAGE>

     of the Assignment Agreement by CCFC and as of and after the time CCFC
     became a party to the South Point Ground Lease, the South Point Ground
     Lease was enforceable against CCFC in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the South Point Ground Lease by any
     past or present Calpine Party (including CCFC) party thereto (i) did not
     and does not contravene any Applicable Law binding on such Calpine Party
     or its property, (ii) does not constitute a default by such Calpine Party
     under, or result in the creation of any Lien upon the property of such
     Calpine Party (other than pursuant to any Operative Document) under any
     indenture, mortgage or other material contract, agreement or instrument to
     which such Calpine Party is a party or by which such Calpine Party or any
     of its property is bound, (iii) does not contravene any Organic Document
     of such Calpine Party, (iv) does not require the consent or approval of
     any Person which has not already been obtained, in each case with respect
     to clauses (i), (ii) and (iv) above, which would reasonably be expected to
     have a Material Adverse Effect, or (v) does not create a Lien on the South
     Point Ground Lease; the Facility Lessee has all Permits with or from any
     Governmental Entity or under Applicable Law required for the performance
     of the South Point Ground Lease by the Owner Lessor or the Facility
     Lessee, other than (i) any Permit where the failure to obtain or maintain
     such Permit would not be reasonably likely to result in a Material Adverse
     Effect, (ii) the FERC Orders, (iii) as may be required under Applicable
     Law providing for the supervision or regulation of the Owner Participant,
     the Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by performance of the South
     Point Ground Lease upon and after the assignment thereof to the Owner
     Lessor pursuant to the Assignment Agreement, (iv) as may be required under
     existing Applicable Laws to be obtained, given, accomplished or renewed at
     any time, or from time to time, in each case, after the Closing Date and
     which the Facility Lessee has no reason to believe will not be timely
     obtained and the lack of which would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of criminal or material
     civil liability being incurred by the Owner Participant, the Owner Lessor,
     the Indenture Trustee or the Pass Through Trustees, (v) in connection with
     any modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates or
     the issuance of Additional Lessor Notes or Additional Certificates, (vii)
     as may be required in consequence of any transfer of the Member Interest
     or any transfer of the Undivided Interest or the Owner Lessor's Interest,
     or any part thereof by the Owner Lessor or the exercise by any such party
     of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of the
     Collateral Trust Indenture, if required, and the ownership and leasehold
     interests conveyed pursuant to this Agreement, or (ix) as may be required
     under any Applicable Law enacted or adopted after the date hereof.

                                       16

<PAGE>

     B.   Representations and Warranties of the Owner Lessor. The Owner Lessor
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the Owner
     Lessor is or will be a party has been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Lessor, and (ii)
     assuming the due authorization, execution and delivery of this Agreement by
     each party hereto other than the Owner Lessor, this Agreement constitutes
     and when executed and delivered each of the other Operative Documents
     (other than the Lessor Notes) to which it is or will be a party will be the
     legal, valid and binding obligations of the Owner Lessor, enforceable
     against the Owner Lessor in accordance with its terms, except as the same
     may be limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the rights of creditors
     generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Lessor is a party or
     by which the Owner Lessor or its property is bound, or in the creation of
     any Owner Lessor's Lien; provided, however, that no representation is made
     with respect to the right, power or authority of the Owner Lessor to act as
     operator of the Facility following a Lease Event of Default or the
     expiration or termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor

                                       17

<PAGE>

     is or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner Lessor,
     threatened, action, suit, investigation or proceeding against the Owner
     Lessor before any Governmental Entity which (i) questions the validity of
     the Operative Documents or the South Point Ground Lease or the ability of
     the Owner Lessor to perform its obligations under the South Point Ground
     Lease or the Operative Documents to which it is or will be a party or (ii)
     if determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Owner Lessor to perform its obligations
     under this Agreement or any other Operative Document to which it is or will
     be a party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, the offering of which for the purposes of the Securities
     Act would be deemed to be part of the same offering as the offering of the
     Member Interest, the Lessor Notes or the Certificates or any part thereof
     or solicited any offer to acquire any of the same in violation of the
     registration requirements of Section 5 of the Securities Act.

          C.   Representations and Warranties of the Lessor Manager and the
Trust Company. The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is a national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative Documents
     to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against

                                       18

<PAGE>

     it in its individual capacity or as Lessor Manager, as the case may be, in
     accordance with its terms, except as may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the case
     may be, with the terms and provisions hereof and thereof, do not and will
     not contravene any Applicable Law of the State of Utah governing the Trust
     Company or any United States federal law governing the banking or trust
     powers of the Trust Company, or the LLC Agreement or its organizational
     documents or bylaws or contravene the provisions of, or constitute a
     default by the Trust Company under any indenture, mortgage or other
     material contract, agreement or instrument to which the Trust Company is a
     party or by which the Trust Company or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of the
     Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may be,
     of the LLC Agreement, this Agreement or the other Operative Documents to
     which the Trust Company or the Lessor Manager is or will be a party, other
     than any such authorization or approval or other action or notice or filing
     as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to

                                       19

<PAGE>

     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may be,
     to perform its obligations under the LLC Agreement, this Agreement or any
     other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any interest
     therein or part thereof or the Lien of the Indenture Trustee on the
     Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any offer
     to acquire any of the same in violation of the registration of Section 5 of
     the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and perform
     its obligations under this Agreement, the LLC Agreement and the Tax
     Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement and
     any other Operative Document to which the Owner Participant is or will be a
     party constitute or when executed and delivered will constitute the legal,
     valid and binding obligations of the Owner Participant, enforceable against
     the Owner Participant in accordance with their respective terms, except as
     the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant with the
     terms and provisions hereof and thereof, do not and will not contravene any
     Applicable Law binding on the Owner Participant, or its organizational
     documents, or contravene the provisions of, or constitute a default under
     any indenture, mortgage or other material contract, agreement or instrument
     to which the Owner Participant is a party or by

                                       20

<PAGE>

     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity is
     required for the due execution, delivery or performance by the Owner
     Participant of this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement or any other Operative Document to which the Owner Participant is
     or will be a party, other than any authorization or approval or other
     action or notice or filing as has been duly obtained, taken or given (it
     being understood that no representation or warranty is being made as to any
     Applicable Laws relating to the Facility or the Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to materially adversely affect the ability of the
     Owner Participant to perform its obligations under the LLC Agreement, this
     Agreement or any other Operative Document to which it is or will be a party
     or would materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present intention
     of distributing such Member Interest or any part thereof in any manner
     which would require registration under or would violate the Securities Act,
     but without prejudice, however, to the right of the Owner Participant at
     all times to sell or otherwise dispose of all or any part of such Member
     Interest under an exemption from registration available under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, or in any security or lease the offering of which for
     the purposes of the Securities Act would be deemed to be part of the

                                       21

<PAGE>

     same offering as the offering of the Member Interest, the Lessor Notes or
     the Certificates or any part thereof or solicited any offer to acquire any
     of the same in violation of the registration requirements of Section 5 of
     the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Indenture Trustee
     and/or in its individual capacity to the extent expressly provided herein
     or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Indenture Trustee, each
of the other Operative Documents to which the Indenture Trustee is or will be a
party constitutes or when executed and delivered will be a legal, valid and
binding obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

                                       22

<PAGE>

Non-Contravention. The execution and delivery by the Lease Indenture Company, in
     its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its individual
     capacity or as Indenture Trustee, as the case may be, of the transactions
     contemplated hereby and thereby, and the compliance by the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, with the terms and provisions hereof and thereof, do not and will
     not contravene any Applicable Law of the State of Connecticut or the United
     States of America governing the Lease Indenture Company or the banking or
     trust powers of the Lease Indenture Company, or its articles of association
     or by-laws, or contravene the provisions of, or constitute a default by the
     Lease Indenture Company under or pursuant to any indenture, mortgage or
     other material contract, agreement or instrument to which the Lease
     Indenture Company is a party or by which the Lease Indenture Company or its
     property is bound, or result in the creation of any Lien attributable to
     the Lease Indenture Company upon the Indenture Estate, the Facility Site or
     any interest therein or any part thereof (other than the Lien of the
     Collateral Trust Indenture), which would materially adversely affect the
     ability of the Lease Indenture Company, in its individual capacity or as
     Indenture Trustee, as the case may be, to perform its obligations under
     this Agreement or the other Operative Documents to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the security interest of the
     Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity of
     the State of Delaware or of the United State of America governing its
     banking or trust powers is required for the due execution, delivery or
     performance by the Lease Indenture Company or the Indenture Trustee, as the
     case may be, of this Agreement or the other Operative Documents to which
     the Indenture Trustee is or will be a party, other than any such
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of the
     Lease Indenture Company or the Indenture Trustee to perform its obligations
     under the Operative Documents to which it is or will be a party or (ii) if
     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Lease Indenture Company to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or could reasonably be expected to materially
     adversely affect the Facility, the Facility Site or any interest therein or
     part thereof or the Lien of the Indenture Trustee on the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
               Trustees and the Pass Through Company. The Pass Through Company
               and the Pass Through

                                       23

<PAGE>

               Trustees hereby severally represent and warrant that as of the
               date of execution and delivery hereof and as of the Closing
               Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement and
     each of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the Pass
     Through Trustees and the Pass Through Company and (B) assuming the due
     authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may be
     limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the other
     Operative Documents by each party thereto other than the Pass Through
     Company or such Pass Through Trustee, as the case may be, each of the other
     Operative Documents to which the Pass Through Company or any Pass Through
     Trustee is or will be a party constitutes or when executed and delivered
     will constitute a legal, valid and binding obligation of the Pass Through
     Company or such Pass Through Trustee, enforceable against the Pass Through
     Company or such Pass Through Trustee, as the case may be, in accordance
     with its terms, except as the same may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the

                                       24

<PAGE>

     Pass Through Company upon the Certificates or any indenture, mortgage or
     other material contract, agreement or instrument to which the Pass Through
     Company is a party or by which the Pass Through Company or its property is
     bound which would materially adversely affect the ability of the Pass
     Through Company, in its individual capacity or as Pass Through Trustee, as
     the case may be, to perform its obligations under this Agreement or the
     other Operative Documents to which it is a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of any Pass Through Trustee in
     the Indenture Estate; provided, however, that no representation is made
     with respect to the right, power or authority of the Pass Through Company
     or any Pass Through Trustee to act as operator of the Facility following a
     Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity
     governing its banking or trust powers is required for the due execution,
     delivery or performance by the Pass Through Company or any Pass Through
     Trustee, as the case may be, of this Agreement or the other Operative
     Documents to which such Pass Through Trustee is or will be a party, other
     than any such authorization or approval or other action or notice or filing
     as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor,
the Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of any
Person shall not be subject to such Person's own performance or compliance, and
each of the Transaction Parties (other than the Certificateholders) shall
provide such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                       25

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 530 MW of
capacity and shall comply in all material respects with the other specifications
set forth in the purchase and construction contracts for the Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall Transaction
to be delivered at Closing (including, without limitation, the Offering
Circular)) shall have been duly authorized, executed and delivered by the
parties thereto (if attached as an Exhibit hereto, in substantially the form
attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and effect,
and executed counterparts of each shall have been delivered to each of the
parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained in
the Certificate Purchase Agreement shall have been satisfied or waived by the
Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner Lessor
through the purchase by the Pass Through Trustees of the applicable Lessor
Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency of
all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and warranties
of each party hereto set forth in Section 3 shall be true and correct on and as
of the Closing Date with the same effect as though made on and as of the
Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the determination by FERC of EWG
status and the FERC Order referenced in clause (ii) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                       26

<PAGE>

     F.   Consents. (a) All permits, licenses, approvals and consents
(including management, credit and other internal approvals of the Transaction
Parties, but excluding the Third Party Consent referred to in (b) below)
necessary to consummate the Overall Transaction and to own and operate the
Facility as currently operated shall have been duly obtained and shall be in
full force and effect and in the form and substance satisfactory to each of the
Transaction Parties.

          (b)  Each Third Party Consent shall have been obtained and shall be
in full force and effect substantially in the form attached hereto as Exhibit M
which is applicable to the relevant third party granting such consent; provided
that if any Third Party Consent is not substantially in the form attached
hereto as Exhibit M, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                       27

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(ii) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a copy of the Survey
(certified to the Owner Lessor and the Title Company) in form and substance
satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance

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<PAGE>

Consultant, and the Power Market Consultant, which reports shall be dated as of
the Closing Date and shall otherwise each be in form and substance reasonably
satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by CCFC of its interest in the Undivided Interest and the Ground
Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to
the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Holland and Hart LLP, Tribal
counsel to the Facility Lessee, the Owner Participant, the Owner Lessor and the
Initial Purchasers, (e) Karen Scowcroft, Esq., in-house counsel to the Equity
Investor, (f) Dewey Ballantine LLP, counsel to the Owner Participant and to the
Owner Lessor, (g) Bingham Dana LLP, counsel to the Lease Indenture Company and
the Indenture Trustee, (h) Bingham Dana LLP, counsel to the Pass Though
Trustees and the Pass Through Company, (i) Ray Quinney & Nebeker, in-house
counsel to the Lessor Manager and (j) Fennemore Craig, A Professional
Corporation, Arizona counsel to the Facility Lessee, the Owner Participant, the
Owner Lessor and the Initial Purchasers, in each case in form and substance
reasonably satisfactory to each Transaction Party. Each such Person expressly
consents to the rendering by its counsel of the opinion referred to in this
Section 4.19 and acknowledges that such opinion shall be deemed to be rendered
at the request and upon the instructions of such Person, each of whom has
consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall,
to the extent requested, permit the Rating Agencies and the Initial Purchasers
to rely on their opinion as if such opinion were addressed to such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the (x) Uniform Commercial Code
of Arizona and Delaware and (y) Fort Mojave Indian Reservation Uniform
Commercial Code ("FMUCC") and FMUCC First Amendments 1994 Amendment, and any
other documents as may be reasonably requested by counsel to the Owner
Participant, the Indenture Trustee or the Pass Through Trustees to perfect (i)
the Owner Lessor's Interest and the Easement, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the South Point
Ground Lease shall have been satisfied or waived and the Owner Participant
shall be satisfied that the Facility shall be in the condition described in the
Closing Appraisal.

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<PAGE>

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to perform its obligations under the
South Point Ground Lease or would materially adversely affect the Facility or
the Facility Site. On the Closing Date, each Certificateholder's purchase of
Lessor Notes shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Certificateholder is subject, (ii) not violate any
Applicable Law (including Regulation U, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Certificateholder to any tax,
penalty or liability under or pursuant to any Applicable Law, which Applicable
Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the other
Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

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<PAGE>

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to both the Facility
Lessee and CCFC in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have a
Material Adverse Effect (including, but not limited to, the Facility Lessee, the
Owner Participant, the Owner Lessor or the Certificateholders being subject to
or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates or
the financial and organizational regulation of electric utilities), nor shall
any order, judgment or decree have been issued or proposed by any Governmental
Entity at the time of the Closing Date, to set aside, restrain, enjoin or
prevent the consummation of the Operative Documents or the South Point Ground
Lease or any of the Transactions contemplated by any of the Operative Documents
or the performance of the South Point Ground Lease.

No Material Adverse Change. The annual reports, information, documents and other
reports referred to in Section 3.2(a) of the Calpine Guaranty shall have been
received by the Owner Participant, and there shall have been no material adverse
change in the financial condition, business assets or operation of Calpine and
its Consolidated Subsidiaries since the date of such annual reports,
information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

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<PAGE>

     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents to
     which Calpine is a party in a manner reasonably satisfactory to the Owner
     Participant, the Owner Lessor or (B) Calpine's obligations under the
     Calpine Guaranty have been succeeded to in accordance with Section 8.4(b)
     of the Calpine Guaranty, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each
     succeeding or surviving entity and the Calpine Guaranty shall remain in
     full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into account
     the nature of the transactions referred to hereunder) have been satisfied
     in connection with such transfer, and (iii) each succeeding or surviving
     entity shall be organized under the laws of the United States, any state
     thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses (including
     reasonable attorneys' fees and expenses) of the Owner Participant, the

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<PAGE>

     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create, incur,
assume or suffer to exist any Indebtedness (including without limitation any
guaranty or other contingent obligations) except (i) by reason of endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of the Facility Lessee's business, (ii) indemnities in respect
of unfiled mechanics' liens and other liens permitted by clause (d) of the
definition of "Permitted Liens", (iii) contingent obligations set forth in, or
incurred in connection with, or indemnities set forth in, the Operative
Documents and the South Point Ground Lease, (iv) unsecured indemnities provided
by, and other unsecured contingent obligations incurred by the Facility Lessee
in connection with either (x) Easement relating to its applicable interest in
the Facility or the Facility Site or (y) any contract, agreement or other
document or instrument relating to the South Point project which is entered into
in the ordinary course of the Facility Lessee's business, (v) customary
indemnities in favor of the title insurers providing the title policies covering
the Facility Site or any portion thereof or any easement or appurtenant right
relating thereto in respect of claims by the holder of mechanics' liens, (vi)
the indemnities referred to in Section 9.1 and 9.2 of the Participation
Agreement or pursuant to the Tax Indemnity Agreement and (vii) unsecured
Indebtedness incurred in accordance with Section 11.1 or 11.2 hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the South Point
Ground Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the South Point Ground Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     K.   Books, Records, Access. The Facility Lessee shall maintain or cause
to be maintained adequate books, accounts and records with respect to itself,
the Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in

                                       33

<PAGE>

compliance with the regulations of any Governmental Entity having jurisdiction
thereof, and permit employees, agents and representatives of the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Collateral Trust
Indenture shall have not been terminated or discharged, the Indenture Trustee,
the Pass Through Trustees and the Certificateholders, and such parties'
independent consultants, at all reasonable times during normal business hours
and upon reasonable prior notice and at no risk or (except during the existence
of a Lease Default or Lease Event of Default) expense to the Facility Lessee to
inspect, the Facility and Facility Site, to examine or audit all of or any of
the Facility Lessee's books, accounts and records and make copies and memoranda
thereof and, together with such consultants, to observe the operation,
maintenance and repair of the Facility; provided, however, any such inspection
shall be conducted in accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be
               furnished to, the Owner Lessor, the Owner Participant and, so
               long as the Lien of the Collateral Trust Indenture has not been
               terminated or discharged, the Indenture Trustee and the Pass
               Through Trustees, and their respective authorized
               representatives from time to time such information as such party
               shall reasonably request concerning the Facility and Facility
               Site including information concerning the condition, operation,
               maintenance and use of the Facility and Facility Site and such
               other financial or operating information as it shall reasonably
               request and which is routinely made available to creditors of
               the Facility Lessee, to the extent it possesses such
               information; provided that, the Facility Lessee reserves the
               right not to provide any information that is not otherwise
               publicly available to any transferee Owner Participant (or its
               Owner Lessor) if it reasonably believes in its good faith
               judgment that such transferee Owner Participant or any Affiliate
               thereof is a competitor or is an Affiliate of a competitor of
               the Facility Lessee or its Affiliates in the competitive power
               market, unless, before receiving any such information, such
               transferee Owner Participant shall have put in place (to the
               reasonable satisfaction of the Facility Lessee) appropriate
               confidentiality arrangements. To the extent such information
               consists of information contained in records kept by the
               Facility Lessee or any Affiliate, such information shall be
               furnished without cost to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the Owner
Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture Trustee
promptly in writing of the occurrence of any Significant Lease Default, Lease
Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

                                       34

<PAGE>

     L.   Intentionally Deleted.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence of
any reportable event (as defined in Section 4043(c) of ERISA) with respect to
any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or any
ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the Facility
Lessee or any ERISA Affiliate is notified that any Multiemployer Plan has
entered reorganization status, has become insolvent, or has terminated (or any
Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of its
intent to terminate) under Section 4041A of ERISA, (iv) the institution of any
action to terminate a Plan in a distress termination under Section 4041(c) of
ERISA, or (v) in the case of the breach of any other covenant contained in this
Section 5.11, the Facility Lessee shall report such occurrence or breach to the
Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the Owner
Participant and furnish such information as such Persons may reasonably request
with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the South Point Ground Lease, it will not enter into or become bound by any
contract or agreement providing for the sale of energy produced from the
Facility, or the purchase of services to be performed at, for or in connection
with, the Facility or any other contract or agreement relating to the Facility
that (i) has a term that extends beyond the Basic Lease Term or the scheduled
expiration of any Renewal Lease Term then in effect or elected by the Facility
Lessee, unless such contract or agreement may be terminated by the Facility
Lessee without material costs or obligation prior to the Basic Lease Term or the
scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or which
binds the Facility or the owner of the Facility beyond the expiration of the
Facility Lease Term; provided that nothing in this Section 5.12 shall prevent
the Operator from entering agreements to operate the Facility in accordance with
the Operative Documents and the South Point Ground Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the Collateral
Trust Indenture.

                                       35

<PAGE>

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Easement and the Facility Site or on any of its other
properties real or personal, whether now owned or hereafter acquired, except
Permitted Liens.

     M.   Investments. The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     N.   Intentionally Deleted

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority. The Facility
               Lessee shall not without the prior written consent of the Owner
               Participant and, except as otherwise provided in Section 8 of
               the Collateral Trust Indenture and so long as the Lien of the
               Collateral Trust Indenture has not been terminated or
               discharged, the Indenture Trustee, (x) cause or consent to or
               (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document. In addition, the
               Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of the
               South Point Ground Lease without the consent of the Owner
               Participant if the same would (i) subject in all cases to the
               provisions of clause (iii) below, during the Facility Lease
               Term, have a material adverse effect on the Owner Participant or
               the Owner Lessor (including, without limitation, any material
               decrease in their respective rights or any material increase in
               their respective obligations or any material increase in the
               liability exposure of the Owner Lessor or the Owner Participant,
               it being agreed that (x) in determining whether any such
               material adverse effect has occurred, the fact of the Facility
               Lessee's obligations under the Operative Documents (including
               paragraph (b) below) and of Calpine under the Calpine Guaranty
               shall be taken into account and (y) any increase in rent or any
               other amount payable by the Owner Lessor or the Owner
               Participant under the South Point Ground Lease that is also
               reflected to the same extent under the Facility Site Lease and
               does not remain in effect after the expiration of the then
               existing Basic Lease Term

                                       36

<PAGE>

               or any Renewal Term with respect to which the Facility Lessee
               shall have irrevocably exercised its renewal option shall not
               constitute or cause or be deemed to constitute or cause such a
               material adverse effect), (ii) during the period after the
               expiration or termination of the Facility Lease Term, have any
               adverse effect whatsoever on the Owner Participant or the Owner
               Lessor (including, without limitation, any increase in their
               respective obligations or decrease in their respective rights)
               or (iii) whether during or after the Facility Lease Term, result
               in any change to the length of the term of the South Point
               Ground Lease or in any option to renew the Facility Lease Term.
               The Facility Lessee will furnish the Owner Participant with a
               copy of the executed version thereof promptly after the
               execution thereof. Notwithstanding anything to the contrary
               contained in the foregoing, the Facility Lessee shall not have
               any right to take any action otherwise permitted pursuant to
               this Section 5.20 if a Significant Lease Default or Lease Event
               of Default shall have occurred and be continuing. So long as the
               Lien of the Collateral Trust Indenture has not been discharged,
               the Facility Lessee shall not take any action pursuant to or in
               accordance with the foregoing provisions of this Section 5.20,
               if such action would (i) have a material adverse effect on the
               Indenture Trustee, the Pass Through Trustees, the Noteholders or
               the Certificateholders including, without limitation, a material
               adverse effect on such Person's rights and remedies under the
               Operative Documents (it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the fact
               of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and Calpine's
               obligations under the Calpine Guaranty shall be taken into
               account and (y) any increase in rent or any other amount payable
               by the Owner Lessor or the Owner Participant under the South
               Point Ground Lease that is also reflected to the same extent
               under the Facility Site Lease ) shall not constitute or cause
               such a material adverse effect) or (ii) result in the release of
               or loss of the first priority, perfected Lien (subject to
               Permitted Liens) on all or any material portion of the Owner
               Lessor's interest in the Facility or the Facility Site, except
               as otherwise permitted by the Operative Documents.

          (b)   During the Facility Lease Term (i) the Facility Lessee shall,
at its own expense, on behalf of the Owner Lessor, duly fulfill and comply with
all obligations on the part of the Owner Lessor under or in connection with the
South Point Ground Lease and the Easement (or any extension or renewal of any
thereof) at the time performance of such obligations is required under the
South Point Ground Lease and (ii) in connection with the foregoing obligation
of the Facility Lessee set forth in clause (i), subject to clause (a) above,
the Facility Lessee shall have and be entitled to exercise all rights and
benefits (including the right to enter into any amendment, modification,
extension, termination, variance, waiver, notice or consent or any action with
respect thereto, subject to the terms and conditions of the Operative
Documents) of the Owner Lessor under the South Point Ground Lease and Easement.

                                       37

<PAGE>

Name and Location. The Facility Lessee shall not change its name or the location
of its chief executive office or place of business without notice to the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through Trustees and
the Owner Participant at least thirty (30) days prior to such change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the South Point Ground Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien on
any part of the Facility; provided, that the Facility Lessee may contest in good
faith any such taxes, assessments and other charges and, in such event, may
permit the taxes, assessments or other charges so contested to remain unpaid
during any period, including appeals, when the Facility Lessee is in good faith
contesting the same, so long as (a) adequate reserves consistent with GAAP
requirements (or other security arrangements reasonably satisfactory to the
Indenture Trustee and the Owner Participant) are established and maintained in
an amount sufficient to pay any such taxes, assessments or other charges,
accrued interest thereon and potential penalties or other costs relating
thereto, or other adequate provision for the payment thereof shall have been
made, and (b) any tax, assessment or other charge determined to be due, together
with any interest or penalties thereon, is immediately paid after resolution of
such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility, the Facility Site or the Easement, whether or not
compliance therewith shall require structural changes in the Facility or any
part thereof or require major changes in operational practices or interfere
with the use and enjoyment of the Facility or any part thereof, and (b)
procure, maintain and comply, or cause to be procured, maintained and complied
with, all Applicable Permits, except in the case of clause (a) and (b) above,
(1) as may be contested in accordance with Section 7 or 8 of the Facility Lease
and (2) the Facility Lessee may, in good faith and by appropriate proceedings,
diligently contest the validity or application of any such Applicable Laws in
any reasonable manner which does not involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material Lien on the Facility,
(ii) impair the use, operation or maintenance of the Facility in any material
respect, (iii) any criminal liability being incurred by the Owner Participant,
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Lease
Indenture Company, the Pass Through Trustees, the Pass Through Company or any
Certificateholder, (iv) the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustees, the

                                       38

<PAGE>

Pass Through Company or any Certificateholder being subjected to any
unindemnified civil liability or of the Owner Participant or the Owner Lessor
being subject to regulation as a public utility under Applicable Law, or (v)
any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and liability,
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as may be necessary in order to
carry out the intent and purposes of this Participation Agreement and the other
Operative Documents, and the transactions contemplated hereby and thereby. The
Facility Lessee, at its own cost, expense and liability, will cause such
financing statements and fixture filings (and continuation statements with
respect thereto) as may be necessary and such other documents as the Owner
Participant, the Owner Lessor and, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
and the Pass Through Trustees shall reasonably request to be recorded or filed
at such places and times in such manner, and will take all such other actions or
cause such actions to be taken, as may be necessary in order to establish,
preserve, protect and perfect the right, title and interest of the Owner Lessor
in and to the Undivided Interest, the Ground Interest, any Component or any
portion of any thereof or any interest therein and the first priority Lien
intended to be created by the Collateral Trust Indenture therein. The Facility
Lessee shall promptly from time to time furnish to the Owner Participant, the
Owner Lessor or, so long as the Lien of the Collateral Trust Indenture shall not
have been terminated or discharged, the Indenture Trustee or the Pass Through
Trustees such information with respect to the Facility or the Facility Site, the
transactions contemplated by the Operative Documents to which the Facility
Lessee is a party and the performance of the South Point Ground Lease as may be
required to enable the Owner Participant, the Owner Lessor or, so long as the
Lien of the Collateral Trust Indenture shall not have been terminated or
discharged, the Indenture Trustee or the Pass Through Trustees, as the case may
be, to timely file with any Governmental Entity any reports and obtain any
licenses or permits required to be filed or obtained by the Owner Lessor under
any Operative Document or the South Point Ground Lease, the Owner Participant as
the owner of the Member Interest or the Indenture Trustee. The Facility Lessee
will preserve, protect, defend and enforce, or cause to be preserved, protected,
defended and enforced, the rights of itself, the Owner Lessor and the Owner
Participant under each and every Operative Document to which it is a party
(including by assignment and assumption of the rights thereunder), including
using commercially reasonable efforts to prosecute suits to enforce any such
rights and, at the request of Indenture Trustee, so long as the Lien of the
Collateral Trust Indenture has not been discharged or terminated (and thereafter
at the request of the Owner Participant), permit the Indenture Trustee and the
Owner Participant, at their respective cost and expense, to participate in such
capacity as it may choose in any such suit, any defense thereof or in the
preparation therefor; provided, however, that upon the occurrence and during the
continuance of any Lease Event of Default, if the Indenture Trustee or the Owner
Participant request that certain actions be taken and the Facility Lessee fails
to take the requested action, or to cause the requested action to be taken
within (5) Business Days, the Indenture Trustee, so long as the Lien of the
Collateral Trust Indenture has not been discharged or terminated, and the Owner
Lessor may, at the Facility

                                       39

<PAGE>

Lessee's reasonable expense, enforce, in its own name, or the Facility Lessee's
name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing the
Facility Lessee may not change the nature of its business.

     O.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the South Point Ground Lease, or earlier at the option of the
Owner Lessor. The Facility Lessee shall also, subject to obtaining any required
third party consents, assign to the Owner Lessor upon termination of the
Facility Lease any support or similar agreements to the extent relating to the
Facility it has with third parties.

     P.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     Q.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

II.   COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

                                       40

<PAGE>

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section 9.1, 9.3,
               13.1 or clause (i) of Section 13.2 of the LLC Agreement without
               the prior written consent of the Facility Lessee so long as no
               Significant Lease Default or Lease Event of Default has occurred
               and is continuing and the Indenture Trustee so long as the Lien
               of the Collateral Trust Indenture has not been terminated or
               discharged.

                                       41

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the South Point
Ground Lease in any manner or (c) except as provided in Section 11 hereof or
Section 2.10 or Section 5.6 of the Collateral Trust Indenture, take any action
to prepay or refund the Lessor Notes or amend any of the payment terms of the
Lessor Notes without, in each case, the prior written consent of the Facility
Lessee so long as no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing and, in the case of clause (a) or (b), the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents or the South Point
Ground Lease.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the Owner
Lessor covenants that it will not incur any Indebtedness nor enter into any
business or activity except as required or expressly permitted by any Operative
Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other

                                       42

<PAGE>

laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner Lessor shall not take any such
action unless the Indenture Trustee shall have given its prior written consent
to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent of
     the Indenture Trustee; provided, however, that the Owner Participant may,
     subject to Section 7.6, assign, convey or transfer all or any part of its
     interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if applicable),
     which opinion(s) and counsel are reasonably satisfactory to each such
     recipient and consistent in scope to the opinions delivered on behalf of
     the Owner Participant at the Closing, including that all regulatory
     approvals required in connection with such transfer or necessary to assume
     the Owner Participant's obligations under the Operative Documents shall
     have been obtained and that the proposed transfer of the Member Interest
     will not require registration under the Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but in
     any event, such Affiliate shall not be a Competitor of Calpine); provided
     that all of the payment and performance obligations of the Transferee with
     respect to the interest being transferred under the Operative Documents
     shall be guaranteed by the transferor Owner Participant, or a Person then
     providing a guaranty of the transferor Owner Participant's obligations
     hereunder, pursuant to an OP Parent Guaranty or (B) a Person which meets,
     or the payment and performance obligations of which with respect to the
     interest being transferred under the Operative Documents are guaranteed
     (pursuant to a OP Parent Guaranty) by a Person (the transferor Owner
     Participant or such other guarantor, the "Transferee Guarantor") which
     meets, the following criteria: (1) the tangible net worth of the Transferee
     or Transferee Guarantor, is at least equal to $75 million calculated in
     accordance with GAAP; and (2) unless waived in writing by the Facility
     Lessee prior to such transfer, such Transferee is not a Competitor of
     Calpine or in material litigation

                                       43

<PAGE>

     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in
this Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees, expenses
     and charges of the Indenture Trustee, the Pass Through Trustees, and the
     Facility Lessee (including reasonable attorneys' fees and expenses in
     connection with any such transfer or proposed transfer), including any of
     the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y) enjoy
     the rights and privileges and

                                       44

<PAGE>

     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such Lien
of which the Owner Participant has Actual Knowledge and shall promptly, at its
own expense, take such action as may be necessary to duly discharge such Owner
Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement without
the prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and without
the prior written consent of the Indenture Trustee so long as the Lien of the
Collateral Trust Indenture has not been terminated or discharged, or (b) revoke,
or otherwise waive compliance with or terminate the LLC Agreement without the
prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                       45

<PAGE>

respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or acquire
its interest of the Owner Lessor's Interest or the Member Interest of the Owner
Participant, and which offers it wishes to accept, together with a full and
complete statement of the price and all of the terms, conditions and provisions
contained in such offers. The Facility Lessee shall thereafter have the right
within a period of 45 days from and after the receipt by them of such notice
(the "Notice Period") to notify the Owner Participant of its intent to exercise
its right of first refusal. If the Facility Lessee elects to exercise the right
provided in the preceding sentence, it will within 60 days of such notice (the
"Agreement Period") execute a contract on the same terms and conditions as the
offer giving rise to such right. If the Facility Lessee does not give such
notice to the Owner Participant within the 45 day period or execute such a
contract within 60 days of such notice, the Owner Participant will be free to
proceed under the terms and conditions set forth in its notice to the Facility
Lessee, unless the failure to execute the contract within 60 days is
attributable to acts or omissions of the Owner Participant. In the event that
such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to the
Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and right
of first refusal provisions of this Section 7.6 prior to entering into such
revised agreement; provided that, for such revised offer, the Notice Period
shall be 10 Business Days from the date of such new notice, and the Agreement
Period shall not exceed 45 days from the date of the Facility Lessee's notice
accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6, it
or one of its Affiliates offers to sell any interest in an owner lessor who has
entered into any Other South Point Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under this Section 7.6 of each such
Other South Point Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                       46

<PAGE>

its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agree to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

                                       47

<PAGE>

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer to
exist any Indenture Trustee's Lien attributable to it and arising out of events
or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase and
holding of such Lessor Note (or any part thereof) constitutes assets of any Plan
or that such purchase and holding will be covered by a prohibited transaction
class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below, the
     Facility Lessee agrees to indemnify, protect, defend and hold harmless, and
     do hereby indemnify the Owner Participant, the Owner Lessor, the Trust
     Company, in its individual capacity, the Lessor Manager, the Lease
     Indenture Company in its individual capacity, the Indenture Trustee, each
     Certificateholder, the Pass Through Company in its individual capacity, the
     Pass Through Trustees, and their respective Affiliates, successors,
     assigns, agents, directors, officers and employees (each an "Indemnitee")
     against any and all Claims (whether or not any of the transactions
     contemplated by the Operative Documents are consummated) imposed on,
     incurred or suffered by or asserted against any Indemnitee in any way
     relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase, sale
     or other disposition, insuring, sublease, or other use or non-use of the
     Undivided Interest, the Ground Interest, the Facility, the Facility Site,
     the Easement or any Component or any portion of any thereof or any interest
     therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility, the Easement or
     the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, the Easement or any
     Component, or any portion of any thereof or any interest therein;

                                       48

<PAGE>

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or the Easement or any Component, or any portion thereof,
     including, for the avoidance of doubt, any such Environmental Condition
     existing prior to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the South Point Ground Lease requested by the Facility Lessee, or resulting
     from the actions of the Facility Lessee or in connection with any Lease
     Default or Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including Environmental
     Laws), or any action of any Governmental Entity or other Person taken with
     respect to the Facility, the Facility Site, the Operative Documents, the
     South Point Ground Lease or the interests of the Owner Participant, the
     Owner Lessor, the Indenture Trustee or the Pass Through Trustees, or under
     the Operative Documents or the South Point Ground Lease or the presence,
     use, storage, release, threatened release, transportation, arrangement for
     transportation, treatment, arrangement for treatment, manufacture, disposal
     or arrangement for disposal of any Hazardous Substance in, at, under or
     from the Facility, the Easement or the Facility Site, including, for the
     avoidance of doubt, any of the foregoing existing or occurring prior to the
     Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     Tribe of any obligation contained in this Agreement or any other Operative
     Document or the South Point Ground Lease or the falsity or inaccuracy of
     any representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the South Point Ground
     Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the South
     Point Ground Lease (other than the Facility Lease and the Facility Site
     Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional

                                       49

<PAGE>

     persons) arising out of the discharge of their respective duties as
     provided in the Operative Documents or the South Point Ground Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after expiration or early termination of the Facility Lease and, where
     required by the Facility Lease, surrender to the Owner Lessor or its
     successor of its interest in the Facility and Facility Site in compliance
     with the provisions of the Facility Lease and the Facility Site Lease
     respectively or (B) if the Closing Date does not occur, acts, omission or
     events occurring after the date set forth in Section 2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph (ii)
     shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition of
     any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease or (ii) any
     violation of Applicable Law by any such Person except to the extent
     attributable to a violation of Applicable Law by the Facility Lessee or any
     other Calpine Party or to any breach by the Facility Lessee or such other
     Calpine Party of any covenant, representation or warranty contained in any
     Operative Document or the South Point Ground Lease;

               a)   as to any Indemnitee, any Claim to the extent attributable
                    to the noncompliance of such Indemnitee or a Related Party,
                    with any of the terms of, or any misrepresentation or
                    breach of warranty by such Indemnitee or Related Party
                    contained in any Operative Document made by such Indemnitee
                    or Related Party or any

                                       50

<PAGE>

                    breach by such Indemnitee or a Related Party of any
                    covenant contained in any Operative Document or any breach
                    by such Indemnitee or a Related Party of any covenant
                    contained in any Operative Document made by such Indemnitee
                    or Related Party except to the extent attributable to any
                    breach by the Facility Lessee or any other Calpine Party of
                    any covenant, representation or warranty contained in any
                    Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any Claim
     constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of Default
     that is not also (or attributable to) a Lease Default or Lease Event of
     Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful misconduct,"
when applied with respect to the Owner Lessor, the Owner Participant, the
Indenture Trustee, the Pass Through Trustees or any Affiliate of any thereof,
shall not include any liability imputed as a matter of law to such Indemnitee
solely by reason of any such entity's interest in the Facility or the Facility
Site or such Indemnitee's failure to act in respect of matters which are or were
the obligation of the Facility Lessee under this Agreement or any other
Operative Document. Nothing herein shall be deemed to constitute a guaranty of
any useful life or any present or future residual value of the Facility or a
guaranty that any amount of any Secured Indebtedness will be paid.

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<PAGE>

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder which
     is covered by a policy of insurance maintained by the Facility Lessee, each
     Indemnitee agrees, unless it and each other Indemnitee shall waive its
     rights to indemnification (for itself and each Related Party thereto) in a
     manner reasonably acceptable to the Facility Lessee, to cooperate, at the
     sole cost and expense of the Facility Lessee, with insurers in exercise of
     their rights to investigate, defend or compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as to
     which indemnification is sought; provided, that the failure so to notify
     the Facility Lessee shall not reduce or affect the Facility Lessee's
     liability which it may have to such Indemnitee under this Section 9.1, and
     no payment hereunder by the Facility Lessee to an Indemnitee shall be
     deemed to constitute a waiver or release of any right or remedy that the
     Facility Lessee may have against any such Indemnitee for actual damages
     resulting directly from the failure or delay of such Indemnitee to give the
     Facility Lessee such notice. Subject to the foregoing, any amount payable
     to any Indemnitee pursuant to this Section 9.1 shall be paid within thirty
     (30) days after receipt of such written demand therefor from such
     Indemnitee, accompanied by a certificate of such Indemnitee stating in
     reasonable detail the basis for the indemnification thereby sought and (if
     such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential information
     of any kind without the execution of an appropriate confidentiality
     agreement. Promptly after the Facility Lessee receives notification of such
     Claim accompanied by a written statement describing in reasonable detail
     the Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default shall have occurred and be continuing, the Facility Lessee
     shall have the right in its sole discretion, to defend or compromise any
     Claim for which indemnification is sought under this Section 9.1 which the
     Facility Lessee acknowledges is subject to indemnification hereunder;
     provided that no such defense or compromise shall involve any danger of (i)
     foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any
     part of the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site, the Lessor Estate or the Indenture Estate or the impairment
     of the Facility or the Facility Site, in any material respect or (ii) any
     criminal liability being incurred or any material adverse effect on such
     Indemnitee; provided, further, that no Claim shall be compromised by the
     Facility Lessee on a basis that admits any criminal violation or gross
     negligence or willful misconduct on the part of such Indemnitee without the
     express written consent of such Indemnitee; and provided, further, that to
     the extent that other Claims unrelated to the transactions contemplated by
     the Operative Documents and the performance of the South Point Ground Lease
     are part of the same proceeding involving such Claim, the Facility Lessee
     may assume responsibility for the contest or compromise of such Claim only
     if the same may be and is severed from such other

                                       52

<PAGE>

     Claims (and each Indemnitee agrees to use reasonable efforts to obtain
     such a severance). In the event that in the course of the investigation or
     defense of a claim, the Facility Lessee shall in good faith reasonably
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties).  Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee

                                       53

<PAGE>

     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to the
     Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the Indemnitee
     waives its rights to indemnification hereunder or (ii) the Facility Lessee
     has not acknowledged its indemnity obligation with respect thereto and
     there is a significant risk that a default judgment will be entered
     against such Indemnitee. Nothing contained in this Section 9.1(e) shall be
     deemed to require an Indemnitee to contest any Claim or to assume
     responsibility for or control of any judicial proceeding with respect
     thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee under
     this Section 9.1 is in fact paid in full by the Facility Lessee or an
     insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by reason
     of the receipt or accrual of such refund and increased by the amount of any
     Tax (but not in excess of the amount of such reduction) saved as a result
     of such payment or (ii) the amount the Facility Lessee or any of their
     insurers has paid in respect of such Claim; provided that, so long as a
     Significant Lease Default or Lease Event of Default shall have occurred and
     is continuing such amount may be held by the Owner Lessor as security for
     the Facility Lessee's obligations under the Facility Lease, the other
     Operative Documents and the South Point Ground Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the case
     may be, or any Affiliate of any thereof or on the business or operations of
     any of the foregoing.

                                       54

<PAGE>

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity, the
     Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Easement, the Undivided Interest, the Facility Site, the
     Ground Interest, or any portion or Component thereof or any interest
     therein, or upon any Operative Document or interest therein, or in any way
     arising out of, in connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the imposition
     of any lien (or incurrence of any liability to refund or pay over any
     amount as a result of any lien) on, the Facility, the Easement, the
     Undivided Interest, the Ground Interest, the Facility Site or any portion
     or Component thereof or any interest therein;

the Facility, the Facility Site, the Easement, the Undivided Interest, the
     Ground Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility Lessee
     or Calpine, the Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Easement, the Facility Site or any portion or Component thereof, or any
     interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;
the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, the Easement or any portion or Component
     thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     South Point Ground Lease;

the conveyance of title to the Undivided Interest; or

                                       55

<PAGE>

otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of South Point Ground Lease.

          Notwithstanding anything herein to the contrary and without
regard to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner Lessor
with respect to any failure to withhold such tax, and the withholding tax would
otherwise be an Excluded Tax under Section 9.2(b) without regard to the first
sentence of this paragraph, then the Certificateholder Indemnitee with respect
to which such withholding was not made will pay the amount of tax not withheld
to the relevant taxing authority if such taxes remain unpaid or will reimburse
the Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the period
commencing on the date the Facility Lessee shall have made the indemnity payment
to such taxing authority and ending the earlier of the date of repayment by such
Tax Indemnitee and five Business Days after the date the Facility Lessee demands
reimbursement thereof pursuant to this sentence, and (b) the Overdue Rate for
the period thereafter to the date the Facility Lessee actually receives such
payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, transaction privilege taxes,
     use, rental, license, value added (to the extent value added taxes are not
     imposed in clear and direct substitution for income taxes) or property
     taxes) ("Income Taxes"), including any such Taxes collected by way of
     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided that
     this exclusion shall not apply so long as a Lease Event of Default shall
     have occurred and be continuing;

                                       56

<PAGE>

Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and not as a result of
     any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee is
     a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the Indenture
     Trustee of any interest in the Lease Debt or the Indenture Estate, or (4)
     in the case of the Owner Lessor or the Owner Participant any direct or
     indirect interest in the Owner Lessor or the Owner Participant, including
     by reason of an election made pursuant to Section 338 of the Code, in each
     case to the extent imposed by reason of any transfer described in this
     clause (v)(A), or (B) to the extent that, under law in effect on the date
     of the transfer such Taxes exceed the amount of Taxes that would be
     indemnified hereunder had there been no such assignment, sale, transfer or
     other voluntary disposition, unless such transfer or disposition occurs
     during the continuance of a Lease Event of Default or is otherwise pursuant
     to the Facility Lessee's exercise of its rights under the Operative
     Documents; provided that this exclusion shall not apply with respect to any
     initial syndication of interests in the Owner Participant accomplished
     prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

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<PAGE>

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall have
     determined in good faith that compliance with any such requirement shall
     not result in any identified non-immaterial adverse effect to its interests
     or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly required
     to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee is
     not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or Section
     8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, transaction privilege taxes, use, rental or license taxes, value
     added taxes

                                       58

<PAGE>

     (except to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all such
     payments are made on an After-Tax Basis. Each payment required to be made
     by the Facility Lessee to a Tax Indemnitee pursuant to this Section 9.2
     shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii) where
     direct payment is not permitted, and with respect to gross up amounts, in
     immediately available funds to such Tax Indemnitee by the later of (A) 10
     days following the Facility Lessee's receipt of the Tax Indemnitee's
     written demand for the payment pursuant to clause (g)(i) below (which
     demand shall be accompanied by a written statement of the Tax Indemnitee
     describing in reasonable detail the Taxes for which the Tax Indemnitee is
     demanding payment and the computation of such Taxes), (B) subject to
     paragraph (g) below, in the case of amounts which are being contested
     pursuant to such paragraph (g), at the time and in accordance with a final
     determination of such contest or (C) in the case of any indemnity demand
     for which the Facility Lessee has requested review and determination
     pursuant to paragraph (d) below, the completion of such review and
     determination; provided, however, in no event later than the date which is
     one Business Day prior to the date on which such Taxes are required to be
     paid to the applicable taxing authority. Any amount payable to the Facility
     Lessee pursuant to paragraph (e) or (f) below shall be paid promptly after
     the Tax Indemnitee realizes a Tax Benefit giving rise to a payment under
     paragraph (e) or receives a refund or credit giving rise to a payment under
     paragraph (f), as the case may be, and shall be accompanied by a statement
     of the Tax Indemnitee computing in reasonable detail the amount of such
     payment. Upon the final determination of any contest pursuant to paragraph
     (g) below in respect of any Taxes for which the Facility Lessee has made a
     Tax Advance, the amount of the Facility Lessee's obligation under paragraph
     (a) above shall be determined as if such Tax Advance had not been made. Any
     obligation of the Facility Lessee under this Section 9.2 and the Tax
     Indemnitee's obligation to repay the Tax Advance will be satisfied first by
     set off against each other, and any difference owing by either party will
     be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary for
     the accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any other
     Operative Document or the South Point Ground Lease are not within the scope

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<PAGE>

     of the independent accountant's responsibility. The fees and disbursements
     of such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason of
     a deduction, credit, allocation or apportionment of income or otherwise)
     than the amount of such Taxes that otherwise would have been payable by
     such Tax Indemnitee (a "Tax Benefit"), then to the extent such Tax Benefit
     was not taken into account in determining the amount of indemnification
     payable by the Facility Lessee under paragraph (a) or (c) above and
     provided no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing (in which event the payment provided under this
     Section 9.2(e) shall be deferred until the Significant Lease Default or
     Lease Event of Default has been cured), such Tax Indemnitee shall pay to
     the Facility Lessee the lesser of (A) (y) the amount of such Tax Benefit,
     plus (z) an amount equal to any United States federal, state or local
     income tax benefit resulting to the Tax Indemnitee from the payment under
     clause (y) above and this clause (z) (determined using the same assumptions
     as set forth in the second sentence under the definition of After-Tax
     Basis) and (B) the amount of the indemnity paid pursuant to this Section
     9.2 giving rise to such Tax Benefit; provided, however, that any excess of
     (A) over (B) shall be carried forward and reduce the Facility Lessee's
     obligations to make subsequent payments to such Tax Indemnitee pursuant to
     this Section 9.2. If it is subsequently determined that the Tax Indemnitee
     was not entitled to such Tax Benefit, the portion of such Tax Benefit that
     is required to be repaid or recaptured will be treated as Taxes for which
     the Facility Lessee must indemnify the Tax Indemnitee pursuant to this
     Section 9.2 without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax benefits,
savings, credit, deduction or allocation in its sole good faith discretion and
each position to be taken on its tax return shall be in its sole control and it
shall not be required to disclose any tax return or related documentation to any
Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility Lessee
     a Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing, such amount shall not be payable until such Significant
     Lease Default or Lease Event of Default has been cured, and (B) the amount
     payable to the Facility Lessee pursuant to this sentence shall not exceed
     the amount of the indemnity payment in respect of

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<PAGE>

     such refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and (y) over (B) in this Section 9.2(f) shall be carried
     forward and reduce the Facility Lessee's obligations to make subsequent
     payments to such Tax Indemnitee pursuant to this Section 9.2. If it is
     subsequently determined that the Tax Indemnitee was not entitled to such
     refund or credit, the portion of such refund or credit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof. If, in connection with a refund or
     credit of all or part of any Taxes paid, reimbursed or advanced by the
     Facility Lessee pursuant to this Section 9.2, a Tax Indemnitee receives an
     amount representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"), such
     Tax Indemnitee shall give the Facility Lessee written notice of such Tax
     Claim promptly after its receipt, and shall furnish the Facility Lessee
     with copies of such Tax Claim and all other writings received from the
     taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

               (1)   the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)   the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

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<PAGE>

               (3)   the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall
consult in good faith with the other party and its designated counsel with
respect to such Tax Claim and shall provide the other party with copies of any
reports or claims (or extracts therefrom) issued by the relevant auditing agents
or taxing authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect to
     a Tax Claim will be required or permitted pursuant to this Section 9.2, and
     the Facility Lessee shall be required to pay the applicable Taxes without
     contest, unless:

               (1)   within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)   there is no risk of imposition of any criminal penalties
or liabilities,

               (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)   the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

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<PAGE>

               (9)   if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to such Tax, which
admission shall be binding on the Facility Lessee unless and to the extent such
contest is determined in a manner that conclusively demonstrates that the
Facility Lessee is not so liable, and

               (10)  if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained in
     this Section 9.2, the Tax Indemnitee at any time may elect to decline to
     take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

               (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)   promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold interest of the Owner Lessor in the Facility for
     United States federal, state and local income tax purposes (if applicable),
     send a copy of such report, statement or return to the Tax Indemnitee and
     timely file such report, statement or return with the appropriate taxing
     authority, or (z) in all other cases, prepare and furnish to such Tax
     Indemnitee not later than 30 days prior to the date such report, statement
     or return is required to be filed (determined without regard to extensions)
     a proposed form of such report, statement or return for filing by the Tax
     Indemnitee; provided that the only

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<PAGE>

     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section
     9.2. Subject to the preceding sentence, the Facility Lessee's obligations
     under this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to this
     Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the rights under the Facility Lease and
Facility Site Lease, including the right to possession, use and quiet enjoyment
of the Easement, the Undivided Interest and the Ground Interest.

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<PAGE>

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an amendment
to the Facility Lease to reflect the adjustments required by clause (iv) below;
provided, however, that (x) the Owner Participant shall have been given the
opportunity, but shall have no obligation, to provide all or part of the funds
required to finance any such Improvement by making an Additional Equity
Investment in such amount, if any, as it may determine in its sole and absolute
discretion, but the Facility Lessee shall have no obligation to accept such
Additional Equity Investment; and (y) the conditions set forth below and in
Section 2.12 of the Collateral Trust Indenture shall have been satisfied. The
obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any financing
of Improvements through the issuance of such Additional Lessor Notes under the
Collateral Trust Indenture being called a "Supplemental Financing") is subject
to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that there
     shall be no changes to the amortization schedule or interest amounts and
     payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section 11
     whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default or
     Lease Event of Default and such Improvements

                                       65

<PAGE>

     shall be made in compliance with the Operative Documents and the South
     Point Ground Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the Undivided
     Interest taking into account the fair market value of such Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant or
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing
of Improvements through the Facility Lease, the Facility Lessee shall at all
times have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution control,
no Improvement shall materially decrease the value, residual value, utility or
remaining economic useful life of the Facility immediately prior to such
Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all

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conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no later
     than the final maturity date of such Initial Lessor Notes and will be fully
     repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the Facility
     Lessee on the Closing Date under the Operative Documents to which it is a
     party (except to the extent necessitated by differences between existing
     Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to such
     effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall not
     result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction
Parties that the Calpine Guaranty covers the additional indebtedness
contemplated by this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in accordance
with the terms of the Operative

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<PAGE>

Documents and the South Point Ground Lease. The Owner Participant will execute
such agreements and documents as may be necessary with respect to any such
refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted, either upward or downward, in accordance with the
     Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not result
     in a change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures ("Tax
     Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest rate
of the Certificates) shall cause either (x) the after-tax net present value of
Basic Rent discounted at 6% to increase by more than 100 basis points or (y) the
total Basic Rent to increase by more than 2%, then in either such case, the
Facility Lessee shall not be obligated to close the Overall Transaction. Any
adjustments pursuant to Section 3.4 of the Facility Lease shall comply with
Applicable Law (including any final or proposed Treasury Regulations issued
under Section 467 of the Code) as well as the requirements of Revenue Procedure
2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of Revenue Procedure 2001-29
in a manner such that amending the Facility Lease complies with the "safe
harbors" under such Treasury Regulations or otherwise does not cause the
Facility Lease to be a "disqualified leaseback or long-term agreement" within
the meaning of Section 467 of the Code and any Treasury Regulations issued
thereunder, in each case, to the extent of such compliance on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or

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<PAGE>

     the Owner Participant in accordance with the terms of the Facility Lease
     to which it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS; EXERCISE
     OF EXTENSION OF SOUTH POINT GROUND LEASE

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing, upon
     satisfaction of the conditions in paragraph (b) below, the Facility Lessee
     may assign the Facility Lease or any other Operative Document to which it
     is a party, or any interest therein to any Person, without the consent of
     the Owner Lessor, the Owner Participant, the Indenture Trustee or any other
     Transaction Party.

Assignment under Section 13.1(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the Ownership
     Interest of any non-assigning Facility Lessee), the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof), and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty or (y) Calpine's obligations under
     the Calpine Guaranty has been succeeded to in accordance with Section
     8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

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<PAGE>

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

               b)   the Facility Lessee shall have paid, at no after-tax cost
                    to such parties, all reasonable documented out-of-pocket
                    expenses (including reasonable attorneys' fees and
                    expenses) of the Owner Lessor, the Lessor Manager, the
                    Owner Participant, the Indenture Trustee, the Lease
                    Indenture Company and the Pass Through Trustees in
                    connection with such assignment;

               c)   the Facility Lessee shall have provided the Indenture
                    Trustee with (x) an indemnity against the risk that such
                    assignment will cause a Tax Event to occur to any direct or
                    indirect holder of any Lessor Note (including any
                    Certificateholder) or (y) an opinion of counsel to the
                    effect that such assignment will not cause a Tax Event to
                    occur to any direct holder of any Lessor Note and any
                    Certificateholder; and

               d)   the transfer shall not cause the Facility to cease being
                    treated as a "qualified Indian reservation or property"
                    within the meaning of Section 168(j)(4) of the Code or
                    cause the Facility to become "tax-exempt use property
                    within the meaning of Section 168(h) of the Code (unless
                    the Facility Lessee shall make a payment contemporaneously
                    with such transfer that in the reasonable

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<PAGE>

                    judgment of the Owner Participant compensates the Owner
                    Participant for the adverse tax consequences therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the South Point Ground Lease, except for obligations (including Section 9.1
and 9.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of the Operative Documents or which have otherwise accrued but
not been paid as of such date and (ii) the Owner Participant or the OP
Guarantor will transfer (by an appropriate instrument of transfer) the Member
Interest to the Facility Lessee (or its designee); provided, however, that if
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

     G.   Exercise of Extension of South Point Ground Lease. The rights of the
Owner Lessor delegated to the Facility Lessee, pursuant to Section 5.20(b)
hereof, and subject to the terms and conditions thereof, include the right to
negotiate and to exercise the Owner Lessor's

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<PAGE>

rights (to the extent of the Owner Lessor's Percentage) to extend the term of
the South Point Ground Lease in accordance with Section 4.2 thereof; provided,
however, that (i) such right may not be exercised by the Facility Lessee during
the occurrence and continuation of a Lease Event of Default and following the
commencement of the exercise of the Owner Lessor's remedies under Section 17 of
the Facility Lease, nor following the termination of the Facility Lease
pursuant to Section 17 thereof or the Facility Site Lease pursuant to Article
XVI thereof; provided further that the Facility Lessee agrees that, except as
otherwise provided in the third paragraph of this Section 13.3, it shall not
decline to exercise such right to extend, and shall not cancel any such
election of such right without the consent of the Owner Lessor unless the Owner
Participant has disapproved of the terms of the extension pursuant to Section
5.20 hereof.

          Notwithstanding the foregoing, the Facility Lessee may elect to
extend the South Point Ground Lease pursuant to Section 4.2 thereof and
exercise the Owner Lessor's rights under such Section only if, concurrently
with such election, the Facility Lessee also elects to extend the South Point
Ground Lease with respect to the Other South Point Owner Lessors on the same
terms and conditions negotiated for the Owner Lessor giving effect to their
respective percentage interests in the South Point Ground Lease. Additionally,
the Owner Lessor shall not give the Facility Lessee consent to refrain from
exercising the extension of the South Point Ground Lease or to cancel any such
extension, unless concurrently with such consent, the Other South Point Owner
Lessors also give such consent to the Facility Lessee with respect to the
respective interests of the Other Owner Lessors in the South Point Ground Lease.

          Notwithstanding any provision to the contrary in this Agreement or in
any other Operative Document, the Facility Lessee shall have no obligation to
exercise the lease extension right as provided in Section 4.2 of the South
Point Ground Lease, as amended, if the Facility Lessee shall disagree with the
amount of the Annual Renewal Amount (as defined in the South Point Ground
Lease) as determined pursuant to the terms of Section 4.2 of the South Point
Ground Lease, as amended. If the Facility Lessee shall so disagree with such
determination of the amount of the Annual Renewal Amount, then the Facility
Lessee shall have the right, in its sole discretion and without consent from
any of the Owner Lessor, Owner Participant or Indenture Trustee or any other
Person, to reject, and not accept and exercise, the lease extension right
contained in Section 4.2 of the South Point Ground Lease, and, in connection
therewith, to permit the Facility Lease and the Facility Site Lease to
terminate after expiration of the then current lease term of each thereof;
provided that nothing in this third paragraph of Section 13.3 shall, or shall
be deemed to, limit or affect the right of the Owner Lessor to extend the term
of the South Point Ground Lease by exercising, for and on its own behalf, the
lease extension right for the amount of the Annual Renewal Amount so
determined, or as otherwise may be determined in subsequent negotiations by the
Owner Lessor, it being understood that (A) unless otherwise agreed by the Owner
Lessor, the Facility Lessee's rejection and non-acceptance referred to above
shall be irrevocable and (B) neither the Facility Lessee nor any Calpine Party
shall have any right, title or interest in, or (except as otherwise provided in
Section 14.6) obligation or liability under or in connection with, the South
Point Ground Lease in respect of any period commencing on or after the later of
the termination of the Facility Lease and the termination of the Facility Site
Lease as aforesaid.

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<PAGE>

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document or
the South Point Ground Lease.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          South Point Energy Center, LLC

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<PAGE>

          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-1, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

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<PAGE>

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

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<PAGE>

          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, NATIONAL
               ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
               ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, NATIONAL
               ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
               ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

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<PAGE>

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto.
          In addition, the Facility Lessee shall (unless otherwise
          directed by the applicable Rating Agency) provide to each
          Rating Agency a copy of any information, report or notice it
          gives to the Indenture Trustee hereunder or any other
          Operative Documents.

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<PAGE>

Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the South Point Ground Lease regardless of any
investigation made by any such party or on behalf of any such party. In
addition, the indemnifications by the Facility Lessee under Sections 9.1 and
9.2 of this Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the
Facility Site Lease and the Calpine Guaranty, shall expressly survive the
expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition of the respective interests
of the Owner Participant, the Owner Lessor, the Lessor Manager, the Lease
Indenture Company, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders in, to and under this Agreement, the Assignment Agreement
and the other Operative Documents and the South Point Ground Lease. Except as
expressly provided above or in Section 22.3 of the Facility Lease, the Tax
Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee for
     any action or inaction on the part of the Owner Lessor in connection with
     the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or duties
     expressly set forth in this Agreement and the other Operative Documents,
     and neither the Facility Lessee nor any other Calpine Party (except Calpine
     to the extent set forth in the Calpine Guaranty) shall be liable for
     performance by any other party hereto of such other party's obligations or
     duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for, or
     for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the South Point Ground Lease, as to
     all of which the other parties hereto agree to look solely to the Indenture
     Estate and the Lessor Estate, respectively; provided, however, that the
     Lease Indenture Company and the Pass Through Trust Company shall be liable
     hereunder for their own negligence or willful misconduct or for a breach of
     their representations, warranties and covenants made in their individual
     capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                       79

<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in their sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York County
     (without prejudice to the right of any party to remove to the United States
     District Court for the Southern District of New York) and to the
     nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or other
     proceeding arising out of this Agreement, the other Operative Documents,
     and the South Point Ground Lease (except as otherwise provided therein) or
     the subject matter hereof or thereof or any of the transactions
     contemplated hereby or thereby brought by any of the parties hereto or
     their successors or assigns; (ii) hereby irrevocably agrees that all claims
     in respect of such action or proceeding may be heard and determined in such
     New York State court, or in such federal court; and (iii) to the extent
     permitted by Applicable Law, hereby irrevocably waives, and agrees not to
     assert, by way of motion, as a defense, or otherwise, in any such suit,
     action or proceeding any claim that it is not personally subject to the
     jurisdiction of the above-named courts, that the suit, action or proceeding
     is brought in an inconvenient forum, that the venue of the suit, action or
     proceeding is improper or that this Agreement, the other Operative
     Documents, or the subject matter hereof or thereof may not be enforced in
     or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                       80

<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee
     designates, appoints and empowers National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents or with respect to the Facility Lessee, for
     so long as it has any obligations remaining under the South Point Ground
     Lease. The Facility Lessee shall grant an irrevocable power of attorney to
     CT Corporation System, in respect of such appointment and shall maintain
     such power of attorney in full force and effect for so long as any
     obligation of the Facility Lessee shall remain outstanding hereunder or
     under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and deliver
such further documents to make such further assurances for and take such further
action reasonably requested by any party to whom such first party is obligated,
all as may be reasonably necessary to carry out more effectively the intent and
purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such subject
matter; provided that, notwithstanding the foregoing,

                                       81

<PAGE>

the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of Loss,
at the cost and expense of the Facility Lessee, so long as there shall be no
adverse consequences to the Owner Lessor or the Owner Participant as the result
of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     14.21;

as may be required by Applicable Law or, upon prompt prior written
     notice to the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed in
     writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

                                       82

<PAGE>

          The foregoing obligation as to confidentiality and non-use
shall survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case of
a waiver, by the party against which enforcement of such waiver is sought, and
no such waiver shall become effective unless signed copies thereof shall have
been delivered to each such party or (b) in the case of termination, amendments,
supplements or modifications, consented to by all parties hereto; provided,
however, that the consent of the Facility Lessee is not required in the case of
amendments to any Operative Document to which the Facility Lessee is not a party
and which would not increase or accelerate the Facility Lessee's or the
Guarantor's obligations under any of the Operative Documents nor impair the
Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

     H.   South Point Ground Lease

     The parties hereto acknowledge and agree that, in accordance with Section
7.2 of the Facility Lease, the Facility Lease is subject and subordinate to all
the terms and conditions of the South Point Ground Lease.

                                       83

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized.

                              SOUTH POINT ENERGY CENTER, LLC,
                              a Delaware limited liability company

                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   SOUTH POINT OL-1, LLC, a Delaware limited
                                   liability company

                                   By: WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION
                                   not in its individual capacity but solely as
                                   Lessor Manager


                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:


                                   SBR OP-1, LLC, a Delaware limited liability
                                   company

                                   By: WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION
                                   not in its individual capacity but solely as
                                   Lessor Manager


                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:


                                   WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION,
                              not in its individual capacity, except as
                              expressly provided herein, but solely as Lessor
                              Manager

                              By: _________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   STATE STREET BANK AND TRUST
                                   COMPANY OF CONNECTICUT, NATIONAL
                                   ASSOCIATION,
                              not in its individual capacity, except to the
                              extent expressly provided herein, but solely as
                              Indenture Trustee under the Collateral Trust
                              Indenture

                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:

                                   STATE STREET BANK AND TRUST
                                   COMPANY OF CONNECTICUT, NATIONAL
                                   ASSOCIATION,
                              not in its individual capacity, except to the
                              extent expressly provided herein, but solely as
                              Pass Through Trustees under the Pass Through
                              Trust Agreement

                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   CALPINE CORPORATION,
                                   a Delaware corporation
                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but
     in another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)  a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;

<PAGE>

     (i)  if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)  a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof.

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and other
     words of similar import shall, unless the context requires otherwise,
     refer to the whole of the applicable document and not to any particular
     article, section, subsection, paragraph or clause thereof; and

     (o)  a reference to "including" shall mean including without limiting the
     generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                        2

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12 of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is
     received or properly accrued, and

                                        3

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents and the South
     Point Ground Lease, to sell electricity therefrom, to enter into any
     Operative Document or to consummate any transaction contemplated thereby,
     or (b) that is necessary so that none of the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholder nor any Affiliate of any of them may be
     deemed by any Governmental Entity to be subject to regulation under PUHCA
     or under any other Applicable Law relating to electric utilities,
     generators, wholesalers or retailers, in each case as a result of the
     operation of the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten
     (10) Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal.
     If either the Owner Participant or the Facility Lessee does not appoint
     its appraiser within such ten Business Day period, the determination of
     the other appraiser shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. If the appraisers appointed by the
     Owner Participant and the Facility Lessee are unable to agree upon the
     value, period, amount or other determination in question within thirty
     (30) days, such appraisers shall jointly appoint a third Independent
     Appraiser or, if

                                        4

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (SP-1) dated
     as of the Closing Date between CCFC and the Owner Lessor, substantially
     in the form of Exhibit B to the Participation Agreement duly completed,
     executed and delivered on the Closing Date pursuant to which the Owner
     Lessor will acquire the Undivided Interest and the Ground Interest from
     CCFC.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $17,187,500.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U.S.C. [sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

                                        5

<PAGE>

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" OR "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interests to Broad
     River Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interest to the Broad
     River Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                        6

<PAGE>

     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and
     the Broad River Ground Interests to the Broad River Owner Lessors, and
     the simultaneous lease of the Broad River Undivided Interests and Broad
     River Ground Interests to the Broad River Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the Broad River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee,
     the Pass Through Trustees and Calpine and designated Participation
     Agreement (BR-1), Participation Agreement (BR-2), Participation Agreement
     (BR-3) and Participation Agreement (BR-4), each dated as of the Closing
     Date, pursuant to which, among other things, the Broad River Facility
     Lessee has agreed to (a) assign and transfer to the applicable Broad
     River Owner Lessors certain undivided leasehold interests in the Broad
     River Facility, and (b) lease from the applicable Broad River Owner
     Lessors such undivided leasehold interest in the Broad River Facility
     pursuant to the Broad River Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                        7

<PAGE>

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment
     Agreement (SP-1) dated as of the Closing Date in favor of the
     Beneficiaries, substantially in the form of Exhibit H to the
     Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, CCFC, the Facility Lessee, and
     each other Affiliate of Calpine that is party to any Operative Document.

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

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

     "CCFC" shall mean Calpine Construction Finance Company, L.P., a Delaware
     limited partnership.

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any

                                        8

<PAGE>

     certificates issued in replacement therefor pursuant to Section 3.3, 3.4
     or 3.5 of the Pass Through Trust Agreement.

     "CES" shall mean Calpine Energy Services L.P., a Delaware limited
     partnership.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Deed of
     Trust, Assignment of Rent and Leases, Security Agreement and Financing
     Statement (SP-1), dated as of the Closing Date, between the Owner Lessor
     and the Indenture Trustee, in substantially the form of Exhibit I to the
     Participation Agreement.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                        9

<PAGE>

     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii) excess
     of cost over fair value of assets of businesses acquired, as determined
     in good faith by the Board of Directors; (iv) any revaluation or other
     write-up in value of assets subsequent to December 31, 1993 as a result
     of a change in the method of valuation in accordance with GAAP; (v)
     unamortized debt discount and expenses and other unamortized deferred
     charges, goodwill, patents, trademarks, service marks, trade names,
     copyrights, licenses, organization or developmental expenses and other
     intangible items; (vi) treasury stock; and (vii) any cash set apart and
     held in a sinking or other analogous fund established for the purpose of
     redemption or other retirement of Capital Stock to the extent such
     obligation is not reflected in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule
     2 of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                       10

<PAGE>

     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "EASEMENT" shall mean the easement defined in the recitals to the
     Facility Site Lease.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     report of the Engineering Consultant, dated October 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Applied EnviroSolutions, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                       11

<PAGE>

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment dated October 12, 2001 prepared by the Environmental
     Consultant for Calpine Corporation.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the Termination Value set forth opposite the Termination
Date corresponding to such date of determination on Schedule 2 of the Facility
Lease, and, if such date of determination is a Rent Payment Date, Periodic Rent
due on that date (to the extent payable in arrears) over (ii) the balance,
including scheduled (in accordance with the payment terms of the Lessor Notes)
accrued interest, on the Lessor Notes scheduled (in accordance with the payment
terms of the Lessor Notes) to be outstanding on such date of determination
corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders the
     Facility permanently unfit for normal use or which does not satisfy the
     preconditions for repair of the Facility set forth in Section 10 of the
     Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)  (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor
     of the Undivided Interest or the Ground Interest, following exhaustion of
     all permitted appeals or an election by the Facility Lessee in its
     discretion not to pursue such appeals or rights; provided that no such
     contest (or exercise) shall

                                       12

<PAGE>

     extend beyond the earlier of the date which is (x) six months after the
     loss of such title, or (y) 48 months prior to the end of the Basic Lease
     Term or any Renewal Lease Term then in effect or elected by the Facility
     Lessee or (b) Requisition of use of, or leasehold in, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall
     have resulted in the loss of possession of the Undivided Interest or all
     or any part of the Ground Interest that is required for the use or
     operation of the Facility; provided that in any case involving
     Requisition of use of the Facility, or all or any part of the Facility
     Site that is required for the use or operation, of the Facility, but not
     of the Owner Lessor's Undivided Interest or the Ground Interest, such
     event shall be an Event of Loss only if loss of possession continues
     beyond the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and the South Point Ground Lease
     and not, in any event, as a result of (a) investments, loans or other
     business activities of the Owner Participant or any of its Affiliates in
     respect of equipment or facilities similar in nature to the Facility or
     any part thereof or in any other electrical, cogeneration or other energy
     or utility related equipment or facilities or the general business or
     other activities of the Owner Participant or any of its Affiliates or the
     nature of any of the properties or assets from time to time owned,
     leased, operated, managed or otherwise used or made available for use by
     the Owner Participant or any of its Affiliates or (b) a failure of the
     Owner Participant to perform routine, administrative or ministerial
     actions the performance of which would not subject the Owner Participant
     or any of its Affiliates to any material adverse consequence (in the
     reasonable opinion of such Owner Participant acting in good faith);
     provided that the Facility Lessee and the Owner Lessor and Owner
     Participant agree to cooperate and to take reasonable measures to
     alleviate the source or consequence of any regulation constituting an
     Event of Loss under this paragraph (iv), so long as there shall be no
     adverse consequences to the Owner Lessor or Owner Participant as a result
     of such cooperation or the taking of reasonable measures (the events and
     circumstances described herein this paragraph (iv), a "Regulatory Event
     of Loss"); or

          (v)   if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Orders shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

                                       13

<PAGE>

          (vi)   the South Point Ground Lease shall have been cancelled or
     terminated or shall otherwise cease to be in full force and effect other
     than by reason of events constituting a Lease Event of Default under
     Section 16(m) of the Facility Lease; or

          (vii)  if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (ii) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor, it being acknowledged and agreed
     that for purposes of this clause (vii), in determining if a material
     adverse effect would reasonably be expected to occur, (x) the fact of
     Calpine's obligations under the Calpine Guaranty shall be taken into
     account, and (y) no such material adverse effect shall be found to be
     reasonably expected to occur if (1) an adverse determination in any such
     pending proceeding would be reasonably likely to result in a FERC order
     accepting Lessee's rate schedule, as amended, or establishing a just and
     reasonable rate, that in either case is sufficient to allow the Facility
     Lessee to satisfy its obligations to pay Periodic Rent under the Facility
     Lease, and (2) no material adverse effect would be reasonably likely to
     occur as a result of any other aspect of such FERC proceeding.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) above shall be the date on which the Facility
     Lessee receives the Owner Participant's election made in accordance with
     such clause (v). The date of occurrence of an Event of Loss in clause

                                       14

<PAGE>

     (vi) above shall be ten (10) Business Days after any such cancellation,
     termination or failure to be in full force and effect as contemplated
     therein. The date of occurrence of an Event of Loss in clause (vii) above
     shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (vii).

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the South Point Ground Lease,
     (ii)(A) insurance proceeds, if any, payable to the Owner Lessor or the
     Owner Participant under insurance separately maintained by the Owner
     Lessor or the Owner Participant with respect to the Facility as permitted
     by Section 3(b) of Schedule 5.31 to the Participation Agreement or (B)
     proceeds of personal injury or property damage liability insurance
     maintained under any Operative Document or the South Point Ground Lease
     for the benefit of the Owner Lessor or the Owner Participant, (iii) any
     amount payable to the Owner Participant as the purchase price of the
     Owner Participant's right and interest in the Member Interest, (iv) all
     other fees expressly payable to the Owner Participant under the Operative
     Documents, (v) any payments in respect of interest, or any payments made
     on an After-Tax Basis, to the extent attributable to payments referred to
     in clause (i) through (vi) above; (vii) any amounts paid to the Owner
     Lessor as reimbursement for amounts expended pursuant to Section 20 of
     the Facility Lease; (viii) proceeds of the items referred to in clause
     (i) through (vii) above; and (ix) any rights to demand, collect, sue for,
     or otherwise receive and enforce payment of the foregoing amounts,
     including under the Calpine Guaranty, but without limiting clause (v) of
     this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 530 MW nameplate capacity gas-fired combined
     cycle merchant power plant located near Bullhead, Arizona and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

                                       15

<PAGE>

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (SP-1), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (SP-1), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean South Point Energy Center, LLC.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean Owner Lessor.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the South Point Ground Lease and the obligations relating
     thereto, (iii) the Undivided Interest or the Owner Lessor's Interest, as
     the case may be, is free and clear of all Liens (other than Owner
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee Liens),
     (iv) taking into account the remaining term of the Facility Site Lease,
     and (v) in the case the Fair Market Rental Value, taking into account the
     terms of the Facility Lease and the other Operative Documents and the
     South Point Ground Lease. If the Fair Market Sales Value of the Owner
     Lessor's Interest is to be determined during the continuance of a Lease
     Event of Default or in connection with the exercise of remedies by the
     Owner Lessor pursuant to Section 17 of the Facility Lease, such value
     shall be determined by an Independent Appraiser appointed solely by the
     Owner Lessor on an "as-is", "where-is" and "with all

                                       16

<PAGE>

     faults" basis and shall take into account all Liens (other than Owner
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee Liens);
     provided, however, in any such case where the Owner Lessor shall be
     unable to obtain constructive possession sufficient to realize the
     economic benefit of the Owner Lessor's Interest, Fair Market Sales Value
     of the Owner Lessor's Interest shall be deemed equal to $0 (zero). If in
     any case other than in the preceding sentence the parties are unable to
     agree upon a Fair Market Sales Value of the Owner Lessor's Interest
     within 30 days after a request therefor has been made, the Fair Market
     Sales Value of the Owner Lessor's Interest shall be determined by
     appraisal pursuant to the Appraisal Procedures. Any fair market value
     determination of a Severable Improvement shall take into consideration
     any liens or encumbrances to which the Severable Improvement being
     appraised is subject and which are being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of (a) the Facility
     Lessee and (b) the Owner Lessor for the benefit of the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell power at
     market-based rates under Section 205 of the FPA effective on or before
     the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities and
     the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal Power
     Act for the transfer of jurisidictional facilities, including the Power
     Marketing Agreement between CCFC and CES from CCFC to CES under Section
     203 of the Federal Power Act in the sale/leaseback contemplated by the
     Operative Documents.

     "FERC OWNER LESSOR EWG ORDERS" shall mean the order issued by the FERC
     determining that the Owner Lessor is an EWG.

                                       17

<PAGE>

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND LEASE" shall have the meaning set forth in recital A of the
     Facility Site Lease.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

                                       18

<PAGE>

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such Indebtedness, the amount
     of such obligation being deemed to be the lesser of the value of such
     property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

                                       19

<PAGE>

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f) of
     the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof that
     are not related to, or that are in violation of, any Operative Document
     or the South Point Ground Lease or the transactions contemplated thereby,
     (ii) Claims against or any act or omission of the Lease Indenture Company
     or the Indenture Trustee, or Affiliate thereof that is not related to, or
     that is in violation of, any of such Person's representations,
     warranties, covenants or agreements in an Operative Document or the
     transactions contemplated thereby or that is in breach of any covenant or
     agreement of the Lease Indenture Company or the Indenture Trustee
     specified therein, (iii) Taxes imposed upon the Lease Indenture Company
     or the Indenture Trustee, or any Affiliate thereof that are not
     indemnified against by the Facility Lessee pursuant to any Operative
     Document or (iv) Claims against or affecting the Lease Indenture Company
     or the Indenture Trustee, or any Affiliate thereof arising out of the
     voluntary or involuntary transfer by the Lease Indenture Company or the
     Indenture Trustee of any portion of the interest of the Lease Indenture
     Company or the Indenture Trustee in the Lessor Estate, other than
     pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

                                       20

<PAGE>

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Summit Global Partners Insurance
     Services.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under
     the Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such

                                       21

<PAGE>

     transaction is considered borrowed money indebtedness of the lessee for
     tax purposes but is classified as an operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 15.3 of the Facility Site Lease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents and the South Point Ground Lease,
     including all funds advanced to the Owner Lessor by the Owner
     Participant, all installments and other payments of Periodic Rent,
     Supplemental Rent or Termination Value under the Facility Lease,
     condemnation awards, purchase price, sale proceeds, insurance proceeds
     and all other proceeds, rights and interests of any kind for or with
     respect to the estate, right, title and interest of the Owner Lessor in,
     to and under the Undivided Interest, the Ground Interest and the
     Operative Documents and the South Point Ground Lease and any of the
     foregoing, but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

                                       22

<PAGE>

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents and the South Point Ground Lease (giving effect
     to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement), (b) the Indenture Estate or the Lessor Estate, the security
     interests in the Lessor Estate, or (c) with respect to the Owner
     Participant's (but not the Certificateholders') interest in the Undivided
     Interest, the residual value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

                                       23

<PAGE>

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (SP-1), dated as of the Closing Date, between the
     Owner Lessor, as landlord, and the Facility Lessee, as tenant, and filed
     with the Recorder of Mohave County, Arizona and the Tribal Recorder of
     the Tribe.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
     (SP-1), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Recorder of Mohave County, Arizona and the
     Tribal Recorder of the Tribe.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
      defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating Officer,
     the Chief Financial Officer, the Treasurer, the Secretary, any Assistant
     Treasurer, any Assistant Secretary or the Controller or Principal
     Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

                                       24

<PAGE>

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing Date
     in favor of the Facility Lessee, the Owner Lessor, the Lessor Manager,
     the Trust Company, the Indenture Trustee, the Pass Through Trustees and
     the Certificateholders, or (ii) any other guaranty agreement provided by
     an OP Guarantor in form and substance substantially in the form of
     Exhibit G to the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Calpine Guaranty, the OP Parent Guaranty (if any), the Certificate
     Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine or any replacement Operator appointed
     pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.2 of the Facility Lease.

                                       25

<PAGE>

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other South
     Point Calpine Guaranties, the Broad River Calpine Guaranties and the
     RockGen Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other South Point
     Facility Leases, the Broad River Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other South Point
     Owner Lessors, the Broad River Owner Lessors and the RockGen Owner
     Lessors.

     "OTHER SOUTH POINT ASSIGNMENT AGREEMENTS " shall mean each of the
     assignment agreements executed and delivered pursuant to the Other South
     Point Participation Agreements.

     "OTHER SOUTH POINT CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine
     pursuant to the Other South Point Participation Agreements.

     "OTHER SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     South Point Participation Agreements.

     "OTHER SOUTH POINT FACILITY LEASES" shall mean the other South Point
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other South Point Owner Lessors and the Facility Lessee, pursuant to
     which the Other South Point Owner Lessors will lease the Other South
     Point Undivided Interests to the Facility Lessee.

     "OTHER SOUTH POINT FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other South
     Point Owner Lessors and the Facility Lessee pursuant to which the Other
     South Point Owner Lessors will lease the Other South Point Ground
     Interests to the Facility Lessee.

     "OTHER SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other South Point Collateral Trust Indentures.

                                       26

<PAGE>

     "OTHER SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other South Point Undivided
     Interests and the Other South Point Ground Interests to the Other South
     Point Owner Lessors, and the lease of the Other South Point Undivided
     Interests and the Other South Point Ground Interest to the Facility
     Lessee on substantially the same terms and conditions as under, and dated
     the same date as, the Overall Transaction.

     "OTHER SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other South Point Owner Lessors pursuant
     to the Other South Point Operative Documents.

     "OTHER SOUTH POINT OWNER LESSORS" shall mean South Point OL-2, LLC,
     South Point OL-3, LLC and South Point OL-4, LLC.

     "OTHER SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "OTHER SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other South Point Lease Transactions.

     "OTHER SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other South Point
     Owner Lessor, the Other South Point Lessor Manager, Other South Point
     Owner Participant, Other South Point Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (SP-2),
     Participation Agreement (SP-3) and Participation Agreement (SP-4), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) cause CCFC to assign and transfer to
     the applicable Other South Point Owner Lessors certain undivided
     leasehold interests in the Facility and the Facility Site, and (b) lease
     from the applicable Other South Point Owner Lessors such undivided
     leasehold interest in the Facility and the Facility Site pursuant to the
     Other South Point Facility Leases.

     "OTHER SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest in the Facility not conveyed to the Owner Lessor under
     the Assignment Agreement.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the South Point Ground Lease (giving effect
     to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean South Point OL-1, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

                                       27

<PAGE>

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: South Point OL-1, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Site or
     the Easement, or any part of any thereof or interest therein arising as a
     result of (i) Taxes against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease (giving effect to its assignment to the Owner
     Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate
     thereof that is not related to, or that is in violation of, any Operative
     Document or the South Point Ground Lease (giving effect to its assignment
     to the Owner Lessor pursuant to the Assignment Agreement) or the
     transactions contemplated thereby or that is in breach of any covenant or
     agreement of the Owner Lessor, the Trust Company or the Lessor Manager
     specified therein, (iii) Taxes imposed upon the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     indemnified against by the Facility Lessee pursuant to any Operative
     Document or (iv) Claims against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof arising out of the
     voluntary or involuntary transfer by the Owner Lessor, the Trust Company
     or the Lessor Manager of any portion of the interest of the Owner Lessor
     in the Owner Lessor's Interest, other than pursuant to the Operative
     Documents and the South Point Ground Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-1, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Site or the Easement, or any part of any thereof or interest
     therein arising as a result of (i) Claims against or any act or omission
     of the Owner Participant that is not related to, or that is in violation
     of, any Operative Document or the South Point Ground Lease or the
     transactions contemplated

                                       28

<PAGE>

     thereby or that is in breach of any covenant or agreement of the Owner
     Participant set forth therein, (ii) Taxes against the Owner Participant
     that are not indemnified against by the Facility Lessee pursuant to the
     Operative Documents or (iii) Claims against or affecting the Owner
     Participant arising out of the voluntary or involuntary transfer by the
     Owner Participant of any portion of the interest of the Owner Participant
     in the Member Interest, other than any transfer (x) pursuant to the
     exercise of any of the Facility Lessee's (or any Affiliate thereof)
     rights under the Operative Documents or (y) during the continuance of a
     Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other South Point Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context
     may require, of (i) the Pass Through Trust Agreement A, dated as of
     October 18, 2001, and (ii) the Pass Through Trust Agreement B, dated as
     of October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass
     Through Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created
     pursuant to the Pass Through Trust Agreements.

                                       29

<PAGE>

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum
     of Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the South Point Ground Lease,
     as well as the rights of sublessees and/or assignees to the extent set
     forth in or expressly permitted pursuant to the Facility Lease or any
     other Operative Document, (b) as to the Facility Lessee, Owner

                                       30

<PAGE>

      Lessor's Liens, Owner Participant's Liens and Indenture Trustee's Liens,
     (c) Liens for any tax, assessment or other governmental charge, either
     secured by a bond reasonably acceptable to the Indenture Trustee and the
     Pass Through Trustees and, so long as no Lease Indenture Event of Default
     which is not a Lease Event of Default exists, the Owner Lessor, or not
     yet due or being contested in good faith and by appropriate proceedings,
     so long as (i) such proceedings shall not reasonably be expected to give
     rise to criminal liability or material civil liability on the part of the
     Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise reasonably be expected to
     have a Material Adverse Effect, or (ii) adequate reserves consistent with
     GAAP requirements have been established and are maintained, so as to
     assure such Persons that any taxes, assessments or other charges
     determined to be due will be promptly paid in full when such contest is
     determined, (d) materialmen's, mechanics', workers', repairmen's,
     employees' or other like Liens arising in the ordinary course of business
     or in connection with the maintenance or repair of the Facility, for
     amounts not yet due or for amounts being contested in good faith and by
     appropriate proceedings, so long as (i) such proceedings shall not
     reasonably be expected to give rise to criminal liability or material
     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, (e) Liens
     arising out of judgments or awards, but only so long as an appeal or
     proceeding for review is being prosecuted in good faith and so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, and (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, or are fully covered by insurance, (f) mineral rights the use
     and enjoyment of which do not materially interfere with the use and
     enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil
     liability on the part of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any

                                       31
<PAGE>

     Certificateholders, and would not otherwise reasonably be expected to
     have a Material Adverse Effect, (k) the interests of the Other Owner
     Lessors and the Other Indenture Trustees in the Facility, the Facility
     Site and the Ownership and Operation Agreement, (l) the interests of the
     Facility Lessee, the Other Owner Participants, the Other Owner Lessors,
     the Other Lessor Managers, the Other Indenture Trustees, and Pass Through
     Trustees under any of the Other Operative Documents, (m) the Ownership
     and Operation Agreement, (n) the interest of the co-owners of the
     Facility as tenants in common in the Facility and the rights of such
     owners under the Ownership and Operation Agreement and (o) any rights of
     the Tribe with respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such
     plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

     "POWER MARKETING AGREEMENT" shall mean the Power Marketing Agreement,
     dated as of October 20, 1999, by and between CES (as successor by merger
     to Calpine Power Services Company) and CCFC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that

                                       32

<PAGE>

     has been included in the issuance or amendment of a proposed Treasury
     Regulation, (c) that is part of a bill that has been introduced into the
     House of Representatives or the Senate and which has been publicly
     endorsed by the Executive Branch or the Department of Treasury, or (d)
     with respect to which a notice of a specific proposed change in
     administrative guidance has been issued by the Internal Revenue Service
     or the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have
     the meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may
     properly advise reporting such position on a tax return in accordance
     with Formal Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary

                                       33

<PAGE>

     and Indebtedness of any Restricted Subsidiary that refinances
     Indebtedness of another Restricted Subsidiary) including Indebtedness
     that refinances Refinancing Indebtedness; provided, however, that (i) if
     the Indebtedness being refinanced is contractually subordinated in right
     of payment to the Obligations, the Refinancing Indebtedness shall be
     contractually subordinated in right of payment to such Obligations to at
     least the same extent as the Indebtedness being refinanced, (ii) the
     Refinancing Indebtedness is scheduled to mature either (a) no earlier
     than the Indebtedness being refinanced or (b) after the Stated Maturity
     of the Obligations, (iii) the Refinancing Indebtedness has an Average
     Life at the time such Refinancing Indebtedness is Incurred that is equal
     to or greater than the Average Life of the Indebtedness being refinanced
     and (iv) such Refinancing Indebtedness is in an aggregate principal
     amount (or if issued with original issue discount, an aggregate issue
     price) that is equal to or less than the aggregate principal amount (or
     if issued with original issue discount, the aggregate accreted value)
     then outstanding (plus fees and expenses, including any premium, swap
     breakage and defeasance costs) under the Indebtedness being refinanced;
     and provided, further, that Refinancing Indebtedness shall not include
     (x) Indebtedness of a Subsidiary of the Guarantor that refinances
     Indebtedness of the Guarantor or (y) Indebtedness of the Guarantor or a
     Restricted Subsidiary that refinances Indebtedness of an Unrestricted
     Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv)
     of the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                       34

<PAGE>

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2037) and October 18, 2037.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases thereafter (except for the
     last Rent Payment Period which period shall commence on May 31, 2037 and
     end on, and include, October 18, 2001), each six-month period commencing
     on each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is
     not designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the
     Granting Clause of the Collateral Trust Indenture.

                                       35

<PAGE>

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed
     and delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests
     in the RockGen Facility Site conveyed to the RockGen Owner Lessors under
     the RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting
     on behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground

                                       36

<PAGE>

     Interest to the RockGen Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the RockGen Overall
     Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen Owner Lessors certain
     undivided interests in the RockGen Facility, and (b) lease from the
     applicable RockGen Owner Lessors such undivided interest in the RockGen
     Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the RockGen Facility conveyed to the RockGen Owner Lessors
     under the RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have
     the meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

                                       37

<PAGE>

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other South Point Facility Lease.

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

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT" shall mean South Point Energy Center, LLC.

     "SOUTH POINT ENERGY" shall have the meaning set forth in the first
     paragraph of the Facility Site Lease.

     "SOUTH POINT GROUND LEASE" shall mean the Amended and Restated Ground
     Lease Agreement dated as of August 4, 1999 and approved by the Bureau of
     Indian Affairs on August 19, 1999, as amended by Lease Modification No. 1
     executed by the Tribe as of May 3, 2001, and Lease Modification No. 2
     executed by the Tribe as of October 11, 2001, by and between the Tribe
     and CCFC (as successor in interest to Calpine South Point, LLC).

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)  (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

     (b)  (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

                                       38

<PAGE>

     (c)  the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section
     11.1 of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of the
     Facility Site, to be dated July 24, 2001 which inter alia, will show the
     location of the Facility Site.

     "TAX" or "TAXEST" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, transaction
     privilege taxes, use taxes, stamp taxes, value-added taxes, excise taxes,
     ad valorem taxes and property taxes (personal and real, tangible and
     intangible)), licenses, exports, duties, recording charges, levies,
     assessments, withholdings , fees, assessments and other charges and
     impositions of any nature, plus all related interest, penalties, fines
     and additions to tax, now or hereafter imposed by any federal, state,
     local or foreign government, the Tribe or other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

                                       39

<PAGE>

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (SP-1),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of
     the Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TERM" with respect to the Facility Site Lease, shall have the meaning
     set forth in Section 2.1(b) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall
     have the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean the Consent Letter from the Tribe with
     respect to the Amended and Restated Ground Lease Agreement executed on or
     about August 4, 1999 between the Tribe, CCFC (as successor in interest to
     CPN South Point LLC, under that certain Assignment and Assumption
     Agreement of Amended and Restated Ground Lease Agreement by and between
     CPN South Point LLC as assignor and CCFC as assignee) (as amended by
     Lease Modification No. 1 dated May 3, 2001 between the Tribe and CCFC),
     the form of which is attached hereto as Exhibit M.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

                                       40

<PAGE>

     "TITLE POLICY" shall mean, the title insurance policy (#291-000-164004)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)      the reasonable costs of reproducing and printing the Operative
     Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement) and
     all costs and fees, including but not limited to filing and recording
     fees and recording, transfer, mortgage, intangible and similar taxes in
     connection with the execution, delivery, filing and recording of the
     Facility Lease, the Facility Site Lease, and any other Operative Document
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and any other document
     required to be filed or recorded pursuant to the provisions hereof or of
     any other Operative Document and the South Point Ground Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)     the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (iii)    the reasonable fees and expenses of (a) Holland & Hart LLP Tribal
     counsel to the Facility Lessee, the Owner Lessor, the Owner Participant
     and the Initial Purchasers and (b) Fennemore Craig, Arizona counsel to
     the Facility Lessee, the Owner Lessor, the Owner Participant and the
     Initial Purchasers;

     (iv)     the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)      the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)     the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)    the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the South Point Ground Lease;

                                       41

<PAGE>

     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)     the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)      the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)     the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)    the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)    the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

     (xv)     the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)    all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)  the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)    the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

                                       42

<PAGE>

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the South Point Ground Lease
     pursuant to the Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRIBE" shall mean the Fort Mojave Indian Tribe of the Fort Mojave
     Indian Reservation, a federally recognized Indian Tribe.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     leasehold interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial
     Code as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

                                       43

<PAGE>

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.4
<SEQUENCE>7
<FILENAME>f80168ex4-22_4.txt
<DESCRIPTION>EXHIBIT 4.22.4
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.4

                                                                 EXECUTION COPY

                         PARTICIPATION AGREEMENT (SP-2)

                          Dated as of October 18, 2001

                                      among

               SOUTH POINT ENERGY CENTER, LLC, as Facility Lessee,

                     SOUTH POINT OL-2, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-2, LLC, as Owner Participant,

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees


                               SOUTH POINT PROJECT

================================================================================
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ...................................................

SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ................................................................

     Section 2.1 Agreements to Participate ...............................................................................

     Section 2.2 Closing Date; Procedure for Participation. ..............................................................

     Section 2.3 Transaction Costs. ......................................................................................

SECTION 3. REPRESENTATIONS AND WARRANTIES                                                                                      6

     Section 3.1  Representations and Warranties of the Facility Lessee ..................................................     6

     Section 3.2  Representations and Warranties of the Owner Lessor .....................................................     7

     Section 3.3  Representations and Warranties of the Lessor Manager and the Trust Company .............................     8

     Section 3.4  Representations and Warranties of the Owner Participant ................................................     0

     Section 3.5  Representations and Warranties of Indenture Trustee and the Lease Indenture Company ....................     2

     Section 3.6  Representations, Warranties and Covenants of the Pass Through Trustees and the
                    Pass Through Company .................................................................................     23

SECTION 4. CLOSING CONDITIONS                                                                                                  25

     Section 4.1   Completion of the Facility ............................................................................     26

     Section 4.2   Operative Documents ...................................................................................     26

     Section 4.3   Certificates and the Lessor Notes .....................................................................     26

     Section 4.4   Equity Investment .....................................................................................     26

     Section 4.5   Organizational Documents ..............................................................................     26

     Section 4.6   Representations and Warranties ........................................................................     26

     Section 4.7   Defaults, Events of Default, Events of Loss ...........................................................     26

     Section 4.8   Regulatory Approvals ..................................................................................     26

     Section 4.9   Consents ..............................................................................................     27

     Section 4.10  Governmental Actions ..................................................................................     28


</TABLE>

                                       i
<PAGE>

                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>

     Section 4.11  Insurance .............................................................................................     28

     Section 4.12  Ratings ...............................................................................................     28

     Section 4.13  Environmental Report ..................................................................................     28

     Section 4.14  Surveys ...............................................................................................     28

     Section 4.15  Appraisal; Condition of the Facility ..................................................................     28

     Section 4.16  Letter from the Appraiser .............................................................................     28

     Section 4.17  Other Reports .........................................................................................     28

     Section 4.18  Opinion with Respect to Certain Tax Aspects ...........................................................     29

     Section 4.19  Opinions of Counsel ...................................................................................     29

     Section 4.20  Recordings and Filings ................................................................................     29

     Section 4.21  Conditions to Closing .................................................................................     29

     Section 4.22  Taxes .................................................................................................     30

     Section 4.23  No Changes in Applicable Law ..........................................................................     30

     Section 4.24  Registered Agent for the Facility Lessee and the Owner Lessor .........................................     30

     Section 4.25  Operating Lease Treatment .............................................................................     30

     Section 4.26  Rent Adjustments ......................................................................................     30

     Section 4.27  Title Insurance .......................................................................................     30

     Section 4.28  Parent Guaranty .......................................................................................     30

     Section 4.29  Letter as to Number of Offerees .......................................................................     31

     Section 4.30  Lien Search ...........................................................................................     31

     Section 4.31  Litigation ............................................................................................     31

     Section 4.32  No Material Adverse Change ............................................................................     31

     Section 4.33  Private Placement Number ..............................................................................     31

     Section 4.34  Proceedings and Documents .............................................................................     31
</TABLE>

                                       ii
<PAGE>

                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>
     Section 4.35  No Proposed Tax Law Change ............................................................................     31

     Section 4.36  Payment of Fees and Expenses ..........................................................................     32

SECTION 5. COVENANTS OF FACILITY LESSEE AND GUARANTOR ....................................................................     32

     Section 5.1   Maintenance of Existence ..............................................................................     32

     Section 5.2   Merger, Consolidation, Sale of Substantially All Assets ...............................................     32

     Section 5.3   Guaranty and Contingent Obligations ...................................................................     33

     Section 5.4   Assignment of Rights ..................................................................................     33

     Section 5.5   Lessor Manager Fees ...................................................................................     33

     Section 5.6   Conduct of Business, Properties, Etc. .................................................................     33

     Section 5.7   Obligations ...........................................................................................     33

     Section 5.8   Books, Records, Access ................................................................................     33

     Section 5.9   Other Information. ....................................................................................     34

     Section 5.10  Intentionally Deleted. ................................................................................     35

     Section 5.11  ERISA .................................................................................................     35

     Section 5.12  Certain Contracts and Agreements ......................................................................     35

     Section 5.13  Certain Costs .........................................................................................     35

     Section 5.14  Limitations on Liens ..................................................................................     36

     Section 5.15  Investments ...........................................................................................     36

     Section 5.16  Intentionally Deleted .................................................................................     36

     Section 5.17  Regulations ...........................................................................................     36

     Section 5.18  Partnerships ..........................................................................................     36

     Section 5.19  Dissolution ...........................................................................................     36

     Section 5.20  Termination of Operative Documents; Delegation of Authority. ..........................................     36

     Section 5.21  Name and Location .....................................................................................     38
</TABLE>

                                       iii
<PAGE>

                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>
     Section 5.22  Use of Facility Site ..................................................................................     38

     Section 5.23  Abandonment of Facility ...............................................................................     38

     Section 5.24  Taxes, Other Government Charges and Utility Charges ...................................................     38

     Section 5.25  Compliance with Laws, Instruments, Etc. ...............................................................     38

     Section 5.26  PUHCA .................................................................................................     39

     Section 5.27  Further Assurances ....................................................................................     39

     Section 5.28  No Subsidiaries .......................................................................................     40

     Section 5.29  Permitted Business ....................................................................................     40

     Section 5.30  Support Arrangements ..................................................................................     40

     Section 5.31  Insurance .............................................................................................     40

     Section 5.32  Tax Status ............................................................................................     40

SECTION 6 COVENANT OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER .........................................     40

     Section 6.1   Compliance with the LLC Agreement .....................................................................     41

     Section 6.2   Owner Lessor's Liens ..................................................................................     42

     Section 6.3   Amendments to Operative Documents .....................................................................     42

     Section 6.4   Transfer of the Owner Lessor's Interest ...............................................................     42

     Section 6.5   Owner Lessor; Lessor Estate ...........................................................................     42

     Section 6.6   Limitation on Indebtedness and Actions ................................................................     42

     Section 6.7   Change of Location ....................................................................................     42

     Section 6.8   Bankruptcy of Owner Lessor. ...........................................................................     42

SECTION 7 COVENANTSOF THE OWNER PARTICIPANT ..............................................................................     43

     Section 7.1   Restrictions on Transfer of Member Interest. ..........................................................     43

     Section 7.2   Owner Participant's Liens .............................................................................     45

     Section 7.3   Amendments or Revocation of LLC Agreement .............................................................     45
</TABLE>

                                       iv
<PAGE>

                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>
     Section 7.4   Bankruptcy Filings ....................................................................................     45

     Section 7.5   Instructions ..........................................................................................     46

     Section 7.6   Right of First Refusal ................................................................................     46

     Section 7.7   Prohibition on Fundamental Changes ....................................................................     46

     Section 7.8   Appointment of Successor Lessor Manager ...............................................................     47

     Section 7.9   Cooperation ...........................................................................................     47

SECTION 8 COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ...............................................    47

     Section 8.1   Indenture Trustee's Liens .............................................................................     48

     Section 8.2   Pass Through Trustees' Covenant Not to Transfer Lessor Notes ..........................................     48

SECTION 9. INDEMNIFICATION ...............................................................................................     48

     Section 9.1  General Indemnity. .....................................................................................     48

     Section 9.2  General Tax Indemnity. .................................................................................     55

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ...................................................................     64

SECTION 11.SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ....................................................     65

     Section 11.1  Financing Improvements ................................................................................     65

     Section 11.2  Optional Refinancing of Lease Debt ....................................................................     66

     Section 11.3  Cooperation ...........................................................................................     67

SECTION 12 CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS .....................................     68

SECTION 13 TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS;
EXERCISE OF EXTENSION OF SOUTH POINT GROUND LEASE ........................................................................     69

     Section 13.1  Transfer of the Facility Lessee Ownership. ............................................................     69

     Section 13.2  Special Facility Lessee Transfers .....................................................................     71

     Section 13.3  Exercise of Extension of South Point Ground Lease .....................................................     71

SECTION 14 MISCELLANEOUS .................................................................................................     73

     Section 14.1   Consents; Cooperation ................................................................................     73
</TABLE>

                                       v
<PAGE>

                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                                                                             PAGE
<S>                                                                                                                          <C>

     Section 14.2   Successor Owner Lessor ...............................................................................     73

     Section 14.3   Bankruptcy of Lessor Estate ..........................................................................     73

     Section 14.4   Amendments and Waivers ...............................................................................     73

     Section 14.5   Notices ..............................................................................................     73

     Section 14.6   Survival .............................................................................................     78

     Section 14.7   Successors and Assigns ...............................................................................     78

     Section 14.8   Business Day .........................................................................................     78

     Section 14.9   Governing Law ........................................................................................     78

     Section 14.10  Severability .........................................................................................     78

     Section 14.11  Counterparts .........................................................................................     78

     Section 14.12  Headings and Table of Contents .......................................................................     79

     Section 14.13  Limitation of Liability. .............................................................................     79

     Section 14.14  Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent. .....................................     80

     Section 14.15  Further Assurances ...................................................................................     81

     Section 14.16  Effectiveness                                                                                              81

     Section 14.17  Measuring Life .......................................................................................     81

     Section 14.18  No Partnership, Etc. .................................................................................     81

     Section 14.19  Entire Agreement .....................................................................................     81

     Section 14.20  Public Utility Regulation ............................................................................     82

     Section 14.21  Confidentiality of Information .......................................................................     82

     Section 14.22  Reliance .............................................................................................     83

     Section 14.23  Amendments, Etc. .....................................................................................     83

     Section 14.24  South Point Ground Lease .............................................................................     83

</TABLE>


                                       vi
<PAGE>

APPENDICES:

     Appendix A Definitions and Rules of Interpretation

<TABLE>
<CAPTION>
SCHEDULES:
<S>                 <C>
Schedule 1-A        Equity Investment
Schedule 1-B        Indenture Trustee's Account
Schedule 1-C        Owner Participant's Account
Schedule 2          Pricing Assumptions
Schedule 3.1(m)     Environmental Matters - Hazardous Substances
Schedule 4.20       Recording and Filings
Schedule 5.31       Maintenance of Insurance

EXHIBITS:
Exhibit A           Description of Facility
Exhibit B           Form of Assignment Agreement (SP-2)
Exhibit C           Form of Facility Lease Agreement
Exhibit D           Form of Facility Site Lease
Exhibit E           Intentionally Omitted
Exhibit F           Form of Pass Through Trust Agreement
Exhibit G           Form of OP Parent Guaranty
Exhibit H           Form of Calpine Guaranty
Exhibit I           Form of Collateral Trust Indenture
Exhibit J           Form of OP Assignment and Assumption Agreement
Exhibit K           List of Competitors
Exhibit L           Form of Guarantor Assignment and Assumption Agreement
Exhibit M           Form of Consents
</TABLE>

                                       vii

<PAGE>

                             PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement"
     or this "Agreement"), among (i) SOUTH POINT ENERGY CENTER, LLC (herein,
     together with its successors and permitted assigns, called the
     "Facility Lessee"), a limited liability company organized under the
     laws of the State of Delaware, (ii) CALPINE CORPORATION, a Delaware
     corporation, as Guarantor (together with its successors and permitted
     assigns, the "Guarantor") under the Calpine Guaranty (SP-2), (the
     "Calpine Guaranty"), (iii) SOUTH POINT OL-2, LLC, a Delaware limited
     liability company (the "Owner Lessor"), (iv) SBR OP-2, LLC, a Delaware
     limited liability company (herein, together with its successors and
     permitted assigns, called the "Owner Participant"), (v) STATE STREET
     BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
     banking association organized and existing under the laws of the United
     States, not in its individual capacity, except as expressly provided
     herein, but solely as trustee under the Collateral Trust Indenture
     (herein in its capacity as trustee under the Collateral Trust
     Indenture, together with its successors and permitted assigns, called
     the "Indenture Trustee", and herein in its individual capacity,
     together with its successors and permitted assigns, called the "Lease
     Indenture Company"), (vi) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under each of the Pass Through Trust Agreements (herein in its
     capacity as trustee under the Pass Through Trust Agreements, the "Pass
     Through Trustees", and herein in its individual capacity, together with
     its successors and permitted assigns, the "Pass Through Company"), and
     (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and validly existing under the laws of
     the United States, not in its individual capacity except as expressly
     provided herein, but solely as independent manager under the LLC
     Agreement (herein in its capacity as independent manager under the LLC
     Agreement, together with its successors and permitted assigns, called
     the "Lessor Manager", and herein in its individual capacity, together
     with its successors and permitted assigns, called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a) CCFC, an indirect, wholly-owned subsidiary of Calpine,
will, as of the Closing Date, own a 530 MW gas-fired combined cycle merchant
power plant located near Bullhead, Arizona and more fully described in Exhibit
A hereto ("Facility");

          WHEREAS, CCFC desires to assign and transfer to the Owner Lessor the
Undivided Interest and the Ground Interest pursuant to the Assignment
Agreement;

<PAGE>

          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
accept such assignment and transfer of the Undivided Interest and the Ground
Interest from CCFC pursuant to the Assignment Agreement, and to lease the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to lease the Undivided
Interest and lease the Ground Interest from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from CCFC pursuant to the Assignment
Agreement, and lease the Undivided Interest and the Ground Interest to the
Facility Lessee pursuant to the Facility Lease and the Facility Site Lease,
respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the
Lessor Notes to the relevant Pass Through Trust and to grant to the Indenture
Trustee liens and security interests in the Indenture Estate to secure its
obligations thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed
all of the obligations of the Facility Lessee under the Participation Agreement
and as of the Closing Date shall guarantee all of the obligations of the
Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and

                                      2

<PAGE>

          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

Calpine and the Facility Lessee shall cause CCFC to assign and transfer the
     Undivided Interest and the Ground Interest to the Owner Lessor on the
     terms and conditions set forth in the Assignment Agreement and the Owner
     Lessor agrees to acquire and accept such assignment and transfer of the
     Undivided Interest and the Ground Interest from CCFC, and each agrees to
     execute and deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest and the Ground Interest
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility Lessee agrees to
     lease the Undivided Interest and the Ground Interest from the Owner
     Lessor, and each agrees to execute and deliver the respective Facility
     Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

                                      3

<PAGE>

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the South Point Ground
     Lease pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

                                      4

<PAGE>

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to the
     Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not occur
     on such date and the Owner Lessor has not returned such funds to the Owner
     Participant on or before 1:00 p.m., New York City time, on such date, then
     Calpine shall reimburse the Owner Participant for loss of the use of such
     funds at the Applicable Rate for each day, from and including the day that
     such funds were made available to the Owner Lessor by the Owner
     Participant to, but excluding the earlier of (i) the day that such funds
     have been returned to the Owner Participant pursuant to Section 2.2(c)
     (funds received by the Owner Participant after 1:00 p.m., New York City
     time, of any day shall be deemed to be returned on the next succeeding
     Business Day) and (ii) the Closing Date. Subject to payment for the
     account of the Owner Participant of any reimbursement for loss of use of
     funds due to it at the Applicable Rate, any net gain realized on the
     investment of such funds (including interest) shall be paid to Calpine by
     the Owner Lessor on the earlier of (i) the date such funds are returned to
     the Owner Participant pursuant to Section 2.2(c) and (ii) the Closing
     Date. The Owner Lessor shall not be liable for any interest on or loss
     resulting from such investments and, if such funds are made available to
     the Owner Lessor and utilized to pay the Purchase Price or Transaction
     Costs on the Closing Date, Calpine shall reimburse the Owner Lessor for
     any net loss realized on the investment of such funds. If such funds are
     not so utilized, Calpine shall, in addition to its obligation to reimburse
     the Owner Participant for loss of use as provided above, reimburse the
     Owner Participant on the date such funds are returned to the Owner
     Participant for any net loss realized on the investment of such funds. In
     order to obtain funds for payment of the Purchase Price or Transaction
     Costs or to return funds made available to the Owner Lessor by the Owner
     Participant, the Owner Lessor is authorized to sell any investments or
     obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$2,370,417, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other

                                      5

<PAGE>

     Transaction Costs, fees, costs and expenses incurred by the Facility
     Lessee, the Owner Lessor and the Owner Participant shall be paid by
     Calpine. If the Overall Transaction is not consummated for any reason
     (including as a result of the Facility Lessee terminating this Agreement
     pursuant to Section 12(a)), then Calpine shall bear all Transaction Costs;
     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware and CCFC is a limited partnership duly constituted,
     validly existing, and in good standing under the laws of the State of
     Delaware. Both the Facility Lessee and CCFC are duly licensed or qualified
     and in good standing in each jurisdiction where the character of their
     respective properties or the nature of their activities makes such
     qualification necessary, and each of the Facility Lessee and CCFC has the
     power and authority to (x) own or hold under lease the property it
     purports to own or hold under lease, (y) carry on its business as now
     being conducted and as presently proposed to be conducted and (z) take all
     actions as may be necessary to consummate the transactions contemplated
     hereunder and under the other Operative Documents to which each is a
     party. Each of the Facility Lessee and CCFC is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee or CCFC is or will be a
     party have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee or
     CCFC, as applicable, and, assuming the due authorization, execution and
     delivery by each other party thereto, this Agreement constitutes and, when
     executed and delivered, the other Operative Documents to which the
     Facility Lessee or CCFC is or will be a party will constitute the legal,
     valid and binding obligations of the Facility Lessee or CCFC, as the case
     may be, enforceable against the Facility Lessee or CCFC, as the case may
     be, in accordance with their respective terms, except as the same may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other similar laws affecting the rights of creditors generally and by
     general principles of equity.

          1.   Non-Contravention. (1) The execution, delivery and performance
               by the Facility Lessee of this Agreement and each of the
               other Operative

                                      6

<PAGE>

               Documents to which it is or will be a party, the consummation
               by the Facility Lessee of the transactions contemplated hereby
               and thereby, and compliance by the Facility Lessee with the
               terms and provisions hereof and thereof, do not and will not
               (i) contravene any Applicable Law binding on the Facility
               Lessee or its property, or its organizational documents, (ii)
               constitute a default by the Facility Lessee under, or result
               in the creation of any Lien upon the property of the Facility
               Lessee (other than pursuant to any Operative Document) under
               any indenture, mortgage or other material contract, agreement
               or instrument to which the Facility Lessee is a party or by
               which the Facility Lessee or any of its property is bound,
               (iii) contravene any Organic Document of the Facility Lessee
               or (iv) require the consent or approval of any Person which
               has not already been obtained, in each case with respect to
               clauses (i), (ii) and (iv) above, which would reasonably be
               expected to have a Material Adverse Effect.

          (2)  The execution, delivery and performance by CCFC of each of
the Operative Documents to which it is or will be a party, the consummation by
CCFC of the transactions contemplated thereby, and compliance by CCFC with the
terms and provisions thereof, do not and will not (i) contravene any Applicable
Law binding on CCFC or its property, or its organizational documents, (ii)
constitute a default by CCFC under, or result in the creation of any Lien upon
the property of CCFC (other than pursuant to any Operative Document) under any
indenture, mortgage or other material contract, agreement or instrument to
which CCFC is a party or by which CCFC or any of its property is bound, (iii)
contravene any Organic Document of CCFC or (iv) require the consent or approval
of any Person which has not already been obtained, in each case with respect to
clauses (i), (ii) and (iv) above, which would reasonably be expected to have a
Material Adverse Effect.

          (3)  Neither the assignment and transfer of the Undivided Interest
and the Ground Interest by CCFC to the Owner Lessor, nor the grant by the Owner
Lessor to the Indenture Trustee of the Liens and security interests in the
Undivided Interest, the Ground Interest and the applicable Operative Documents
executed in connection therewith to secure its obligations thereunder does or
will constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. (1) The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing, with
     respect to the participation by the Owner Participant, the Owner Lessor in
     the Overall Transaction, other than (i) any Permit where the failure to
     obtain or maintain such Permit

                                      7

<PAGE>

     would not be reasonably likely to result in a Material Adverse Effect,
     (ii) the FERC Orders, (iii) as may be required under Applicable Law
     providing for the supervision or regulation of the Owner Participant, the
     Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of which
     would not reasonably be expected to have a Material Adverse Effect or
     involve any danger of criminal or material civil liability being incurred
     by the Owner Participant, the Owner Lessor, the Indenture Trustee or the
     Pass Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any relinquishment
     of the use or operation of the Facility by the Facility Lessee, (viii)
     appropriate filing and recording to perfect the Lien of the Collateral
     Trust Indenture, if required, and the ownership and leasehold interests
     conveyed pursuant to this Agreement, or (ix) as may be required under any
     Applicable Law enacted or adopted after the date hereof.

          (2) CCFC has all Permits with, any Governmental Entity or under any
Applicable Law required for the due execution, delivery or performance by CCFC
of the Operative Documents to which CCFC is or will be a party.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the South
     Point Ground Lease or the ability of the Facility Lessee or such other
     Calpine Party to perform its obligations under the Operative Documents and
     the South Point Ground Lease to which the Facility Lessee or such other
     Calpine Party is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to have a Material Adverse Effect or
     otherwise materially adversely affect the Undivided Interest leased by the
     Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc. (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground

                                      8

<PAGE>

     Interest, the Facility Site and the Operative Documents is located at:
     c/o Calpine Corporation, 50 West San Fernando Street, 5th Floor, San Jose,
     CA 95113.

          (2)  The Facility is located on the Facility Site.

          (3)  The condition of the Facility is substantially identical to the
condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Leasehold Interest; Liens. (1) On and before the Closing Date, CCFC has (i)
     good and valid leasehold interest to the Facility, free and clear of all
     Liens other than Permitted Closing Date Liens, and (ii) good and valid
     leasehold interest to the Facility Site and Easement free and clear of all
     Liens other than Permitted Closing Date Liens.

          (2)  Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid leasehold interest to the Undivided Interest will be duly, validly and
effectively conveyed and transferred to the Owner Lessor free and clear of all
Liens other than Permitted Closing Date Liens, and (B) good and valid leasehold
interest in the Ground Interest will be duly, validly and effectively granted
to the Owner Lessor upon the terms and conditions in the corresponding Facility
Site Lease, free and clear of all Liens other than Permitted Closing Date Liens.

          (3)  When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)  None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the South Point Ground Lease) or
the use of or the exercise by the Owner Lessor of its rights under the
Assignment Agreement or the Facility Site Lease, the Facility Lease or the
Easement, in a manner which could reasonably be expected to have a Material
Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party, directly
     or indirectly, for the purpose of buying or carrying any margin stock
     within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

                                      9

<PAGE>

Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the South Point Ground Lease will not subject the Facility
     Lessee to such regulation under the Holding Company Act and do not violate
     any provision of the Holding Company Act or any rule or regulation
     thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same, in any such case, in violation of the registration
     requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)  Neither the Facility Lessee nor CCFC has received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site or any of
the Easement; (ii) the Facility Lessee or any other Calpine Party is or is
asserted to be liable, in whole or in part, for the costs of cleaning up,
remedying or responding at any location (including any location at which any
Hazardous Substances have been generated, stored, treated or disposed by or on
behalf of the Facility Lessee or such other Calpine Party) to a Release or
threatened Release of any Hazardous Substance generated, used or stored at or
Released in, on, under or from the Facility or the Facility Site or any of the
Easement; (iii) the Facility or the Facility Site is subject to a Lien in favor
of any Governmental Entity in response to a Release or threatened Release of
Hazardous Substances or (iv) the Facility or the Facility Site or any of the
Easement is or is asserted to be in violation of or not in compliance with any
Environmental Law, in any case with respect to clauses (ii), (iii) or (iv),
which could reasonably be expected to have a Material Adverse Effect;

          (2)  The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)  To the Facility Lessee's or CCFC's Actual Knowledge, there is
not and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site or any of the Easement, or (B) at, on, under or
from any other location resulting from or arising in connection with the
operation by any Person of the Facility or the Facility Site or any of the
Easement, that in each case could reasonably be expected to have a Material
Adverse Effect or

                                      10

<PAGE>

involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material lien on, such Facility or the Facility Site or any of
such Easement, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or, maintenance of the Facility or the Facility
Site or any of the Easement in any material respect, or (iii) any criminal or
material civil liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)  All environmental permits necessary to own, operate, lease or
maintain the Facility, the Facility Site and the Easement in accordance with
the Operative Documents and the South Point Ground Lease and Environmental Laws
have been obtained on behalf of the Owner Lessor or by the Facility Lessee and
they are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility,
the Facility Site or Easement, (ii) the impairment of the ownership (or
leasehold or easement interest in), use, operation or maintenance of the
Facility, the Facility Site or Easement in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest, the Ground Interest and the Easement and based
     upon the Facility Lessee's reasonable expectations and on Applicable Law
     in effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     South Point Ground Lease and the rights contemplated by the Facility Lease
     to be made available under such Operative Documents and the South Point
     Ground Lease, permit on a commercially practicable basis during the
     Facility Lease Term and the period following the expiration or termination
     of the Facility Lease Term, as applicable, until the end of the Facility's
     useful life as set forth in the Closing Appraisal, (i) the location,
     occupation, interconnection, maintenance and repair of each Facility, (ii)
     the use, operation and possession of the Facility, (iii) as of the Closing
     Date, the use, operation, possession, maintenance, replacement, renewal
     and repair of all Improvements required to be made to the Facility, (iv)
     adequate ingress to and egress from the Facility in connection with the
     ownership, use, operation, possession, maintenance or repair of the
     Facility and (v) the transmission of electricity from the Facility
     substantially in the manner currently transmitted as of the Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns
     or pursuant to any assessment received by it (other than Taxes and
     assessments the payment of which is being contested in good faith by such
     Person and with respect to which appropriate accounting reserves have to
     the extent required by GAAP been set aside) and neither the Facility
     Lessee nor any other Calpine Party has any Actual Knowledge of any actual
     or proposed assessment in connection therewith which,

                                      11

<PAGE>

     either in any case or in the aggregate, would reasonably be expected to
     have a Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State of
     New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility, the Facility Site and the Easement, except
     where the noncompliance would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of (i) foreclosure, sale,
     forfeiture or loss of, or imposition of a material lien on, the Facility,
     the Facility Site or any such Easement, (ii) the impairment of the
     ownership (or leasehold or easement interest in), use, operation or
     maintenance of the Facility or the Facility Site in any material respect,
     or (iii) any criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
     Trustee or the Pass Through Trustees, including subjecting the Owner
     Participant or the Owner Lessor to regulation as a public utility under
     Applicable Law. None of the Calpine Parties is in default of any
     judgments, orders or decrees of any Governmental Entity relating to such
     Facility, the Facility Site or any of the Easement.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists under the Operative Documents
     exists or will exist upon the execution and delivery of the Operative
     Documents. To the Actual Knowledge of the Facility Lessee, no Burdensome
     Buyout Event has occurred under the Operative Documents or will occur upon
     the execution and delivery of the Operative Documents and the Facility
     Lessee does not have Actual Knowledge of any event that could reasonably
     be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's or
     CCFC's Actual Knowledge, threatened by a Governmental Entity or other
     Person to specially assess the Facility or the Facility Site for any
     public improvements constructed or to be constructed which would
     reasonably be expected to have a Material Adverse Effect.

                                      12

<PAGE>

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the South Point Ground Lease, except where the
     failure to have any such services or public utilities available would not
     result in a material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest, the Facility
     Site or any of the Easement, which would reasonably be expected to have a
     Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any Easement, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility, the Facility Site or any of the Easement, which
     would reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's or CCFC's
     Actual Knowledge, there are no plans of any Governmental Entity to change
     the highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted by CCFC
     with respect to the Facility and the Facility Site and to transfer all
     such rights to the Owner Lessor subsequent to termination of the Facility
     Lease, except to the extent failure to possess such rights would not
     reasonably be likely to result in a Material Adverse Effect.

                                      13

<PAGE>

Land Not in Flood Zone. No portion of the Facility, the Facility Site or the
     Easement includes improved real property that is located in an area that
     has been identified by the Director of the Federal Emergency Management
     Agency as an area having special flood hazards and in which flood
     insurance has been made available under the National Flood Insurance Act
     of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee and CCFC are consummating the
     transactions contemplated hereby (including with respect to CCFC, the
     transfer of certain of its assets and properties to the Owner Lessor) in
     good faith and without any intent to defraud creditors of the Facility
     Lessee or subsequent purchasers. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not
     render the Facility Lessee insolvent under GAAP or leave the Facility
     Lessee with assets whose present fair valuation of assets is less than the
     present fair valuation of the Facility Lessee's debts. As used in this
     Section 3.1(dd), "debts" includes any and all liabilities, whether matured
     or unmatured, liquidated or unliquidated, absolute, fixed or contingent,
     and whether or not such liabilities are required under GAAP to be shown on
     the Facility Lessee's balance sheet. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not leave
     it with property remaining in its hands which would constitute
     unreasonably small assets or capital, and the Facility Lessee has and,
     after giving effect to such transactions will have, an adequate amount of
     assets and capital to engage in its business now and in the future, based
     on the actual and anticipated needs for capital of the businesses
     anticipated to be conducted by the Facility Lessee, and based upon the
     other information described herein. After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term debt
     as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv) of
     the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the South Point Ground Lease shall be or become (i) subject to
     regulation as a "public utility company," "holding company," an
     "affiliate" of a "holding company" or a "subsidiary company" of a "holding
     company" within the meaning of PUHCA or (ii) a "public utility" (except
     that the Facility Lessee will be a public utility subject to the Federal
     Power Act with authority to sell wholesale electricity at market-based
     rates and with waivers of regulations customarily granted to a public
     utility that sells wholesale power at market-based rates), a "transmitting
     utility," or an "electric utility" within the meaning of the Federal Power
     Act, (iii) subject to state regulation of rates or organizational
     requirements for electric utilities.

                                      14

<PAGE>

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained therein,
     in light of the circumstances under which they were made, not misleading;
     provided, that no representation or warranty is made with regard to (i)
     any projections or other forward-looking statements provided by or on
     behalf of the Facility Lessee, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, further, each of the Transaction Parties acknowledge and agree
     that (i) Calpine has heretofore provided to the Appraiser, solely in order
     to assist the Appraiser in connection with the preparation of the
     appraisal to be delivered by the Appraiser to certain of the Transaction
     Parties at the Closing, certain (1) general market information, (2)
     information about the Arizona energy markets and (3) information passed
     along from other Persons and (ii) that the Facility Lessee makes no
     representation or warranty whatsoever with respect to the information
     described in clause (i) above except to the extent expressly set forth in
     Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Western Area Power Administration and has
     access to transmission services and ancillary services sufficient to sell
     the net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the determination by
     FERC of EWG status and the FERC Order referenced in clause (ii) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is not
     intended to be construed as nor shall it be deemed to be a guaranty as to
     any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee or CCFC, the Facility has commenced commercial operations
     and is currently capable of producing at least 530 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

South Point Ground Lease. The South Point Ground Lease is in full force and
     effect and neither CCFC nor, to the Actual Knowledge of the Facility
     Lessee or CCFC, the Tribe is in default thereunder; all of the rights,
     title and interest of CCFC in, to and under the South Point Ground Lease
     assigned pursuant to the Assignment Agreement have been transferred free
     and clear of any and all Liens other than Permitted Liens. Prior to the
     execution and delivery

                                      15

<PAGE>

     of the Assignment Agreement by CCFC and as of and after the time CCFC
     became a party to the South Point Ground Lease, the South Point Ground
     Lease was enforceable against CCFC in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the South Point Ground Lease by any
     past or present Calpine Party (including CCFC) party thereto (i) did not
     and does not contravene any Applicable Law binding on such Calpine Party
     or its property, (ii) does not constitute a default by such Calpine Party
     under, or result in the creation of any Lien upon the property of such
     Calpine Party (other than pursuant to any Operative Document) under any
     indenture, mortgage or other material contract, agreement or instrument to
     which such Calpine Party is a party or by which such Calpine Party or any
     of its property is bound, (iii) does not contravene any Organic Document
     of such Calpine Party, (iv) does not require the consent or approval of
     any Person which has not already been obtained, in each case with respect
     to clauses (i), (ii) and (iv) above, which would reasonably be expected to
     have a Material Adverse Effect, or (v) does not create a Lien on the South
     Point Ground Lease; the Facility Lessee has all Permits with or from any
     Governmental Entity or under Applicable Law required for the performance
     of the South Point Ground Lease by the Owner Lessor or the Facility
     Lessee, other than (i) any Permit where the failure to obtain or maintain
     such Permit would not be reasonably likely to result in a Material Adverse
     Effect, (ii) the FERC Orders, (iii) as may be required under Applicable
     Law providing for the supervision or regulation of the Owner Participant,
     the Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by performance of the South
     Point Ground Lease upon and after the assignment thereof to the Owner
     Lessor pursuant to the Assignment Agreement, (iv) as may be required under
     existing Applicable Laws to be obtained, given, accomplished or renewed at
     any time, or from time to time, in each case, after the Closing Date and
     which the Facility Lessee has no reason to believe will not be timely
     obtained and the lack of which would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of criminal or material
     civil liability being incurred by the Owner Participant, the Owner Lessor,
     the Indenture Trustee or the Pass Through Trustees, (v) in connection with
     any modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates or
     the issuance of Additional Lessor Notes or Additional Certificates, (vii)
     as may be required in consequence of any transfer of the Member Interest
     or any transfer of the Undivided Interest or the Owner Lessor's Interest,
     or any part thereof by the Owner Lessor or the exercise by any such party
     of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of the
     Collateral Trust Indenture, if required, and the ownership and leasehold
     interests conveyed pursuant to this Agreement, or (ix) as may be required
     under any Applicable Law enacted or adopted after the date hereof.

                                      16

<PAGE>

     B.   Representations and Warranties of the Owner Lessor. The Owner Lessor
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the Owner
     Lessor is or will be a party has been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Lessor, and (ii)
     assuming the due authorization, execution and delivery of this Agreement
     by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor

                                      17

<PAGE>

     is or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the South Point Ground Lease or the
     ability of the Owner Lessor to perform its obligations under the South
     Point Ground Lease or the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Owner Lessor to perform
     its obligations under this Agreement or any other Operative Document to
     which it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

          C.   Representations and Warranties of the Lessor Manager and the
Trust Company. The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is a national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against

                                      18

<PAGE>

     it in its individual capacity or as Lessor Manager, as the case may be,
     in accordance with its terms, except as may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principals of equity.

          (2)  Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to

                                      19

<PAGE>

     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement
     and any other Operative Document to which the Owner Participant is or will
     be a party constitute or when executed and delivered will constitute the
     legal, valid and binding obligations of the Owner Participant, enforceable
     against the Owner Participant in accordance with their respective terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant with the
     terms and provisions hereof and thereof, do not and will not contravene
     any Applicable Law binding on the Owner Participant, or its organizational
     documents, or contravene the provisions of, or constitute a default under
     any indenture, mortgage or other material contract, agreement or
     instrument to which the Owner Participant is a party or by

                                      20

<PAGE>

     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner
     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the

                                      21

<PAGE>

     same offering as the offering of the Member Interest, the Lessor Notes or
     the Certificates or any part thereof or solicited any offer to acquire any
     of the same in violation of the registration requirements of Section 5 of
     the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the
other Operative Documents by each party thereto other than the Indenture
Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

                                      22

<PAGE>

Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of the Indenture Trustee in the
     Indenture Estate; provided, however, that no representation or warranty is
     made with respect to the right, power or authority of the Lease Indenture
     Company or the Indenture Trustee to act as operator of the Facility
     following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Lease Indenture Company
     to perform its obligations under this Agreement or any other Operative
     Document to which it is or will be a party or could reasonably be expected
     to materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
          Trustees and the Pass Through Company. The Pass Through Company and
          the Pass Through

                                      23

<PAGE>

Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement
     and each of the other Operative Documents to which it is or will be a
     party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the
     other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the

                                      24

<PAGE>

     Pass Through Company upon the Certificates or any indenture, mortgage or
     other material contract, agreement or instrument to which the Pass Through
     Company is a party or by which the Pass Through Company or its property is
     bound which would materially adversely affect the ability of the Pass
     Through Company, in its individual capacity or as Pass Through Trustee, as
     the case may be, to perform its obligations under this Agreement or the
     other Operative Documents to which it is a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of any Pass Through Trustee in
     the Indenture Estate; provided, however, that no representation is made
     with respect to the right, power or authority of the Pass Through Company
     or any Pass Through Trustee to act as operator of the Facility following a
     Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                      25

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 530 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and warranties of
each party hereto set forth in Section 3 shall be true and correct on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the determination by FERC of EWG
status and the FERC Order referenced in clause (ii) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                      26

<PAGE>

     F.   Consents. (a) All permits, licenses, approvals and consents
(including management, credit and other internal approvals of the Transaction
Parties, but excluding the Third Party Consent referred to in (b) below)
necessary to consummate the Overall Transaction and to own and operate the
Facility as currently operated shall have been duly obtained and shall be in
full force and effect and in the form and substance satisfactory to each of the
Transaction Parties.

          (b)  Each Third Party Consent shall have been obtained and shall be
in full force and effect substantially in the form attached hereto as Exhibit M
which is applicable to the relevant third party granting such consent; provided
that if any Third Party Consent is not substantially in the form attached
hereto as Exhibit M, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                      27

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(ii) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a copy of the Survey
(certified to the Owner Lessor and the Title Company) in form and substance
satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance

                                      28

<PAGE>

Consultant, and the Power Market Consultant, which reports shall be dated as of
the Closing Date and shall otherwise each be in form and substance reasonably
satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by CCFC of its interest in the Undivided Interest and the Ground
Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to
the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Holland and Hart LLP, Tribal
counsel to the Facility Lessee, the Owner Participant, the Owner Lessor and the
Initial Purchasers, (e) Karen Scowcroft, Esq., in-house counsel to the Equity
Investor, (f) Dewey Ballantine LLP, counsel to the Owner Participant and to the
Owner Lessor, (g) Bingham Dana LLP, counsel to the Lease Indenture Company and
the Indenture Trustee, (h) Bingham Dana LLP, counsel to the Pass Though
Trustees and the Pass Through Company, (i) Ray Quinney & Nebeker, in-house
counsel to the Lessor Manager and (j) Fennemore Craig, A Professional
Corporation, Arizona counsel to the Facility Lessee, the Owner Participant, the
Owner Lessor and the Initial Purchasers, in each case in form and substance
reasonably satisfactory to each Transaction Party. Each such Person expressly
consents to the rendering by its counsel of the opinion referred to in this
Section 4.19 and acknowledges that such opinion shall be deemed to be rendered
at the request and upon the instructions of such Person, each of whom has
consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall,
to the extent requested, permit the Rating Agencies and the Initial Purchasers
to rely on their opinion as if such opinion were addressed to such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the (x) Uniform Commercial Code
of Arizona and Delaware and (y) Fort Mojave Indian Reservation Uniform
Commercial Code ("FMUCC") and FMUCC First Amendments 1994 Amendment, and any
other documents as may be reasonably requested by counsel to the Owner
Participant, the Indenture Trustee or the Pass Through Trustees to perfect (i)
the Owner Lessor's Interest and the Easement, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the South Point
Ground Lease shall have been satisfied or waived and the Owner Participant
shall be satisfied that the Facility shall be in the condition described in the
Closing Appraisal.

                                      29

<PAGE>

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to perform its obligations under the
South Point Ground Lease or would materially adversely affect the Facility or
the Facility Site. On the Closing Date, each Certificateholder's purchase of
Lessor Notes shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Certificateholder is subject, (ii) not violate any
Applicable Law (including Regulation U, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Certificateholder to any tax,
penalty or liability under or pursuant to any Applicable Law, which Applicable
Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

                                      30

<PAGE>

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to both the Facility
Lessee and CCFC in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the South
Point Ground Lease or any of the Transactions contemplated by any of the
Operative Documents or the performance of the South Point Ground Lease.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

                                      31

<PAGE>

     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided
below, covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant, the Owner Lessor or (B) Calpine's obligations under the
     Calpine Guaranty have been succeeded to in accordance with Section 8.4(b)
     of the Calpine Guaranty, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each
     succeeding or surviving entity and the Calpine Guaranty shall remain in
     full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the

                                      32

<PAGE>

     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents and the South Point Ground Lease, (iv) unsecured
indemnities provided by, and other unsecured contingent obligations incurred by
the Facility Lessee in connection with either (x) Easement relating to its
applicable interest in the Facility or the Facility Site or (y) any contract,
agreement or other document or instrument relating to the South Point project
which is entered into in the ordinary course of the Facility Lessee's business,
(v) customary indemnities in favor of the title insurers providing the title
policies covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the South Point
Ground Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the South Point Ground Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     K.   Books, Records, Access. The Facility Lessee shall maintain or cause
to be maintained adequate books, accounts and records with respect to itself,
the Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in

                                      33

<PAGE>

compliance with the regulations of any Governmental Entity having jurisdiction
thereof, and permit employees, agents and representatives of the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Collateral Trust
Indenture shall have not been terminated or discharged, the Indenture Trustee,
the Pass Through Trustees and the Certificateholders, and such parties'
independent consultants, at all reasonable times during normal business hours
and upon reasonable prior notice and at no risk or (except during the existence
of a Lease Default or Lease Event of Default) expense to the Facility Lessee to
inspect, the Facility and Facility Site, to examine or audit all of or any of
the Facility Lessee's books, accounts and records and make copies and memoranda
thereof and, together with such consultants, to observe the operation,
maintenance and repair of the Facility; provided, however, any such inspection
shall be conducted in accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be
               furnished to, the Owner Lessor, the Owner Participant and, so
               long as the Lien of the Collateral Trust Indenture has not
               been terminated or discharged, the Indenture Trustee and the
               Pass Through Trustees, and their respective authorized
               representatives from time to time such information as such
               party shall reasonably request concerning the Facility and
               Facility Site including information concerning the condition,
               operation, maintenance and use of the Facility and Facility
               Site and such other financial or operating information as it
               shall reasonably request and which is routinely made available
               to creditors of the Facility Lessee, to the extent it
               possesses such information; provided that, the Facility Lessee
               reserves the right not to provide any information that is not
               otherwise publicly available to any transferee Owner
               Participant (or its Owner Lessor) if it reasonably believes in
               its good faith judgment that such transferee Owner Participant
               or any Affiliate thereof is a competitor or is an Affiliate of
               a competitor of the Facility Lessee or its Affiliates in the
               competitive power market, unless, before receiving any such
               information, such transferee Owner Participant shall have put
               in place (to the reasonable satisfaction of the Facility
               Lessee) appropriate confidentiality arrangements. To the
               extent such information consists of information contained in
               records kept by the Facility Lessee or any Affiliate, such
               information shall be furnished without cost to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

                                      34

<PAGE>

     L.   Intentionally Deleted.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the South Point Ground Lease, it will not enter into or become bound by any
contract or agreement providing for the sale of energy produced from the
Facility, or the purchase of services to be performed at, for or in connection
with, the Facility or any other contract or agreement relating to the Facility
that (i) has a term that extends beyond the Basic Lease Term or the scheduled
expiration of any Renewal Lease Term then in effect or elected by the Facility
Lessee, unless such contract or agreement may be terminated by the Facility
Lessee without material costs or obligation prior to the Basic Lease Term or
the scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the South Point Ground Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

                                      35

<PAGE>

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Easement and the Facility Site or on any of its other
properties real or personal, whether now owned or hereafter acquired, except
Permitted Liens.

     M.   Investments. The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     N.   Intentionally Deleted

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority. The Facility
               Lessee shall not without the prior written consent of the
               Owner Participant and, except as otherwise provided in Section
               8 of the Collateral Trust Indenture and so long as the Lien of
               the Collateral Trust Indenture has not been terminated or
               discharged, the Indenture Trustee, (x) cause or consent to or
               (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document. In addition,
               the Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of
               the South Point Ground Lease without the consent of the Owner
               Participant if the same would (i) subject in all cases to the
               provisions of clause (iii) below, during the Facility Lease
               Term, have a material adverse effect on the Owner Participant
               or the Owner Lessor (including, without limitation, any
               material decrease in their respective rights or any material
               increase in their respective obligations or any material
               increase in the liability exposure of the Owner Lessor or the
               Owner Participant, it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the
               fact of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and of Calpine under
               the Calpine Guaranty shall be taken into account and (y) any
               increase in rent or any other amount payable by the Owner
               Lessor or the Owner Participant under the South Point Ground
               Lease that is also reflected to the same extent under the
               Facility Site Lease and does not remain in effect after the
               expiration of the then existing Basic Lease Term

                                      36

<PAGE>

               or any Renewal Term with respect to which the Facility Lessee
               shall have irrevocably exercised its renewal option shall not
               constitute or cause or be deemed to constitute or cause such a
               material adverse effect), (ii) during the period after the
               expiration or termination of the Facility Lease Term, have any
               adverse effect whatsoever on the Owner Participant or the
               Owner Lessor (including, without limitation, any increase in
               their respective obligations or decrease in their respective
               rights) or (iii) whether during or after the Facility Lease
               Term, result in any change to the length of the term of the
               South Point Ground Lease or in any option to renew the
               Facility Lease Term. The Facility Lessee will furnish the
               Owner Participant with a copy of the executed version thereof
               promptly after the execution thereof. Notwithstanding anything
               to the contrary contained in the foregoing, the Facility
               Lessee shall not have any right to take any action otherwise
               permitted pursuant to this Section 5.20 if a Significant Lease
               Default or Lease Event of Default shall have occurred and be
               continuing. So long as the Lien of the Collateral Trust
               Indenture has not been discharged, the Facility Lessee shall
               not take any action pursuant to or in accordance with the
               foregoing provisions of this Section 5.20, if such action
               would (i) have a material adverse effect on the Indenture
               Trustee, the Pass Through Trustees, the Noteholders or the
               Certificateholders including, without limitation, a material
               adverse effect on such Person's rights and remedies under the
               Operative Documents (it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the
               fact of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and Calpine's
               obligations under the Calpine Guaranty shall be taken into
               account and (y) any increase in rent or any other amount
               payable by the Owner Lessor or the Owner Participant under the
               South Point Ground Lease that is also reflected to the same
               extent under the Facility Site Lease ) shall not constitute or
               cause such a material adverse effect) or (ii) result in the
               release of or loss of the first priority, perfected Lien
               (subject to Permitted Liens) on all or any material portion of
               the Owner Lessor's interest in the Facility or the Facility
               Site, except as otherwise permitted by the Operative Documents.

          (b)  During the Facility Lease Term (i) the Facility Lessee
shall, at its own expense, on behalf of the Owner Lessor, duly fulfill and
comply with all obligations on the part of the Owner Lessor under or in
connection with the South Point Ground Lease and the Easement (or any extension
or renewal of any thereof) at the time performance of such obligations is
required under the South Point Ground Lease and (ii) in connection with the
foregoing obligation of the Facility Lessee set forth in clause (i), subject to
clause (a) above, the Facility Lessee shall have and be entitled to exercise
all rights and benefits (including the right to enter into any amendment,
modification, extension, termination, variance, waiver, notice or consent or
any action with respect thereto, subject to the terms and conditions of the
Operative Documents) of the Owner Lessor under the South Point Ground Lease and
Easement.

                                      37

<PAGE>

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the South Point Ground Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility, the Facility Site or the Easement, whether or not
compliance therewith shall require structural changes in the Facility or any
part thereof or require major changes in operational practices or interfere
with the use and enjoyment of the Facility or any part thereof, and (b)
procure, maintain and comply, or cause to be procured, maintained and complied
with, all Applicable Permits, except in the case of clause (a) and (b) above,
(1) as may be contested in accordance with Section 7 or 8 of the Facility Lease
and (2) the Facility Lessee may, in good faith and by appropriate proceedings,
diligently contest the validity or application of any such Applicable Laws in
any reasonable manner which does not involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material Lien on the Facility,
(ii) impair the use, operation or maintenance of the Facility in any material
respect, (iii) any criminal liability being incurred by the Owner Participant,
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Lease
Indenture Company, the Pass Through Trustees, the Pass Through Company or any
Certificateholder, (iv) the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustees, the

                                      38

<PAGE>

Pass Through Company or any Certificateholder being subjected to any
unindemnified civil liability or of the Owner Participant or the Owner Lessor
being subject to regulation as a public utility under Applicable Law, or (v)
any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site, the transactions contemplated by the Operative Documents to
which the Facility Lessee is a party and the performance of the South Point
Ground Lease as may be required to enable the Owner Participant, the Owner
Lessor or, so long as the Lien of the Collateral Trust Indenture shall not have
been terminated or discharged, the Indenture Trustee or the Pass Through
Trustees, as the case may be, to timely file with any Governmental Entity any
reports and obtain any licenses or permits required to be filed or obtained by
the Owner Lessor under any Operative Document or the South Point Ground Lease,
the Owner Participant as the owner of the Member Interest or the Indenture
Trustee. The Facility Lessee will preserve, protect, defend and enforce, or
cause to be preserved, protected, defended and enforced, the rights of itself,
the Owner Lessor and the Owner Participant under each and every Operative
Document to which it is a party (including by assignment and assumption of the
rights thereunder), including using commercially reasonable efforts to
prosecute suits to enforce any such rights and, at the request of Indenture
Trustee, so long as the Lien of the Collateral Trust Indenture has not been
discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the
Facility

                                      39

<PAGE>

Lessee's reasonable expense, enforce, in its own name, or the Facility Lessee's
name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

     O.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the South Point Ground Lease, or earlier at the option of the
Owner Lessor. The Facility Lessee shall also, subject to obtaining any required
third party consents, assign to the Owner Lessor upon termination of the
Facility Lease any support or similar agreements to the extent relating to the
Facility it has with third parties.

     P.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     Q.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

II.  COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

                                      40

<PAGE>

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section 9.1, 9.3,
               13.1 or clause (i) of Section 13.2 of the LLC Agreement
               without the prior written consent of the Facility Lessee so
               long as no Significant Lease Default or Lease Event of Default
               has occurred and is continuing and the Indenture Trustee so
               long as the Lien of the Collateral Trust Indenture has not
               been terminated or discharged.

                                      41

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the South Point
Ground Lease in any manner or (c) except as provided in Section 11 hereof or
Section 2.10 or Section 5.6 of the Collateral Trust Indenture, take any action
to prepay or refund the Lessor Notes or amend any of the payment terms of the
Lessor Notes without, in each case, the prior written consent of the Facility
Lessee so long as no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing and, in the case of clause (a) or (b), the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents or the South Point
Ground Lease.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other

                                      42

<PAGE>

laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner Lessor shall not take any such
action unless the Indenture Trustee shall have given its prior written consent
to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation

                                      43

<PAGE>

     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in this
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                      44

<PAGE>

     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                      45

<PAGE>

respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section 7.6 prior to
entering into such revised agreement; provided that, for such revised offer,
the Notice Period shall be 10 Business Days from the date of such new notice,
and the Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other South Point Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under this Section 7.6 of each such
Other South Point Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                      46

<PAGE>

its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agree to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

                                      47

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Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site, the Easement or any Component or any portion of any thereof or any
     interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility, the Easement or
     the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, the Easement or
     any Component, or any portion of any thereof or any interest therein;

                                      48

<PAGE>

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or the Easement or any Component, or any portion thereof,
     including, for the avoidance of doubt, any such Environmental Condition
     existing prior to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the South Point Ground Lease requested by the Facility Lessee, or
     resulting from the actions of the Facility Lessee or in connection with
     any Lease Default or Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the South Point Ground Lease or the interests of the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, or under the Operative Documents or the South Point
     Ground Lease or the presence, use, storage, release, threatened release,
     transportation, arrangement for transportation, treatment, arrangement for
     treatment, manufacture, disposal or arrangement for disposal of any
     Hazardous Substance in, at, under or from the Facility, the Easement or
     the Facility Site, including, for the avoidance of doubt, any of the
     foregoing existing or occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     Tribe of any obligation contained in this Agreement or any other Operative
     Document or the South Point Ground Lease or the falsity or inaccuracy of
     any representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the South Point Ground
     Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the South
     Point Ground Lease (other than the Facility Lease and the Facility Site
     Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional

                                      49

<PAGE>

     persons) arising out of the discharge of their respective duties as
     provided in the Operative Documents or the South Point Ground Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after expiration or early termination of the Facility Lease and, where
     required by the Facility Lease, surrender to the Owner Lessor or its
     successor of its interest in the Facility and Facility Site in compliance
     with the provisions of the Facility Lease and the Facility Site Lease
     respectively or (B) if the Closing Date does not occur, acts, omission or
     events occurring after the date set forth in Section 2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease or (ii) any
     violation of Applicable Law by any such Person except to the extent
     attributable to a violation of Applicable Law by the Facility Lessee or
     any other Calpine Party or to any breach by the Facility Lessee or such
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease;

               a)   as to any Indemnitee, any Claim to the extent attributable
                    to the noncompliance of such Indemnitee or a Related
                    Party, with any of the terms of, or any
                    misrepresentation or breach of warranty by such
                    Indemnitee or Related Party contained in any Operative
                    Document made by such Indemnitee or Related Party or any

                                      50

<PAGE>

                    breach by such Indemnitee or a Related Party of any
                    covenant contained in any Operative Document or any
                    breach by such Indemnitee or a Related Party of any
                    covenant contained in any Operative Document made by
                    such Indemnitee or Related Party except to the extent
                    attributable to any breach by the Facility Lessee or any
                    other Calpine Party of any covenant, representation or
                    warranty contained in any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of Default
     that is not also (or attributable to) a Lease Default or Lease Event of
     Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

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<PAGE>

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other Indemnitee shall
     waive its rights to indemnification (for itself and each Related Party
     thereto) in a manner reasonably acceptable to the Facility Lessee, to
     cooperate, at the sole cost and expense of the Facility Lessee, with
     insurers in exercise of their rights to investigate, defend or compromise
     such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default shall have occurred and be
     continuing, the Facility Lessee shall have the right in its sole
     discretion, to defend or compromise any Claim for which indemnification is
     sought under this Section 9.1 which the Facility Lessee acknowledges is
     subject to indemnification hereunder; provided that no such defense or
     compromise shall involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a Lien on any part of the Facility, the
     Undivided Interest, the Ground Interest, the Facility Site, the Lessor
     Estate or the Indenture Estate or the impairment of the Facility or the
     Facility Site, in any material respect or (ii) any criminal liability
     being incurred or any material adverse effect on such Indemnitee;
     provided, further, that no Claim shall be compromised by the Facility
     Lessee on a basis that admits any criminal violation or gross negligence
     or willful misconduct on the part of such Indemnitee without the express
     written consent of such Indemnitee; and provided, further, that to the
     extent that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the performance of the South Point Ground Lease
     are part of the same proceeding involving such Claim, the Facility Lessee
     may assume responsibility for the contest or compromise of such Claim only
     if the same may be and is severed from such other

                                      52

<PAGE>

     Claims (and each Indemnitee agrees to use reasonable efforts to obtain
     such a severance). In the event that in the course of the investigation or
     defense of a claim, the Facility Lessee shall in good faith reasonably
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties). Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee

                                      53

<PAGE>

     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to the
     Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the Indemnitee
     waives its rights to indemnification hereunder or (ii) the Facility Lessee
     has not acknowledged its indemnity obligation with respect thereto and
     there is a significant risk that a default judgment will be entered
     against such Indemnitee. Nothing contained in this Section 9.1(e) shall be
     deemed to require an Indemnitee to contest any Claim or to assume
     responsibility for or control of any judicial proceeding with respect
     thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of their insurers has paid in respect of such Claim; provided that,
     so long as a Significant Lease Default or Lease Event of Default shall
     have occurred and is continuing such amount may be held by the Owner
     Lessor as security for the Facility Lessee's obligations under the
     Facility Lease, the other Operative Documents and the South Point Ground
     Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the
     case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

                                      54

<PAGE>

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Easement, the Undivided Interest, the Facility Site, the
     Ground Interest, or any portion or Component thereof or any interest
     therein, or upon any Operative Document or interest therein, or in any way
     arising out of, in connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Easement,
     the Undivided Interest, the Ground Interest, the Facility Site or any
     portion or Component thereof or any interest therein;

the Facility, the Facility Site, the Easement, the Undivided Interest, the
     Ground Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility Lessee
     or Calpine, the Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Easement, the Facility Site or any portion or Component thereof, or
     any interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, the Easement or any portion or Component
     thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     South Point Ground Lease;

the conveyance of title to the Undivided Interest; or

                                      55

<PAGE>

otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of South Point Ground Lease.

          Notwithstanding anything herein to the contrary and without regard
to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, transaction privilege taxes,
     use, rental, license, value added (to the extent value added taxes are not
     imposed in clear and direct substitution for income taxes) or property
     taxes) ("Income Taxes"), including any such Taxes collected by way of
     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided
     that this exclusion shall not apply so long as a Lease Event of Default
     shall have occurred and be continuing;

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<PAGE>

Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and not as a result of
     any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the
     Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that, under
     law in effect on the date of the transfer such Taxes exceed the amount of
     Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

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<PAGE>

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall
     have determined in good faith that compliance with any such requirement
     shall not result in any identified non-immaterial adverse effect to its
     interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, transaction privilege taxes, use, rental or license taxes, value
     added taxes

                                      58

<PAGE>

     (except to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document or the South Point Ground Lease are not within
     the scope

                                      59

<PAGE>

     of the independent accountant's responsibility. The fees and
     disbursements of such accounting firm will be paid by the Facility Lessee;
     provided that such fees and disbursements will be paid by the Tax
     Indemnitee if the verification results in an adjustment in the Facility
     Lessee's favor of 5 percent or more of the indemnity payment or payments
     computed by the Tax Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility
     Lessee a Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing, such amount shall not be payable until such
     Significant Lease Default or Lease Event of Default has been cured, and
     (B) the amount payable to the Facility Lessee pursuant to this sentence
     shall not exceed the amount of the indemnity payment in respect of

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<PAGE>

     such refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and (y) over (B) in this Section 9.2(f) shall be carried
     forward and reduce the Facility Lessee's obligations to make subsequent
     payments to such Tax Indemnitee pursuant to this Section 9.2. If it is
     subsequently determined that the Tax Indemnitee was not entitled to such
     refund or credit, the portion of such refund or credit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof. If, in connection with a refund or
     credit of all or part of any Taxes paid, reimbursed or advanced by the
     Facility Lessee pursuant to this Section 9.2, a Tax Indemnitee receives an
     amount representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

               (1)  the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)  the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

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<PAGE>

               (3)  the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall consult in
good faith with the other party and its designated counsel with respect to such
Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

               (1)  within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)  no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)  there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)  there is no risk of imposition of any criminal penalties
or liabilities,

               (5)  if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)  the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)  the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)  in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

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<PAGE>

               (9)  if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to such Tax, which
admission shall be binding on the Facility Lessee unless and to the extent such
contest is determined in a manner that conclusively demonstrates that the
Facility Lessee is not so liable, and

               (10) if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

               (1)  waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)  promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold interest of the Owner Lessor in the Facility for
     United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement or
     return for filing by the Tax Indemnitee; provided that the only

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<PAGE>

     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section
     9.2. Subject to the preceding sentence, the Facility Lessee's obligations
     under this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to
     this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents
in all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the rights under the Facility Lease and
Facility Site Lease, including the right to possession, use and quiet enjoyment
of the Easement, the Undivided Interest and the Ground Interest.

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<PAGE>

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that
     there shall be no changes to the amortization schedule or interest amounts
     and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements

                                      65

<PAGE>

     shall be made in compliance with the Operative Documents and the South
     Point Ground Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant
     or the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all

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conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which
     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative

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<PAGE>

Documents and the South Point Ground Lease. The Owner Participant will execute
such agreements and documents as may be necessary with respect to any such
refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not result
     in a change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
     ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or

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<PAGE>

     the Owner Participant in accordance with the terms of the Facility Lease
     to which it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS; EXERCISE
     OF EXTENSION OF SOUTH POINT GROUND LEASE

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing, upon
     satisfaction of the conditions in paragraph (b) below, the Facility Lessee
     may assign the Facility Lease or any other Operative Document to which it
     is a party, or any interest therein to any Person, without the consent of
     the Owner Lessor, the Owner Participant, the Indenture Trustee or any
     other Transaction Party.

Assignment under Section 13.1(a) above by the Facility Lessee shall be
     permitted if (A) after giving effect to such assignment or assignments,
     either (x) Calpine owns, directly or indirectly, at least a majority of
     the Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in writing
     its obligations under the Calpine Guaranty or (y) Calpine's obligations
     under the Calpine Guaranty has been succeeded to in accordance with
     Section 8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

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<PAGE>

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any state
thereof or the District of Columbia;

               b)   the Facility Lessee shall have paid, at no after-tax cost
                    to such parties, all reasonable documented out-of-pocket
                    expenses (including reasonable attorneys' fees and expenses)
                    of the Owner Lessor, the Lessor Manager, the Owner
                    Participant, the Indenture Trustee, the Lease Indenture
                    Company and the Pass Through Trustees in connection with
                    such assignment;

               c)   the Facility Lessee shall have provided the Indenture
                    Trustee with (x) an indemnity against the risk that such
                    assignment will cause a Tax Event to occur to any direct
                    or indirect holder of any Lessor Note (including any
                    Certificateholder) or (y) an opinion of counsel to the
                    effect that such assignment will not cause a Tax Event to
                    occur to any direct holder of any Lessor Note and any
                    Certificateholder; and

               d)   the transfer shall not cause the Facility to cease being
                    treated as a "qualified Indian reservation or property"
                    within the meaning of Section 168(j)(4) of the Code or cause
                    the Facility to become "tax-exempt use property within the
                    meaning of Section 168(h) of the Code (unless the Facility
                    Lessee shall make a payment contemporaneously with such
                    transfer that in the reasonable

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<PAGE>

                    judgment of the Owner Participant compensates the Owner
                    Participant for the adverse tax consequences therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the South Point Ground Lease, except for obligations (including Section 9.1
and 9.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of the Operative Documents or which have otherwise accrued but
not been paid as of such date and (ii) the Owner Participant or the OP
Guarantor will transfer (by an appropriate instrument of transfer) the Member
Interest to the Facility Lessee (or its designee); provided, however, that if
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

     G.   Exercise of Extension of South Point Ground Lease. The rights of the
Owner Lessor delegated to the Facility Lessee, pursuant to Section 5.20(b)
hereof, and subject to the terms and conditions thereof, include the right to
negotiate and to exercise the Owner Lessor's

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<PAGE>

rights (to the extent of the Owner Lessor's Percentage) to extend the term of
the South Point Ground Lease in accordance with Section 4.2 thereof; provided,
however, that (i) such right may not be exercised by the Facility Lessee during
the occurrence and continuation of a Lease Event of Default and following the
commencement of the exercise of the Owner Lessor's remedies under Section 17 of
the Facility Lease, nor following the termination of the Facility Lease
pursuant to Section 17 thereof or the Facility Site Lease pursuant to Article
XVI thereof; provided further that the Facility Lessee agrees that, except as
otherwise provided in the third paragraph of this Section 13.3, it shall not
decline to exercise such right to extend, and shall not cancel any such
election of such right without the consent of the Owner Lessor unless the Owner
Participant has disapproved of the terms of the extension pursuant to Section
5.20 hereof.

          Notwithstanding the foregoing, the Facility Lessee may elect to
extend the South Point Ground Lease pursuant to Section 4.2 thereof and
exercise the Owner Lessor's rights under such Section only if, concurrently
with such election, the Facility Lessee also elects to extend the South Point
Ground Lease with respect to the Other South Point Owner Lessors on the same
terms and conditions negotiated for the Owner Lessor giving effect to their
respective percentage interests in the South Point Ground Lease. Additionally,
the Owner Lessor shall not give the Facility Lessee consent to refrain from
exercising the extension of the South Point Ground Lease or to cancel any such
extension, unless concurrently with such consent, the Other South Point Owner
Lessors also give such consent to the Facility Lessee with respect to the
respective interests of the Other Owner Lessors in the South Point Ground Lease.

          Notwithstanding any provision to the contrary in this Agreement or
in any other Operative Document, the Facility Lessee shall have no obligation
to exercise the lease extension right as provided in Section 4.2 of the South
Point Ground Lease, as amended, if the Facility Lessee shall disagree with the
amount of the Annual Renewal Amount (as defined in the South Point Ground
Lease) as determined pursuant to the terms of Section 4.2 of the South Point
Ground Lease, as amended. If the Facility Lessee shall so disagree with such
determination of the amount of the Annual Renewal Amount, then the Facility
Lessee shall have the right, in its sole discretion and without consent from
any of the Owner Lessor, Owner Participant or Indenture Trustee or any other
Person, to reject, and not accept and exercise, the lease extension right
contained in Section 4.2 of the South Point Ground Lease, and, in connection
therewith, to permit the Facility Lease and the Facility Site Lease to
terminate after expiration of the then current lease term of each thereof;
provided that nothing in this third paragraph of Section 13.3 shall, or shall
be deemed to, limit or affect the right of the Owner Lessor to extend the term
of the South Point Ground Lease by exercising, for and on its own behalf, the
lease extension right for the amount of the Annual Renewal Amount so
determined, or as otherwise may be determined in subsequent negotiations by the
Owner Lessor, it being understood that (A) unless otherwise agreed by the Owner
Lessor, the Facility Lessee's rejection and non-acceptance referred to above
shall be irrevocable and (B) neither the Facility Lessee nor any Calpine Party
shall have any right, title or interest in, or (except as otherwise provided in
Section 14.6) obligation or liability under or in connection with, the South
Point Ground Lease in respect of any period commencing on or after the later of
the termination of the Facility Lease and the termination of the Facility Site
Lease as aforesaid.

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<PAGE>

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document or
the South Point Ground Lease.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          South Point Energy Center, LLC

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<PAGE>

          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention: Senior Counsel
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-2, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

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<PAGE>

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

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<PAGE>

          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

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<PAGE>

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto. In
          addition, the Facility Lessee shall (unless otherwise directed by
          the applicable Rating Agency) provide to each Rating Agency a copy
          of any information, report or notice it gives to the Indenture
          Trustee hereunder or any other Operative Documents.

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<PAGE>

Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the South Point Ground Lease regardless of any
investigation made by any such party or on behalf of any such party. In
addition, the indemnifications by the Facility Lessee under Sections 9.1 and
9.2 of this Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the
Facility Site Lease and the Calpine Guaranty, shall expressly survive the
expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition of the respective interests
of the Owner Participant, the Owner Lessor, the Lessor Manager, the Lease
Indenture Company, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders in, to and under this Agreement, the Assignment Agreement
and the other Operative Documents and the South Point Ground Lease. Except as
expressly provided above or in Section 22.3 of the Facility Lease, the Tax
Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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<PAGE>

Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the South Point Ground Lease, as to
     all of which the other parties hereto agree to look solely to the
     Indenture Estate and the Lessor Estate, respectively; provided, however,
     that the Lease Indenture Company and the Pass Through Trust Company shall
     be liable hereunder for their own negligence or willful misconduct or for
     a breach of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

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<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in their sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and to
     the nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the South Point Ground Lease (except as otherwise provided
     therein) or the subject matter hereof or thereof or any of the
     transactions contemplated hereby or thereby brought by any of the parties
     hereto or their successors or assigns; (ii) hereby irrevocably agrees that
     all claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is not
     personally subject to the jurisdiction of the above-named courts, that the
     suit, action or proceeding is brought in an inconvenient forum, that the
     venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                      80

<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee
     designates, appoints and empowers National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents or with respect to the Facility Lessee, for
     so long as it has any obligations remaining under the South Point Ground
     Lease. The Facility Lessee shall grant an irrevocable power of attorney to
     CT Corporation System, in respect of such appointment and shall maintain
     such power of attorney in full force and effect for so long as any
     obligation of the Facility Lessee shall remain outstanding hereunder or
     under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                      81

<PAGE>

the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     14.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

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<PAGE>

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

     H.   South Point Ground Lease

     The parties hereto acknowledge and agree that, in accordance with Section
7.2 of the Facility Lease, the Facility Lease is subject and subordinate to all
the terms and conditions of the South Point Ground Lease.

                                      83

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                         SOUTH POINT ENERGY CENTER, LLC,
                         a Delaware limited liability company

                              By:______________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              SOUTH POINT OL-2, LLC, a Delaware limited
                              liability company

                              By: WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: ______________________________________
                              Name:
                              Title:
                              Date:

                              SBR OP-2, LLC, a Delaware limited liability
                              company

                              By: WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By:______________________________________
                              Name:
                              Title:
                              Date:

                              WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION,
                         not in its individual capacity, except as expressly
                         provided herein, but solely as Lessor Manager

                         By:______________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              STATE STREET BANK AND TRUST
                              COMPANY OF CONNECTICUT, NATIONAL
                              ASSOCIATION,
                         not in its individual capacity, except to the extent
                         expressly provided herein, but solely as Indenture
                         Trustee under the Collateral Trust Indenture

                              By:______________________________________
                              Name:
                              Title:
                              Date:

                              STATE STREET BANK AND TRUST
                              COMPANY OF CONNECTICUT, NATIONAL
                              ASSOCIATION,
                         not in its individual capacity, except to the
                         extent expressly provided herein, but solely as Pass
                         Through Trustees under the Pass Through Trust
                         Agreement

                              By:______________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              CALPINE CORPORATION,
                              a Delaware corporation
                              By:______________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used
     in an Operative Document and not defined therein or in this Appendix A
     but in another Operative Document shall have the meaning herein or
     therein provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article,
     party, annex, appendix, exhibit, schedule or other attachment to or in
     respect of an Operative Document is a reference to a part, clause,
     section, paragraph, or article of, or a party, annex, appendix, exhibit,
     schedule or other attachment to, such Operative Document unless, in any
     such case, otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance
     or law includes all statutes, regulations, proclamations, ordinances or
     laws varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in any
     such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule,
     exhibit, instrument or agreement includes an amendment or supplement to,
     or restatement, replacement, modification or novation of, any such
     document, schedule, exhibit, instrument or agreement unless otherwise
     specified in such definition or in the context in which such reference is
     used;

     (h)  a reference to a particular section, paragraph or other part of
     a particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;

<PAGE>

     (i)  if a capitalized term describes, or shall be defined by
     reference to, a document, instrument or agreement that has not as of any
     particular date been executed and delivered and such document, instrument
     or agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)  a reference to any Person (as hereinafter defined) includes
     such Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless
     "Business Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of
     the Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or words
     of similar import shall, whether or not so expressly stated, be deemed to
     be a reference to the satisfaction, release and discharge in full and
     cancellation of the Lien of the Collateral Trust Indenture or the
     Collateral Documents, as the case may be, in accordance with the express
     provisions thereof.

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)  a reference to "including" shall mean including without
     limiting the generality of any description preceding such term, and for
     purposes hereof and of each Operative Document the rule of ejusdem generis
     shall not be applicable to limit a general statement, followed by or
     referable to an enumeration of specific matters, to matters similar to
     those specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured debt
     of which is rated at least A by

                                      2

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or other
     employee whose responsibilities include the administration of the Overall
     Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to finance
     all or a portion of the Owner Lessor's Percentage of the cost of any
     Required or Non-Severable Improvement financed pursuant to Section 11.1 of
     the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12 of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially owning
     or holding, directly or indirectly, 10% or more of any class of voting or
     equity interest of such first Person or any corporation of which such
     first Person beneficially owns or holds, in the aggregate, directly or
     indirectly, 10% or more of any class of voting or equity interest. For
     purposes of this definition, "control" when used with respect to any
     particular Person shall mean the power to direct the management and
     policies of such Person, directly or indirectly, whether through the
     ownership of voting securities, by contract or otherwise, and the terms
     "controlling" and "controlled" have meanings correlative to the foregoing;
     provided, however, that under no circumstances shall the Lease Indenture
     Company be considered to be an Affiliate of either the Indenture Trustee
     or any Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease Indenture
     Company, nor shall the Lease Indenture Company, the Indenture Trustee,
     solely because any Operative Document contemplates that any of them may
     request or act at the instruction of any such Person or such Person's
     Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is received
     or properly accrued, and

                                      3

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use the
     Facility, the Undivided Interest (if any), the Ground Interest or Facility
     Site as contemplated by the Operative Documents and the South Point Ground
     Lease, to sell electricity therefrom, to enter into any Operative Document
     or to consummate any transaction contemplated thereby, or (b) that is
     necessary so that none of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of the
     Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten (10)
     Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal. If
     either the Owner Participant or the Facility Lessee does not appoint its
     appraiser within such ten Business Day period, the determination of the
     other appraiser shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. If the appraisers appointed by the Owner
     Participant and the Facility Lessee are unable to agree upon the value,
     period, amount or other determination in question within thirty (30) days,
     such appraisers shall jointly appoint a third Independent Appraiser or, if

                                      4

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the granting clause of the collateral trust indenture.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (SP-2) dated
     as of the Closing Date between CCFC and the Owner Lessor, substantially in
     the form of Exhibit B to the Participation Agreement duly completed,
     executed and delivered on the Closing Date pursuant to which the Owner
     Lessor will acquire the Undivided Interest and the Ground Interest from
     CCFC.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $17,187,500.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate of
     interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee for
     rental payments during the remaining term of the lease included in such
     Sale/Leaseback Transaction (including any period for which such lease has
     been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
     the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U.S.C. [sec.] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of the
     Facility Lease.

                                      5

<PAGE>

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" OR "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interests to Broad River
     Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interest to the Broad River
     Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                      6

<PAGE>

     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad River
     OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and the
     Broad River Ground Interests to the Broad River Owner Lessors, and the
     simultaneous lease of the Broad River Undivided Interests and Broad River
     Ground Interests to the Broad River Facility Lessee on substantially the
     same terms and conditions as under, and dated the same date as, the Broad
     River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee, the
     Pass Through Trustees and Calpine and designated Participation Agreement
     (BR-1), Participation Agreement (BR-2), Participation Agreement (BR-3) and
     Participation Agreement (BR-4), each dated as of the Closing Date,
     pursuant to which, among other things, the Broad River Facility Lessee has
     agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the Broad River Facility,
     and (b) lease from the applicable Broad River Owner Lessors such undivided
     leasehold interest in the Broad River Facility pursuant to the Broad River
     Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                      7

<PAGE>

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required by
     law, regulation or executive order to be closed in New York, New York, the
     city and the state in which the Corporate Trust Office of the Indenture
     Trustee is located or the city and state in which the Pass Through
     Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment Agreement
     (SP-2) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, CCFC, the Facility Lessee, and each
     other Affiliate of Calpine that is party to any Operative Document.

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

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

     "CCFC" shall mean Calpine Construction Finance Company, L.P., a Delaware
     limited partnership.

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of
Certificates, and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any

                                      8

<PAGE>

     certificates issued in replacement therefor pursuant to Section 3.3, 3.4
     or 3.5 of the Pass Through Trust Agreement.

     "CES" shall mean Calpine Energy Services L.P., a Delaware limited
     partnership.

     "CLAIM(S)" individually or collectively as the context may require, shall
     mean any liability (including in respect of negligence (whether passive or
     active or other torts), strict or absolute liability in tort or otherwise,
     warranty, latent or other defects (regardless of whether or not
     discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges, of
     whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Deed of
     Trust, Assignment of Rent and Leases, Security Agreement and Financing
     Statement (SP-2), dated as of the Closing Date, between the Owner Lessor
     and the Indenture Trustee, in substantially the form of Exhibit I to the
     Participation Agreement.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature that
     may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                      9

<PAGE>

     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a Consolidated
     balance sheet of the Guarantor and its Subsidiaries, determined in
     accordance with GAAP, and after giving effect to purchase accounting and
     after deducting therefrom, to the extent otherwise included, the amounts
     of: (i) Consolidated Current Liabilities; (ii) minority interests in
     consolidated Restricted Subsidiaries held by Persons other than the
     Guarantor or a Restricted Subsidiary; (iii) excess of cost over fair value
     of assets of businesses acquired, as determined in good faith by the Board
     of Directors; (iv) any revaluation or other write-up in value of assets
     subsequent to December 31, 1993 as a result of a change in the method of
     valuation in accordance with GAAP; (v) unamortized debt discount and
     expenses and other unamortized deferred charges, goodwill, patents,
     trademarks, service marks, trade names, copyrights, licenses, organization
     or developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous fund
     established for the purpose of redemption or other retirement of Capital
     Stock to the extent such obligation is not reflected in Consolidated
     Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule 2
     of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                      10

<PAGE>

     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time or
     both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section 1(a)
     of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "EASEMENT" shall mean the easement defined in the recitals to the
     Facility Site Lease.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the report
     of the Engineering Consultant, dated October 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether civil
     or criminal, arising under a theory of negligence or strict liability, or
     otherwise) under any Environmental Law, (iii) create or constitute a
     public or private nuisance or trespass, or (iv) constitute a violation of
     or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Applied EnviroSolutions, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                      11

<PAGE>

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment dated October 12, 2001 prepared by the Environmental Consultant
     for Calpine Corporation.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any
determination of Termination Value or amount determined by reference to
Termination Value payable pursuant to the Operative Documents, shall mean an
amount equal to the excess, if any, of (i) the Termination Value set forth
opposite the Termination Date corresponding to such date of determination on
Schedule 2 of the Facility Lease, and, if such date of determination is a Rent
Payment Date, Periodic Rent due on that date (to the extent payable in arrears)
over (ii) the balance, including scheduled (in accordance with the payment
terms of the Lessor Notes) accrued interest, on the Lessor Notes scheduled (in
accordance with the payment terms of the Lessor Notes) to be outstanding on
such date of determination corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee being
     or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders the
     Facility permanently unfit for normal use or which does not satisfy the
     preconditions for repair of the Facility set forth in Section 10 of the
     Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)  (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor
     of the Undivided Interest or the Ground Interest, following exhaustion of
     all permitted appeals or an election by the Facility Lessee in its
     discretion not to pursue such appeals or rights; provided that no such
     contest (or exercise) shall

                                      12

<PAGE>

     extend beyond the earlier of the date which is (x) six months after the
     loss of such title, or (y) 48 months prior to the end of the Basic Lease
     Term or any Renewal Lease Term then in effect or elected by the Facility
     Lessee or (b) Requisition of use of, or leasehold in, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall have
     resulted in the loss of possession of the Undivided Interest or all or any
     part of the Ground Interest that is required for the use or operation of
     the Facility; provided that in any case involving Requisition of use of
     the Facility, or all or any part of the Facility Site that is required for
     the use or operation, of the Facility, but not of the Owner Lessor's
     Undivided Interest or the Ground Interest, such event shall be an Event of
     Loss only if loss of possession continues beyond the Basic Lease Term or
     any Renewal Lease Term then in effect or elected by the Facility
     Lessee; or

          (iv)   if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below, subjection
     of the Owner Participant or the Owner Lessor to any public utility
     regulation of any Governmental Entity or law which in the reasonable
     opinion of the Owner Participant is burdensome, or the subjection of the
     Owner Participant's or the Owner Lessor's interest in the Facility Lease
     to any rate of return regulation by any Governmental Entity, in either
     case by reason of the participation of the Owner Lessor, the Owner
     Participant or the OP Guarantor in the transactions contemplated by the
     Operative Documents and the South Point Ground Lease and not, in any
     event, as a result of (a) investments, loans or other business activities
     of the Owner Participant or any of its Affiliates in respect of equipment
     or facilities similar in nature to the Facility or any part thereof or in
     any other electrical, cogeneration or other energy or utility related
     equipment or facilities or the general business or other activities of the
     Owner Participant or any of its Affiliates or the nature of any of the
     properties or assets from time to time owned, leased, operated, managed or
     otherwise used or made available for use by the Owner Participant or any
     of its Affiliates or (b) a failure of the Owner Participant to perform
     routine, administrative or ministerial actions the performance of which
     would not subject the Owner Participant or any of its Affiliates to any
     material adverse consequence (in the reasonable opinion of such Owner
     Participant acting in good faith); provided that the Facility Lessee and
     the Owner Lessor and Owner Participant agree to cooperate and to take
     reasonable measures to alleviate the source or consequence of any
     regulation constituting an Event of Loss under this paragraph (iv), so
     long as there shall be no adverse consequences to the Owner Lessor or
     Owner Participant as a result of such cooperation or the taking of
     reasonable measures (the events and circumstances described herein this
     paragraph (iv), a "Regulatory Event of Loss"); or

          (v)   if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Orders shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

                                      13

<PAGE>

          (vi)   the South Point Ground Lease shall have been cancelled or
     terminated or shall otherwise cease to be in full force and effect other
     than by reason of events constituting a Lease Event of Default under
     Section 16(m) of the Facility Lease; or

          (vii)  if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (ii) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor, it being acknowledged and agreed
     that for purposes of this clause (vii), in determining if a material
     adverse effect would reasonably be expected to occur, (x) the fact of
     Calpine's obligations under the Calpine Guaranty shall be taken into
     account, and (y) no such material adverse effect shall be found to be
     reasonably expected to occur if (1) an adverse determination in any such
     pending proceeding would be reasonably likely to result in a FERC order
     accepting Lessee's rate schedule, as amended, or establishing a just and
     reasonable rate, that in either case is sufficient to allow the Facility
     Lessee to satisfy its obligations to pay Periodic Rent under the Facility
     Lease, and (2) no material adverse effect would be reasonably likely to
     occur as a result of any other aspect of such FERC proceeding.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or exercise
     its rights of eminent domain, and (C) the date which is 48 months prior to
     the end of the Basic Lease Term or any Renewal Lease Term then in effect
     or elected by the Facility Lessee (if an event described in clause
     (iii)(a) shall be continuing at such time). The date of occurrence of an
     Event of Loss described in clause (iii)(b) above shall be the date of
     requisition of title to the Facility Site or, in the case of a requisition
     of use of the Facility Site, the date which is the scheduled expiration
     date of the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee, as the case may be (if an event described
     in clause (iii)(b) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iv) above shall be the
     date on which the Facility Lessee receives the Owner Participant's
     election made in accordance with such clause (iv) during any period when
     an event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause (v)
     above shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (v). The date
     of occurrence of an Event of Loss in clause

                                      14

<PAGE>

     (vi) above shall be ten (10) Business Days after any such cancellation,
     termination or failure to be in full force and effect as contemplated
     therein. The date of occurrence of an Event of Loss in clause (vii) above
     shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (vii).

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable by
     the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the South Point Ground Lease,
     (ii)(A) insurance proceeds, if any, payable to the Owner Lessor or the
     Owner Participant under insurance separately maintained by the Owner
     Lessor or the Owner Participant with respect to the Facility as permitted
     by Section 3(b) of Schedule 5.31 to the Participation Agreement or (B)
     proceeds of personal injury or property damage liability insurance
     maintained under any Operative Document or the South Point Ground Lease
     for the benefit of the Owner Lessor or the Owner Participant, (iii) any
     amount payable to the Owner Participant as the purchase price of the Owner
     Participant's right and interest in the Member Interest, (iv) all other
     fees expressly payable to the Owner Participant under the Operative
     Documents, (v) any payments in respect of interest, or any payments made
     on an After-Tax Basis, to the extent attributable to payments referred to
     in clause (i) through (vi) above; (vii) any amounts paid to the Owner
     Lessor as reimbursement for amounts expended pursuant to Section 20 of the
     Facility Lease; (viii) proceeds of the items referred to in clause (i)
     through (vii) above; and (ix) any rights to demand, collect, sue for, or
     otherwise receive and enforce payment of the foregoing amounts, including
     under the Calpine Guaranty, but without limiting clause (v) of this
     definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 530 MW nameplate capacity gas-fired combined
     cycle merchant power plant located near Bullhead, Arizona and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

                                      15

<PAGE>

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (SP-2), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all Renewal
     Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (SP-2), dated as
     of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean South Point Energy Center, LLC.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean Owner Lessor.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion to
     lease or purchase and an informed and willing lessor or seller or supplier
     under no compulsion to lease or sell or supply the property or service in
     question, and shall, in the case of the Undivided Interest or the Owner
     Lessor's Interest, be determined (except pursuant to Section 17 of the
     Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with in
     all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the South Point Ground Lease and the obligations relating
     thereto, (iii) the Undivided Interest or the Owner Lessor's Interest, as
     the case may be, is free and clear of all Liens (other than Owner Lessor's
     Liens, Owner Participant's Liens and Indenture Trustee Liens), (iv) taking
     into account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents and the South Point
     Ground Lease. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner Lessor
     pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all

                                      16

<PAGE>

     faults" basis and shall take into account all Liens (other than Owner
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee Liens);
     provided, however, in any such case where the Owner Lessor shall be unable
     to obtain constructive possession sufficient to realize the economic
     benefit of the Owner Lessor's Interest, Fair Market Sales Value of the
     Owner Lessor's Interest shall be deemed equal to $0 (zero). If in any case
     other than in the preceding sentence the parties are unable to agree upon
     a Fair Market Sales Value of the Owner Lessor's Interest within 30 days
     after a request therefor has been made, the Fair Market Sales Value of the
     Owner Lessor's Interest shall be determined by appraisal pursuant to the
     Appraisal Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of (a) the Facility
     Lessee and (b) the Owner Lessor for the benefit of the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell power at
     market-based rates under Section 205 of the FPA effective on or before
     the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities and
     the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal Power
     Act for the transfer of jurisidictional facilities, including the Power
     Marketing Agreement between CCFC and CES from CCFC to CES under Section
     203 of the Federal Power Act in the sale/leaseback contemplated by the
     Operative Documents.

     "FERC OWNER LESSOR EWG ORDERS" shall mean the order issued by the FERC
     determining that the Owner Lessor is an EWG.

                                      17

<PAGE>

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(a) of the Facility Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the Ground
     Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND LEASE" shall have the meaning set forth in recital A of the
     Facility Site Lease.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance in
     any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or Optional
     Improvements, but do not include Components.

                                      18

<PAGE>

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests of
     such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under "swaps",
     "caps", "floors", "collars", or other interest rate hedging contracts or
     similar arrangements, (ix) all Indebtedness of any other Person of the
     type referred to in clauses (i) through (viii), guaranteed by such Person
     or for which such Person shall otherwise (including pursuant to any
     keepwell, makewell or similar arrangement) become directly or indirectly
     liable, and (x) all Indebtedness of the type referred to in clauses (i)
     through (ix) above secured by (or for which the holder of such
     Indebtedness has an existing right, contingent or otherwise, to be secured
     by) any Lien on property (including accounts and contracts rights) owned
     by such Person, even though such Person has not assumed or become liable
     for the payment of such Indebtedness, the amount of such obligation being
     deemed to be the lesser of the value of such property or the amount of the
     obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

                                      19

<PAGE>

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the Participation
     Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease or the transactions contemplated thereby, (ii)
     Claims against or any act or omission of the Lease Indenture Company or
     the Indenture Trustee, or Affiliate thereof that is not related to, or
     that is in violation of, any of such Person's representations, warranties,
     covenants or agreements in an Operative Document or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Lease Indenture Company or the Indenture Trustee specified therein,
     (iii) Taxes imposed upon the Lease Indenture Company or the Indenture
     Trustee, or any Affiliate thereof that are not indemnified against by the
     Facility Lessee pursuant to any Operative Document or (iv) Claims against
     or affecting the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof arising out of the voluntary or involuntary transfer by
     the Lease Indenture Company or the Indenture Trustee of any portion of the
     interest of the Lease Indenture Company or the Indenture Trustee in the
     Lessor Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

                                      20

<PAGE>

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Summit Global Partners Insurance
     Services.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under the
     Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such

                                      21

<PAGE>

     transaction is considered borrowed money indebtedness of the lessee for
     tax purposes but is classified as an operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents and the South Point Ground Lease,
     including all funds advanced to the Owner Lessor by the Owner Participant,
     all installments and other payments of Periodic Rent, Supplemental Rent or
     Termination Value under the Facility Lease, condemnation awards, purchase
     price, sale proceeds, insurance proceeds and all other proceeds, rights
     and interests of any kind for or with respect to the estate, right, title
     and interest of the Owner Lessor in, to and under the Undivided Interest,
     the Ground Interest and the Operative Documents and the South Point Ground
     Lease and any of the foregoing, but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the provisions
     of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title retention
     arrangement.

                                      22

<PAGE>

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of this
     definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations, assets,
     financial position, results of operation or business of the Guarantor,
     including a material adverse effect on (i) the Facility, the Undivided
     Interest, the Facility Site or the Ground Interest which adversely affects
     the ability of the Guarantor to perform its obligations under the
     Operative Documents or (ii) the validity or enforceability of the
     Operative Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement), (b)
     the Indenture Estate or the Lessor Estate, the security interests in the
     Lessor Estate, or (c) with respect to the Owner Participant's (but not the
     Certificateholders') interest in the Undivided Interest, the residual
     value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

                                      23

<PAGE>

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (SP-2), dated as of the Closing Date, between the Owner Lessor,
     as landlord, and the Facility Lessee, as tenant, and filed with the
     Recorder of Mohave County, Arizona and the Tribal Recorder of the Tribe.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (SP-2),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Recorder of Mohave County, Arizona and the Tribal
     Recorder of the Tribe.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any Person
     authorized by or pursuant to the organizational documents, the by-laws or
     any resolution of the Board of Directors or Executive Committee of such
     Person (whether general or specific) to execute, deliver and take actions
     on behalf of such Person in respect of any of the Operative Documents,
     (ii) in the case of a partnership, by the Chairman of the Board of
     Directors, the President or any Vice President, the Treasurer or an
     Assistant Treasurer of a corporate general partner and (iii) in the case
     of an Indenture Trustee, a certificate signed by a Responsible Officer of
     such Indenture Trustee.

                                      24

<PAGE>

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an OP
     Guarantor in form and substance substantially in the form of Exhibit G to
     the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Calpine Guaranty, the OP Parent Guaranty (if any), the Certificate
     Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine or any replacement Operator appointed
     pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at Closing,
     and as to all other matters, Thelen Reid & Priest LLP and/or Davis Wright
     & Tremaine LLP, or any other outside legal counsel reasonably acceptable
     to the Owner Participant, (ii) in form and substance (with respect to
     qualifications, exception, assumption and the like) substantially
     equivalent to the legal opinions delivered at Closing, with any material
     modification or supplements thereto to be reasonably acceptable to the
     Owner Participant, or in any such other form as may be reasonably
     acceptable to the Owner Participant, and (iii) the scope of which shall
     cover due authorization, execution, delivery and enforceability of the
     applicable agreement(s), and exemption from regulation, in each case,
     substantially in the form set forth in the opinions delivered at Closing
     with any material modifications thereto to be reasonably acceptable to the
     Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

                                      25

<PAGE>

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other South Point
     Calpine Guaranties, the Broad River Calpine Guaranties and the RockGen
     Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other South Point
     Facility Leases, the Broad River Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other South Point
     Owner Lessors, the Broad River Owner Lessors and the RockGen Owner Lessors.

     "OTHER SOUTH POINT ASSIGNMENT AGREEMENTS " shall mean each of the
     assignment agreements executed and delivered pursuant to the Other South
     Point Participation Agreements.

     "OTHER SOUTH POINT CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine pursuant
     to the Other South Point Participation Agreements.

     "OTHER SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     South Point Participation Agreements.

     "OTHER SOUTH POINT FACILITY LEASES" shall mean the other South Point
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other South Point Owner Lessors and the Facility Lessee, pursuant to
     which the Other South Point Owner Lessors will lease the Other South Point
     Undivided Interests to the Facility Lessee.

     "OTHER SOUTH POINT FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other South
     Point Owner Lessors and the Facility Lessee pursuant to which the Other
     South Point Owner Lessors will lease the Other South Point Ground
     Interests to the Facility Lessee.

     "OTHER SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other South Point Collateral Trust Indentures.

                                      26

<PAGE>

     "OTHER SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other South Point Undivided
     Interests and the Other South Point Ground Interests to the Other South
     Point Owner Lessors, and the lease of the Other South Point Undivided
     Interests and the Other South Point Ground Interest to the Facility Lessee
     on substantially the same terms and conditions as under, and dated the
     same date as, the Overall Transaction.

     "OTHER SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other South Point Owner Lessors pursuant
     to the Other South Point Operative Documents.

     "OTHER SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South
     Point OL-3, LLC and South Point OL-4, LLC.

     "OTHER SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "OTHER SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other South Point Lease Transactions.

     "OTHER SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other South Point
     Owner Lessor, the Other South Point Lessor Manager, Other South Point
     Owner Participant, Other South Point Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (SP-1),
     Participation Agreement (SP-3) and Participation Agreement (SP-4), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) cause CCFC to assign and transfer to the
     applicable Other South Point Owner Lessors certain undivided leasehold
     interests in the Facility and the Facility Site, and (b) lease from the
     applicable Other South Point Owner Lessors such undivided leasehold
     interest in the Facility and the Facility Site pursuant to the Other South
     Point Facility Leases.

     "OTHER SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest in the Facility not conveyed to the Owner Lessor under
     the Assignment Agreement.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the South Point Ground Lease (giving effect to
     its assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean South Point OL-2, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

                                      27

<PAGE>

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: South Point OL-2, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Site or
     the Easement, or any part of any thereof or interest therein arising as a
     result of (i) Taxes against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease (giving effect to its assignment to the Owner
     Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate thereof
     that is not related to, or that is in violation of, any Operative Document
     or the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Owner Lessor, the Trust Company or the Lessor Manager specified
     therein, (iii) Taxes imposed upon the Owner Lessor, the Trust Company or
     the Lessor Manager or any Affiliate thereof that are not indemnified
     against by the Facility Lessee pursuant to any Operative Document or (iv)
     Claims against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof arising out of the voluntary or
     involuntary transfer by the Owner Lessor, the Trust Company or the Lessor
     Manager of any portion of the interest of the Owner Lessor in the Owner
     Lessor's Interest, other than pursuant to the Operative Documents and the
     South Point Ground Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-2, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility Site
     or the Easement, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document or the South Point Ground Lease or the transactions
     Contemplated

                                      28

<PAGE>

     thereby or that is in breach of any covenant or agreement of the Owner
     Participant set forth therein, (ii) Taxes against the Owner Participant
     that are not indemnified against by the Facility Lessee pursuant to the
     Operative Documents or (iii) Claims against or affecting the Owner
     Participant arising out of the voluntary or involuntary transfer by the
     Owner Participant of any portion of the interest of the Owner Participant
     in the Member Interest, other than any transfer (x) pursuant to the
     exercise of any of the Facility Lessee's (or any Affiliate thereof) rights
     under the Operative Documents or (y) during the continuance of a Lease
     Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to the
     multiple investment sinking fund method of analysis, and (ii) periodic
     GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other South Point Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass Through
     Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

                                      29

<PAGE>

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the South Point Ground Lease,
     as well as the rights of sublessees and/or assignees to the extent set
     forth in or expressly permitted pursuant to the Facility Lease or any
     other Operative Document, (b) as to the Facility Lessee, Owner

                                      30

<PAGE>

     Lessor's Liens, Owner Participant's Liens and Indenture Trustee's Liens,
     (c) Liens for any tax, assessment or other governmental charge, either
     secured by a bond reasonably acceptable to the Indenture Trustee and the
     Pass Through Trustees and, so long as no Lease Indenture Event of Default
     which is not a Lease Event of Default exists, the Owner Lessor, or not yet
     due or being contested in good faith and by appropriate proceedings, so
     long as (i) such proceedings shall not reasonably be expected to give rise
     to criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so long
     as an appeal or proceeding for review is being prosecuted in good faith
     and so long as (i) such proceedings shall not reasonably be expected to
     give rise to criminal liability or material civil liability on the part of
     the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, and (ii) adequate reserves consistent with GAAP
     requirements have been established and are maintained, so as to ensure
     that any amounts determined to be due will be promptly paid in full when
     such contest is determined, or are fully covered by insurance, (f) mineral
     rights the use and enjoyment of which do not materially interfere with the
     use and enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any

                                      31

<PAGE>

     Certificateholders, and would not otherwise reasonably be expected to
     have a Material Adverse Effect, (k) the interests of the Other Owner
     Lessors and the Other Indenture Trustees in the Facility, the Facility
     Site and the Ownership and Operation Agreement, (l) the interests of the
     Facility Lessee, the Other Owner Participants, the Other Owner Lessors,
     the Other Lessor Managers, the Other Indenture Trustees, and Pass Through
     Trustees under any of the Other Operative Documents, (m) the Ownership and
     Operation Agreement, (n) the interest of the co-owners of the Facility as
     tenants in common in the Facility and the rights of such owners under the
     Ownership and Operation Agreement and (o) any rights of the Tribe with
     respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

     "POWER MARKETING AGREEMENT" shall mean the Power Marketing Agreement,
     dated as of October 20, 1999, by and between CES (as successor by merger
     to Calpine Power Services Company) and CCFC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that

                                      32

<PAGE>

     has been included in the issuance or amendment of a proposed Treasury
     Regulation, (c) that is part of a bill that has been introduced into the
     House of Representatives or the Senate and which has been publicly
     endorsed by the Executive Branch or the Department of Treasury, or (d)
     with respect to which a notice of a specific proposed change in
     administrative guidance has been issued by the Internal Revenue Service or
     the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary

                                      33

<PAGE>

     and Indebtedness of any Restricted Subsidiary that refinances
     Indebtedness of another Restricted Subsidiary) including Indebtedness that
     refinances Refinancing Indebtedness; provided, however, that (i) if the
     Indebtedness being refinanced is contractually subordinated in right of
     payment to the Obligations, the Refinancing Indebtedness shall be
     contractually subordinated in right of payment to such Obligations to at
     least the same extent as the Indebtedness being refinanced, (ii) the
     Refinancing Indebtedness is scheduled to mature either (a) no earlier than
     the Indebtedness being refinanced or (b) after the Stated Maturity of the
     Obligations, (iii) the Refinancing Indebtedness has an Average Life at the
     time such Refinancing Indebtedness is Incurred that is equal to or greater
     than the Average Life of the Indebtedness being refinanced and (iv) such
     Refinancing Indebtedness is in an aggregate principal amount (or if issued
     with original issue discount, an aggregate issue price) that is equal to
     or less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                      34

<PAGE>

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2037) and October 18, 2037.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases thereafter (except for the last
     Rent Payment Period which period shall commence on May 31, 2037 and end
     on, and include, October 18, 2001), each six-month period commencing on
     each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

                                      35

<PAGE>

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests
     in the RockGen Facility Site conveyed to the RockGen Owner Lessors under
     the RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting
     on behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground

                                      36

<PAGE>

     Interest to the RockGen Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the RockGen Overall
     Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen Owner Lessors certain
     undivided interests in the RockGen Facility, and (b) lease from the
     applicable RockGen Owner Lessors such undivided interest in the RockGen
     Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the RockGen Facility conveyed to the RockGen Owner Lessors
     under the RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

                                      37

<PAGE>

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other South Point Facility Lease.

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

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT" shall mean South Point Energy Center, LLC.

     "SOUTH POINT ENERGY" shall have the meaning set forth in the first
     paragraph of the Facility Site Lease.

     "SOUTH POINT GROUND LEASE" shall mean the Amended and Restated Ground
     Lease Agreement dated as of August 4, 1999 and approved by the Bureau of
     Indian Affairs on August 19, 1999, as amended by Lease Modification No. 1
     executed by the Tribe as of May 3, 2001, and Lease Modification No. 2
     executed by the Tribe as of October 11, 2001, by and between the Tribe and
     CCFC (as successor in interest to Calpine South Point, LLC).

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)  (i) if the determination shall be a Termination Date, the Termination
     Value under the Facility Lease on such date, or (ii) if such date shall
     not be a Termination Date, the Termination Value under the Facility Lease
     on the immediately succeeding Termination Date; plus

     (b)  (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

                                      38

<PAGE>

     (c)  the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of the
     Facility Site, to be dated July 24, 2001 which inter alia, will show the
     location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, transaction
     privilege taxes, use taxes, stamp taxes, value-added taxes, excise taxes,
     ad valorem taxes and property taxes (personal and real, tangible and
     intangible)), licenses, exports, duties, recording charges, levies,
     assessments, withholdings , fees, assessments and other charges and
     impositions of any nature, plus all related interest, penalties, fines and
     additions to tax, now or hereafter imposed by any federal, state, local or
     foreign government, the Tribe or other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

                                      39

<PAGE>

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (SP-2),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TERM" with respect to the Facility Site Lease, shall have the meaning
     set forth in Section 2.1(b) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean the Consent Letter from the Tribe with
     respect to the Amended and Restated Ground Lease Agreement executed on or
     about August 4, 1999 between the Tribe, CCFC (as successor in interest to
     CPN South Point LLC, under that certain Assignment and Assumption
     Agreement of Amended and Restated Ground Lease Agreement by and between
     CPN South Point LLC as assignor and CCFC as assignee) (as amended by Lease
     Modification No. 1 dated May 3, 2001 between the Tribe and CCFC), the form
     of which is attached hereto as Exhibit M.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

                                      40

<PAGE>

     "TITLE POLICY" shall mean, the title insurance policy (#291-000-164004)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)    the reasonable costs of reproducing and printing the Operative
     Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement) and
     all costs and fees, including but not limited to filing and recording fees
     and recording, transfer, mortgage, intangible and similar taxes in
     connection with the execution, delivery, filing and recording of the
     Facility Lease, the Facility Site Lease, and any other Operative Document
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and any other document
     required to be filed or recorded pursuant to the provisions hereof or of
     any other Operative Document and the South Point Ground Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)   the reasonable fees and expenses of Dewey Ballantine LLP, counsel to
     the Owner Participant and the Owner Lessor for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)  the reasonable fees and expenses of (a) Holland & Hart LLP Tribal
     counsel to the Facility Lessee, the Owner Lessor, the Owner Participant
     and the Initial Purchasers and (b) Fennemore Craig, Arizona counsel to the
     Facility Lessee, the Owner Lessor, the Owner Participant and the Initial
     Purchasers;

     (iv)   the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)    the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)   the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)  the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the South Point Ground Lease;

                                      41

<PAGE>

     (viii) the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)   the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)    the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)   the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)  the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii) the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)  the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)  all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii) the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)  the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

                                      42

<PAGE>

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the South Point Ground Lease
     pursuant to the Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRIBE" shall mean the Fort Mojave Indian Tribe of the Fort Mojave Indian
     Reservation, a federally recognized Indian Tribe.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     leasehold interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

                                      43

<PAGE>

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.5
<SEQUENCE>8
<FILENAME>f80168ex4-22_5.txt
<DESCRIPTION>EXHIBIT 4.22.5
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.5

                                                               EXECUTION COPY


                         PARTICIPATION AGREEMENT (SP-3)

                          Dated as of October 18, 2001

                                      among

              SOUTH POINT ENERGY CENTER, LLC, as Facility Lessee,

                    SOUTH POINT OL-3, LLC, as Owner Lessor,

    WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-3, LLC, as Owner Participant,

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees


                              SOUTH POINT PROJECT
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
SECTION 1.  DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ...      3

SECTION 2.  PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ................      3

  Section 2.1.  Agreements to Participate .................................      3

  Section 2.2.  Closing Date; Procedure for Participation. ................      4

  Section 2.3.  Transaction Costs. ........................................      5

SECTION 3.  REPRESENTATIONS AND WARRANTIES ................................      6

  Section 3.1.  Representations and Warranties of the Facility Lessee .....      6

  Section 3.2.  Representations and Warranties of the Owner Lessor ........     17

  Section 3.3.  Representations and Warranties of the Lessor Manager and
                the Trust Company .........................................     18

  Section 3.4.  Representations and Warranties of the Owner Participant ...     20

  Section 3.5.  Representations and Warranties of Indenture Trustee and
                the Lease Indenture Company ...............................     22

  Section 3.6.  Representations, Warranties and Covenants of the Pass
                Through Trustees and the Pass Through Company .............     23

SECTION 4.  CLOSING CONDITIONS ............................................     25

  Section 4.1.  Completion of the Facility ................................     26

  Section 4.2.  Operative Documents .......................................     26

  Section 4.3.  Certificates and the Lessor Notes .........................     26

  Section 4.4.  Equity Investment .........................................     26

  Section 4.5.  Organizational Documents ..................................     26

  Section 4.6.  Representations and Warranties ............................     26

  Section 4.7.  Defaults, Events of Default, Events of Loss ...............     26

  Section 4.8.  Regulatory Approvals ......................................     26

  Section 4.9.  Consents ..................................................     27

  Section 4.10. Governmental Actions ......................................     28
</TABLE>

                                       i
<PAGE>
                           TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
  Section 4.11. Insurance .................................................     28

  Section 4.12. Ratings ...................................................     28

  Section 4.13. Environmental Report ......................................     28

  Section 4.14. Surveys ...................................................     28

  Section 4.15. Appraisal; Condition of the Facility ......................     28

  Section 4.16. Letter from the Appraiser .................................     28

  Section 4.17. Other Reports .............................................     28

  Section 4.18. Opinion with Respect to Certain Tax Aspects ...............     29

  Section 4.19. Opinions of Counsel .......................................     29

  Section 4.20. Recordings and Filings ....................................     29

  Section 4.21. Conditions to Closing .....................................     29

  Section 4.22. Taxes .....................................................     30

  Section 4.23. No Changes in Applicable Law ..............................     30

  Section 4.24. Registered Agent for the Facility Lessee and the Owner
                Lessor ....................................................     30

  Section 4.25. Operating Lease Treatment .................................     30

  Section 4.26. Rent Adjustments ..........................................     30

  Section 4.27. Title Insurance ...........................................     30

  Section 4.28. Parent Guaranty ...........................................     30

  Section 4.29. Letter as to Number of Offerees ...........................     31

  Section 4.30. Lien Search ...............................................     31

  Section 4.31. Litigation ................................................     31

  Section 4.32. No Material Adverse Change ................................     31

  Section 4.33. Private Placement Number ..................................     31

  Section 4.34. Proceedings and Documents .................................     31
</TABLE>

                                     ii
<PAGE>
                           TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
  Section 4.35. No Proposed Tax Law Change ................................     31

  Section 4.36. Payment of Fees and Expenses ..............................     32

SECTION 5.  COVENANTS OF FACILITY LESSEE AND GUARANTOR ....................     32

  Section 5.1.  Maintenance of Existence ..................................     32

  Section 5.2.  Merger, Consolidation, Sale of Substantially All Assets ...     32

  Section 5.3.  Guaranty and Contingent Obligations .......................     33

  Section 5.4.  Assignment of Rights ......................................     33

  Section 5.5.  Lessor Manager Fees .......................................     33

  Section 5.6.  Conduct of Business, Properties, Etc. .....................     33

  Section 5.7.  Obligations ...............................................     33

  Section 5.8.  Books, Records, Access ....................................     33

  Section 5.9.  Other Information. ........................................     34

  Section 5.10. Intentionally Deleted. ....................................     35

  Section 5.11. ERISA .....................................................     35

  Section 5.12. Certain Contracts and Agreements ..........................     35

  Section 5.13. Certain Costs .............................................     35

  Section 5.14. Limitations on Liens ......................................     36

  Section 5.15. Investments ...............................................     36

  Section 5.16. Intentionally Deleted .....................................     36

  Section 5.17. Regulations ...............................................     36

  Section 5.18. Partnerships ..............................................     36

  Section 5.19. Dissolution ...............................................     36

  Section 5.20. Termination of Operative Documents; Delegation of
                Authority. ................................................     36

  Section 5.21. Name and Location .........................................     38
</TABLE>

                                     iii
<PAGE>
                           TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
  Section 5.22. Use of Facility Site ......................................     38

  Section 5.23. Abandonment of Facility ...................................     38

  Section 5.24. Taxes, Other Government Charges and Utility Charges .......     38

  Section 5.25. Compliance with Laws, Instruments, Etc. ...................     38

  Section 5.26. PUHCA .....................................................     39

  Section 5.27. Further Assurances ........................................     39

  Section 5.28. No Subsidiaries ...........................................     40

  Section 5.29. Permitted Business ........................................     40

  Section 5.30. Support Arrangements ......................................     40

  Section 5.31. Insurance .................................................     40

  Section 5.32. Tax Status ................................................     40

SECTION 6.  COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE
            LESSOR MANAGER ................................................     40

  Section 6.1.  Compliance with the LLC Agreement .........................     41

  Section 6.2.  Owner Lessor's Liens ......................................     42

  Section 6.3.  Amendments to Operative Documents .........................     42

  Section 6.4.  Transfer of the Owner Lessor's Interest ...................     42

  Section 6.5.  Owner Lessor; Lessor Estate ...............................     42

  Section 6.6.  Limitation on Indebtedness and Actions ....................     42

  Section 6.7.  Change of Location ........................................     42

  Section 6.8.  Bankruptcy of Owner Lessor. ...............................     42

SECTION 7.  COVENANTS OF THE OWNER PARTICIPANT ............................     43

  Section 7.1.  Restrictions on Transfer of Member Interest. ..............     43

  Section 7.2.  Owner Participant's Liens .................................     45

  Section 7.3.  Amendments or Revocation of LLC Agreement .................     45
</TABLE>

                                     iv
<PAGE>
                           TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
  Section 7.4.  Bankruptcy Filings ........................................     45

  Section 7.5.  Instructions ..............................................     46

  Section 7.6.  Right of First Refusal ....................................     46

  Section 7.7.  Prohibition on Fundamental Changes ........................     46

  Section 7.8.  Appointment of Successor Lessor Manager ...................     47

  Section 7.9.  Cooperation ...............................................     47

SECTION 8.  COVENANTS OF THE INDENTURE TRUSTEE AND THE
            PASS THROUGH TRUSTEES .........................................     47

  Section 8.1.  Indenture Trustee's Liens .................................     48

  Section 8.2.  Pass Through Trustees' Covenant Not to Transfer Lessor
                Notes .....................................................     48

SECTION 9.  INDEMNIFICATION ...............................................     48

  Section 9.1.  General Indemnity. ........................................     48

  Section 9.2.  General Tax Indemnity. ....................................     55

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ....................     64

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ....     65

  Section 11.1. Financing Improvements ....................................     65

  Section 11.2. Optional Refinancing of Lease Debt ........................     66

  Section 11.3. Cooperation ...............................................     67

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT,
            TERMINATION VALUE AND OTHER AMOUNTS ...........................     68

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE
            TRANSFERS .....................................................     69

  Section 13.1. Transfer of the Facility Lessee Ownership. ................     69

  Section 13.2. Special Facility Lessee Transfers .........................     71

  Section 13.3. Exercise of Extension of South Point Ground Lease .........     71

SECTION 14. MISCELLANEOUS .................................................     73

  Section 14.1. Consents; Cooperation .....................................     73
</TABLE>

                                     v
<PAGE>
                           TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                            <C>
  Section 14.2. Successor Owner Lessor ....................................     73

  Section 14.3. Bankruptcy of Lessor Estate ...............................     73

  Section 14.4. Amendments and Waivers ....................................     73

  Section 14.5. Notices ...................................................     73

  Section 14.6. Survival ..................................................     78

  Section 14.7. Successors and Assigns ....................................     78

  Section 14.8. Business Day ..............................................     78

  Section 14.9. Governing Law .............................................     78

  Section 14.10.Severability ..............................................     78

  Section 14.11.Counterparts ..............................................     78

  Section 14.12.Headings and Table of Contents ............................     79

  Section 14.13.Limitation of Liability. ..................................     79

  Section 14.14.Consent to Jurisdiction; Waiver of Trial by Jury;
                Process Agent. ............................................     80

  Section 14.15.Further Assurances ........................................     81

  Section 14.16.Effectiveness .............................................     81

  Section 14.17.Measuring Life ............................................     81

  Section 14.18.No Partnership, Etc. ......................................     81

  Section 14.19.Entire Agreement ..........................................     81

  Section 14.20.Public Utility Regulation .................................     82

  Section 14.21.Confidentiality of Information ............................     82

  Section 14.22.Reliance ..................................................     83

  Section 14.23.Amendments, Etc. ..........................................     83

  Section 14.24.South Point Ground Lease ..................................     83

</TABLE>

                                     vi
<PAGE>
APPENDICES:

     Appendix A     Definitions and Rules of Interpretation

<TABLE>
<S>                      <C>
SCHEDULES:

     Schedule 1-A        Equity Investment
     Schedule 1-B        Indenture Trustee's Account
     Schedule 1-C        Owner Participant's Account
     Schedule 2          Pricing Assumptions
     Schedule 3.1(m)     Environmental Matters - Hazardous Substances
     Schedule 4.20       Recording and Filings
     Schedule 5.31       Maintenance of Insurance
</TABLE>

<TABLE>
<S>                   <C>
EXHIBITS:

     Exhibit A        Description of Facility
     Exhibit B        Form of Assignment Agreement (SP-3)
     Exhibit C        Form of Facility Lease Agreement
     Exhibit D        Form of Facility Site Lease
     Exhibit E        Intentionally Omitted
     Exhibit F        Form of Pass Through Trust Agreement
     Exhibit G        Form of OP Parent Guaranty
     Exhibit H        Form of Calpine Guaranty
     Exhibit I        Form of Collateral Trust Indenture
     Exhibit J        Form of OP Assignment and Assumption Agreement
     Exhibit K        List of Competitors
     Exhibit L        Form of Guarantor Assignment and Assumption Agreement
     Exhibit M        Form of Consents
</TABLE>

                                     vii
<PAGE>
                            PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) SOUTH POINT ENERGY CENTER, LLC (herein,
     together with its successors and permitted assigns, called the "Facility
     Lessee"), a limited liability company organized under the laws of the
     State of Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as
     Guarantor (together with its successors and permitted assigns, the
     "Guarantor") under the Calpine Guaranty (SP-3), (the "Calpine Guaranty"),
     (iii) SOUTH POINT OL-3, LLC, a Delaware limited liability company (the
     "Owner Lessor"), (iv) SBR OP-3, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     validly existing under the laws of the United States, not in its
     individual capacity except as expressly provided herein, but solely as
     independent manager under the LLC Agreement (herein in its capacity as
     independent manager under the LLC Agreement, together with its successors
     and permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a) CCFC, an indirect, wholly-owned subsidiary of Calpine,
will, as of the Closing Date, own a 530 MW gas-fired combined cycle merchant
power plant located near Bullhead, Arizona and more fully described in Exhibit
A hereto ("Facility");

          WHEREAS, CCFC desires to assign and transfer to the Owner Lessor
the Undivided Interest and the Ground Interest pursuant to the Assignment
Agreement;
<PAGE>
          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
accept such assignment and transfer of the Undivided Interest and the Ground
Interest from CCFC pursuant to the Assignment Agreement, and to lease the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to lease the Undivided
Interest and lease the Ground Interest from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from CCFC pursuant to the Assignment
Agreement, and lease the Undivided Interest and the Ground Interest to the
Facility Lessee pursuant to the Facility Lease and the Facility Site Lease,
respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed
all of the obligations of the Facility Lessee under the Participation Agreement
and as of the Closing Date shall guarantee all of the obligations of the
Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and

                                       2
<PAGE>
          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

Calpine and the Facility Lessee shall cause CCFC to assign and transfer the
     Undivided Interest and the Ground Interest to the Owner Lessor on the
     terms and conditions set forth in the Assignment Agreement and the Owner
     Lessor agrees to acquire and accept such assignment and transfer of the
     Undivided Interest and the Ground Interest from CCFC, and each agrees to
     execute and deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest and the Ground Interest
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility Lessee agrees to
     lease the Undivided Interest and the Ground Interest from the Owner
     Lessor, and each agrees to execute and deliver the respective Facility
     Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security
     interests in the Indenture Estate to secure its obligations thereunder;

                                       3
<PAGE>
the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the South Point
     Ground Lease pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall
     have otherwise directed. All funds made available pursuant to Section
     2.2(b) will be held by the Owner Lessor in trust for the Owner
     Participant and shall not be part of the Indenture Estate or the Lessor
     Estate, shall be invested by the Owner Lessor in accordance with clause
     (d) below and such funds shall remain the sole property of the Owner
     Participant unless and until released by the Owner Participant and made
     available to the Owner Lessor and applied to pay the Purchase Price or
     Transaction Costs or returned to the Owner Participant, as provided in
     this Agreement.

                                       4
<PAGE>
Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such
     date and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to
     the Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not
     occur on such date and the Owner Lessor has not returned such funds to
     the Owner Participant on or before 1:00 p.m., New York City time, on such
     date, then Calpine shall reimburse the Owner Participant for loss of the
     use of such funds at the Applicable Rate for each day, from and including
     the day that such funds were made available to the Owner Lessor by the
     Owner Participant to, but excluding the earlier of (i) the day that such
     funds have been returned to the Owner Participant pursuant to Section
     2.2(c) (funds received by the Owner Participant after 1:00 p.m., New York
     City time, of any day shall be deemed to be returned on the next
     succeeding Business Day) and (ii) the Closing Date. Subject to payment
     for the account of the Owner Participant of any reimbursement for loss of
     use of funds due to it at the Applicable Rate, any net gain realized on
     the investment of such funds (including interest) shall be paid to
     Calpine by the Owner Lessor on the earlier of (i) the date such funds are
     returned to the Owner Participant pursuant to Section 2.2(c) and (ii) the
     Closing Date. The Owner Lessor shall not be liable for any interest on or
     loss resulting from such investments and, if such funds are made
     available to the Owner Lessor and utilized to pay the Purchase Price or
     Transaction Costs on the Closing Date, Calpine shall reimburse the Owner
     Lessor for any net loss realized on the investment of such funds. If such
     funds are not so utilized, Calpine shall, in addition to its obligation
     to reimburse the Owner Participant for loss of use as provided above,
     reimburse the Owner Participant on the date such funds are returned to
     the Owner Participant for any net loss realized on the investment of such
     funds. In order to obtain funds for payment of the Purchase Price or
     Transaction Costs or to return funds made available to the Owner Lessor
     by the Owner Participant, the Owner Lessor is authorized to sell any
     investments or obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$2,370,417, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other

                                       5
<PAGE>
     Transaction Costs, fees, costs and expenses incurred by the Facility
     Lessee, the Owner Lessor and the Owner Participant shall be paid by
     Calpine. If the Overall Transaction is not consummated for any reason
     (including as a result of the Facility Lessee terminating this Agreement
     pursuant to Section 12(a)), then Calpine shall bear all Transaction Costs;
     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware and CCFC is a limited partnership duly constituted,
     validly existing, and in good standing under the laws of the State of
     Delaware. Both the Facility Lessee and CCFC are duly licensed or
     qualified and in good standing in each jurisdiction where the character
     of their respective properties or the nature of their activities makes
     such qualification necessary, and each of the Facility Lessee and CCFC
     has the power and authority to (x) own or hold under lease the property
     it purports to own or hold under lease, (y) carry on its business as now
     being conducted and as presently proposed to be conducted and (z) take
     all actions as may be necessary to consummate the transactions
     contemplated hereunder and under the other Operative Documents to which
     each is a party. Each of the Facility Lessee and CCFC is an indirect
     wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee or CCFC is or will be a
     party have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee or
     CCFC, as applicable, and, assuming the due authorization, execution and
     delivery by each other party thereto, this Agreement constitutes and,
     when executed and delivered, the other Operative Documents to which the
     Facility Lessee or CCFC is or will be a party will constitute the legal,
     valid and binding obligations of the Facility Lessee or CCFC, as the case
     may be, enforceable against the Facility Lessee or CCFC, as the case may
     be, in accordance with their respective terms, except as the same may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other similar laws affecting the rights of creditors generally and by
     general principles of equity.

          1.   Non-Contravention. (1) The execution, delivery and performance
               by the Facility Lessee of this Agreement and each of the other
               Operative

                                       6
<PAGE>
               Documents to which it is or will be a party, the consummation by
               the Facility Lessee of the transactions contemplated hereby and
               thereby, and compliance by the Facility Lessee with the terms
               and provisions hereof and thereof, do not and will not (i)
               contravene any Applicable Law binding on the Facility Lessee or
               its property, or its organizational documents, (ii) constitute a
               default by the Facility Lessee under, or result in the creation
               of any Lien upon the property of the Facility Lessee (other than
               pursuant to any Operative Document) under any indenture,
               mortgage or other material contract, agreement or instrument to
               which the Facility Lessee is a party or by which the Facility
               Lessee or any of its property is bound, (iii) contravene any
               Organic Document of the Facility Lessee or (iv) require the
               consent or approval of any Person which has not already been
               obtained, in each case with respect to clauses (i), (ii) and
               (iv) above, which would reasonably be expected to have a
               Material Adverse Effect.

          (2)   The execution, delivery and performance by CCFC of each of the
Operative Documents to which it is or will be a party, the consummation by CCFC
of the transactions contemplated thereby, and compliance by CCFC with the terms
and provisions thereof, do not and will not (i) contravene any Applicable Law
binding on CCFC or its property, or its organizational documents, (ii)
constitute a default by CCFC under, or result in the creation of any Lien upon
the property of CCFC (other than pursuant to any Operative Document) under any
indenture, mortgage or other material contract, agreement or instrument to
which CCFC is a party or by which CCFC or any of its property is bound, (iii)
contravene any Organic Document of CCFC or (iv) require the consent or approval
of any Person which has not already been obtained, in each case with respect to
clauses (i), (ii) and (iv) above, which would reasonably be expected to have a
Material Adverse Effect.

          (3)   Neither the assignment and transfer of the Undivided Interest
and the Ground Interest by CCFC to the Owner Lessor, nor the grant by the Owner
Lessor to the Indenture Trustee of the Liens and security interests in the
Undivided Interest, the Ground Interest and the applicable Operative Documents
executed in connection therewith to secure its obligations thereunder does or
will constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. (1)   The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing,
     with respect to the participation by the Owner Participant, the Owner
     Lessor in the Overall Transaction, other than (i) any Permit where the
     failure to obtain or maintain such Permit

                                       7
<PAGE>
     would not be reasonably likely to result in a Material Adverse Effect,
     (ii) the FERC Orders, (iii) as may be required under Applicable Law
     providing for the supervision or regulation of the Owner Participant,
     the Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of which
     would not reasonably be expected to have a Material Adverse Effect or
     involve any danger of criminal or material civil liability being incurred
     by the Owner Participant, the Owner Lessor, the Indenture Trustee or the
     Pass Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

          (2)   CCFC has all Permits with, any Governmental Entity or under any
Applicable Law required for the due execution, delivery or performance by CCFC
of the Operative Documents to which CCFC is or will be a party.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the South
     Point Ground Lease or the ability of the Facility Lessee or such other
     Calpine Party to perform its obligations under the Operative Documents
     and the South Point Ground Lease to which the Facility Lessee or such
     other Calpine Party is or will be a party or (ii) if determined adversely
     to it, could reasonably be expected to have a Material Adverse Effect or
     otherwise materially adversely affect the Undivided Interest leased by
     the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc.
     (1)   The chief executive office and principal place of business of the
     Facility Lessee and the office where the Facility Lessee keeps its
     company records concerning the Facility, the Undivided Interest, the
     Ground

                                       8
<PAGE>
     Interest, the Facility Site and the Operative Documents is located at:
     c/o Calpine Corporation, 50 West San Fernando Street, 5th Floor, San Jose,
     CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical to the
condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Leasehold Interest; Liens. (1)   On and before the Closing Date, CCFC has (i)
     good and valid leasehold interest to the Facility, free and clear of all
     Liens other than Permitted Closing Date Liens, and (ii) good and valid
     leasehold interest to the Facility Site and Easement free and clear of
     all Liens other than Permitted Closing Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid leasehold interest to the Undivided Interest will be duly, validly and
effectively conveyed and transferred to the Owner Lessor free and clear of all
Liens other than Permitted Closing Date Liens, and (B) good and valid leasehold
interest in the Ground Interest will be duly, validly and effectively granted
to the Owner Lessor upon the terms and conditions in the corresponding Facility
Site Lease, free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the South Point Ground Lease) or
the use of or the exercise by the Owner Lessor of its rights under the
Assignment Agreement or the Facility Site Lease, the Facility Lease or the
Easement, in a manner which could reasonably be expected to have a Material
Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

                                       9
<PAGE>
Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the South Point Ground Lease will not subject the Facility
     Lessee to such regulation under the Holding Company Act and do not
     violate any provision of the Holding Company Act or any rule or
     regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)   Neither the Facility Lessee nor CCFC has received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site or any of
the Easement; (ii) the Facility Lessee or any other Calpine Party is or is
asserted to be liable, in whole or in part, for the costs of cleaning up,
remedying or responding at any location (including any location at which any
Hazardous Substances have been generated, stored, treated or disposed by or on
behalf of the Facility Lessee or such other Calpine Party) to a Release or
threatened Release of any Hazardous Substance generated, used or stored at or
Released in, on, under or from the Facility or the Facility Site or any of the
Easement; (iii) the Facility or the Facility Site is subject to a Lien in favor
of any Governmental Entity in response to a Release or threatened Release of
Hazardous Substances or (iv) the Facility or the Facility Site or any of the
Easement is or is asserted to be in violation of or not in compliance with any
Environmental Law, in any case with respect to clauses (ii), (iii) or (iv),
which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's or CCFC's Actual Knowledge, there is
not and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site or any of the Easement, or (B) at, on, under or
from any other location resulting from or arising in connection with the
operation by any Person of the Facility or the Facility Site or any of the
Easement, that in each case could reasonably be expected to have a Material
Adverse Effect or

                                       10
<PAGE>
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material lien on, such Facility or the Facility Site or any
of such Easement, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or the
Facility Site or any of the Easement in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility, the Facility Site and the Easement in accordance with
the Operative Documents and the South Point Ground Lease and Environmental Laws
have been obtained on behalf of the Owner Lessor or by the Facility Lessee and
they are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility,
the Facility Site or Easement, (ii) the impairment of the ownership (or
leasehold or easement interest in), use, operation or maintenance of the
Facility, the Facility Site or Easement in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest, the Ground Interest and the Easement
     and based upon the Facility Lessee's reasonable expectations and on
     Applicable Law in effect on and as of the Closing Date, the rights and
     interests made available to the Owner Lessor pursuant to the Operative
     Documents and the South Point Ground Lease and the rights contemplated by
     the Facility Lease to be made available under such Operative Documents
     and the South Point Ground Lease, permit on a commercially practicable
     basis during the Facility Lease Term and the period following the
     expiration or termination of the Facility Lease Term, as applicable,
     until the end of the Facility's useful life as set forth in the Closing
     Appraisal, (i) the location, occupation, interconnection, maintenance and
     repair of each Facility, (ii) the use, operation and possession of the
     Facility, (iii) as of the Closing Date, the use, operation, possession,
     maintenance, replacement, renewal and repair of all Improvements required
     to be made to the Facility, (iv) adequate ingress to and egress from the
     Facility in connection with the ownership, use, operation, possession,
     maintenance or repair of the Facility and (v) the transmission of
     electricity from the Facility substantially in the manner currently
     transmitted as of the Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which,

                                       11
<PAGE>
     either in any case or in the aggregate, would reasonably be expected to
     have a Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State
     of New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility, the Facility Site and the Easement,
     except where the noncompliance would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of (i) foreclosure, sale,
     forfeiture or loss of, or imposition of a material lien on, the Facility,
     the Facility Site or any such Easement, (ii) the impairment of the
     ownership (or leasehold or easement interest in), use, operation or
     maintenance of the Facility or the Facility Site in any material respect,
     or (iii) any criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
     Trustee or the Pass Through Trustees, including subjecting the Owner
     Participant or the Owner Lessor to regulation as a public utility under
     Applicable Law. None of the Calpine Parties is in default of any
     judgments, orders or decrees of any Governmental Entity relating to such
     Facility, the Facility Site or any of the Easement.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the
     Lessor Notes under the Collateral Trust Indenture and the Certificates
     under the Pass Through Trust Agreements will be exempt from, or will not
     involve any transaction which is subject to, the prohibitions of either
     Section 406 of ERISA or Section 4975 of the Code and will not involve any
     transaction in connection with which a penalty could be imposed under
     Section 502(i) of ERISA or a tax could be imposed pursuant to Section
     4975 of the Code.

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists under the Operative
     Documents exists or will exist upon the execution and delivery of the
     Operative Documents. To the Actual Knowledge of the Facility Lessee, no
     Burdensome Buyout Event has occurred under the Operative Documents or
     will occur upon the execution and delivery of the Operative Documents and
     the Facility Lessee does not have Actual Knowledge of any event that
     could reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's or
     CCFC's Actual Knowledge, threatened by a Governmental Entity or other
     Person to specially assess the Facility or the Facility Site for any
     public improvements constructed or to be constructed which would
     reasonably be expected to have a Material Adverse Effect.

                                       12
<PAGE>
Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the South Point Ground Lease, except where the
     failure to have any such services or public utilities available would not
     result in a material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest, the Facility
     Site or any of the Easement, which would reasonably be expected to have a
     Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any Easement, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or
     covenants relating to the Facility, the Facility Site or any of the
     Easement, which would reasonably be expected to have a Material Adverse
     Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's or CCFC's
     Actual Knowledge, there are no plans of any Governmental Entity to change
     the highway or road system in the vicinity of the Facility or the
     Facility Site, or to restrict or change access from any such highway or
     road to the Facility or the Facility Site, in either case, in any manner
     which would reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility
     or Facility Site by any Governmental Entity or by any insurance company
     which currently issues any insurance to the Facility Lessee or by any
     board of fire underwriters or other body exercising similar functions,
     except, in either case with respect to (i) or (ii) above, where such
     violation, noncompliance or repairs could not reasonably be expected to
     have a Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation,
     maintenance, leasing and financing of the Facility and Facility Site and
     activities incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted by
     CCFC with respect to the Facility and the Facility Site and to transfer
     all such rights to the Owner Lessor subsequent to termination of the
     Facility Lease, except to the extent failure to possess such rights would
     not reasonably be likely to result in a Material Adverse Effect.

                                       13
<PAGE>
Land Not in Flood Zone. No portion of the Facility, the Facility Site or the
     Easement includes improved real property that is located in an area that
     has been identified by the Director of the Federal Emergency Management
     Agency as an area having special flood hazards and in which flood
     insurance has been made available under the National Flood Insurance Act
     of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee and CCFC are consummating the
     transactions contemplated hereby (including with respect to CCFC, the
     transfer of certain of its assets and properties to the Owner Lessor) in
     good faith and without any intent to defraud creditors of the Facility
     Lessee or subsequent purchasers. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not
     render the Facility Lessee insolvent under GAAP or leave the Facility
     Lessee with assets whose present fair valuation of assets is less than
     the present fair valuation of the Facility Lessee's debts. As used in
     this Section 3.1(dd), "debts" includes any and all liabilities, whether
     matured or unmatured, liquidated or unliquidated, absolute, fixed or
     contingent, and whether or not such liabilities are required under GAAP
     to be shown on the Facility Lessee's balance sheet. The execution and
     delivery of the Operative Documents to which the Facility Lessee is a
     party will not leave it with property remaining in its hands which would
     constitute unreasonably small assets or capital, and the Facility Lessee
     has and, after giving effect to such transactions will have, an adequate
     amount of assets and capital to engage in its business now and in the
     future, based on the actual and anticipated needs for capital of the
     businesses anticipated to be conducted by the Facility Lessee, and based
     upon the other information described herein. After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term
     debt as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv) of
     the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the South Point Ground Lease shall be or become (i) subject to
     regulation as a "public utility company," "holding company," an
     "affiliate" of a "holding company" or a "subsidiary company" of a
     "holding company" within the meaning of PUHCA or (ii) a "public utility"
     (except that the Facility Lessee will be a public utility subject to the
     Federal Power Act with authority to sell wholesale electricity at
     market-based rates and with waivers of regulations customarily granted to
     a public utility that sells wholesale power at market-based rates), a
     "transmitting utility," or an "electric utility" within the meaning of
     the Federal Power Act, (iii) subject to state regulation of rates or
     organizational requirements for electric utilities.

                                       14
<PAGE>
Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained
     therein, in light of the circumstances under which they were made, not
     misleading; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Facility Lessee, or (ii) the descriptions
     of the Operative Documents or the tax consequences to beneficial owners
     of Certificates; provided, further, each of the Transaction Parties
     acknowledge and agree that (i) Calpine has heretofore provided to the
     Appraiser, solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Arizona energy markets and (3)
     information passed along from other Persons and (ii) that the Facility
     Lessee makes no representation or warranty whatsoever with respect to the
     information described in clause (i) above except to the extent expressly
     set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Western Area Power Administration and has
     access to transmission services and ancillary services sufficient to sell
     the net generating capacity of the Facility at wholesale, and the
     Facility Lessee has the authority to sell wholesale electric power from
     the net generating capacity of such generating Facility at market-based
     rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the determination
     by FERC of EWG status and the FERC Order referenced in clause (ii) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is not
     intended to be construed as nor shall it be deemed to be a guaranty as to
     any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee or CCFC, the Facility has commenced commercial operations
     and is currently capable of producing at least 530 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

South Point Ground Lease. The South Point Ground Lease is in full force and
     effect and neither CCFC nor, to the Actual Knowledge of the Facility
     Lessee or CCFC, the Tribe is in default thereunder; all of the rights,
     title and interest of CCFC in, to and under the South Point Ground Lease
     assigned pursuant to the Assignment Agreement have been transferred free
     and clear of any and all Liens other than Permitted Liens. Prior to the
     execution and delivery

                                       15
<PAGE>
     of the Assignment Agreement by CCFC and as of and after the time CCFC
     became a party to the South Point Ground Lease, the South Point Ground
     Lease was enforceable against CCFC in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     the rights of creditors generally and by general principles of equity;
     the execution, delivery and performance of the South Point Ground Lease
     by any past or present Calpine Party (including CCFC) party thereto
     (i) did not and does not contravene any Applicable Law binding on such
     Calpine Party or its property, (ii) does not constitute a default by such
     Calpine Party under, or result in the creation of any Lien upon the
     property of such Calpine Party (other than pursuant to any Operative
     Document) under any indenture, mortgage or other material contract,
     agreement or instrument to which such Calpine Party is a party or by
     which such Calpine Party or any of its property is bound, (iii) does not
     contravene any Organic Document of such Calpine Party, (iv) does not
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect, or
     (v) does not create a Lien on the South Point Ground Lease; the Facility
     Lessee has all Permits with or from any Governmental Entity or under
     Applicable Law required for the performance of the South Point Ground
     Lease by the Owner Lessor or the Facility Lessee, other than (i) any
     Permit where the failure to obtain or maintain such Permit would not be
     reasonably likely to result in a Material Adverse Effect, (ii) the FERC
     Orders, (iii) as may be required under Applicable Law providing for the
     supervision or regulation of the Owner Participant, the Owner Lessor or
     any Affiliate of any of them as a result of investing, lending or other
     commercial activity in which the Owner Participant, the Owner Lessor or
     any Affiliate of any of them is or may be engaged other than the
     transactions contemplated hereby or by performance of the South Point
     Ground Lease upon and after the assignment thereof to the Owner Lessor
     pursuant to the Assignment Agreement, (iv) as may be required under
     existing Applicable Laws to be obtained, given, accomplished or renewed
     at any time, or from time to time, in each case, after the Closing Date
     and which the Facility Lessee has no reason to believe will not be timely
     obtained and the lack of which would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of criminal or material
     civil liability being incurred by the Owner Participant, the Owner
     Lessor, the Indenture Trustee or the Pass Through Trustees, (v) in
     connection with any modification to or rebuilding or replacement of the
     Facility or any portion thereof that may occur in the future, (vi) as may
     be required in connection with any refinancing of the Lessor Notes or the
     Certificates or the issuance of Additional Lessor Notes or Additional
     Certificates, (vii) as may be required in consequence of any transfer of
     the Member Interest or any transfer of the Undivided Interest or the
     Owner Lessor's Interest, or any part thereof by the Owner Lessor or the
     exercise by any such party of dispossessory remedies under the Operative
     Documents or any relinquishment of the use or operation of the Facility
     by the Facility Lessee, (viii) appropriate filing and recording to
     perfect the Lien of the Collateral Trust Indenture, if required, and the
     ownership and leasehold interests conveyed pursuant to this Agreement, or
     (ix) as may be required under any Applicable Law enacted or adopted after
     the date hereof.

                                       16
<PAGE>
     B.   Representations and Warranties of the Owner Lessor. The Owner Lessor
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of
     which the Owner Participant is the sole member, and has the power and
     authority to enter into and perform its obligations under this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and
     delivered will be duly authorized, executed and delivered by the Owner
     Lessor, and (ii) assuming the due authorization, execution and delivery
     of this Agreement by each party hereto other than the Owner Lessor, this
     Agreement constitutes and when executed and delivered each of the other
     Operative Documents (other than the Lessor Notes) to which it is or will
     be a party will be the legal, valid and binding obligations of the Owner
     Lessor, enforceable against the Owner Lessor in accordance with its
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     the rights of creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the
     State of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC
     Agreement, the Collateral Trust Indenture, the Lessor Notes, this
     Agreement or the other Operative Documents to which the Owner Lessor

                                       17
<PAGE>
     is or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or
     given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the South Point Ground Lease or
     the ability of the Owner Lessor to perform its obligations under the
     South Point Ground Lease or the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably
     be expected to materially adversely affect the ability of the Owner
     Lessor to perform its obligations under this Agreement or any other
     Operative Document to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the Lien of the Indenture Trustee on the Indenture
     Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning
     the Facility, the Facility Site, the Operative Documents and the South
     Point Ground Lease with the Lessor Manager, at the Lessor Manager's
     address set forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

     C.   Representations and Warranties of the Lessor Manager and the Trust
Company. The Trust Company (only with respect to representations and warranties
expressly relating to the Trust Company) and the Lessor Manager hereby
severally represent and warrant that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Trust Company is a national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against

                                       18
<PAGE>
     it in its individual capacity or as Lessor Manager, as the case may be, in
     accordance with its terms, except as may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it
     is or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage
     or other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is
     bound, or in the creation of any Owner Lessor's Lien; provided, however,
     that no representation is made with respect to the right, power or
     authority of the Trust Company or the Lessor Manager to act as operator
     of the Facility following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice
     or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against
     the Trust Company either in its individual capacity or as Lessor Manager,
     as the case may be, before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Lessor to

                                       19
<PAGE>
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered
     or sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease,
     the offering of which, for the purposes of the Securities Act, would be
     deemed to be part of the same offering as the offering of the Member
     Interest, the Lessor Notes or the Certificates or any part thereof or
     solicited any offer to acquire any of the same in violation of the
     registration of Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement and any other Operative Document to which the Owner Participant
     is or will be a party constitute or when executed and delivered will
     constitute the legal, valid and binding obligations of the Owner
     Participant, enforceable against the Owner Participant in accordance with
     their respective terms, except as the same may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the rights of creditors generally and by general principles of
     equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant with the
     terms and provisions hereof and thereof, do not and will not contravene
     any Applicable Law binding on the Owner Participant, or its organizational
     documents, or contravene the provisions of, or constitute a default under
     any indenture, mortgage or other material contract, agreement or
     instrument to which the Owner Participant is a party or by

                                       20
<PAGE>
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site
     or any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC
     Agreement, the Tax Indemnity Agreement or any other Operative Document to
     which the Owner Participant is or will be a party, other than any
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given (it being understood that no representation
     or warranty is being made as to any Applicable Laws relating to the
     Facility or the Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding
     against the Owner Participant before any Governmental Entity which (i)
     questions the validity of the Operative Documents or the ability of the
     Owner Participant to perform its obligations under the Operative
     Documents to which it is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to materially adversely
     affect the ability of the Owner Participant to perform its obligations
     under the LLC Agreement, this Agreement or any other Operative Document
     to which it is or will be a party or would materially adversely affect
     the Facility, the Facility Site or any interest therein or part thereof
     or the Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly,
     constitutes or is deemed to constitute assets (within the meaning of
     ERISA and any applicable rules, regulations and court decisions
     thereunder) of any "employee benefit plan" (as defined in Section 3(3) of
     ERISA) that is subject to ERISA, of any Transaction Party and ERISA
     Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner
     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the

                                       21
<PAGE>
     same offering as the offering of the Member Interest, the Lessor Notes or
     the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section
     5 of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the
     foregoing, under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly
     provided herein or in the Collateral Trust Indenture, to enter into and
     perform its obligations under the Collateral Trust Indenture, this
     Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and
     the Indenture Trustee, enforceable against the Lease Indenture Company or
     the Indenture Trustee, as the case may be, in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the
other Operative Documents by each party thereto other than the Indenture
Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

                                       22
<PAGE>
Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or
     will be a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State
     of Connecticut or the United States of America governing the Lease
     Indenture Company or the banking or trust powers of the Lease Indenture
     Company, or its articles of association or by-laws, or contravene the
     provisions of, or constitute a default by the Lease Indenture Company
     under or pursuant to any indenture, mortgage or other material contract,
     agreement or instrument to which the Lease Indenture Company is a party
     or by which the Lease Indenture Company or its property is bound, or
     result in the creation of any Lien attributable to the Lease Indenture
     Company upon the Indenture Estate, the Facility Site or any interest
     therein or any part thereof (other than the Lien of the Collateral Trust
     Indenture), which would materially adversely affect the ability of the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, to perform its obligations under this
     Agreement or the other Operative Documents to which it is or will be a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     the Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act
     as operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice
     or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Lease Indenture Company
     to perform its obligations under this Agreement or any other Operative
     Document to which it is or will be a party or could reasonably be
     expected to materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

     D.   Representations, Warranties and Covenants of the Pass Through
Trustees and the Pass Through Company. The Pass Through Company and the Pass
Through

                                       23
<PAGE>
Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly
     provided herein or in the Pass Through Trust Agreements, to enter into
     and perform its obligations under the Pass Through Trust Agreements, this
     Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by
     the Pass Through Trustees and the Pass Through Company and (B) assuming
     the due authorization, execution and delivery of this Agreement by each
     party hereto other than each Pass Through Trustee and the Pass Through
     Company, as the case may be, this Agreement constitutes a legal, valid
     and binding obligation of the Pass Through Company and each Pass Through
     Trustee, enforceable against the Pass Through Company or each Pass
     Through Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by bankruptcy, insolvency, fraudulent
     conveyance, reorganization, arrangement, moratorium or other laws
     relating to or affecting the rights of creditors generally and by general
     principles of equity.

(A)  Each of the other Operative Documents to which the Pass Through
     Company or any Pass Through Trustee is or will be a party has been or
     when executed and delivered will be duly authorized, executed and
     delivered by the Pass Through Company or such Pass Through Trustee, as
     the case may be, and (B) assuming the due authorization, execution and
     delivery of each of the other Operative Documents by each party thereto
     other than the Pass Through Company or such Pass Through Trustee, as the
     case may be, each of the other Operative Documents to which the Pass
     Through Company or any Pass Through Trustee is or will be a party
     constitutes or when executed and delivered will constitute a legal, valid
     and binding obligation of the Pass Through Company or such Pass Through
     Trustee, enforceable against the Pass Through Company or such Pass
     Through Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by bankruptcy, insolvency, fraudulent
     conveyance, reorganization, arrangement, moratorium or other laws
     relating to or affecting the rights of creditors generally and by general
     principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or
     will be a party, the consummation by the Pass Through Company, in its
     individual capacity or as Pass Through Trustee, as the case may be, of
     the transactions contemplated hereby and thereby, and the compliance by
     the Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or
     its organizational documents or by-laws, or contravene the provisions of,
     or constitute a default by the Pass Through Company under, or result in
     the creation of any Lien attributable to the

                                       24
<PAGE>
     Pass Through Company upon the Certificates or any indenture, mortgage or
     other material contract, agreement or instrument to which the Pass Through
     Company is a party or by which the Pass Through Company or its property is
     bound which would materially adversely affect the ability of the Pass
     Through Company, in its individual capacity or as Pass Through Trustee, as
     the case may be, to perform its obligations under this Agreement or the
     other Operative Documents to which it is a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of any Pass Through Trustee in
     the Indenture Estate; provided, however, that no representation is made
     with respect to the right, power or authority of the Pass Through Company
     or any Pass Through Trustee to act as operator of the Facility following a
     Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will
     be a party, other than any such authorization or approval or other action
     or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                       25
<PAGE>
Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 530 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and Warranties
of each party hereto set forth in Section 3 shall be true and correct on and as
of the Closing Date with the same effect as though made on and as of the
Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the determination by FERC of EWG
status and the FERC Order referenced in clause (ii) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                       26
<PAGE>
     F.   Consents. (a) All permits, licenses, approvals and consents
(including management, credit and other internal approvals of the Transaction
Parties, but excluding the Third Party Consent referred to in (b) below)
necessary to consummate the Overall Transaction and to own and operate the
Facility as currently operated shall have been duly obtained and shall be in
full force and effect and in the form and substance satisfactory to each of the
Transaction Parties.

               (b)   Each Third Party Consent shall have been obtained and
shall be in full force and effect substantially in the form attached hereto as
Exhibit M which is applicable to the relevant third party granting such
consent; provided that if any Third Party Consent is not substantially in the
form attached hereto as Exhibit M, an authorized officer of Calpine shall
provide a certificate to the Owner Lessor, the Indenture Trustee and the Pass
Through Trustee certifying that any differences between the form of such
consent attached hereto and the executed version are not materially adverse to
any of the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                       27
<PAGE>
Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(ii) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a copy of the Survey
(certified to the Owner Lessor and the Title Company) in form and substance
satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance

                                       28
<PAGE>
Consultant, and the Power Market Consultant, which reports shall be dated as of
the Closing Date and shall otherwise each be in form and substance reasonably
satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by CCFC of its interest in the Undivided Interest and the Ground
Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to
the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Holland and Hart LLP, Tribal
counsel to the Facility Lessee, the Owner Participant, the Owner Lessor and the
Initial Purchasers, (e) Karen Scowcroft, Esq., in-house counsel to the Equity
Investor, (f) Dewey Ballantine LLP, counsel to the Owner Participant and to the
Owner Lessor, (g) Bingham Dana LLP, counsel to the Lease Indenture Company and
the Indenture Trustee, (h) Bingham Dana LLP, counsel to the Pass Though
Trustees and the Pass Through Company, (i) Ray Quinney & Nebeker, in-house
counsel to the Lessor Manager and (j) Fennemore Craig, A Professional
Corporation, Arizona counsel to the Facility Lessee, the Owner Participant, the
Owner Lessor and the Initial Purchasers, in each case in form and substance
reasonably satisfactory to each Transaction Party. Each such Person expressly
consents to the rendering by its counsel of the opinion referred to in this
Section 4.19 and acknowledges that such opinion shall be deemed to be rendered
at the request and upon the instructions of such Person, each of whom has
consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall,
to the extent requested, permit the Rating Agencies and the Initial Purchasers
to rely on their opinion as if such opinion were addressed to such parties.

     H.   Recordings and Filings. All filings and recordings listed on
Schedule 4.20 hereto shall have been duly made and all filing, recordation,
transfer and other fees payable in connection therewith shall have been paid;
and the filing of all precautionary financing statements under the (x) Uniform
Commercial Code of Arizona and Delaware and (y) Fort Mojave Indian Reservation
Uniform Commercial Code ("FMUCC") and FMUCC First Amendments 1994 Amendment,
and any other documents as may be reasonably requested by counsel to the Owner
Participant, the Indenture Trustee or the Pass Through Trustees to perfect (i)
the Owner Lessor's Interest and the Easement, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the South Point
Ground Lease shall have been satisfied or waived and the Owner Participant
shall be satisfied that the Facility shall be in the condition described in the
Closing Appraisal.

                                       29
<PAGE>
Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to perform its obligations under the
South Point Ground Lease or would materially adversely affect the Facility or
the Facility Site. On the Closing Date, each Certificateholder's purchase of
Lessor Notes shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Certificateholder is subject, (ii) not violate any
Applicable Law (including Regulation U, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Certificateholder to any tax,
penalty or liability under or pursuant to any Applicable Law, which Applicable
Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

                                       30
<PAGE>
Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to both the Facility
Lessee and CCFC in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the South
Point Ground Lease or any of the Transactions contemplated by any of the
Operative Documents or the performance of the South Point Ground Lease.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

                                       31
<PAGE>
     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with
     Section 8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant, the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through
     (vi) of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the

                                       32
<PAGE>
     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents and the South Point Ground Lease, (iv) unsecured
indemnities provided by, and other unsecured contingent obligations incurred by
the Facility Lessee in connection with either (x) Easement relating to its
applicable interest in the Facility or the Facility Site or (y) any contract,
agreement or other document or instrument relating to the South Point project
which is entered into in the ordinary course of the Facility Lessee's business,
(v) customary indemnities in favor of the title insurers providing the title
policies covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the South Point
Ground Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the South Point Ground Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     K.   Books, Records, Access. The Facility Lessee shall maintain or
cause to be maintained adequate books, accounts and records with respect to
itself, the Facility and Facility Site and prepare all financial statements
required hereunder in accordance with GAAP and in

                                       33
<PAGE>
compliance with the regulations of any Governmental Entity having jurisdiction
thereof, and permit employees, agents and representatives of the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Collateral Trust
Indenture shall have not been terminated or discharged, the Indenture Trustee,
the Pass Through Trustees and the Certificateholders, and such parties'
independent consultants, at all reasonable times during normal business hours
and upon reasonable prior notice and at no risk or (except during the existence
of a Lease Default or Lease Event of Default) expense to the Facility Lessee to
inspect, the Facility and Facility Site, to examine or audit all of or any of
the Facility Lessee's books, accounts and records and make copies and memoranda
thereof and, together with such consultants, to observe the operation,
maintenance and repair of the Facility; provided, however, any such inspection
shall be conducted in accordance with Section 12 of the Facility Lease.

Other Information.

               1.   The Facility Lessee shall furnish, or shall cause to be
                    furnished to, the Owner Lessor, the Owner Participant
                    and, so long as the Lien of the Collateral Trust
                    Indenture has not been terminated or discharged, the
                    Indenture Trustee and the Pass Through Trustees, and
                    their respective authorized representatives from time to
                    time such information as such party shall reasonably
                    request concerning the Facility and Facility Site
                    including information concerning the condition,
                    operation, maintenance and use of the Facility and
                    Facility Site and such other financial or operating
                    information as it shall reasonably request and which is
                    routinely made available to creditors of the Facility
                    Lessee, to the extent it possesses such information;
                    provided that, the Facility Lessee reserves the right
                    not to provide any information that is not otherwise
                    publicly available to any transferee Owner Participant
                    (or its Owner Lessor) if it reasonably believes in its
                    good faith judgment that such transferee Owner
                    Participant or any Affiliate thereof is a competitor or
                    is an Affiliate of a competitor of the Facility Lessee
                    or its Affiliates in the competitive power market,
                    unless, before receiving any such information, such
                    transferee Owner Participant shall have put in place (to
                    the reasonable satisfaction of the Facility Lessee)
                    appropriate confidentiality arrangements. To the extent
                    such information consists of information contained in
                    records kept by the Facility Lessee or any Affiliate,
                    such information shall be furnished without cost to the
                    recipient.

               (b)   The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

                                       34
<PAGE>
     L.   Intentionally Deleted.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the South Point Ground Lease, it will not enter into or become bound by any
contract or agreement providing for the sale of energy produced from the
Facility, or the purchase of services to be performed at, for or in connection
with, the Facility or any other contract or agreement relating to the Facility
that (i) has a term that extends beyond the Basic Lease Term or the scheduled
expiration of any Renewal Lease Term then in effect or elected by the Facility
Lessee, unless such contract or agreement may be terminated by the Facility
Lessee without material costs or obligation prior to the Basic Lease Term or
the scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the South Point Ground Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

                                       35
<PAGE>
Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Easement and the Facility Site or on any of its other
properties real or personal, whether now owned or hereafter acquired, except
Permitted Liens.

     M.   Investments. The Facility Lessee shall not make or permit to
remain outstanding any advances, loans or extensions of credit to, or purchase
or own any stock, bonds, notes, debentures or other securities of any Person,
except Permitted Investments.

     N.   Intentionally Deleted

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority. The Facility
                    Lessee shall not without the prior written consent of
                    the Owner Participant and, except as otherwise provided
                    in Section 8 of the Collateral Trust Indenture and so
                    long as the Lien of the Collateral Trust Indenture has
                    not been terminated or discharged, the Indenture
                    Trustee, (x) cause or consent to or (y) acquiesce in any
                    amendment, modification, extension, termination,
                    variance or waiver of timely compliance with any terms
                    or conditions of any Operative Document. In addition,
                    the Facility Lessee shall not enter into or acquiesce in
                    any amendment, modification, extension, termination,
                    variance or waiver of timely compliance with any terms
                    or provisions of the South Point Ground Lease without
                    the consent of the Owner Participant if the same would
                    (i) subject in all cases to the provisions of clause
                    (iii) below, during the Facility Lease Term, have a
                    material adverse effect on the Owner Participant or the
                    Owner Lessor (including, without limitation, any
                    material decrease in their respective rights or any
                    material increase in their respective obligations or any
                    material increase in the liability exposure of the Owner
                    Lessor or the Owner Participant, it being agreed that
                    (x) in determining whether any such material adverse
                    effect has occurred, the fact of the Facility Lessee's
                    obligations under the Operative Documents (including
                    paragraph (b) below) and of Calpine under the Calpine
                    Guaranty shall be taken into account and (y) any
                    increase in rent or any other amount payable by the
                    Owner Lessor or the Owner Participant under the South
                    Point Ground Lease that is also reflected to the same
                    extent under the Facility Site Lease and does not remain
                    in effect after the expiration of the then existing
                    Basic Lease Term

                                       36
<PAGE>
                    or any Renewal Term with respect to which the Facility
                    Lessee shall have irrevocably exercised its renewal option
                    shall not constitute or cause or be deemed to constitute or
                    cause such a material adverse effect), (ii) during the
                    period after the expiration or termination of the Facility
                    Lease Term, have any adverse effect whatsoever on the Owner
                    Participant or the Owner Lessor (including, without
                    limitation, any increase in their respective obligations
                    or decrease in their respective rights) or (iii) whether
                    during or after the Facility Lease Term, result in any
                    change to the length of the term of the South Point
                    Ground Lease or in any option to renew the Facility
                    Lease Term. The Facility Lessee will furnish the Owner
                    Participant with a copy of the executed version thereof
                    promptly after the execution thereof. Notwithstanding
                    anything to the contrary contained in the foregoing, the
                    Facility Lessee shall not have any right to take any
                    action otherwise permitted pursuant to this Section 5.20
                    if a Significant Lease Default or Lease Event of Default
                    shall have occurred and be continuing. So long as the
                    Lien of the Collateral Trust Indenture has not been
                    discharged, the Facility Lessee shall not take any
                    action pursuant to or in accordance with the foregoing
                    provisions of this Section 5.20, if such action would
                    (i) have a material adverse effect on the Indenture
                    Trustee, the Pass Through Trustees, the Noteholders or
                    the Certificateholders including, without limitation, a
                    material adverse effect on such Person's rights and
                    remedies under the Operative Documents (it being agreed
                    that (x) in determining whether any such material
                    adverse effect has occurred, the fact of the Facility
                    Lessee's obligations under the Operative Documents
                    (including paragraph (b) below) and Calpine's
                    obligations under the Calpine Guaranty shall be taken
                    into account and (y) any increase in rent or any other
                    amount payable by the Owner Lessor or the Owner
                    Participant under the South Point Ground Lease that is
                    also reflected to the same extent under the Facility
                    Site Lease ) shall not constitute or cause such a
                    material adverse effect) or (ii) result in the release
                    of or loss of the first priority, perfected Lien
                    (subject to Permitted Liens) on all or any material
                    portion of the Owner Lessor's interest in the Facility
                    or the Facility Site, except as otherwise permitted by
                    the Operative Documents.

               (b)   During the Facility Lease Term (i) the Facility Lessee
shall, at its own expense, on behalf of the Owner Lessor, duly fulfill and
comply with all obligations on the part of the Owner Lessor under or in
connection with the South Point Ground Lease and the Easement (or any extension
or renewal of any thereof) at the time performance of such obligations is
required under the South Point Ground Lease and (ii) in connection with the
foregoing obligation of the Facility Lessee set forth in clause (i), subject to
clause (a) above, the Facility Lessee shall have and be entitled to exercise
all rights and benefits (including the right to enter into any amendment,
modification, extension, termination, variance, waiver, notice or consent or
any action with respect thereto, subject to the terms and conditions of the
Operative Documents) of the Owner Lessor under the South Point Ground Lease and
Easement.

                                       37
<PAGE>
Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the South Point Ground Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility, the Facility Site or the Easement, whether or not
compliance therewith shall require structural changes in the Facility or any
part thereof or require major changes in operational practices or interfere
with the use and enjoyment of the Facility or any part thereof, and (b)
procure, maintain and comply, or cause to be procured, maintained and complied
with, all Applicable Permits, except in the case of clause (a) and (b) above,
(1) as may be contested in accordance with Section 7 or 8 of the Facility Lease
and (2) the Facility Lessee may, in good faith and by appropriate proceedings,
diligently contest the validity or application of any such Applicable Laws in
any reasonable manner which does not involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material Lien on the Facility,
(ii) impair the use, operation or maintenance of the Facility in any material
respect, (iii) any criminal liability being incurred by the Owner Participant,
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Lease
Indenture Company, the Pass Through Trustees, the

                                       38
<PAGE>
Pass Through Company or any Certificateholder, (iv) the Owner Participant, the
Owner Lessor, the Lessor Manager, the Indenture Trustee, the Lease Indenture
Company, the Pass Through Trustees, the Pass Through Company or any
Certificateholder being subjected to any unindemnified civil liability or of
the Owner Participant or the Owner Lessor being subject to regulation as a
public utility under Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site, the transactions contemplated by the Operative Documents to
which the Facility Lessee is a party and the performance of the South Point
Ground Lease as may be required to enable the Owner Participant, the Owner
Lessor or, so long as the Lien of the Collateral Trust Indenture shall not have
been terminated or discharged, the Indenture Trustee or the Pass Through
Trustees, as the case may be, to timely file with any Governmental Entity any
reports and obtain any licenses or permits required to be filed or obtained by
the Owner Lessor under any Operative Document or the South Point Ground Lease,
the Owner Participant as the owner of the Member Interest or the Indenture
Trustee. The Facility Lessee will preserve, protect, defend and enforce, or
cause to be preserved, protected, defended and enforced, the rights of itself,
the Owner Lessor and the Owner Participant under each and every Operative
Document to which it is a party (including by assignment and assumption of the
rights thereunder), including using commercially reasonable efforts to
prosecute suits to enforce any such rights and, at the request of Indenture
Trustee, so long as the Lien of the Collateral Trust Indenture has not been
discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the
Facility

                                       39
<PAGE>
Lessee's reasonable expense, enforce, in its own name, or the Facility Lessee's
name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

     O.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the South Point Ground Lease, or earlier at the option of the
Owner Lessor. The Facility Lessee shall also, subject to obtaining any required
third party consents, assign to the Owner Lessor upon termination of the
Facility Lease any support or similar agreements to the extent relating to the
Facility it has with third parties.

     P.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     Q.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

II.   COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

                                       40
<PAGE>
Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

               1.   not amend, supplement, or otherwise modify Section 9.1,
                    9.3, 13.1 or clause (i) of Section 13.2 of the LLC
                    Agreement without the prior written consent of the
                    Facility Lessee so long as no Significant Lease Default
                    or Lease Event of Default has occurred and is continuing
                    and the Indenture Trustee so long as the Lien of the
                    Collateral Trust Indenture has not been terminated or
                    discharged.

                                       41
<PAGE>
Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the South Point
Ground Lease in any manner or (c) except as provided in Section 11 hereof or
Section 2.10 or Section 5.6 of the Collateral Trust Indenture, take any action
to prepay or refund the Lessor Notes or amend any of the payment terms of the
Lessor Notes without, in each case, the prior written consent of the Facility
Lessee so long as no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing and, in the case of clause (a) or (b), the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents or the South Point
Ground Lease.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other

                                       42
<PAGE>
laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner Lessor shall not take any such
action unless the Indenture Trustee shall have given its prior written consent
to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust
     Indenture has not been terminated or discharged, without the prior
     written consent of the Indenture Trustee; provided, however, that the
     Owner Participant may, subject to Section 7.6, assign, convey or transfer
     all or any part of its interest in the Member Interest without such
     consent to a Person (the "Transferee") which shall assume the duties and
     obligations of the Owner Participant under the Operative Documents with
     respect to the interest being transferred pursuant to an OP Assignment
     and Assumption Agreement substantially in the form of Exhibit J hereto,
     if each of the following conditions shall have been satisfied on or prior
     to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor
     Owner Participant's obligations hereunder, pursuant to an OP Parent
     Guaranty or (B) a Person which meets, or the payment and performance
     obligations of which with respect to the interest being transferred under
     the Operative Documents are guaranteed (pursuant to a OP Parent Guaranty)
     by a Person (the transferor Owner Participant or such other guarantor,
     the "Transferee Guarantor") which meets, the following criteria: (1) the
     tangible net worth of the Transferee or Transferee Guarantor, is at least
     equal to $75 million calculated in accordance with GAAP; and (2) unless
     waived in writing by the Facility Lessee prior to such transfer, such
     Transferee is not a Competitor of Calpine or in material litigation

                                       43
<PAGE>
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of
     this clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in this
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to
     be a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each
     notice from the Owner Participant of its intent to transfer its interest
     and, in addition, no more than once in any calendar year plus each time
     the Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether
     the proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and
     expenses in connection with any such transfer or proposed transfer),
     including any of the foregoing relating to any amendments to the
     Operative Documents required in connection therewith, shall be paid on an
     After-Tax Basis by the Owner Lessor, without any right of indemnification
     from the Facility Lessee or any other Person; provided, however, that the
     Owner Participant shall have no obligation to pay fees, expenses or
     charges of the Facility Lessee as a result of any transfer while a
     Significant Lease Default or a Lease Event of Default is continuing, in
     which case the Facility Lessee shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                       44
<PAGE>
     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an
     OP Assignment and Assumption Agreement) shall also apply to any transfer
     of the equity ownership interests of an Owner Participant which has as
     its sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative
     Documents. In the case of such a transfer of equity ownership interests
     which satisfies such restrictions of this Section 7.1, the Owner
     Participant's obligations under the Operative Documents shall continue,
     but the Owner Participant shall, except in the case of a transfer to a
     transferee described in clause (a)(iii)(A) above, procure a new OP Parent
     Guaranty from a guarantor meeting the requirements of clause (a)(iii)(B)
     above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                       45
<PAGE>
respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section 7.6 prior to
entering into such revised agreement; provided that, for such revised offer,
the Notice Period shall be 10 Business Days from the date of such new notice,
and the Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other South Point Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under this Section 7.6 of each such
Other South Point Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                       46
<PAGE>
its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

     D.   Appointment of Successor Lessor Manager. Notwithstanding any
other provision of this Agreement, a successor Lessor Manager shall not be
appointed by the Owner Participant without the consent of the Facility Lessee
and, so long as the Lien of the Collateral Trust Indenture has not been
terminated or discharged and the Indenture Trustee unless such successor Lessor
Manager (a) meets the requirements of the LLC Agreement, (b) has a combined
capital and surplus of at least $150 million, and (c) the Facility Lessee and,
so long as Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee, shall have received at the expense of
Facility Lessee on an After-Tax Basis: (i) an opinion or opinions of counsel,
such counsel and such opinion to be reasonably acceptable to such parties, to
the effect that no regulatory consents or approvals are required, or (ii) such
other documentation reasonably satisfactory to the Facility Lessee or the
Indenture Trustee as the case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agree to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

                                       47
<PAGE>
Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site, the Easement or any Component or any portion of any thereof or any
     interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility, the Easement or
     the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, the Easement or
     any Component, or any portion of any thereof or any interest therein;

                                       48
<PAGE>
the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or the Easement or any Component, or any portion thereof,
     including, for the avoidance of doubt, any such Environmental Condition
     existing prior to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the South Point Ground Lease requested by the Facility Lessee, or
     resulting from the actions of the Facility Lessee or in connection with
     any Lease Default or Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the South Point Ground Lease or the interests of the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, or under the Operative Documents or the South Point
     Ground Lease or the presence, use, storage, release, threatened release,
     transportation, arrangement for transportation, treatment, arrangement for
     treatment, manufacture, disposal or arrangement for disposal of any
     Hazardous Substance in, at, under or from the Facility, the Easement or
     the Facility Site, including, for the avoidance of doubt, any of the
     foregoing existing or occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     Tribe of any obligation contained in this Agreement or any other Operative
     Document or the South Point Ground Lease or the falsity or inaccuracy of
     any representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the South Point Ground
     Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the South
     Point Ground Lease (other than the Facility Lease and the Facility Site
     Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional

                                       49
<PAGE>
     persons) arising out of the discharge of their respective duties as
     provided in the Operative Documents or the South Point Ground Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)   acts, omissions or events with respect to the Facility first occurring
     after expiration or early termination of the Facility Lease and, where
     required by the Facility Lease, surrender to the Owner Lessor or its
     successor of its interest in the Facility and Facility Site in compliance
     with the provisions of the Facility Lease and the Facility Site Lease
     respectively or (B) if the Closing Date does not occur, acts, omission or
     events occurring after the date set forth in Section 2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease or (ii) any
     violation of Applicable Law by any such Person except to the extent
     attributable to a violation of Applicable Law by the Facility Lessee or
     any other Calpine Party or to any breach by the Facility Lessee or such
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease;

               a)   as to any Indemnitee, any Claim to the extent
                    attributable to the noncompliance of such Indemnitee or
                    a Related Party, with any of the terms of, or any
                    misrepresentation or breach of warranty by such
                    Indemnitee or Related Party contained in any Operative
                    Document made by such Indemnitee or Related Party or any

                                       50
<PAGE>
                    breach by such Indemnitee or a Related Party of any
                    covenant contained in any Operative Document or any
                    breach by such Indemnitee or a Related Party of any
                    covenant contained in any Operative Document made by
                    such Indemnitee or Related Party except to the extent
                    attributable to any breach by the Facility Lessee or any
                    other Calpine Party of any covenant, representation or
                    warranty contained in any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of Default
     that is not also (or attributable to) a Lease Default or Lease Event of
     Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

                                       51
<PAGE>
Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other Indemnitee shall
     waive its rights to indemnification (for itself and each Related Party
     thereto) in a manner reasonably acceptable to the Facility Lessee, to
     cooperate, at the sole cost and expense of the Facility Lessee, with
     insurers in exercise of their rights to investigate, defend or compromise
     such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default shall have occurred and be
     continuing, the Facility Lessee shall have the right in its sole
     discretion, to defend or compromise any Claim for which indemnification is
     sought under this Section 9.1 which the Facility Lessee acknowledges is
     subject to indemnification hereunder; provided that no such defense or
     compromise shall involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a Lien on any part of the Facility, the
     Undivided Interest, the Ground Interest, the Facility Site, the Lessor
     Estate or the Indenture Estate or the impairment of the Facility or the
     Facility Site, in any material respect or (ii) any criminal liability
     being incurred or any material adverse effect on such Indemnitee;
     provided, further, that no Claim shall be compromised by the Facility
     Lessee on a basis that admits any criminal violation or gross negligence
     or willful misconduct on the part of such Indemnitee without the express
     written consent of such Indemnitee; and provided, further, that to the
     extent that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the performance of the South Point Ground Lease
     are part of the same proceeding involving such Claim, the Facility Lessee
     may assume responsibility for the contest or compromise of such Claim only
     if the same may be and is severed from such other

                                       52
<PAGE>
     Claims (and each Indemnitee agrees to use reasonable efforts to obtain
     such a severance). In the event that in the course of the investigation or
     defense of a claim, the Facility Lessee shall in good faith reasonably
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties). Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee

                                       53
<PAGE>
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such
     claim; provided, however, that such party's participation does not
     constitute a waiver of the indemnification provided in this Section 9.1;
     provided, further, that if and to the extent that (i) such Indemnitee is
     advised by counsel that an actual or potential conflict of interest exists
     where it is advisable for such Indemnitee to be represented by separate
     counsel or (ii) there is a risk that such Indemnitee may be subject to
     criminal liability and such Indemnitee informs the Facility Lessee that
     such Indemnitee desires to be represented by separate counsel, such
     Indemnitee shall have the right to control its own defense of such Claim
     and the reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the Indemnitee
     waives its rights to indemnification hereunder or (ii) the Facility Lessee
     has not acknowledged its indemnity obligation with respect thereto and
     there is a significant risk that a default judgment will be entered
     against such Indemnitee. Nothing contained in this Section 9.1(e) shall be
     deemed to require an Indemnitee to contest any Claim or to assume
     responsibility for or control of any judicial proceeding with respect
     thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of their insurers has paid in respect of such Claim; provided that,
     so long as a Significant Lease Default or Lease Event of Default shall
     have occurred and is continuing such amount may be held by the Owner
     Lessor as security for the Facility Lessee's obligations under the
     Facility Lease, the other Operative Documents and the South Point Ground
     Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the
     case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

                                       54
<PAGE>
General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Easement, the Undivided Interest, the Facility Site, the
     Ground Interest, or any portion or Component thereof or any interest
     therein, or upon any Operative Document or interest therein, or in any way
     arising out of, in connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Easement,
     the Undivided Interest, the Ground Interest, the Facility Site or any
     portion or Component thereof or any interest therein;

the Facility, the Facility Site, the Easement, the Undivided Interest, the
     Ground Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility Lessee
     or Calpine, the Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Easement, the Facility Site or any portion or Component thereof, or
     any interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, the Easement or any portion or Component
     thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     South Point Ground Lease;

the conveyance of title to the Undivided Interest; or

                                       55
<PAGE>
otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of South Point Ground Lease.

          Notwithstanding anything herein to the contrary and without regard
to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, transaction privilege taxes,
     use, rental, license, value added (to the extent value added taxes are not
     imposed in clear and direct substitution for income taxes) or property
     taxes) ("Income Taxes"), including any such Taxes collected by way of
     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided
     that this exclusion shall not apply so long as a Lease Event of Default
     shall have occurred and be continuing;

                                       56
<PAGE>
Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and not as a result of
     any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the
     Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that, under
     law in effect on the date of the transfer such Taxes exceed the amount of
     Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

                                       57
<PAGE>
Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall
     have determined in good faith that compliance with any such requirement
     shall not result in any identified non-immaterial adverse effect to its
     interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, transaction privilege taxes, use, rental or license taxes, value
     added taxes

                                       58
<PAGE>
     (except to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document or the South Point Ground Lease are not within
     the scope

                                       59
<PAGE>
     of the independent accountant's responsibility. The fees and disbursements
     of such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility
     Lessee a Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing, such amount shall not be payable until such
     Significant Lease Default or Lease Event of Default has been cured, and
     (B) the amount payable to the Facility Lessee pursuant to this sentence
     shall not exceed the amount of the indemnity payment in respect of

                                       60
<PAGE>
     such refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and (y) over (B) in this Section 9.2(f) shall be carried
     forward and reduce the Facility Lessee's obligations to make subsequent
     payments to such Tax Indemnitee pursuant to this Section 9.2. If it is
     subsequently determined that the Tax Indemnitee was not entitled to such
     refund or credit, the portion of such refund or credit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof. If, in connection with a refund or
     credit of all or part of any Taxes paid, reimbursed or advanced by the
     Facility Lessee pursuant to this Section 9.2, a Tax Indemnitee receives an
     amount representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

               (1)   the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)   the decisions regarding what actions to be taken
shall be made by the Tax Indemnitee in its sole judgment, and

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<PAGE>
               (3)   the Tax Indemnitee shall not otherwise settle,
compromise or abandon such contest without the Facility Lessee's prior written
consent except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall consult in
good faith with the other party and its designated counsel with respect to such
Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

               (1)   within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)   there is no risk of imposition of any criminal penalties
or liabilities,

               (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)   the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

                                       62
<PAGE>
               (9)   if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to such Tax, which
admission shall be binding on the Facility Lessee unless and to the extent such
contest is determined in a manner that conclusively demonstrates that the
Facility Lessee is not so liable, and

               (10)  if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

               (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)   promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold interest of the Owner Lessor in the Facility for
     United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement or
     return for filing by the Tax Indemnitee; provided that the only

                                       63
<PAGE>
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section
     9.2. Subject to the preceding sentence, the Facility Lessee's obligations
     under this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to
     this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents
in all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the rights under the Facility Lease and
Facility Site Lease, including the right to possession, use and quiet enjoyment
of the Easement, the Undivided Interest and the Ground Interest.

                                       64
<PAGE>
SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that
     there shall be no changes to the amortization schedule or interest amounts
     and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements

                                       65
<PAGE>
     shall be made in compliance with the Operative Documents and the South
     Point Ground Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant
     or the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all

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<PAGE>
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which
     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative

                                       67
<PAGE>
Documents and the South Point Ground Lease. The Owner Participant will execute
such agreements and documents as may be necessary with respect to any such
refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not result
     in a change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
     ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or

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<PAGE>
     the Owner Participant in accordance with the terms of the Facility Lease
     to which it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS; EXERCISE
     OF EXTENSION OF SOUTH POINT GROUND LEASE

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing, upon
     satisfaction of the conditions in paragraph (b) below, the Facility Lessee
     may assign the Facility Lease or any other Operative Document to which it
     is a party, or any interest therein to any Person, without the consent of
     the Owner Lessor, the Owner Participant, the Indenture Trustee or any
     other Transaction Party.

Assignment under Section 13.1(a) above by the Facility Lessee shall be
     permitted if (A) after giving effect to such assignment or assignments,
     either (x) Calpine owns, directly or indirectly, at least a majority of
     the Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in writing
     its obligations under the Calpine Guaranty or (y) Calpine's obligations
     under the Calpine Guaranty has been succeeded to in accordance with
     Section 8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

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<PAGE>
the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

               b)   the Facility Lessee shall have paid, at no after-tax cost to
                    such parties, all reasonable documented out-of-pocket
                    expenses (including reasonable attorneys' fees and
                    expenses) of the Owner Lessor, the Lessor Manager, the
                    Owner Participant, the Indenture Trustee, the Lease
                    Indenture Company and the Pass Through Trustees in
                    connection with such assignment;

               c)   the Facility Lessee shall have provided the Indenture
                    Trustee with (x) an indemnity against the risk that such
                    assignment will cause a Tax Event to occur to any direct
                    or indirect holder of any Lessor Note (including any
                    Certificateholder) or (y) an opinion of counsel to the
                    effect that such assignment will not cause a Tax Event
                    to occur to any direct holder of any Lessor Note and any
                    Certificateholder; and

               d)   the transfer shall not cause the Facility to cease
                    being treated as a "qualified Indian reservation or
                    property" within the meaning of Section 168(j)(4) of the
                    Code or cause the Facility to become "tax-exempt use
                    property within the meaning of Section 168(h) of the Code
                    (unless the Facility Lessee shall make a payment
                    contemporaneously with such transfer that in the reasonable

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<PAGE>
                    judgment of the Owner Participant compensates the Owner
                    Participant for the adverse tax consequences therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the South Point Ground Lease, except for obligations (including Section 9.1
and 9.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of the Operative Documents or which have otherwise accrued but
not been paid as of such date and (ii) the Owner Participant or the OP
Guarantor will transfer (by an appropriate instrument of transfer) the Member
Interest to the Facility Lessee (or its designee); provided, however, that if
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

     G.   Exercise of Extension of South Point Ground Lease. The rights of the
Owner Lessor delegated to the Facility Lessee, pursuant to Section 5.20(b)
hereof, and subject to the terms and conditions thereof, include the right to
negotiate and to exercise the Owner Lessor's

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<PAGE>
rights (to the extent of the Owner Lessor's Percentage) to extend the term of
the South Point Ground Lease in accordance with Section 4.2 thereof; provided,
however, that (i) such right may not be exercised by the Facility Lessee
during the occurrence and continuation of a Lease Event of Default and
following the commencement of the exercise of the Owner Lessor's remedies
under Section 17 of the Facility Lease, nor following the termination of the
Facility Lease pursuant to Section 17 thereof or the Facility Site Lease
pursuant to Article XVI thereof; provided further that the Facility Lessee
agrees that, except as otherwise provided in the third paragraph of this
Section 13.3, it shall not decline to exercise such right to extend, and shall
not cancel any such election of such right without the consent of the Owner
Lessor unless the Owner Participant has disapproved of the terms of the
extension pursuant to Section 5.20 hereof.

          Notwithstanding the foregoing, the Facility Lessee may elect to
extend the South Point Ground Lease pursuant to Section 4.2 thereof and
exercise the Owner Lessor's rights under such Section only if, concurrently
with such election, the Facility Lessee also elects to extend the South Point
Ground Lease with respect to the Other South Point Owner Lessors on the same
terms and conditions negotiated for the Owner Lessor giving effect to their
respective percentage interests in the South Point Ground Lease. Additionally,
the Owner Lessor shall not give the Facility Lessee consent to refrain from
exercising the extension of the South Point Ground Lease or to cancel any such
extension, unless concurrently with such consent, the Other South Point Owner
Lessors also give such consent to the Facility Lessee with respect to the
respective interests of the Other Owner Lessors in the South Point Ground Lease.

          Notwithstanding any provision to the contrary in this Agreement or
in any other Operative Document, the Facility Lessee shall have no obligation
to exercise the lease extension right as provided in Section 4.2 of the South
Point Ground Lease, as amended, if the Facility Lessee shall disagree with the
amount of the Annual Renewal Amount (as defined in the South Point Ground
Lease) as determined pursuant to the terms of Section 4.2 of the South Point
Ground Lease, as amended. If the Facility Lessee shall so disagree with such
determination of the amount of the Annual Renewal Amount, then the Facility
Lessee shall have the right, in its sole discretion and without consent from
any of the Owner Lessor, Owner Participant or Indenture Trustee or any other
Person, to reject, and not accept and exercise, the lease extension right
contained in Section 4.2 of the South Point Ground Lease, and, in connection
therewith, to permit the Facility Lease and the Facility Site Lease to
terminate after expiration of the then current lease term of each thereof;
provided that nothing in this third paragraph of Section 13.3 shall, or shall
be deemed to, limit or affect the right of the Owner Lessor to extend the term
of the South Point Ground Lease by exercising, for and on its own behalf, the
lease extension right for the amount of the Annual Renewal Amount so
determined, or as otherwise may be determined in subsequent negotiations by the
Owner Lessor, it being understood that (A) unless otherwise agreed by the Owner
Lessor, the Facility Lessee's rejection and non-acceptance referred to above
shall be irrevocable and (B) neither the Facility Lessee nor any Calpine Party
shall have any right, title or interest in, or (except as otherwise provided in
Section 14.6) obligation or liability under or in connection with, the South
Point Ground Lease in respect of any period commencing on or after the later of
the termination of the Facility Lease and the termination of the Facility Site
Lease as aforesaid.

                                       72
<PAGE>
MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document or
the South Point Ground Lease.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          South Point Energy Center, LLC

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<PAGE>
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention: Senior Counsel
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5(th) Floor
               San Jose, California 95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California 95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-3, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

                                       74
<PAGE>
          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York 10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

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<PAGE>
          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

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<PAGE>
          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto. In
          addition, the Facility Lessee shall (unless otherwise directed by
          the applicable Rating Agency) provide to each Rating Agency a copy
          of any information, report or notice it gives to the Indenture
          Trustee hereunder or any other Operative Documents.

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<PAGE>
Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the South Point Ground Lease regardless of any
investigation made by any such party or on behalf of any such party. In
addition, the indemnifications by the Facility Lessee under Sections 9.1 and
9.2 of this Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the
Facility Site Lease and the Calpine Guaranty, shall expressly survive the
expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition of the respective interests
of the Owner Participant, the Owner Lessor, the Lessor Manager, the Lease
Indenture Company, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders in, to and under this Agreement, the Assignment Agreement
and the other Operative Documents and the South Point Ground Lease. Except as
expressly provided above or in Section 22.3 of the Facility Lease, the Tax
Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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<PAGE>
Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the South Point Ground Lease, as to
     all of which the other parties hereto agree to look solely to the
     Indenture Estate and the Lessor Estate, respectively; provided, however,
     that the Lease Indenture Company and the Pass Through Trust Company shall
     be liable hereunder for their own negligence or willful misconduct or for
     a breach of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                       79
<PAGE>
     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in their sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and to
     the nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the South Point Ground Lease (except as otherwise provided
     therein) or the subject matter hereof or thereof or any of the
     transactions contemplated hereby or thereby brought by any of the parties
     hereto or their successors or assigns; (ii) hereby irrevocably agrees that
     all claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is not
     personally subject to the jurisdiction of the above-named courts, that the
     suit, action or proceeding is brought in an inconvenient forum, that the
     venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                       80
<PAGE>
By the execution and delivery of this Agreement, the Facility Lessee
     designates, appoints and empowers National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents or with respect to the Facility Lessee, for
     so long as it has any obligations remaining under the South Point Ground
     Lease. The Facility Lessee shall grant an irrevocable power of attorney to
     CT Corporation System, in respect of such appointment and shall maintain
     such power of attorney in full force and effect for so long as any
     obligation of the Facility Lessee shall remain outstanding hereunder or
     under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                       81
<PAGE>
the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     14.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

                                       82
<PAGE>
          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

     H.   South Point Ground Lease

     The parties hereto acknowledge and agree that, in accordance with Section
7.2 of the Facility Lease, the Facility Lease is subject and subordinate to all
the terms and conditions of the South Point Ground Lease.

                                       83
<PAGE>
          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                                 SOUTH POINT ENERGY CENTER, LLC,
                                 a Delaware limited liability company

                                        By: _______________________________
                                        Name:
                                        Title:
                                        Date:
<PAGE>
                                 SOUTH POINT OL-3, LLC, a Delaware
                                 limited liability company

                                 By: WELLS FARGO BANK NORTHWEST,
                                 NATIONAL ASSOCIATION
                                 not in its individual capacity but
                                 solely as Lessor Manager


                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:


                                 SBR OP-3, LLC, a Delaware limited
                                 liability company

                                 By: WELLS FARGO BANK NORTHWEST,
                                 NATIONAL ASSOCIATION
                                 not in its individual capacity but
                                 solely as Lessor Manager


                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:


                                 WELLS FARGO BANK NORTHWEST,
                                 NATIONAL ASSOCIATION,
                                 not in its individual capacity, except as
                                 expressly provided herein, but solely as
                                 Lessor Manager

                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:
<PAGE>
                                 STATE STREET BANK AND TRUST COMPANY
                                 OF CONNECTICUT, NATIONAL ASSOCIATION,
                        not in its individual capacity, except to the
                        extent expressly provided herein, but solely
                        as Indenture Trustee under the
                        Collateral Trust Indenture

                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:

                                 STATE STREET BANK AND TRUST COMPANY
                                 OF CONNECTICUT, NATIONAL ASSOCIATION,
                        not in its individual capacity, except to the
                        extent expressly provided herein, but solely
                        as Pass Through Trustees under the Pass
                        Through Trust Agreement


                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:
<PAGE>
                                 CALPINE CORPORATION,
                                 a Delaware corporation
                                 By: ________________________________________
                                 Name:
                                 Title:
                                 Date:
<PAGE>
  APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION RULES OF INTERPRETATION


          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but in
     another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect of
     an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in any
     such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other section,
     paragraph or other part substituted therefor from time to time;
<PAGE>
     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or words
     of similar import shall, whether or not so expressly stated, be deemed to
     be a reference to the satisfaction, release and discharge in full and
     cancellation of the Lien of the Collateral Trust Indenture or the
     Collateral Documents, as the case may be, in accordance with the express
     provisions thereof.

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and other
     words of similar import shall, unless the context requires otherwise,
     refer to the whole of the applicable document and not to any particular
     article, section, subsection, paragraph or clause thereof; and

     (o)   a reference to "including" shall mean including without limiting the
     generality of any description preceding such term, and for purposes hereof
     and of each Operative Document the rule of ejusdem generis shall not be
     applicable to limit a general statement, followed by or referable to an
     enumeration of specific matters, to matters similar to those specifically
     mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured debt
     of which is rated at least A by

                                       2
<PAGE>
     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or other
     employee whose responsibilities include the administration of the Overall
     Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to finance
     all or a portion of the Owner Lessor's Percentage of the cost of any
     Required or Non-Severable Improvement financed pursuant to Section 11.1 of
     the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12 of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially owning
     or holding, directly or indirectly, 10% or more of any class of voting or
     equity interest of such first Person or any corporation of which such
     first Person beneficially owns or holds, in the aggregate, directly or
     indirectly, 10% or more of any class of voting or equity interest. For
     purposes of this definition, "control" when used with respect to any
     particular Person shall mean the power to direct the management and
     policies of such Person, directly or indirectly, whether through the
     ownership of voting securities, by contract or otherwise, and the terms
     "controlling" and "controlled" have meanings correlative to the foregoing;
     provided, however, that under no circumstances shall the Lease Indenture
     Company be considered to be an Affiliate of either the Indenture Trustee
     or any Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease Indenture
     Company, nor shall the Lease Indenture Company, the Indenture Trustee,
     solely because any Operative Document contemplates that any of them may
     request or act at the instruction of any such Person or such Person's
     Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is received
     or properly accrued, and

                                       3
<PAGE>
     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use the
     Facility, the Undivided Interest (if any), the Ground Interest or Facility
     Site as contemplated by the Operative Documents and the South Point Ground
     Lease, to sell electricity therefrom, to enter into any Operative Document
     or to consummate any transaction contemplated thereby, or (b) that is
     necessary so that none of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of the
     Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten (10)
     Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal. If
     either the Owner Participant or the Facility Lessee does not appoint its
     appraiser within such ten Business Day period, the determination of the
     other appraiser shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. If the appraisers appointed by the Owner
     Participant and the Facility Lessee are unable to agree upon the value,
     period, amount or other determination in question within thirty (30) days,
     such appraisers shall jointly appoint a third Independent Appraiser or, if

                                       4
<PAGE>
     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (SP-3) dated
     as of the Closing Date between CCFC and the Owner Lessor, substantially in
     the form of Exhibit B to the Participation Agreement duly completed,
     executed and delivered on the Closing Date pursuant to which the Owner
     Lessor will acquire the Undivided Interest and the Ground Interest from
     CCFC.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $17,187,500.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate of
     interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee for
     rental payments during the remaining term of the lease included in such
     Sale/Leaseback Transaction (including any period for which such lease has
     been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
     the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U. S.C. [sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of the
     Facility Lease.

                                       5
<PAGE>
     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" OR "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interests to Broad River
     Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interest to the Broad River
     Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                       6
<PAGE>
     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad River
     OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and the
     Broad River Ground Interests to the Broad River Owner Lessors, and the
     simultaneous lease of the Broad River Undivided Interests and Broad River
     Ground Interests to the Broad River Facility Lessee on substantially the
     same terms and conditions as under, and dated the same date as, the Broad
     River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee, the
     Pass Through Trustees and Calpine and designated Participation Agreement
     (BR-1), Participation Agreement (BR-2), Participation Agreement (BR-3) and
     Participation Agreement (BR-4), each dated as of the Closing Date,
     pursuant to which, among other things, the Broad River Facility Lessee has
     agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the Broad River Facility,
     and (b) lease from the applicable Broad River Owner Lessors such undivided
     leasehold interest in the Broad River Facility pursuant to the Broad River
     Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                       7
<PAGE>
     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required by
     law, regulation or executive order to be closed in New York, New York, the
     city and the state in which the Corporate Trust Office of the Indenture
     Trustee is located or the city and state in which the Pass Through
     Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment Agreement
     (SP-3) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, CCFC, the Facility Lessee, and each
     other Affiliate of Calpine that is party to any Operative Document.

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

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

     "CCFC" shall mean Calpine Construction Finance Company, L.P., a Delaware
     limited partnership.

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of
Certificates, and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any

                                       8
<PAGE>
     certificates issued in replacement therefor pursuant to Section 3.3, 3.4
     or 3.5 of the Pass Through Trust Agreement.

     "CES" shall mean Calpine Energy Services L.P., a Delaware limited
     partnership.

     "CLAIM(S)" individually or collectively as the context may require, shall
     mean any liability (including in respect of negligence (whether passive or
     active or other torts), strict or absolute liability in tort or otherwise,
     warranty, latent or other defects (regardless of whether or not
     discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges, of
     whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Deed of
     Trust, Assignment of Rent and Leases, Security Agreement and Financing
     Statement (SP-3), dated as of the Closing Date, between the Owner Lessor
     and the Indenture Trustee, in substantially the form of Exhibit I to the
     Participation Agreement.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature that
     may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                       9
<PAGE>
     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a Consolidated
     balance sheet of the Guarantor and its Subsidiaries, determined in
     accordance with GAAP, and after giving effect to purchase accounting and
     after deducting therefrom, to the extent otherwise included, the amounts
     of: (i) Consolidated Current Liabilities; (ii) minority interests in
     consolidated Restricted Subsidiaries held by Persons other than the
     Guarantor or a Restricted Subsidiary; (iii) excess of cost over fair value
     of assets of businesses acquired, as determined in good faith by the Board
     of Directors; (iv) any revaluation or other write-up in value of assets
     subsequent to December 31, 1993 as a result of a change in the method of
     valuation in accordance with GAAP; (v) unamortized debt discount and
     expenses and other unamortized deferred charges, goodwill, patents,
     trademarks, service marks, trade names, copyrights, licenses, organization
     or developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous fund
     established for the purpose of redemption or other retirement of Capital
     Stock to the extent such obligation is not reflected in Consolidated
     Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule 2
     of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                       10
<PAGE>
     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time or
     both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section 1(a)
     of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "EASEMENT" shall mean the easement defined in the recitals to the
     Facility Site Lease.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the report
     of the Engineering Consultant, dated October 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether civil
     or criminal, arising under a theory of negligence or strict liability, or
     otherwise) under any Environmental Law, (iii) create or constitute a
     public or private nuisance or trespass, or (iv) constitute a violation of
     or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Applied EnviroSolutions, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                       11
<PAGE>
     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment dated October 12, 2001 prepared by the Environmental Consultant
     for Calpine Corporation.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the Termination Value set forth opposite the Termination
Date corresponding to such date of determination on Schedule 2 of the Facility
Lease, and, if such date of determination is a Rent Payment Date, Periodic Rent
due on that date (to the extent payable in arrears) over (ii) the balance,
including scheduled (in accordance with the payment terms of the Lessor Notes)
accrued interest, on the Lessor Notes scheduled (in accordance with the payment
terms of the Lessor Notes) to be outstanding on such date of determination
corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee being
     or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders the
     Facility permanently unfit for normal use or which does not satisfy the
     preconditions for repair of the Facility set forth in Section 10 of the
     Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor
     of the Undivided Interest or the Ground Interest, following exhaustion of
     all permitted appeals or an election by the Facility Lessee in its
     discretion not to pursue such appeals or rights; provided that no such
     contest (or exercise) shall

                                       12
<PAGE>
     extend beyond the earlier of the date which is (x) six months after the
     loss of such title, or (y) 48 months prior to the end of the Basic Lease
     Term or any Renewal Lease Term then in effect or elected by the Facility
     Lessee or (b) Requisition of use of, or leasehold in, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall
     have resulted in the loss of possession of the Undivided Interest or all
     or any part of the Ground Interest that is required for the use or
     operation of the Facility; provided that in any case involving
     Requisition of use of the Facility, or all or any part of the Facility
     Site that is required for the use or operation, of the Facility, but not
     of the Owner Lessor's Undivided Interest or the Ground Interest, such
     event shall be an Event of Loss only if loss of possession continues
     beyond the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below, subjection
     of the Owner Participant or the Owner Lessor to any public utility
     regulation of any Governmental Entity or law which in the reasonable
     opinion of the Owner Participant is burdensome, or the subjection of the
     Owner Participant's or the Owner Lessor's interest in the Facility Lease
     to any rate of return regulation by any Governmental Entity, in either
     case by reason of the participation of the Owner Lessor, the Owner
     Participant or the OP Guarantor in the transactions contemplated by the
     Operative Documents and the South Point Ground Lease and not, in any
     event, as a result of (a) investments, loans or other business activities
     of the Owner Participant or any of its Affiliates in respect of equipment
     or facilities similar in nature to the Facility or any part thereof or in
     any other electrical, cogeneration or other energy or utility related
     equipment or facilities or the general business or other activities of the
     Owner Participant or any of its Affiliates or the nature of any of the
     properties or assets from time to time owned, leased, operated, managed or
     otherwise used or made available for use by the Owner Participant or any
     of its Affiliates or (b) a failure of the Owner Participant to perform
     routine, administrative or ministerial actions the performance of which
     would not subject the Owner Participant or any of its Affiliates to any
     material adverse consequence (in the reasonable opinion of such Owner
     Participant acting in good faith); provided that the Facility Lessee and
     the Owner Lessor and Owner Participant agree to cooperate and to take
     reasonable measures to alleviate the source or consequence of any
     regulation constituting an Event of Loss under this paragraph (iv), so
     long as there shall be no adverse consequences to the Owner Lessor or
     Owner Participant as a result of such cooperation or the taking of
     reasonable measures (the events and circumstances described herein this
     paragraph (iv), a "Regulatory Event of Loss"); or

          (v)   if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Orders shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

                                       13
<PAGE>
          (vi)   the South Point Ground Lease shall have been cancelled or
     terminated or shall otherwise cease to be in full force and effect other
     than by reason of events constituting a Lease Event of Default under
     Section 16(m) of the Facility Lease; or

          (vii)   if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (ii) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor, it being acknowledged and agreed
     that for purposes of this clause (vii), in determining if a material
     adverse effect would reasonably be expected to occur, (x) the fact of
     Calpine's obligations under the Calpine Guaranty shall be taken into
     account, and (y) no such material adverse effect shall be found to be
     reasonably expected to occur if (1) an adverse determination in any such
     pending proceeding would be reasonably likely to result in a FERC order
     accepting Lessee's rate schedule, as amended, or establishing a just and
     reasonable rate, that in either case is sufficient to allow the Facility
     Lessee to satisfy its obligations to pay Periodic Rent under the Facility
     Lease, and (2) no material adverse effect would be reasonably likely to
     occur as a result of any other aspect of such FERC proceeding.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or exercise
     its rights of eminent domain, and (C) the date which is 48 months prior to
     the end of the Basic Lease Term or any Renewal Lease Term then in effect
     or elected by the Facility Lessee (if an event described in clause
     (iii)(a) shall be continuing at such time). The date of occurrence of an
     Event of Loss described in clause (iii)(b) above shall be the date of
     requisition of title to the Facility Site or, in the case of a requisition
     of use of the Facility Site, the date which is the scheduled expiration
     date of the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee, as the case may be (if an event described
     in clause (iii)(b) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iv) above shall be the
     date on which the Facility Lessee receives the Owner Participant's
     election made in accordance with such clause (iv) during any period when
     an event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause (v)
     above shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (v). The date
     of occurrence of an Event of Loss in clause

                                       14
<PAGE>
     (vi) above shall be ten (10) Business Days after any such cancellation,
     termination or failure to be in full force and effect as contemplated
     therein. The date of occurrence of an Event of Loss in clause (vii)
     above shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (vii).

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable by
     the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the South Point Ground Lease,
     (ii)(A) insurance proceeds, if any, payable to the Owner Lessor or the
     Owner Participant under insurance separately maintained by the Owner
     Lessor or the Owner Participant with respect to the Facility as permitted
     by Section 3(b) of Schedule 5.31 to the Participation Agreement or (B)
     proceeds of personal injury or property damage liability insurance
     maintained under any Operative Document or the South Point Ground Lease
     for the benefit of the Owner Lessor or the Owner Participant, (iii) any
     amount payable to the Owner Participant as the purchase price of the Owner
     Participant's right and interest in the Member Interest, (iv) all other
     fees expressly payable to the Owner Participant under the Operative
     Documents, (v) any payments in respect of interest, or any payments made
     on an After-Tax Basis, to the extent attributable to payments referred to
     in clause (i) through (vi) above; (vii) any amounts paid to the Owner
     Lessor as reimbursement for amounts expended pursuant to Section 20 of the
     Facility Lease; (viii) proceeds of the items referred to in clause (i)
     through (vii) above; and (ix) any rights to demand, collect, sue for, or
     otherwise receive and enforce payment of the foregoing amounts, including
     under the Calpine Guaranty, but without limiting clause (v) of this
     definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 530 MW nameplate capacity gas-fired combined
     cycle merchant power plant located near Bullhead, Arizona and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

                                       15
<PAGE>
     "FACILITY LEASE" shall mean, the Facility Lease Agreement (SP-3), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all Renewal
     Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (SP-3), dated as
     of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean South Point Energy Center, LLC.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean Owner Lessor.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion to
     lease or purchase and an informed and willing lessor or seller or supplier
     under no compulsion to lease or sell or supply the property or service in
     question, and shall, in the case of the Undivided Interest or the Owner
     Lessor's Interest, be determined (except pursuant to Section 17 of the
     Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with in
     all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the South Point Ground Lease and the obligations relating
     thereto, (iii) the Undivided Interest or the Owner Lessor's Interest, as
     the case may be, is free and clear of all Liens (other than Owner Lessor's
     Liens, Owner Participant's Liens and Indenture Trustee Liens), (iv) taking
     into account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents and the South Point
     Ground Lease. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner Lessor
     pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all

                                       16
<PAGE>
     faults" basis and shall take into account all Liens (other than Owner
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee Liens);
     provided, however, in any such case where the Owner Lessor shall be unable
     to obtain constructive possession sufficient to realize the economic
     benefit of the Owner Lessor's Interest, Fair Market Sales Value of the
     Owner Lessor's Interest shall be deemed equal to $0 (zero). If in any case
     other than in the preceding sentence the parties are unable to agree upon
     a Fair Market Sales Value of the Owner Lessor's Interest within 30 days
     after a request therefor has been made, the Fair Market Sales Value of the
     Owner Lessor's Interest shall be determined by appraisal pursuant to the
     Appraisal Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)   a determination by FERC of EWG status of (a) the Facility
     Lessee and (b) the Owner Lessor for the benefit of the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell power at
     market-based rates under Section 205 of the FPA effective on or before
     the Closing Date;

          (iii)   either an approval by FERC of the issuance of securities and
     the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)   an approval from FERC under Section 203 of the Federal Power
     Act for the transfer of jurisidictional facilities, including the Power
     Marketing Agreement between CCFC and CES from CCFC to CES under Section
     203 of the Federal Power Act in the sale/leaseback contemplated by the
     Operative Documents.

     "FERC OWNER LESSOR EWG ORDERS" shall mean the order issued by the FERC
     determining that the Owner Lessor is an EWG.

                                       17
<PAGE>
     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(a) of the Facility Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the Ground
     Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND LEASE" shall have the meaning set forth in recital A of the
     Facility Site Lease.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance in
     any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or Optional
     Improvements, but do not include Components.

                                       18
<PAGE>
     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests of
     such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under "swaps",
     "caps", "floors", "collars", or other interest rate hedging contracts or
     similar arrangements, (ix) all Indebtedness of any other Person of the
     type referred to in clauses (i) through (viii), guaranteed by such Person
     or for which such Person shall otherwise (including pursuant to any
     keepwell, makewell or similar arrangement) become directly or indirectly
     liable, and (x) all Indebtedness of the type referred to in clauses (i)
     through (ix) above secured by (or for which the holder of such
     Indebtedness has an existing right, contingent or otherwise, to be secured
     by) any Lien on property (including accounts and contracts rights) owned
     by such Person, even though such Person has not assumed or become liable
     for the payment of such Indebtedness, the amount of such obligation being
     deemed to be the lesser of the value of such property or the amount of the
     obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

                                       19
<PAGE>
     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the Participation
     Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease or the transactions contemplated thereby, (ii)
     Claims against or any act or omission of the Lease Indenture Company or
     the Indenture Trustee, or Affiliate thereof that is not related to, or
     that is in violation of, any of such Person's representations, warranties,
     covenants or agreements in an Operative Document or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Lease Indenture Company or the Indenture Trustee specified therein,
     (iii) Taxes imposed upon the Lease Indenture Company or the Indenture
     Trustee, or any Affiliate thereof that are not indemnified against by the
     Facility Lessee pursuant to any Operative Document or (iv) Claims against
     or affecting the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof arising out of the voluntary or involuntary transfer by
     the Lease Indenture Company or the Indenture Trustee of any portion of the
     interest of the Lease Indenture Company or the Indenture Trustee in the
     Lessor Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

                                       20
<PAGE>
     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Summit Global Partners Insurance
     Services.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under the
     Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such

                                       21
<PAGE>
     transaction is considered borrowed money indebtedness of the lessee for
     tax purposes but is classified as an operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents and the South Point Ground Lease,
     including all funds advanced to the Owner Lessor by the Owner Participant,
     all installments and other payments of Periodic Rent, Supplemental Rent or
     Termination Value under the Facility Lease, condemnation awards, purchase
     price, sale proceeds, insurance proceeds and all other proceeds, rights
     and interests of any kind for or with respect to the estate, right, title
     and interest of the Owner Lessor in, to and under the Undivided Interest,
     the Ground Interest and the Operative Documents and the South Point Ground
     Lease and any of the foregoing, but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the provisions
     of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title retention
     arrangement.

                                       22
<PAGE>
     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of this
     definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations, assets,
     financial position, results of operation or business of the Guarantor,
     including a material adverse effect on (i) the Facility, the Undivided
     Interest, the Facility Site or the Ground Interest which adversely affects
     the ability of the Guarantor to perform its obligations under the
     Operative Documents or (ii) the validity or enforceability of the
     Operative Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement), (b)
     the Indenture Estate or the Lessor Estate, the security interests in the
     Lessor Estate, or (c) with respect to the Owner Participant's (but not the
     Certificateholders') interest in the Undivided Interest, the residual
     value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

                                       23
<PAGE>
     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (SP-3), dated as of the Closing Date, between the Owner Lessor,
     as landlord, and the Facility Lessee, as tenant, and filed with the
     Recorder of Mohave County, Arizona and the Tribal Recorder of the Tribe.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (SP-3),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Recorder of Mohave County, Arizona and the Tribal
     Recorder of the Tribe.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any Person
     authorized by or pursuant to the organizational documents, the by-laws or
     any resolution of the Board of Directors or Executive Committee of such
     Person (whether general or specific) to execute, deliver and take actions
     on behalf of such Person in respect of any of the Operative Documents,
     (ii) in the case of a partnership, by the Chairman of the Board of
     Directors, the President or any Vice President, the Treasurer or an
     Assistant Treasurer of a corporate general partner and (iii) in the case
     of an Indenture Trustee, a certificate signed by a Responsible Officer of
     such Indenture Trustee.

                                       24
<PAGE>
     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an OP
     Guarantor in form and substance substantially in the form of Exhibit G to
     the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Calpine Guaranty, the OP Parent Guaranty (if any), the Certificate
     Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine or any replacement Operator appointed
     pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at Closing,
     and as to all other matters, Thelen Reid & Priest LLP and/or Davis Wright
     & Tremaine LLP, or any other outside legal counsel reasonably acceptable
     to the Owner Participant, (ii) in form and substance (with respect to
     qualifications, exception, assumption and the like) substantially
     equivalent to the legal opinions delivered at Closing, with any material
     modification or supplements thereto to be reasonably acceptable to the
     Owner Participant, or in any such other form as may be reasonably
     acceptable to the Owner Participant, and (iii) the scope of which shall
     cover due authorization, execution, delivery and enforceability of the
     applicable agreement(s), and exemption from regulation, in each case,
     substantially in the form set forth in the opinions delivered at Closing
     with any material modifications thereto to be reasonably acceptable to the
     Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

                                       25
<PAGE>
     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other South Point
     Calpine Guaranties, the Broad River Calpine Guaranties and the RockGen
     Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other South Point
     Facility Leases, the Broad River Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other South Point
     Owner Lessors, the Broad River Owner Lessors and the RockGen Owner Lessors.

     "OTHER SOUTH POINT ASSIGNMENT AGREEMENTS " shall mean each of the
     assignment agreements executed and delivered pursuant to the Other South
     Point Participation Agreements.

     "OTHER SOUTH POINT CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine pursuant
     to the Other South Point Participation Agreements.

     "OTHER SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     South Point Participation Agreements.

     "OTHER SOUTH POINT FACILITY LEASES" shall mean the other South Point
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other South Point Owner Lessors and the Facility Lessee, pursuant to
     which the Other South Point Owner Lessors will lease the Other South Point
     Undivided Interests to the Facility Lessee.

     "OTHER SOUTH POINT FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other South
     Point Owner Lessors and the Facility Lessee pursuant to which the Other
     South Point Owner Lessors will lease the Other South Point Ground
     Interests to the Facility Lessee.

     "OTHER SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other South Point Collateral Trust Indentures.

                                       26
<PAGE>
     "OTHER SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other South Point Undivided
     Interests and the Other South Point Ground Interests to the Other South
     Point Owner Lessors, and the lease of the Other South Point Undivided
     Interests and the Other South Point Ground Interest to the Facility Lessee
     on substantially the same terms and conditions as under, and dated the
     same date as, the Overall Transaction.

     "OTHER SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other South Point Owner Lessors pursuant
     to the Other South Point Operative Documents.

     "OTHER SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South
     Point OL-2, LLC and South Point OL-4, LLC.

     "OTHER SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR
     OP-2, LLC and SBR OP-4, LLC.

     "OTHER SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other South Point Lease Transactions.

     "OTHER SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other South Point
     Owner Lessor, the Other South Point Lessor Manager, Other South Point
     Owner Participant, Other South Point Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (SP-1),
     Participation Agreement (SP-2) and Participation Agreement (SP-4), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) cause CCFC to assign and transfer to the
     applicable Other South Point Owner Lessors certain undivided leasehold
     interests in the Facility and the Facility Site, and (b) lease from the
     applicable Other South Point Owner Lessors such undivided leasehold
     interest in the Facility and the Facility Site pursuant to the Other South
     Point Facility Leases.

     "OTHER SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest in the Facility not conveyed to the Owner Lessor under
     the Assignment Agreement.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the South Point Ground Lease (giving effect to
     its assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean South Point OL-3, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

                                       27
<PAGE>
     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: South Point OL-3, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Site or
     the Easement, or any part of any thereof or interest therein arising as a
     result of (i) Taxes against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease (giving effect to its assignment to the Owner
     Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate thereof
     that is not related to, or that is in violation of, any Operative Document
     or the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Owner Lessor, the Trust Company or the Lessor Manager specified
     therein, (iii) Taxes imposed upon the Owner Lessor, the Trust Company or
     the Lessor Manager or any Affiliate thereof that are not indemnified
     against by the Facility Lessee pursuant to any Operative Document or (iv)
     Claims against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof arising out of the voluntary or
     involuntary transfer by the Owner Lessor, the Trust Company or the Lessor
     Manager of any portion of the interest of the Owner Lessor in the Owner
     Lessor's Interest, other than pursuant to the Operative Documents and the
     South Point Ground Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-3, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility Site
     or the Easement, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document or the South Point Ground Lease or the transactions
     contemplated

                                       28
<PAGE>
     thereby or that is in breach of any covenant or agreement of the Owner
     Participant set forth therein, (ii) Taxes against the Owner Participant
     that are not indemnified against by the Facility Lessee pursuant to the
     Operative Documents or (iii) Claims against or affecting the Owner
     Participant arising out of the voluntary or involuntary transfer by the
     Owner Participant of any portion of the interest of the Owner Participant
     in the Member Interest, other than any transfer (x) pursuant to the
     exercise of any of the Facility Lessee's (or any Affiliate thereof)
     rights under the Operative Documents or (y) during the continuance of a
     Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to the
     multiple investment sinking fund method of analysis, and (ii) periodic
     GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other South Point Owner Lessors.
     "Ownership Interest" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass Through
     Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

                                       29
<PAGE>
     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the South Point Ground Lease,
     as well as the rights of sublessees and/or assignees to the extent set
     forth in or expressly permitted pursuant to the Facility Lease or any
     other Operative Document, (b) as to the Facility Lessee, Owner

                                       30
<PAGE>
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee's Liens,
     (c) Liens for any tax, assessment or other governmental charge, either
     secured by a bond reasonably acceptable to the Indenture Trustee and the
     Pass Through Trustees and, so long as no Lease Indenture Event of Default
     which is not a Lease Event of Default exists, the Owner Lessor, or not yet
     due or being contested in good faith and by appropriate proceedings, so
     long as (i) such proceedings shall not reasonably be expected to give rise
     to criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so long
     as an appeal or proceeding for review is being prosecuted in good faith
     and so long as (i) such proceedings shall not reasonably be expected to
     give rise to criminal liability or material civil liability on the part of
     the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, and (ii) adequate reserves consistent with GAAP
     requirements have been established and are maintained, so as to ensure
     that any amounts determined to be due will be promptly paid in full when
     such contest is determined, or are fully covered by insurance, (f) mineral
     rights the use and enjoyment of which do not materially interfere with the
     use and enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any

                                       31
<PAGE>
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, (k) the interests of the Other Owner Lessors
     and the Other Indenture Trustees in the Facility, the Facility Site and
     the Ownership and Operation Agreement, (l) the interests of the Facility
     Lessee, the Other Owner Participants, the Other Owner Lessors, the Other
     Lessor Managers, the Other Indenture Trustees, and Pass Through Trustees
     under any of the Other Operative Documents, (m) the Ownership and
     Operation Agreement, (n) the interest of the co-owners of the Facility as
     tenants in common in the Facility and the rights of such owners under the
     Ownership and Operation Agreement and (o) any rights of the Tribe with
     respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

     "POWER MARKETING AGREEMENT" shall mean the Power Marketing Agreement,
     dated as of October 20, 1999, by and between CES (as successor by merger
     to Calpine Power Services Company) and CCFC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that

                                       32
<PAGE>
     has been included in the issuance or amendment of a proposed Treasury
     Regulation, (c) that is part of a bill that has been introduced into the
     House of Representatives or the Senate and which has been publicly
     endorsed by the Executive Branch or the Department of Treasury, or (d)
     with respect to which a notice of a specific proposed change in
     administrative guidance has been issued by the Internal Revenue Service
     or the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary

                                       33
<PAGE>
     and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
     of another Restricted Subsidiary) including Indebtedness that refinances
     Refinancing Indebtedness; provided, however, that (i) if the Indebtedness
     being refinanced is contractually subordinated in right of payment to the
     Obligations, the Refinancing Indebtedness shall be contractually
     subordinated in right of payment to such Obligations to at least the same
     extent as the Indebtedness being refinanced, (ii) the Refinancing
     Indebtedness is scheduled to mature either (a) no earlier than the
     Indebtedness being refinanced or (b) after the Stated Maturity of the
     Obligations, (iii) the Refinancing Indebtedness has an Average Life at the
     time such Refinancing Indebtedness is Incurred that is equal to or greater
     than the Average Life of the Indebtedness being refinanced and (iv) such
     Refinancing Indebtedness is in an aggregate principal amount (or if issued
     with original issue discount, an aggregate issue price) that is equal to
     or less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                       34
<PAGE>
     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2037) and October 18, 2037.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases thereafter (except for the last
     Rent Payment Period which period shall commence on May 31, 2037 and end
     on, and include, October 18, 2001), each six-month period commencing on
     each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

                                       35
<PAGE>
     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests
     in the RockGen Facility Site conveyed to the RockGen Owner Lessors under
     the RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting
     on behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground

                                       36
<PAGE>
     Interest to the RockGen Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the RockGen Overall
     Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen Owner Lessors certain
     undivided interests in the RockGen Facility, and (b) lease from the
     applicable RockGen Owner Lessors such undivided interest in the RockGen
     Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the RockGen Facility conveyed to the RockGen Owner Lessors
     under the RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

                                       37
<PAGE>
     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other South Point Facility Lease.

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

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT" shall mean South Point Energy Center, LLC.

     "SOUTH POINT ENERGY" shall have the meaning set forth in the first
     paragraph of the Facility Site Lease.

     "SOUTH POINT GROUND LEASE" shall mean the Amended and Restated Ground
     Lease Agreement dated as of August 4, 1999 and approved by the Bureau of
     Indian Affairs on August 19, 1999, as amended by Lease Modification No. 1
     executed by the Tribe as of May 3, 2001, and Lease Modification No. 2
     executed by the Tribe as of October 11, 2001, by and between the Tribe and
     CCFC (as successor in interest to Calpine South Point, LLC).

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

                                       38
<PAGE>
     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of the
     Facility Site, to be dated July 24, 2001 which inter alia, will show the
     location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, transaction
     privilege taxes, use taxes, stamp taxes, value-added taxes, excise taxes,
     ad valorem taxes and property taxes (personal and real, tangible and
     intangible)), licenses, exports, duties, recording charges, levies,
     assessments, withholdings , fees, assessments and other charges and
     impositions of any nature, plus all related interest, penalties, fines and
     additions to tax, now or hereafter imposed by any federal, state, local or
     foreign government, the Tribe or other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

                                       39
<PAGE>
     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (SP-3),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TERM" with respect to the Facility Site Lease, shall have the meaning
     set forth in Section 2.1(b) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean the Consent Letter from the Tribe with
     respect to the Amended and Restated Ground Lease Agreement executed on or
     about August 4, 1999 between the Tribe, CCFC (as successor in interest to
     CPN South Point LLC, under that certain Assignment and Assumption
     Agreement of Amended and Restated Ground Lease Agreement by and between
     CPN South Point LLC as assignor and CCFC as assignee) (as amended by Lease
     Modification No. 1 dated May 3, 2001 between the Tribe and CCFC), the form
     of which is attached hereto as Exhibit M.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

                                       40
<PAGE>
     "TITLE POLICY" shall mean, the title insurance policy (#291-000-164004)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)   the reasonable costs of reproducing and printing the Operative
     Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement) and
     all costs and fees, including but not limited to filing and recording fees
     and recording, transfer, mortgage, intangible and similar taxes in
     connection with the execution, delivery, filing and recording of the
     Facility Lease, the Facility Site Lease, and any other Operative Document
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and any other document
     required to be filed or recorded pursuant to the provisions hereof or of
     any other Operative Document and the South Point Ground Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)   the reasonable fees and expenses of Dewey Ballantine LLP,
     counsel to the Owner Participant and the Owner Lessor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of (a) Holland & Hart LLP Tribal
     counsel to the Facility Lessee, the Owner Lessor, the Owner Participant
     and the Initial Purchasers and (b) Fennemore Craig, Arizona counsel to the
     Facility Lessee, the Owner Lessor, the Owner Participant and the Initial
     Purchasers;

     (iv)   the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)   the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)   the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the South Point Ground Lease;

                                       41
<PAGE>
     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)   the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)   the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)   the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)   the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

                                       42
<PAGE>
     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the South Point Ground Lease
     pursuant to the Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRIBE" shall mean the Fort Mojave Indian Tribe of the Fort Mojave Indian
     Reservation, a federally recognized Indian Tribe.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     leasehold interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

                                       43
<PAGE>
     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.6
<SEQUENCE>9
<FILENAME>f80168ex4-22_6.txt
<DESCRIPTION>EXHIBIT 4.22.6
<TEXT>
<PAGE>
                                                                  EXHIBIT 4.22.6


                                                                  EXECUTION COPY


                         PARTICIPATION AGREEMENT (SP-4)

                          Dated as of October 18, 2001

                                      among

               SOUTH POINT ENERGY CENTER, LLC, as Facility Lessee,

                     SOUTH POINT OL-4, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-4, LLC, as Owner Participant,

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

          STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees


                               SOUTH POINT PROJECT

===============================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ....    3

SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS .................    3

     Section 2.1.  Agreements to Participate ..............................    3

     Section 2.2.  Closing Date; Procedure for Participation ..............    4

     Section 2.3.  Transaction Costs ......................................    5

SECTION 3. REPRESENTATIONS AND WARRANTIES .................................    6

     Section 3.1.  Representations and Warranties of the Facility Lessee ..    6

     Section 3.2.  Representations and Warranties of the Owner Lessor .....   17

     Section 3.3.  Representations and Warranties of the Lessor Manager
                   and the Trust Company ..................................   18

     Section 3.4.  Representations and Warranties of the Owner Participant    20

     Section 3.5.  Representations and Warranties of Indenture Trustee and
                   the Lease Indenture Company ............................   22

     Section 3.6.  Representations, Warranties and Covenants of the Pass
                   Through Trustees and the Pass Through Company ..........   23

SECTION 4. CLOSING CONDITIONS .............................................   25

     Section 4.1.  Completion of the Facility .............................   26

     Section 4.2.  Operative Documents ....................................   26

     Section 4.3.  Certificates and the Lessor Notes ......................   26

     Section 4.4.  Equity Investment ......................................   26

     Section 4.5.  Organizational Documents ...............................   26

     Section 4.6.  Representations and Warranties .........................   26

     Section 4.7.  Defaults, Events of Default, Events of Loss ............   26

     Section 4.8.  Regulatory Approvals ...................................   26

     Section 4.9.  Consents ...............................................   27

     Section 4.10. Governmental Actions ...................................   28
</TABLE>


                                       i
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
     Section 4.11. Insurance ..............................................   28

     Section 4.12. Ratings ................................................   28

     Section 4.13. Environmental Report ...................................   28

     Section 4.14. Surveys ................................................   28

     Section 4.15. Appraisal; Condition of the Facility ...................   28

     Section 4.16. Letter from the Appraiser ..............................   28

     Section 4.17. Other Reports ..........................................   28

     Section 4.18. Opinion with Respect to Certain Tax Aspects ............   29

     Section 4.19. Opinions of Counsel ....................................   29

     Section 4.20. Recordings and Filings .................................   29

     Section 4.21. Conditions to Closing ..................................   29

     Section 4.22. Taxes ..................................................   30

     Section 4.23. No Changes in Applicable Law ...........................   30

     Section 4.24. Registered Agent for the Facility Lessee
                   and the Owner Lessor ...................................   30

     Section 4.25. Operating Lease Treatment ..............................   30

     Section 4.26. Rent Adjustments .......................................   30

     Section 4.27. Title Insurance ........................................   30

     Section 4.28. Parent Guaranty ........................................   30

     Section 4.29. Letter as to Number of Offerees ........................   31

     Section 4.30. Lien Search ............................................   31

     Section 4.31. Litigation .............................................   31

     Section 4.32. No Material Adverse Change .............................   31

     Section 4.33. Private Placement Number ...............................   31

     Section 4.34. Proceedings and Documents ..............................   31
</TABLE>


                                       ii
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
     Section 4.35. No Proposed Tax Law Change .............................   31

     Section 4.36. Payment of Fees and Expenses ...........................   32

SECTION 5. COVENANTS OF FACILITY LESSEE AND GUARANTOR .....................   32

     Section 5.1.  Maintenance of Existence ...............................   32

     Section 5.2.  Merger, Consolidation, Sale of Substantially
                   All Assets .............................................   32

     Section 5.3.  Guaranty and Contingent Obligations ....................   33

     Section 5.4.  Assignment of Rights ...................................   33

     Section 5.5.  Lessor Manager Fees ....................................   33

     Section 5.6.  Conduct of Business, Properties, Etc ...................   33

     Section 5.7.  Obligations ............................................   33

     Section 5.8.  Books, Records, Access .................................   33

     Section 5.9.  Other Information ......................................   34

     Section 5.10. Intentionally Deleted ..................................   35

     Section 5.11. ERISA ..................................................   35

     Section 5.12. Certain Contracts and Agreements .......................   35

     Section 5.13. Certain Costs ..........................................   35

     Section 5.14. Limitations on Liens ...................................   36

     Section 5.15. Investments ............................................   36

     Section 5.16. Intentionally Deleted ..................................   36

     Section 5.17. Regulations ............................................   36

     Section 5.18. Partnerships ...........................................   36

     Section 5.19. Dissolution ............................................   36

     Section 5.20. Termination of Operative Documents; Delegation
                   of Authority ...........................................   36

     Section 5.21. Name and Location ......................................   38
</TABLE>


                                       iii
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
     Section 5.22. Use of Facility Site ...................................   38

     Section 5.23. Abandonment of Facility ................................   38

     Section 5.24. Taxes, Other Government Charges and Utility Charges ....   38

     Section 5.25. Compliance with Laws, Instruments, Etc .................   38

     Section 5.26. PUHCA ..................................................   39

     Section 5.27. Further Assurances .....................................   39

     Section 5.28. No Subsidiaries ........................................   40

     Section 5.29. Permitted Business .....................................   40

     Section 5.30. Support Arrangements ...................................   40

     Section 5.31. Insurance ..............................................   40

     Section 5.32. Tax Status .............................................   40

SECTION 6. COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY
           AND THE LESSOR MANAGER .........................................   40

     Section 6.1.  Compliance with the LLC Agreement ......................   41

     Section 6.2.  Owner Lessor's Liens ...................................   42

     Section 6.3.  Amendments to Operative Documents ......................   42

     Section 6.4.  Transfer of the Owner Lessor's Interest ................   42

     Section 6.5.  Owner Lessor; Lessor Estate ............................   42

     Section 6.6.  Limitation on Indebtedness and Actions .................   42

     Section 6.7.  Change of Location .....................................   42

     Section 6.8.  Bankruptcy of Owner Lessor .............................   42

SECTION 7. COVENANTS OF THE OWNER PARTICIPANT .............................   43

     Section 7.1.  Restrictions on Transfer of Member Interest ............   43

     Section 7.2.  Owner Participant's Liens ..............................   45

     Section 7.3.  Amendments or Revocation of LLC Agreement ..............   45
</TABLE>


                                       iv
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
     Section 7.4.  Bankruptcy Filings .....................................   45

     Section 7.5.  Instructions ...........................................   46

     Section 7.6.  Right of First Refusal .................................   46

     Section 7.7.  Prohibition on Fundamental Changes .....................   46

     Section 7.8.  Appointment of Successor Lessor Manager ................   47

     Section 7.9.  Cooperation ............................................   47

SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS
           THROUGH TRUSTEES ...............................................   47

     Section 8.1.  Indenture Trustee's Liens ..............................   48

     Section 8.2.  Pass Through Trustees' Covenant Not to Transfer
                   Lessor Notes ...........................................   48

SECTION 9. INDEMNIFICATION ................................................   48

     Section 9.1.  General Indemnity ......................................   48

     Section 9.2.  General Tax Indemnity ..................................   55

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ....................   64

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ....   65

     Section 11.1. Financing Improvements .................................   65

     Section 11.2. Optional Refinancing of Lease Debt .....................   66

     Section 11.3. Cooperation ............................................   67

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION
            VALUE AND OTHER AMOUNTS .......................................   68

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE
            TRANSFERS; EXERCISE OF EXTENSION OF SOUTH POINT GROUND LEASE ..   69

     Section 13.1. Transfer of the Facility Lessee Ownership ..............   69

     Section 13.2. Special Facility Lessee Transfers ......................   71

     Section 13.3. Exercise of Extension of South Point Ground Lease ......   71

SECTION 14. MISCELLANEOUS .................................................   73

     Section 14.1. Consents; Cooperation ..................................   73
</TABLE>


                                        v
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
     Section 14.2.  Successor Owner Lessor ................................   73

     Section 14.3.  Bankruptcy of Lessor Estate ...........................   73

     Section 14.4.  Amendments and Waivers ................................   73

     Section 14.5.  Notices ...............................................   73

     Section 14.6.  Survival ..............................................   78

     Section 14.7.  Successors and Assigns ................................   78

     Section 14.8.  Business Day ..........................................   78

     Section 14.9.  Governing Law .........................................   78

     Section 14.10. Severability ..........................................   78

     Section 14.11. Counterparts ..........................................   78

     Section 14.12. Headings and Table of Contents ........................   79

     Section 14.13. Limitation of Liability ...............................   79

     Section 14.14. Consent to Jurisdiction; Waiver of Trial by
                    Jury; Process Agent ...................................   80

     Section 14.15. Further Assurances ....................................   81

     Section 14.16. Effectiveness .........................................   81

     Section 14.17. Measuring Life ........................................   81

     Section 14.18. No Partnership, Etc ...................................   81

     Section 14.19. Entire Agreement ......................................   81

     Section 14.20. Public Utility Regulation .............................   82

     Section 14.21. Confidentiality of Information ........................   82

     Section 14.22. Reliance ..............................................   83

     Section 14.23. Amendments, Etc .......................................   83

     Section 14.24. South Point Ground Lease ..............................   83
</TABLE>


                                       vi
<PAGE>
<TABLE>
<S>                      <C>
APPENDICES:

    Appendix A           Definitions and Rules of Interpretation

SCHEDULES:

    Schedule 1-A         Equity Investment
    Schedule 1-B         Indenture Trustee's Account
    Schedule 1-C         Owner Participant's Account
    Schedule 2           Pricing Assumptions
    Schedule 3.1(m)      Environmental Matters - Hazardous Substances
    Schedule 4.20        Recording and Filings
    Schedule 5.31        Maintenance of Insurance

EXHIBITS:

    Exhibit A            Description of Facility
    Exhibit B            Form of Assignment Agreement (SP-4)
    Exhibit C            Form of Facility Lease Agreement
    Exhibit D            Form of Facility Site Lease
    Exhibit E            Intentionally Omitted
    Exhibit F            Form of Pass Through Trust Agreement
    Exhibit G            Form of OP Parent Guaranty
    Exhibit H            Form of Calpine Guaranty
    Exhibit I            Form of Collateral Trust Indenture
    Exhibit J            Form of OP Assignment and Assumption Agreement
    Exhibit K            List of Competitors
    Exhibit L            Form of Guarantor Assignment and Assumption Agreement
    Exhibit M            Form of Consents
</TABLE>


                                       vii
<PAGE>
                             PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) SOUTH POINT ENERGY CENTER, LLC (herein,
     together with its successors and permitted assigns, called the "Facility
     Lessee"), a limited liability company organized under the laws of the
     State of Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as
     Guarantor (together with its successors and permitted assigns, the
     "Guarantor") under the Calpine Guaranty (SP-4), (the "Calpine Guaranty"),
     (iii) SOUTH POINT OL-4, LLC, a Delaware limited liability company (the
     "Owner Lessor"), (iv) SBR OP-4, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its successors
     and permitted assigns, called the "Indenture Trustee", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Lease Indenture Company"), (vi) STATE STREET BANK AND TRUST
     COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
     association organized and existing under the laws of the United States,
     not in its individual capacity, except as expressly provided herein, but
     solely as trustee under each of the Pass Through Trust Agreements (herein
     in its capacity as trustee under the Pass Through Trust Agreements, the
     "Pass Through Trustees", and herein in its individual capacity, together
     with its successors and permitted assigns, the "Pass Through Company"),
     and (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and validly existing under the laws of the
     United States, not in its individual capacity except as expressly provided
     herein, but solely as independent manager under the LLC Agreement (herein
     in its capacity as independent manager under the LLC Agreement, together
     with its successors and permitted assigns, called the "Lessor Manager",
     and herein in its individual capacity, together with its successors and
     permitted assigns, called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a) CCFC, an indirect, wholly-owned subsidiary of Calpine,
will, as of the Closing Date, own a 530 MW gas-fired combined cycle merchant
power plant located near Bullhead, Arizona and more fully described in Exhibit
A hereto ("Facility");

          WHEREAS, CCFC desires to assign and transfer to the Owner Lessor the
Undivided Interest and the Ground Interest pursuant to the Assignment Agreement;
<PAGE>
          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
accept such assignment and transfer of the Undivided Interest and the Ground
Interest from CCFC pursuant to the Assignment Agreement, and to lease the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to lease the Undivided
Interest and lease the Ground Interest from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from CCFC pursuant to the Assignment
Agreement, and lease the Undivided Interest and the Ground Interest to the
Facility Lessee pursuant to the Facility Lease and the Facility Site Lease,
respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed
all of the obligations of the Facility Lessee under the Participation Agreement
and as of the Closing Date shall guarantee all of the obligations of the
Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and

                                        2
<PAGE>
          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

Calpine and the Facility Lessee shall cause CCFC to assign and transfer the
     Undivided Interest and the Ground Interest to the Owner Lessor on the
     terms and conditions set forth in the Assignment Agreement and the Owner
     Lessor agrees to acquire and accept such assignment and transfer of the
     Undivided Interest and the Ground Interest from CCFC, and each agrees to
     execute and deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest and the Ground Interest
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility Lessee agrees to
     lease the Undivided Interest and the Ground Interest from the Owner
     Lessor, and each agrees to execute and deliver the respective Facility
     Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

                                        3
<PAGE>
the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the South Point Ground
     Lease pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

                                        4
<PAGE>
Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to the
     Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not occur
     on such date and the Owner Lessor has not returned such funds to the Owner
     Participant on or before 1:00 p.m., New York City time, on such date, then
     Calpine shall reimburse the Owner Participant for loss of the use of such
     funds at the Applicable Rate for each day, from and including the day that
     such funds were made available to the Owner Lessor by the Owner
     Participant to, but excluding the earlier of (i) the day that such funds
     have been returned to the Owner Participant pursuant to Section 2.2(c)
     (funds received by the Owner Participant after 1:00 p.m., New York City
     time, of any day shall be deemed to be returned on the next succeeding
     Business Day) and (ii) the Closing Date.  Subject to payment for the
     account of the Owner Participant of any reimbursement for loss of use of
     funds due to it at the Applicable Rate, any net gain realized on the
     investment of such funds (including interest) shall be paid to Calpine by
     the Owner Lessor on the earlier of (i) the date such funds are returned to
     the Owner Participant pursuant to Section 2.2(c) and (ii) the Closing
     Date. The Owner Lessor shall not be liable for any interest on or loss
     resulting from such investments and, if such funds are made available to
     the Owner Lessor and utilized to pay the Purchase Price or Transaction
     Costs on the Closing Date, Calpine shall reimburse the Owner Lessor for
     any net loss realized on the investment of such funds. If such funds are
     not so utilized, Calpine shall, in addition to its obligation to reimburse
     the Owner Participant for loss of use as provided above, reimburse the
     Owner Participant on the date such funds are returned to the Owner
     Participant for any net loss realized on the investment of such funds. In
     order to obtain funds for payment of the Purchase Price or Transaction
     Costs or to return funds made available to the Owner Lessor by the Owner
     Participant, the Owner Lessor is authorized to sell any investments or
     obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$2,370,417, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date.  All other

                                        5
<PAGE>
     Transaction Costs, fees, costs and expenses incurred by the Facility
     Lessee, the Owner Lessor and the Owner Participant shall be paid by
     Calpine. If the Overall Transaction is not consummated for any reason
     (including as a result of the Facility Lessee terminating this Agreement
     pursuant to Section 12(a)), then Calpine shall bear all Transaction Costs;
     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware and CCFC is a limited partnership duly constituted,
     validly existing, and in good standing under the laws of the State of
     Delaware.  Both the Facility Lessee and CCFC are duly licensed or
     qualified and in good standing in each jurisdiction where the character of
     their respective properties or the nature of their activities makes such
     qualification necessary, and each of the Facility Lessee and CCFC has the
     power and authority to (x) own or hold under lease the property it
     purports to own or hold under lease, (y) carry on its business as now
     being conducted and as presently proposed to be conducted and (z) take all
     actions as may be necessary to consummate the transactions contemplated
     hereunder and under the other Operative Documents to which each is a
     party.  Each of the Facility Lessee and CCFC is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee or CCFC is or will be a
     party have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee or
     CCFC, as applicable, and, assuming the due authorization, execution and
     delivery by each other party thereto, this Agreement constitutes and, when
     executed and delivered, the other Operative Documents to which the
     Facility Lessee or CCFC is or will be a party will constitute the legal,
     valid and binding obligations of the Facility Lessee or CCFC, as the case
     may be, enforceable against the Facility Lessee or CCFC, as the case may
     be, in accordance with their respective terms, except as the same may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other similar laws affecting the rights of creditors generally and by
     general principles of equity.

          1.   Non-Contravention. (1) The execution, delivery and performance
               by the Facility Lessee of this Agreement and each of the other
               Operative

                                        6
<PAGE>
               Documents to which it is or will be a party, the consummation
               by the Facility Lessee of the transactions contemplated hereby
               and thereby, and compliance by the Facility Lessee with the
               terms and provisions hereof and thereof, do not and will not
               (i) contravene any Applicable Law binding on the Facility
               Lessee or its property, or its organizational documents, (ii)
               constitute a default by the Facility Lessee under, or result
               in the creation of any Lien upon the property of the Facility
               Lessee (other than pursuant to any Operative Document) under
               any indenture, mortgage or other material contract, agreement
               or instrument to which the Facility Lessee is a party or by
               which the Facility Lessee or any of its property is bound,
               (iii) contravene any Organic Document of the Facility Lessee
               or (iv) require the consent or approval of any Person which
               has not already been obtained, in each case with respect to
               clauses (i), (ii) and (iv) above, which would reasonably be
               expected to have a Material Adverse Effect.

          (2)  The execution, delivery and performance by CCFC of each of
the Operative Documents to which it is or will be a party, the consummation by
CCFC of the transactions contemplated thereby, and compliance by CCFC with the
terms and provisions thereof, do not and will not (i) contravene any Applicable
Law binding on CCFC or its property, or its organizational documents, (ii)
constitute a default by CCFC under, or result in the creation of any Lien upon
the property of CCFC (other than pursuant to any Operative Document) under any
indenture, mortgage or other material contract, agreement or instrument to
which CCFC is a party or by which CCFC or any of its property is bound, (iii)
contravene any Organic Document of CCFC or (iv) require the consent or approval
of any Person which has not already been obtained, in each case with respect to
clauses (i), (ii) and (iv) above, which would reasonably be expected to have a
Material Adverse Effect.

          (3)  Neither the assignment and transfer of the Undivided
Interest and the Ground Interest by CCFC to the Owner Lessor, nor the grant by
the Owner Lessor to the Indenture Trustee of the Liens and security interests
in the Undivided Interest, the Ground Interest and the applicable Operative
Documents executed in connection therewith to secure its obligations thereunder
does or will constitute a default by the Facility Lessee or the Owner Lessors
under the Ownership and Operation Agreement.

Government Actions. (1) The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing, with
     respect to the participation by the Owner Participant, the Owner Lessor in
     the Overall Transaction, other than (i) any Permit where the failure to
     obtain or maintain such Permit

                                        7
<PAGE>
     would not be reasonably likely to result in a Material Adverse Effect,
     (ii) the FERC Orders, (iii) as may be required under Applicable Law
     providing for the supervision or regulation of the Owner Participant, the
     Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of which
     would not reasonably be expected to have a Material Adverse Effect or
     involve any danger of criminal or material civil liability being incurred
     by the Owner Participant, the Owner Lessor, the Indenture Trustee or the
     Pass Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any relinquishment
     of the use or operation of the Facility by the Facility Lessee, (viii)
     appropriate filing and recording to perfect the Lien of the Collateral
     Trust Indenture, if required, and the ownership and leasehold interests
     conveyed pursuant to this Agreement, or (ix) as may be required under any
     Applicable Law enacted or adopted after the date hereof.

          (2)   CCFC has all Permits with, any Governmental Entity or
under any Applicable Law required for the due execution, delivery or
performance by CCFC of the Operative Documents to which CCFC is or will be a
party.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the South
     Point Ground Lease or the ability of the Facility Lessee or such other
     Calpine Party to perform its obligations under the Operative Documents and
     the South Point Ground Lease to which the Facility Lessee or such other
     Calpine Party is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to have a Material Adverse Effect or
     otherwise materially adversely affect the Undivided Interest leased by the
     Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc. (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground

                                        8
<PAGE>
     Interest, the Facility Site and the Operative Documents is located at: c/o
     Calpine Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA
     95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Leasehold Interest; Liens. (1) On and before the Closing Date, CCFC has (i)
     good and valid leasehold interest to the Facility, free and clear of all
     Liens other than Permitted Closing Date Liens, and (ii) good and valid
     leasehold interest to the Facility Site and Easement free and clear of all
     Liens other than Permitted Closing Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid leasehold interest to the Undivided Interest will be duly, validly and
effectively conveyed and transferred to the Owner Lessor free and clear of all
Liens other than Permitted Closing Date Liens, and (B) good and valid leasehold
interest in the Ground Interest will be duly, validly and effectively granted
to the Owner Lessor upon the terms and conditions in the corresponding Facility
Site Lease, free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of
the parties thereto, the Collateral Trust Indenture will create a valid and,
when the filings and recordings to be made pursuant to Section 4.20 have been
made, first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the South Point Ground Lease) or
the use of or the exercise by the Owner Lessor of its rights under the
Assignment Agreement or the Facility Site Lease, the Facility Lease or the
Easement, in a manner which could reasonably be expected to have a Material
Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party, directly
     or indirectly, for the purpose of buying or carrying any margin stock
     within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

                                        9
<PAGE>
Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the South Point Ground Lease will not subject the Facility
     Lessee to such regulation under the Holding Company Act and do not violate
     any provision of the Holding Company Act or any rule or regulation
     thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same, in any such case, in violation of the registration
     requirements of Section 5 of the Securities Act.

Environmental Matters.  Except as set forth in Schedule 3.1(m):

          (1)   Neither the Facility Lessee nor CCFC has received or has
Actual Knowledge of any written notice, letter, citation, order, warning,
complaint, inquiry, claim or demand from any Governmental Entity or any other
Person that: (i) there has been a Release, or there is a threat of Release, of
Hazardous Substances in, on, under or from the Facility or the Facility Site or
any of the Easement; (ii) the Facility Lessee or any other Calpine Party is or
is asserted to be liable, in whole or in part, for the costs of cleaning up,
remedying or responding at any location (including any location at which any
Hazardous Substances have been generated, stored, treated or disposed by or on
behalf of the Facility Lessee or such other Calpine Party) to a Release or
threatened Release of any Hazardous Substance generated, used or stored at or
Released in, on, under or from the Facility or the Facility Site or any of the
Easement; (iii) the Facility or the Facility Site is subject to a Lien in favor
of any Governmental Entity in response to a Release or threatened Release of
Hazardous Substances or (iv) the Facility or the Facility Site or any of the
Easement is or is asserted to be in violation of or not in compliance with any
Environmental Law, in any case with respect to clauses (ii), (iii) or (iv),
which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's or CCFC's Actual Knowledge, there
is not and has not been any Environmental Condition (A) at, on, under or from
the Facility or the Facility Site or any of the Easement, or (B) at, on, under
or from any other location resulting from or arising in connection with the
operation by any Person of the Facility or the Facility Site or any of the
Easement, that in each case could reasonably be expected to have a Material
Adverse Effect or

                                       10
<PAGE>
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material lien on, such Facility or the Facility Site or any of
such Easement, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or, maintenance of the Facility or the Facility
Site or any of the Easement in any material respect, or (iii) any criminal or
material civil liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee or the Pass Through Trustees.

         (4)   All environmental permits necessary to own, operate, lease
or maintain the Facility, the Facility Site and the Easement in accordance with
the Operative Documents and the South Point Ground Lease and Environmental Laws
have been obtained on behalf of the Owner Lessor or by the Facility Lessee and
they are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility,
the Facility Site or Easement, (ii) the impairment of the ownership (or
leasehold or easement interest in), use, operation or maintenance of the
Facility, the Facility Site or Easement in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest, the Ground Interest and the Easement and based
     upon the Facility Lessee's reasonable expectations and on Applicable Law
     in effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     South Point Ground Lease and the rights contemplated by the Facility Lease
     to be made available under such Operative Documents and the South Point
     Ground Lease, permit on a commercially practicable basis during the
     Facility Lease Term and the period following the expiration or termination
     of the Facility Lease Term, as applicable, until the end of the Facility's
     useful life as set forth in the Closing Appraisal, (i) the location,
     occupation, interconnection, maintenance and repair of each Facility, (ii)
     the use, operation and possession of the Facility, (iii) as of the Closing
     Date, the use, operation, possession, maintenance, replacement, renewal
     and repair of all Improvements required to be made to the Facility, (iv)
     adequate ingress to and egress from the Facility in connection with the
     ownership, use, operation, possession, maintenance or repair of the
     Facility and (v) the transmission of electricity from the Facility
     substantially in the manner currently transmitted as of the Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns
     or pursuant to any assessment received by it (other than Taxes and
     assessments the payment of which is being contested in good faith by such
     Person and with respect to which appropriate accounting reserves have to
     the extent required by GAAP been set aside) and neither the Facility
     Lessee nor any other Calpine Party has any Actual Knowledge of any actual
     or proposed assessment in connection therewith which,

                                       11
<PAGE>
     either in any case or in the aggregate, would reasonably be expected to
     have a Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State of
     New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility, the Facility Site and the Easement, except
     where the noncompliance would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of (i) foreclosure, sale,
     forfeiture or loss of, or imposition of a material lien on, the Facility,
     the Facility Site or any such Easement, (ii) the impairment of the
     ownership (or leasehold or easement interest in), use, operation or
     maintenance of the Facility or the Facility Site in any material respect,
     or (iii) any criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
     Trustee or the Pass Through Trustees, including subjecting the Owner
     Participant or the Owner Lessor to regulation as a public utility under
     Applicable Law.  None of the Calpine Parties is in default of any
     judgments, orders or decrees of any Governmental Entity relating to such
     Facility, the Facility Site or any of the Easement.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists under the Operative Documents
     exists or will exist upon the execution and delivery of the Operative
     Documents. To the Actual Knowledge of the Facility Lessee, no Burdensome
     Buyout Event has occurred under the Operative Documents or will occur upon
     the execution and delivery of the Operative Documents and the Facility
     Lessee does not have Actual Knowledge of any event that could reasonably
     be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's or
     CCFC's Actual Knowledge, threatened by a Governmental Entity or other
     Person to specially assess the Facility or the Facility Site for any
     public improvements constructed or to be constructed which would
     reasonably be expected to have a Material Adverse Effect.

                                       12
<PAGE>
Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the South Point Ground Lease, except where the
     failure to have any such services or public utilities available would not
     result in a material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest, the Facility
     Site or any of the Easement, which would reasonably be expected to have a
     Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any Easement, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility, the Facility Site or any of the Easement, which
     would reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's or CCFC's
     Actual Knowledge, there are no plans of any Governmental Entity to change
     the highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted by CCFC
     with respect to the Facility and the Facility Site and to transfer all
     such rights to the Owner Lessor subsequent to termination of the Facility
     Lease, except to the extent failure to possess such rights would not
     reasonably be likely to result in a Material Adverse Effect.

                                       13
<PAGE>
Land Not in Flood Zone. No portion of the Facility, the Facility Site or the
     Easement includes improved real property that is located in an area that
     has been identified by the Director of the Federal Emergency Management
     Agency as an area having special flood hazards and in which flood
     insurance has been made available under the National Flood Insurance Act
     of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee and CCFC are consummating the
     transactions contemplated hereby (including with respect to CCFC, the
     transfer of certain of its assets and properties to the Owner Lessor) in
     good faith and without any intent to defraud creditors of the Facility
     Lessee or subsequent purchasers. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not
     render the Facility Lessee insolvent under GAAP or leave the Facility
     Lessee with assets whose present fair valuation of assets is less than the
     present fair valuation of the Facility Lessee's debts.  As used in this
     Section 3.1(dd), "debts" includes any and all liabilities, whether matured
     or unmatured, liquidated or unliquidated, absolute, fixed or contingent,
     and whether or not such liabilities are required under GAAP to be shown on
     the Facility Lessee's balance sheet. The execution and delivery of the
     Operative Documents to which the Facility Lessee is a party will not leave
     it with property remaining in its hands which would constitute
     unreasonably small assets or capital, and the Facility Lessee has and,
     after giving effect to such transactions will have, an adequate amount of
     assets and capital to engage in its business now and in the future, based
     on the actual and anticipated needs for capital of the businesses
     anticipated to be conducted by the Facility Lessee, and based upon the
     other information described herein.  After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term debt
     as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv) of
     the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the South Point Ground Lease shall be or become (i) subject to
     regulation as a "public utility company," "holding company," an
     "affiliate" of a "holding company" or a "subsidiary company" of a "holding
     company" within the meaning of PUHCA or (ii) a "public utility" (except
     that the Facility Lessee will be a public utility subject to the Federal
     Power Act with authority to sell wholesale electricity at market-based
     rates and with waivers of regulations customarily granted to a public
     utility that sells wholesale power at market-based rates), a "transmitting
     utility," or an "electric utility" within the meaning of the Federal Power
     Act, (iii) subject to state regulation of rates or organizational
     requirements for electric utilities.

                                       14
<PAGE>
Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained therein,
     in light of the circumstances under which they were made, not misleading;
     provided, that no representation or warranty is made with regard to (i)
     any projections or other forward-looking statements provided by or on
     behalf of the Facility Lessee, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, further, each of the Transaction Parties acknowledge and agree
     that (i) Calpine has heretofore provided to the Appraiser, solely in order
     to assist the Appraiser in connection with the preparation of the
     appraisal to be delivered by the Appraiser to certain of the Transaction
     Parties at the Closing, certain (1) general market information, (2)
     information about the Arizona energy markets and (3) information passed
     along from other Persons and (ii) that the Facility Lessee makes no
     representation or warranty whatsoever with respect to the information
     described in clause (i) above except to the extent expressly set forth in
     Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Western Area Power Administration and has
     access to transmission services and ancillary services sufficient to sell
     the net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the determination by
     FERC of EWG status and the FERC Order referenced in clause (ii) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is not
     intended to be construed as nor shall it be deemed to be a guaranty as to
     any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee or CCFC, the Facility has commenced commercial operations
     and is currently capable of producing at least 530 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

South Point Ground Lease. The South Point Ground Lease is in full force and
     effect and neither CCFC nor, to the Actual Knowledge of the Facility
     Lessee or CCFC, the Tribe is in default thereunder; all of the rights,
     title and interest of CCFC in, to and under the South Point Ground Lease
     assigned pursuant to the Assignment Agreement have been transferred free
     and clear of any and all Liens other than Permitted Liens. Prior to the
     execution and delivery

                                       15
<PAGE>
     of the Assignment Agreement by CCFC and as of and after the time CCFC
     became a party to the South Point Ground Lease, the South Point Ground
     Lease was enforceable against CCFC in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the South Point Ground Lease by any
     past or present Calpine Party (including CCFC) party thereto (i) did not
     and does not contravene any Applicable Law binding on such Calpine Party
     or its property, (ii) does not constitute a default by such Calpine Party
     under, or result in the creation of any Lien upon the property of such
     Calpine Party (other than pursuant to any Operative Document) under any
     indenture, mortgage or other material contract, agreement or instrument to
     which such Calpine Party is a party or by which such Calpine Party or any
     of its property is bound, (iii) does not contravene any Organic Document
     of such Calpine Party, (iv) does not require the consent or approval of
     any Person which has not already been obtained, in each case with respect
     to clauses (i), (ii) and (iv) above, which would reasonably be expected to
     have a Material Adverse Effect, or (v) does not create a Lien on the South
     Point Ground Lease; the Facility Lessee has all Permits with or from any
     Governmental Entity or under Applicable Law required for the performance
     of the South Point Ground Lease by the Owner Lessor or the Facility
     Lessee, other than (i) any Permit where the failure to obtain or maintain
     such Permit would not be reasonably likely to result in a Material Adverse
     Effect, (ii) the FERC Orders, (iii) as may be required under Applicable
     Law providing for the supervision or regulation of the Owner Participant,
     the Owner Lessor or any Affiliate of any of them as a result of investing,
     lending or other commercial activity in which the Owner Participant, the
     Owner Lessor or any Affiliate of any of them is or may be engaged other
     than the transactions contemplated hereby or by performance of the South
     Point Ground Lease upon and after the assignment thereof to the Owner
     Lessor pursuant to the Assignment Agreement, (iv) as may be required under
     existing Applicable Laws to be obtained, given, accomplished or renewed at
     any time, or from time to time, in each case, after the Closing Date and
     which the Facility Lessee has no reason to believe will not be timely
     obtained and the lack of which would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of criminal or material
     civil liability being incurred by the Owner Participant, the Owner Lessor,
     the Indenture Trustee or the Pass Through Trustees, (v) in connection with
     any modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates or
     the issuance of Additional Lessor Notes or Additional Certificates, (vii)
     as may be required in consequence of any transfer of the Member Interest
     or any transfer of the Undivided Interest or the Owner Lessor's Interest,
     or any part thereof by the Owner Lessor or the exercise by any such party
     of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of the
     Collateral Trust Indenture, if required, and the ownership and leasehold
     interests conveyed pursuant to this Agreement, or (ix) as may be required
     under any Applicable Law enacted or adopted after the date hereof.

                                       16
<PAGE>
     B.   Representations and Warranties of the Owner Lessor. The Owner Lessor
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Lessor, and
     (ii) assuming the due authorization, execution and delivery of this
     Agreement by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor

                                       17
<PAGE>
     is or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or
     given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the South Point Ground Lease or the
     ability of the Owner Lessor to perform its obligations under the South
     Point Ground Lease or the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Owner Lessor to perform
     its obligations under this Agreement or any other Operative Document to
     which it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

     C.   Representations and Warranties of the Lessor Manager and the Trust
Company. The Trust Company (only with respect to representations and warranties
expressly relating to the Trust Company) and the Lessor Manager hereby
severally represent and warrant that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Trust Company is a national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been
     duly authorized, executed and delivered by the Trust Company, and (ii)
     assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against

                                       18
<PAGE>
     it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to

                                       19
<PAGE>
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered
     or sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct
     wholly owned subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement
     and any other Operative Document to which the Owner Participant is or will
     be a party constitute or when executed and delivered will constitute the
     legal, valid and binding obligations of the Owner Participant, enforceable
     against the Owner Participant in accordance with their respective terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant with the
     terms and provisions hereof and thereof, do not and will not contravene any
     Applicable Law binding on the Owner Participant, or its organizational
     documents, or contravene the provisions of, or constitute a default under
     any indenture, mortgage or other material contract, agreement or instrument
     to which the Owner Participant is a party or by

                                       20
<PAGE>
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding
     against the Owner Participant before any Governmental Entity which (i)
     questions the validity of the Operative Documents or the ability of the
     Owner Participant to perform its obligations under the Operative Documents
     to which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner
     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the

                                       21
<PAGE>
     same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section 5
     of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss.  The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the Indenture
Trustee is or will be a party has been or when executed and delivered will be
duly authorized, executed and delivered by the Indenture Trustee, and (ii)
assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Indenture Trustee,
each of the other Operative Documents to which the Indenture Trustee is or will
be a party constitutes or when executed and delivered will be a legal, valid
and binding obligation of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally
and by general principles of equity.

                                       22
<PAGE>
Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the security interest of the
     Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Lease Indenture Company
     to perform its obligations under this Agreement or any other Operative
     Document to which it is or will be a party or could reasonably be expected
     to materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
               Trustees and the Pass Through Company. The Pass Through Company
               and the Pass Through

                                       23
<PAGE>
Trustees hereby severally represent and warrant that as of the date Of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement
     and each of the other Operative Documents to which it is or will be a
     party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the
     other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the

                                       24
<PAGE>
     Pass Through Company upon the Certificates or any indenture, mortgage or
     other material contract, agreement or instrument to which the Pass Through
     Company is a party or by which the Pass Through Company or its property is
     bound which would materially adversely affect the ability of the Pass
     Through Company, in its individual capacity or as Pass Through Trustee, as
     the case may be, to perform its obligations under this Agreement or the
     other Operative Documents to which it is a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of any Pass Through Trustee in
     the Indenture Estate; provided, however, that no representation is made
     with respect to the right, power or authority of the Pass Through Company
     or any Pass Through Trustee to act as operator of the Facility following a
     Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor,
the Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the
Pass Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                       25
<PAGE>
Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 530 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and warranties of
each party hereto set forth in Section 3 shall be true and correct on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the determination by FERC of EWG
status and the FERC Order referenced in clause (ii) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                       26
<PAGE>
     F.   Consents. (a) All permits, licenses, approvals and consents
(including management, credit and other internal approvals of the Transaction
Parties, but excluding the Third Party Consent referred to in (b) below)
necessary to consummate the Overall Transaction and to own and operate the
Facility as currently operated shall have been duly obtained and shall be in
full force and effect and in the form and substance satisfactory to each of the
Transaction Parties.

          (b)   Each Third Party Consent shall have been obtained and shall be
in full force and effect substantially in the form attached hereto as Exhibit
M which is applicable to the relevant third party granting such consent;
provided that if any Third Party Consent is not substantially in the form
attached hereto as Exhibit M, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                       27
<PAGE>
Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(ii) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a copy of the Survey
(certified to the Owner Lessor and the Title Company) in form and substance
satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

Other Reports. The Owner Participant, the Indenture Trustee and the Pass Through
Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance

                                       28
<PAGE>
Consultant, and the Power Market Consultant, which reports shall be dated as of
the Closing Date and shall otherwise each be in form and substance reasonably
satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by CCFC of its interest in the Undivided Interest and the Ground
Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to
the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Holland and Hart LLP, Tribal
counsel to the Facility Lessee, the Owner Participant, the Owner Lessor and the
Initial Purchasers, (e) Karen Scowcroft, Esq., in-house counsel to the Equity
Investor, (f) Dewey Ballantine LLP, counsel to the Owner Participant and to the
Owner Lessor, (g) Bingham Dana LLP, counsel to the Lease Indenture Company and
the Indenture Trustee, (h) Bingham Dana LLP, counsel to the Pass Though
Trustees and the Pass Through Company, (i) Ray Quinney & Nebeker, in-house
counsel to the Lessor Manager and (j) Fennemore Craig, A Professional
Corporation, Arizona counsel to the Facility Lessee, the Owner Participant, the
Owner Lessor and the Initial Purchasers, in each case in form and substance
reasonably satisfactory to each Transaction Party. Each such Person expressly
consents to the rendering by its counsel of the opinion referred to in this
Section 4.19 and acknowledges that such opinion shall be deemed to be rendered
at the request and upon the instructions of such Person, each of whom has
consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall,
to the extent requested, permit the Rating Agencies and the Initial Purchasers
to rely on their opinion as if such opinion were addressed to such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the (x) Uniform Commercial Code
of Arizona and Delaware and (y) Fort Mojave Indian Reservation Uniform
Commercial Code ("FMUCC") and FMUCC First Amendments 1994 Amendment, and any
other documents as may be reasonably requested by counsel to the Owner
Participant, the Indenture Trustee or the Pass Through Trustees to perfect (i)
the Owner Lessor's Interest and the Easement, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the South Point
Ground Lease shall have been satisfied or waived and the Owner Participant
shall be satisfied that the Facility shall be in the condition described in the
Closing Appraisal.

                                       29
<PAGE>
Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to perform its obligations under the
South Point Ground Lease or would materially adversely affect the Facility or
the Facility Site. On the Closing Date, each Certificateholder's purchase of
Lessor Notes shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Certificateholder is subject, (ii) not violate any
Applicable Law (including Regulation U, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Certificateholder to any tax,
penalty or liability under or pursuant to any Applicable Law, which Applicable
Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

                                       30
<PAGE>
Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to both the Facility
Lessee and CCFC in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the South
Point Ground Lease or any of the Transactions contemplated by any of the
Operative Documents or the performance of the South Point Ground Lease.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

                                       31
<PAGE>
     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided
below, covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant, the Owner Lessor or (B) Calpine's obligations under the
     Calpine Guaranty have been succeeded to in accordance with Section 8.4(b)
     of the Calpine Guaranty, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each
     succeeding or surviving entity and the Calpine Guaranty shall remain in
     full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the

                                       32
<PAGE>
     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents and the South Point Ground Lease, (iv) unsecured
indemnities provided by, and other unsecured contingent obligations incurred by
the Facility Lessee in connection with either (x) Easement relating to its
applicable interest in the Facility or the Facility Site or (y) any contract,
agreement or other document or instrument relating to the South Point project
which is entered into in the ordinary course of the Facility Lessee's business,
(v) customary indemnities in favor of the title insurers providing the title
policies covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the South Point
Ground Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the South Point Ground Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     K.   Books, Records, Access. The Facility Lessee shall maintain or cause to
be maintained adequate books, accounts and records with respect to itself, the
Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in

                                       33
<PAGE>
compliance with the regulations of any Governmental Entity having jurisdiction
thereof, and permit employees, agents and representatives of the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Collateral Trust
Indenture shall have not been terminated or discharged, the Indenture Trustee,
the Pass Through Trustees and the Certificateholders, and such parties'
independent consultants, at all reasonable times during normal business hours
and upon reasonable prior notice and at no risk or (except during the existence
of a Lease Default or Lease Event of Default) expense to the Facility Lessee to
inspect, the Facility and Facility Site, to examine or audit all of or any of
the Facility Lessee's books, accounts and records and make copies and memoranda
thereof and, together with such consultants, to observe the operation,
maintenance and repair of the Facility; provided, however, any such inspection
shall be conducted in accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be
               furnished to, the Owner Lessor, the Owner Participant and, so
               long as the Lien of the Collateral Trust Indenture has not
               been terminated or discharged, the Indenture Trustee and the
               Pass Through Trustees, and their respective authorized
               representatives from time to time such information as such
               party shall reasonably request concerning the Facility and
               Facility Site including information concerning the condition,
               operation, maintenance and use of the Facility and Facility
               Site and such other financial or operating information as it
               shall reasonably request and which is routinely made available
               to creditors of the Facility Lessee, to the extent it
               possesses such information; provided that, the Facility Lessee
               reserves the right not to provide any information that is not
               otherwise publicly available to any transferee Owner
               Participant (or its Owner Lessor) if it reasonably believes in
               its good faith judgment that such transferee Owner Participant
               or any Affiliate thereof is a competitor or is an Affiliate of
               a competitor of the Facility Lessee or its Affiliates in the
               competitive power market, unless, before receiving any such
               information, such transferee Owner Participant shall have put
               in place (to the reasonable satisfaction of the Facility
               Lessee) appropriate confidentiality arrangements. To the
               extent such information consists of information contained in
               records kept by the Facility Lessee or any Affiliate, such
               information shall be furnished without cost to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

                                       34
<PAGE>
     L.   Intentionally Deleted.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the South Point Ground Lease, it will not enter into or become bound by any
contract or agreement providing for the sale of energy produced from the
Facility, or the purchase of services to be performed at, for or in connection
with, the Facility or any other contract or agreement relating to the Facility
that (i) has a term that extends beyond the Basic Lease Term or the scheduled
expiration of any Renewal Lease Term then in effect or elected by the Facility
Lessee, unless such contract or agreement may be terminated by the Facility
Lessee without material costs or obligation prior to the Basic Lease Term or
the scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the South Point Ground Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

                                       35
<PAGE>
Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Easement and the Facility Site or on any of its other
properties real or personal, whether now owned or hereafter acquired, except
Permitted Liens.

     M.   Investments. The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     N.   Intentionally Deleted

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority. The Facility
               Lessee shall not without the prior written consent of the
               Owner Participant and, except as otherwise provided in Section
               8 of the Collateral Trust Indenture and so long as the Lien of
               the Collateral Trust Indenture has not been terminated or
               discharged, the Indenture Trustee, (x) cause or consent to or
               (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document. In addition,
               the Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of
               the South Point Ground Lease without the consent of the Owner
               Participant if the same would (i) subject in all cases to the
               provisions of clause (iii) below, during the Facility Lease
               Term, have a material adverse effect on the Owner Participant
               or the Owner Lessor (including, without limitation, any
               material decrease in their respective rights or any material
               increase in their respective obligations or any material
               increase in the liability exposure of the Owner Lessor or the
               Owner Participant, it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the
               fact of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and of Calpine under
               the Calpine Guaranty shall be taken into account and (y) any
               increase in rent or any other amount payable by the Owner
               Lessor or the Owner Participant under the South Point Ground
               Lease that is also reflected to the same extent under the
               Facility Site Lease and does not remain in effect after the
               expiration of the then existing Basic Lease Term

                                       36
<PAGE>
               or any Renewal Term with respect to which the Facility Lessee
               shall have irrevocably exercised its renewal option shall not
               constitute or cause or be deemed to constitute or cause such a
               material adverse effect), (ii) during the period after the
               expiration or termination of the Facility Lease Term, have any
               adverse effect whatsoever on the Owner Participant or the
               Owner Lessor (including, without limitation, any increase in
               their respective obligations or decrease in their respective
               rights) or (iii) whether during or after the Facility Lease
               Term, result in any change to the length of the term of the
               South Point Ground Lease or in any option to renew the
               Facility Lease Term. The Facility Lessee will furnish the
               Owner Participant with a copy of the executed version thereof
               promptly after the execution thereof. Notwithstanding anything
               to the contrary contained in the foregoing, the Facility
               Lessee shall not have any right to take any action otherwise
               permitted pursuant to this Section 5.20 if a Significant Lease
               Default or Lease Event of Default shall have occurred and be
               continuing. So long as the Lien of the Collateral Trust
               Indenture has not been discharged, the Facility Lessee shall
               not take any action pursuant to or in accordance with the
               foregoing provisions of this Section 5.20, if such action
               would (i) have a material adverse effect on the Indenture
               Trustee, the Pass Through Trustees, the Noteholders or the
               Certificateholders including, without limitation, a material
               adverse effect on such Person's rights and remedies under the
               Operative Documents (it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the
               fact of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and Calpine's
               obligations under the Calpine Guaranty shall be taken into
               account and (y) any increase in rent or any other amount
               payable by the Owner Lessor or the Owner Participant under the
               South Point Ground Lease that is also reflected to the same
               extent under the Facility Site Lease ) shall not constitute or
               cause such a material adverse effect) or (ii) result in the
               release of or loss of the first priority, perfected Lien
               (subject to Permitted Liens) on all or any material portion of
               the Owner Lessor's interest in the Facility or the Facility
               Site, except as otherwise permitted by the Operative Documents.

          (b)  During the Facility Lease Term (i) the Facility Lessee
shall, at its own expense, on behalf of the Owner Lessor, duly fulfill and
comply with all obligations on the part of the Owner Lessor under or in
connection with the South Point Ground Lease and the Easement (or any extension
or renewal of any thereof) at the time performance of such obligations is
required under the South Point Ground Lease and (ii) in connection with the
foregoing obligation of the Facility Lessee set forth in clause (i), subject to
clause (a) above, the Facility Lessee shall have and be entitled to exercise
all rights and benefits (including the right to enter into any amendment,
modification, extension, termination, variance, waiver, notice or consent or
any action with respect thereto, subject to the terms and conditions of the
Operative Documents) of the Owner Lessor under the South Point Ground Lease and
Easement.

                                       37
<PAGE>
Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the South Point Ground Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility, the Facility Site or the Easement, whether or not
compliance therewith shall require structural changes in the Facility or any
part thereof or require major changes in operational practices or interfere
with the use and enjoyment of the Facility or any part thereof, and (b)
procure, maintain and comply, or cause to be procured, maintained and complied
with, all Applicable Permits, except in the case of clause (a) and (b) above,
(1) as may be contested in accordance with Section 7 or 8 of the Facility Lease
and (2) the Facility Lessee may, in good faith and by appropriate proceedings,
diligently contest the validity or application of any such Applicable Laws in
any reasonable manner which does not involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material Lien on the Facility,
(ii) impair the use, operation or maintenance of the Facility in any material
respect, (iii) any criminal liability being incurred by the Owner Participant,
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Lease
Indenture Company, the Pass Through Trustees, the Pass Through Company or any
Certificateholder, (iv) the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustees, the

                                       38
<PAGE>
Pass Through Company or any Certificateholder being subjected to any
unindemnified civil liability or of the Owner Participant or the Owner Lessor
being subject to regulation as a public utility under Applicable Law, or (v)
any Material Adverse Effect.

PUHCA.  The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances.  The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site, the transactions contemplated by the Operative Documents to
which the Facility Lessee is a party and the performance of the South Point
Ground Lease as may be required to enable the Owner Participant, the Owner
Lessor or, so long as the Lien of the Collateral Trust Indenture shall not have
been terminated or discharged, the Indenture Trustee or the Pass Through
Trustees, as the case may be, to timely file with any Governmental Entity any
reports and obtain any licenses or permits required to be filed or obtained by
the Owner Lessor under any Operative Document or the South Point Ground Lease,
the Owner Participant as the owner of the Member Interest or the Indenture
Trustee. The Facility Lessee will preserve, protect, defend and enforce, or
cause to be preserved, protected, defended and enforced, the rights of itself,
the Owner Lessor and the Owner Participant under each and every Operative
Document to which it is a party (including by assignment and assumption of the
rights thereunder), including using commercially reasonable efforts to
prosecute suits to enforce any such rights and, at the request of Indenture
Trustee, so long as the Lien of the Collateral Trust Indenture has not been
discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the Facility

                                       39
<PAGE>
Lessee's reasonable expense, enforce, in its own name, or the Facility Lessee's
name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

     O.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the South Point Ground Lease, or earlier at the option of the
Owner Lessor. The Facility Lessee shall also, subject to obtaining any required
third party consents, assign to the Owner Lessor upon termination of the
Facility Lease any support or similar agreements to the extent relating to the
Facility it has with third parties.

     P.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     Q.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

II.  COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

                                       40
<PAGE>
Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section
               9.1, 9.3, 13.1 or clause (i) of Section 13.2 of the LLC
               Agreement without the prior written consent of the Facility
               Lessee so long as no Significant Lease Default or Lease Event
               of Default has occurred and is continuing and the Indenture
               Trustee so long as the Lien of the Collateral Trust Indenture
               has not been terminated or discharged.

                                       41
<PAGE>
Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the South Point
Ground Lease in any manner or (c) except as provided in Section 11 hereof or
Section 2.10 or Section 5.6 of the Collateral Trust Indenture, take any action
to prepay or refund the Lessor Notes or amend any of the payment terms of the
Lessor Notes without, in each case, the prior written consent of the Facility
Lessee so long as no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing and, in the case of clause (a) or (b), the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents or the South Point
Ground Lease.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other

                                       42
<PAGE>
laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner Lessor shall not take any such
action unless the Indenture Trustee shall have given its prior written consent
to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation

                                       43
<PAGE>
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in
this Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                       44
<PAGE>
     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an
     OP Assignment and Assumption Agreement) shall also apply to any transfer
     of the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                       45
<PAGE>
respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions.  The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal.  In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section 7.6 prior to
entering into such revised agreement; provided that, for such revised offer,
the Notice Period shall be 10 Business Days from the date of such new notice,
and the Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other South Point Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under this Section 7.6 of each such
Other South Point Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                       46
<PAGE>
its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agree to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

                                       47
<PAGE>
Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site, the Easement or any Component or any portion of any thereof or any
     interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility, the Easement or
     the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, the Easement or
     any Component, or any portion of any thereof or any interest therein;

                                       48
<PAGE>
the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or the Easement or any Component, or any portion thereof,
     including, for the avoidance of doubt, any such Environmental Condition
     existing prior to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the South Point Ground Lease requested by the Facility Lessee, or
     resulting from the actions of the Facility Lessee or in connection with
     any Lease Default or Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the South Point Ground Lease or the interests of the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, or under the Operative Documents or the South Point
     Ground Lease or the presence, use, storage, release, threatened release,
     transportation, arrangement for transportation, treatment, arrangement for
     treatment, manufacture, disposal or arrangement for disposal of any
     Hazardous Substance in, at, under or from the Facility, the Easement or
     the Facility Site, including, for the avoidance of doubt, any of the
     foregoing existing or occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     Tribe of any obligation contained in this Agreement or any other
     Operative Document or the South Point Ground Lease or the falsity or
     inaccuracy of any representation, warranty or obligation of any such
     Person contained in this Agreement or any other Operative Document or the
     South Point Ground Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the South
     Point Ground Lease (other than the Facility Lease and the Facility Site
     Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional

                                       49
<PAGE>
     persons) arising out of the discharge of their respective duties as
     provided in the Operative Documents or the South Point Ground Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after expiration or early termination of the Facility Lease and, where
     required by the Facility Lease, surrender to the Owner Lessor or its
     successor of its interest in the Facility and Facility Site in compliance
     with the provisions of the Facility Lease and the Facility Site Lease
     respectively or (B) if the Closing Date does not occur, acts, omission or
     events occurring after the date set forth in Section 2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease or (ii) any
     violation of Applicable Law by any such Person except to the extent
     attributable to a violation of Applicable Law by the Facility Lessee or
     any other Calpine Party or to any breach by the Facility Lessee or such
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the South Point Ground Lease;

          a)   as to any Indemnitee, any Claim to the extent attributable to
               the noncompliance of such Indemnitee or a Related Party, with
               any of the terms of, or any misrepresentation or breach of
               warranty by such Indemnitee or Related Party contained in any
               Operative Document made by such Indemnitee or Related Party or
               any

                                       50
<PAGE>
               breach by such Indemnitee or a Related Party of any
               covenant contained in any Operative Document or any breach by
               such Indemnitee or a Related Party of any covenant contained
               in any Operative Document made by such Indemnitee or Related
               Party except to the extent attributable to any breach by the
               Facility Lessee or any other Calpine Party of any covenant,
               representation or warranty contained in any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

                                       51
<PAGE>
Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other Indemnitee shall
     waive its rights to indemnification (for itself and each Related Party
     thereto) in a manner reasonably acceptable to the Facility Lessee, to
     cooperate, at the sole cost and expense of the Facility Lessee, with
     insurers in exercise of their rights to investigate, defend or compromise
     such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default shall have occurred and be
     continuing, the Facility Lessee shall have the right in its sole
     discretion, to defend or compromise any Claim for which indemnification is
     sought under this Section 9.1 which the Facility Lessee acknowledges is
     subject to indemnification hereunder; provided that no such defense or
     compromise shall involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a Lien on any part of the Facility, the
     Undivided Interest, the Ground Interest, the Facility Site, the Lessor
     Estate or the Indenture Estate or the impairment of the Facility or the
     Facility Site, in any material respect or (ii) any criminal liability
     being incurred or any material adverse effect on such Indemnitee;
     provided, further, that no Claim shall be compromised by the Facility
     Lessee on a basis that admits any criminal violation or gross negligence
     or willful misconduct on the part of such Indemnitee without the express
     written consent of such Indemnitee; and provided, further, that to the
     extent that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the performance of the South Point Ground Lease
     are part of the same proceeding involving such Claim, the Facility Lessee
     may assume responsibility for the contest or compromise of such Claim only
     if the same may be and is severed from such other

                                       52
<PAGE>
     Claims (and each Indemnitee agrees to use reasonable efforts to obtain
     such a severance). In the event that in the course of the investigation or
     defense of a claim, the Facility Lessee shall in good faith reasonably
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties). Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee

                                       53
<PAGE>
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to the
     Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee.  So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the Indemnitee
     waives its rights to indemnification hereunder or (ii) the Facility Lessee
     has not acknowledged its indemnity obligation with respect thereto and
     there is a significant risk that a default judgment will be entered
     against such Indemnitee. Nothing contained in this Section 9.1(e) shall be
     deemed to require an Indemnitee to contest any Claim or to assume
     responsibility for or control of any judicial proceeding with respect
     thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of their insurers has paid in respect of such Claim; provided that,
     so long as a Significant Lease Default or Lease Event of Default shall
     have occurred and is continuing such amount may be held by the Owner
     Lessor as security for the Facility Lessee's obligations under the
     Facility Lease, the other Operative Documents and the South Point Ground
     Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the
     case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

                                       54
<PAGE>
General Tax Indemnity.

Indemnity.  Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Easement, the Undivided Interest, the Facility Site, the
     Ground Interest, or any portion or Component thereof or any interest
     therein, or upon any Operative Document or interest therein, or in any way
     arising out of, in connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Easement,
     the Undivided Interest, the Ground Interest, the Facility Site or any
     portion or Component thereof or any interest therein;

the Facility, the Facility Site, the Easement, the Undivided Interest, the
     Ground Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility Lessee
     or Calpine, the Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the
     Facility, the Easement, the Facility Site or any portion or Component
     thereof, or any interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, the Easement or any portion or Component
     thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     South Point Ground Lease;

the conveyance of title to the Undivided Interest; or

                                       55
<PAGE>
otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of South Point Ground Lease.

          Notwithstanding anything herein to the contrary and without
regard to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, transaction privilege taxes,
     use, rental, license, value added (to the extent value added taxes are not
     imposed in clear and direct substitution for income taxes) or property
     taxes) ("Income Taxes"), including any such Taxes collected by way of
     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee
     that occurs after expiration or other termination of the Facility Lease
     and surrender of the Undivided Interest to the Owner Lessor or its
     successors (or in the case of a Certificateholder Indemnitee, Taxes
     imposed for any period after the repayment of the Lease Debt) in
     accordance with the Facility Lease, (as opposed to any act, event or
     omission occurring prior to or simultaneous with such expiration,
     termination or surrender (or, in the case of a Certificateholder
     Indemnitee, such repayment)), provided that this exclusion shall not apply
     so long as a Lease Event of Default shall have occurred and be continuing;

                                       56
<PAGE>
Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and not as a result of
     any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes(A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the
     Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that, under
     law in effect on the date of the transfer such Taxes exceed the amount of
     Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

                                       57
<PAGE>
Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a
     grantor trust or other conduit entity for federal, state or local income
     tax purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall
     have determined in good faith that compliance with any such requirement
     shall not result in any identified non-immaterial adverse effect to its
     interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, transaction privilege taxes, use, rental or license taxes, value
     added taxes

                                       58
<PAGE>
     (except to the extent value added taxes are imposed in clear
     and direct substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document or the South Point Ground Lease are not within
     the scope

                                       59
<PAGE>
     of the independent accountant's responsibility. The fees and
     disbursements of such accounting firm will be paid by the Facility Lessee;
     provided that such fees and disbursements will be paid by the Tax
     Indemnitee if the verification results in an adjustment in the Facility
     Lessee's favor of 5 percent or more of the indemnity payment or payments
     computed by the Tax Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax benefits,
savings, credit, deduction or allocation in its sole good faith discretion and
each position to be taken on its tax return shall be in its sole control and it
shall not be required to disclose any tax return or related documentation to any
Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility
     Lessee a Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing, such amount shall not be payable until such
     Significant Lease Default or Lease Event of Default has been cured, and
     (B) the amount payable to the Facility Lessee pursuant to this sentence
     shall not exceed the amount of the indemnity payment in respect of

                                       60
<PAGE>
     such refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and (y) over (B) in this Section 9.2(f) shall be carried
     forward and reduce the Facility Lessee's obligations to make subsequent
     payments to such Tax Indemnitee pursuant to this Section 9.2. If it is
     subsequently determined that the Tax Indemnitee was not entitled to such
     refund or credit, the portion of such refund or credit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof. If, in connection with a refund or
     credit of all or part of any Taxes paid, reimbursed or advanced by the
     Facility Lessee pursuant to this Section 9.2, a Tax Indemnitee receives an
     amount representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which
     the Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

               (1)  the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)  the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

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<PAGE>
               (3)  the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall
consult in good faith with the other party and its designated counsel with
respect to such Tax Claim and shall provide the other party with copies of any
reports or claims (or extracts therefrom) issued by the relevant auditing
agents or taxing authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

               (1)   within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)   there is no risk of imposition of any criminal penalties or
liabilities,

               (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)   the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

                                       62
<PAGE>
               (9)   if such contest is controlled by the Facility Lessee, prior
to commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity
pursuant to this Section 9.2 with respect to such Tax, which admission shall be
binding on the Facility Lessee unless and to the extent such contest is
determined in a manner that conclusively demonstrates that the Facility Lessee
is not so liable, and

               (10)  if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

               (1)  waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)  promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold interest of the Owner Lessor in the Facility for
     United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement or
     return for filing by the Tax Indemnitee; provided that the only

                                       63
<PAGE>
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section
     9.2. Subject to the preceding sentence, the Facility Lessee's obligations
     under this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to
     this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Facility Lease and the Facility
Site Lease and expressly, severally and as to its own actions only, agrees
that, so long as no Lease Event of Default has occurred and is continuing, it
shall not take or cause to be taken any action or direct that any action be
taken, which is contrary to or inconsistent with the rights under the Facility
Lease and Facility Site Lease, including the right to possession, use and quiet
enjoyment of the Easement, the Undivided Interest and the Ground Interest.

                                       64
<PAGE>
SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that
     there shall be no changes to the amortization schedule or interest amounts
     and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements

                                       65
<PAGE>
     shall be made in compliance with the Operative Documents and the South
     Point Ground Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as a
     result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant
     or the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing
of Improvements through the Facility Lease, the Facility Lessee shall at all
times have the right to fund Improvements to the Facility other than through
the Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all

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<PAGE>
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which
     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties that
the Calpine Guaranty covers the additional indebtedness contemplated by this
Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative

                                       67
<PAGE>
Documents and the South Point Ground Lease. The Owner Participant will execute
such agreements and documents as may be necessary with respect to any such
refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not result
     in a change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change
     in the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
     ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or

                                       68
<PAGE>
     the Owner Participant in accordance with the terms of the Facility Lease
     to which it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS; EXERCISE OF
     EXTENSION OF SOUTH POINT GROUND LEASE

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing, upon
     satisfaction of the conditions in paragraph (b) below, the Facility Lessee
     may assign the Facility Lease or any other Operative Document to which it
     is a party, or any interest therein to any Person, without the consent of
     the Owner Lessor, the Owner Participant, the Indenture Trustee or any
     other Transaction Party.

Assignment under Section 13.1(a) above by the Facility Lessee shall be
     permitted if (A) after giving effect to such assignment or assignments,
     either (x) Calpine owns, directly or indirectly, at least a majority of
     the Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in writing
     its obligations under the Calpine Guaranty or (y) Calpine's obligations
     under the Calpine Guaranty has been succeeded to in accordance with
     Section 8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

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<PAGE>
the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any state
     thereof or the District of Columbia;

               b)   the Facility Lessee shall have paid, at no
                    after-tax cost to such parties, all reasonable
                    documented out-of-pocket expenses (including reasonable
                    attorneys' fees and expenses) of the Owner Lessor, the
                    Lessor Manager, the Owner Participant, the Indenture
                    Trustee, the Lease Indenture Company and the Pass Through
                    Trustees in connection with such assignment;

               c)   the Facility Lessee shall have provided the
                    Indenture Trustee with (x) an indemnity against the risk
                    that such assignment will cause a Tax Event to occur to
                    any direct or indirect holder of any Lessor Note
                    (including any Certificateholder) or (y) an opinion of
                    counsel to the effect that such assignment will not cause
                    a Tax Event to occur to any direct holder of any Lessor
                    Note and any Certificateholder; and

               d)   the transfer shall not cause the Facility to
                    cease being treated as a "qualified Indian reservation
                    or property" within the meaning of Section 168(j)(4) of
                    the Code or cause the Facility to become "tax-exempt use
                    property within the meaning of Section 168(h) of the Code
                    (unless the Facility Lessee shall make a payment
                    contemporaneously with such transfer that in the reasonable

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<PAGE>
                    judgment of the Owner Participant compensates the Owner
                    Participant for the adverse tax consequences therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the South Point Ground Lease, except for obligations (including Section 9.1
and 9.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of the Operative Documents or which have otherwise accrued but
not been paid as of such date and (ii) the Owner Participant or the OP
Guarantor will transfer (by an appropriate instrument of transfer) the Member
Interest to the Facility Lessee (or its designee); provided, however, that if
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

     G.   Exercise of Extension of South Point Ground Lease. The rights of the
Owner Lessor delegated to the Facility Lessee, pursuant to Section 5.20(b)
hereof, and subject to the terms and conditions thereof, include the right to
negotiate and to exercise the Owner Lessor's

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<PAGE>
rights (to the extent of the Owner Lessor's Percentage) to extend the term of
the South Point Ground Lease in accordance with Section 4.2 thereof; provided,
however, that (i) such right may not be exercised by the Facility Lessee during
the occurrence and continuation of a Lease Event of Default and following the
commencement of the exercise of the Owner Lessor's remedies under Section 17 of
the Facility Lease, nor following the termination of the Facility Lease
pursuant to Section 17 thereof or the Facility Site Lease pursuant to Article
XVI thereof; provided further that the Facility Lessee agrees that, except as
otherwise provided in the third paragraph of this Section 13.3, it shall not
decline to exercise such right to extend, and shall not cancel any such
election of such right without the consent of the Owner Lessor unless the Owner
Participant has disapproved of the terms of the extension pursuant to Section
5.20 hereof.

          Notwithstanding the foregoing, the Facility Lessee may elect
to extend the South Point Ground Lease pursuant to Section 4.2 thereof and
exercise the Owner Lessor's rights under such Section only if, concurrently
with such election, the Facility Lessee also elects to extend the South Point
Ground Lease with respect to the Other South Point Owner Lessors on the same
terms and conditions negotiated for the Owner Lessor giving effect to their
respective percentage interests in the South Point Ground Lease. Additionally,
the Owner Lessor shall not give the Facility Lessee consent to refrain from
exercising the extension of the South Point Ground Lease or to cancel any such
extension, unless concurrently with such consent, the Other South Point Owner
Lessors also give such consent to the Facility Lessee with respect to the
respective interests of the Other Owner Lessors in the South Point Ground Lease.

          Notwithstanding any provision to the contrary in this
Agreement or in any other Operative Document, the Facility Lessee shall have no
obligation to exercise the lease extension right as provided in Section 4.2 of
the South Point Ground Lease, as amended, if the Facility Lessee shall disagree
with the amount of the Annual Renewal Amount (as defined in the South Point
Ground Lease) as determined pursuant to the terms of Section 4.2 of the South
Point Ground Lease, as amended. If the Facility Lessee shall so disagree with
such determination of the amount of the Annual Renewal Amount, then the
Facility Lessee shall have the right, in its sole discretion and without
consent from any of the Owner Lessor, Owner Participant or Indenture Trustee or
any other Person, to reject, and not accept and exercise, the lease extension
right contained in Section 4.2 of the South Point Ground Lease, and, in
connection therewith, to permit the Facility Lease and the Facility Site Lease
to terminate after expiration of the then current lease term of each thereof;
provided that nothing in this third paragraph of Section 13.3 shall, or shall
be deemed to, limit or affect the right of the Owner Lessor to extend the term
of the South Point Ground Lease by exercising, for and on its own behalf, the
lease extension right for the amount of the Annual Renewal Amount so
determined, or as otherwise may be determined in subsequent negotiations by the
Owner Lessor, it being understood that (A) unless otherwise agreed by the Owner
Lessor, the Facility Lessee's rejection and non-acceptance referred to above
shall be irrevocable and (B) neither the Facility Lessee nor any Calpine Party
shall have any right, title or interest in, or (except as otherwise provided in
Section 14.6) obligation or liability under or in connection with, the South
Point Ground Lease in respect of any period commencing on or after the later of
the termination of the Facility Lease and the termination of the Facility Site
Lease as aforesaid.

                                       72
<PAGE>
MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document or
the South Point Ground Lease.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          South Point Energy Center, LLC

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<PAGE>
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-4, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

                                       74
<PAGE>
          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone:  (212) 382-7255
               Facsimile:  (212) 382-9033
               Attention:  Managing Director

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<PAGE>
          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, NATIONAL
                       ASSOCIATION
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, NATIONAL
                       ASSOCIATION
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

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<PAGE>
          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto.
          In addition, the Facility Lessee shall (unless otherwise
          directed by the applicable Rating Agency) provide to each
          Rating Agency a copy of any information, report or notice it
          gives to the Indenture Trustee hereunder or any other
          Operative Documents.

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<PAGE>
Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the South Point Ground Lease regardless of any
investigation made by any such party or on behalf of any such party. In
addition, the indemnifications by the Facility Lessee under Sections 9.1 and
9.2 of this Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the
Facility Site Lease and the Calpine Guaranty, shall expressly survive the
expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition of the respective interests
of the Owner Participant, the Owner Lessor, the Lessor Manager, the Lease
Indenture Company, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders in, to and under this Agreement, the Assignment Agreement
and the other Operative Documents and the South Point Ground Lease. Except as
expressly provided above or in Section 22.3 of the Facility Lease, the Tax
Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts.  This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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<PAGE>
Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the South Point Ground Lease, as to
     all of which the other parties hereto agree to look solely to the
     Indenture Estate and the Lessor Estate, respectively; provided, however,
     that the Lease Indenture Company and the Pass Through Trust Company shall
     be liable hereunder for their own negligence or willful misconduct or for
     a breach of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                       79
<PAGE>
     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in their sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement
     (other than an amendment solely effecting a transfer of the Owner
     Participant's interest in the Lessor Estate) and deliver true, complete
     and fully executed copies to the Facility Lessee of any amendment or
     supplement to the LLC Agreement. No amendment or supplement to the LLC
     Agreement that would reasonably be expected to materially adversely affect
     the interests of the Facility Lessee or the Indenture Trustee shall become
     effective without the written consent of the Indenture Trustee and the
     Facility Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and to
     the nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the South Point Ground Lease (except as otherwise provided
     therein) or the subject matter hereof or thereof or any of the
     transactions contemplated hereby or thereby brought by any of the parties
     hereto or their successors or assigns; (ii) hereby irrevocably agrees that
     all claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is not
     personally subject to the jurisdiction of the above-named courts, that the
     suit, action or proceeding is brought in an inconvenient forum, that the
     venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                       80
<PAGE>
By the execution and delivery of this Agreement, the Facility Lessee
     designates, appoints and empowers National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents or with respect to the Facility Lessee, for
     so long as it has any obligations remaining under the South Point Ground
     Lease. The Facility Lessee shall grant an irrevocable power of attorney to
     CT Corporation System, in respect of such appointment and shall maintain
     such power of attorney in full force and effect for so long as any
     obligation of the Facility Lessee shall remain outstanding hereunder or
     under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                       81
<PAGE>
the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     14.21;

as may be required by Applicable Law or, upon prompt prior written notice to the
     affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

                                       82
<PAGE>
          The foregoing obligation as to confidentiality and non-use
shall survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties may
rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

     H.   South Point Ground Lease

     The parties hereto acknowledge and agree that, in accordance with Section
7.2 of the Facility Lease, the Facility Lease is subject and subordinate to all
the terms and conditions of the South Point Ground Lease.

                                       83
<PAGE>
          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                         SOUTH POINT ENERGY CENTER, LLC,
                         a Delaware limited liability company

                              By: _________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              SOUTH POINT OL-4, LLC, a Delaware limited
                              liability company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: _______________________________________
                              Name:
                              Title:
                              Date:

                              SBR OP-4, LLC, a Delaware limited liability
                              company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: _______________________________________
                              Name:
                              Title:
                              Date:

                              WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION,
                         not in its individual capacity, except as expressly
                         provided herein, but solely as Lessor Manager

                         By:  ___________________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                         not in its individual capacity, except to the
                         extent expressly provided herein, but solely as
                         Indenture Trustee under the Collateral Trust
                         Indenture

                              By: _______________________________________
                              Name:
                              Title:
                              Date:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                         not in its individual capacity, except to the
                         extent expressly provided herein, but solely as
                         Pass Through Trustees under the Pass Through
                         Trust Agreement

                              By: _______________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              CALPINE CORPORATION,
                              a Delaware corporation
                              By: _______________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but in
     another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect of
     an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in any
     such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)  a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other section,
     paragraph or other part substituted therefor from time to time;
<PAGE>
     (i)  if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)  a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or words
     of similar import shall, whether or not so expressly stated, be deemed to
     be a reference to the satisfaction, release and discharge in full and
     cancellation of the Lien of the Collateral Trust Indenture or the
     Collateral Documents, as the case may be, in accordance with the express
     provisions thereof.

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)  a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in
     Section 3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                        2
<PAGE>
     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or other
     employee whose responsibilities include the administration of the Overall
     Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to finance
     all or a portion of the Owner Lessor's Percentage of the cost of any
     Required or Non-Severable Improvement financed pursuant to Section 11.1 of
     the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12 of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially owning
     or holding, directly or indirectly, 10% or more of any class of voting or
     equity interest of such first Person or any corporation of which such
     first Person beneficially owns or holds, in the aggregate, directly or
     indirectly, 10% or more of any class of voting or equity interest. For
     purposes of this definition, "control" when used with respect to any
     particular Person shall mean the power to direct the management and
     policies of such Person, directly or indirectly, whether through the
     ownership of voting securities, by contract or otherwise, and the terms
     "controlling" and "controlled" have meanings correlative to the foregoing;
     provided, however, that under no circumstances shall the Lease Indenture
     Company be considered to be an Affiliate of either the Indenture Trustee
     or any Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease Indenture
     Company, nor shall the Lease Indenture Company, the Indenture Trustee,
     solely because any Operative Document contemplates that any of them may
     request or act at the instruction of any such Person or such Person's
     Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is received
     or properly accrued, and

                                        3
<PAGE>
     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use the
     Facility, the Undivided Interest (if any), the Ground Interest or Facility
     Site as contemplated by the Operative Documents and the South Point Ground
     Lease, to sell electricity therefrom, to enter into any Operative Document
     or to consummate any transaction contemplated thereby, or (b) that is
     necessary so that none of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of the
     Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten (10)
     Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal. If
     either the Owner Participant or the Facility Lessee does not appoint its
     appraiser within such ten Business Day period, the determination of the
     other appraiser shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. If the appraisers appointed by the Owner
     Participant and the Facility Lessee are unable to agree upon the value,
     period, amount or other determination in question within thirty (30) days,
     such appraisers shall jointly appoint a third Independent Appraiser or, if

                                        4
<PAGE>
     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (SP-4) dated
     as of the Closing Date between CCFC and the Owner Lessor, substantially in
     the form of Exhibit B to the Participation Agreement duly completed,
     executed and delivered on the Closing Date pursuant to which the Owner
     Lessor will acquire the Undivided Interest and the Ground Interest from
     CCFC.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $17,187,500.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate of
     interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee for
     rental payments during the remaining term of the lease included in such
     Sale/Leaseback Transaction (including any period for which such lease has
     been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
     the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U. S.C.ss. 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of the
     Facility Lease.

                                        5
<PAGE>
     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interests to Broad River
     Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner Lessor
     will lease the applicable Broad River Ground Interest to the Broad River
     Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                        6
<PAGE>
     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad River
     OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and the
     Broad River Ground Interests to the Broad River Owner Lessors, and the
     simultaneous lease of the Broad River Undivided Interests and Broad River
     Ground Interests to the Broad River Facility Lessee on substantially the
     same terms and conditions as under, and dated the same date as, the Broad
     River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee, the
     Pass Through Trustees and Calpine and designated Participation Agreement
     (BR-1), Participation Agreement (BR-2), Participation Agreement (BR-3) and
     Participation Agreement (BR-4), each dated as of the Closing Date,
     pursuant to which, among other things, the Broad River Facility Lessee has
     agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the Broad River Facility,
     and (b) lease from the applicable Broad River Owner Lessors such undivided
     leasehold interest in the Broad River Facility pursuant to the Broad River
     Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                        7
<PAGE>
     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required by
     law, regulation or executive order to be closed in New York, New York, the
     city and the state in which the Corporate Trust Office of the Indenture
     Trustee is located or the city and state in which the Pass Through
     Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment Agreement
     (SP-4) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, CCFC, the Facility Lessee, and each
     other Affiliate of Calpine that is party to any Operative Document.

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

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

     "CCFC" shall mean Calpine Construction Finance Company, L.P., a Delaware
     limited partnership.

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any

                                        8
<PAGE>
     certificates issued in replacement therefor pursuant to Section 3.3, 3.4
     or 3.5 of the Pass Through Trust Agreement.

     "CES" shall mean Calpine Energy Services L.P., a Delaware limited
     partnership.

     "CLAIM(S)" individually or collectively as the context may require, shall
     mean any liability (including in respect of negligence (whether passive or
     active or other torts), strict or absolute liability in tort or otherwise,
     warranty, latent or other defects (regardless of whether or not
     discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges, of
     whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Deed of
     Trust, Assignment of Rent and Leases, Security Agreement and Financing
     Statement (SP-4), dated as of the Closing Date, between the Owner Lessor
     and the Indenture Trustee, in substantially the form of Exhibit I to the
     Participation Agreement.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature that
     may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                        9
<PAGE>
     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a Consolidated
     balance sheet of the Guarantor and its Subsidiaries, determined in
     accordance with GAAP, and after giving effect to purchase accounting and
     after deducting therefrom, to the extent otherwise included, the amounts
     of: (i) Consolidated Current Liabilities; (ii) minority interests in
     consolidated Restricted Subsidiaries held by Persons other than the
     Guarantor or a Restricted Subsidiary; (iii) excess of cost over fair value
     of assets of businesses acquired, as determined in good faith by the Board
     of Directors; (iv) any revaluation or other write-up in value of assets
     subsequent to December 31, 1993 as a result of a change in the method of
     valuation in accordance with GAAP; (v) unamortized debt discount and
     expenses and other unamortized deferred charges, goodwill, patents,
     trademarks, service marks, trade names, copyrights, licenses, organization
     or developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous fund
     established for the purpose of redemption or other retirement of Capital
     Stock to the extent such obligation is not reflected in Consolidated
     Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule 2
     of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                       10
<PAGE>
     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time or
     both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section 1(a)
     of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "EASEMENT" shall mean the easement defined in the recitals to the
     Facility Site Lease.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the report
     of the Engineering Consultant, dated October 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether civil
     or criminal, arising under a theory of negligence or strict liability, or
     otherwise) under any Environmental Law, (iii) create or constitute a
     public or private nuisance or trespass, or (iv) constitute a violation of
     or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Applied EnviroSolutions, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                       11
<PAGE>
     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment dated October 12, 2001 prepared by the Environmental Consultant
     for Calpine Corporation.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any
determination of Termination Value or amount determined by reference to
Termination Value payable pursuant to the Operative Documents, shall mean an
amount equal to the excess, if any, of (i) the Termination Value set forth
opposite the Termination Date corresponding to such date of determination on
Schedule 2 of the Facility Lease, and, if such date of determination is a Rent
Payment Date, Periodic Rent due on that date (to the extent payable in arrears)
over (ii) the balance, including scheduled (in accordance with the payment
terms of the Lessor Notes) accrued interest, on the Lessor Notes scheduled (in
accordance with the payment terms of the Lessor Notes) to be outstanding on
such date of determination corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee being
     or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)  (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor
     of the Undivided Interest or the Ground Interest, following exhaustion of
     all permitted appeals or an election by the Facility Lessee in its
     discretion not to pursue such appeals or rights; provided that no such
     contest (or exercise) shall

                                       12
<PAGE>
     extend beyond the earlier of the date which is (x) six months after the
     loss of such title, or (y) 48 months prior to the end of the Basic Lease
     Term or any Renewal Lease Term then in effect or elected by the Facility
     Lessee or (b) Requisition of use of, or leasehold in, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall have
     resulted in the loss of possession of the Undivided Interest or all or any
     part of the Ground Interest that is required for the use or operation of
     the Facility; provided that in any case involving Requisition of use of
     the Facility, or all or any part of the Facility Site that is required for
     the use or operation, of the Facility, but not of the Owner Lessor's
     Undivided Interest or the Ground Interest, such event shall be an Event of
     Loss only if loss of possession continues beyond the Basic Lease Term or
     any Renewal Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner Lessor,
     the Owner Participant or the OP Guarantor in the transactions contemplated
     by the Operative Documents and the South Point Ground Lease and not, in
     any event, as a result of (a) investments, loans or other business
     activities of the Owner Participant or any of its Affiliates in respect of
     equipment or facilities similar in nature to the Facility or any part
     thereof or in any other electrical, cogeneration or other energy or
     utility related equipment or facilities or the general business or other
     activities of the Owner Participant or any of its Affiliates or the nature
     of any of the properties or assets from time to time owned, leased,
     operated, managed or otherwise used or made available for use by the Owner
     Participant or any of its Affiliates or (b) a failure of the Owner
     Participant to perform routine, administrative or ministerial actions the
     performance of which would not subject the Owner Participant or any of its
     Affiliates to any material adverse consequence (in the reasonable opinion
     of such Owner Participant acting in good faith); provided that the
     Facility Lessee and the Owner Lessor and Owner Participant agree to
     cooperate and to take reasonable measures to alleviate the source or
     consequence of any regulation constituting an Event of Loss under this
     paragraph (iv), so long as there shall be no adverse consequences to the
     Owner Lessor or Owner Participant as a result of such cooperation or the
     taking of reasonable measures (the events and circumstances described
     herein this paragraph (iv), a "Regulatory Event of Loss"); or

          (v)    if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Orders shall not have been obtained and become
     final within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

                                       13
<PAGE>
          (vi)   the South Point Ground Lease shall have been cancelled or
     terminated or shall otherwise cease to be in full force and effect other
     than by reason of events constituting a Lease Event of Default under
     Section 16(m) of the Facility Lease; or

          (vii)  if elected by the Owner Participant, in the event that
     the FERC Order set forth in clause (ii) of the definition of "FERC
     Orders" herein shall not have been obtained and become final within ninety
     (90) days of the Closing Date, such election to be conditioned upon
     receipt of a reasoned legal opinion of nationally recognized independent
     counsel (Owner Participant's outside counsel at Closing to be deemed to
     meet such qualifications) that any pending proceeding, if adversely
     determined, would reasonably be expected to have a material adverse effect
     on the Owner Participant or the Owner Lessor, it being acknowledged and
     agreed that for purposes of this clause (vii), in determining if a
     material adverse effect would reasonably be expected to occur, (x) the
     fact of Calpine's obligations under the Calpine Guaranty shall be taken
     into account, and (y) no such material adverse effect shall be found to be
     reasonably expected to occur if (1) an adverse determination in any such
     pending proceeding would be reasonably likely to result in a FERC order
     accepting Lessee's rate schedule, as amended, or establishing a just and
     reasonable rate, that in either case is sufficient to allow the Facility
     Lessee to satisfy its obligations to pay Periodic Rent under the Facility
     Lease, and (2) no material adverse effect would be reasonably likely to
     occur as a result of any other aspect of such FERC proceeding.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or exercise
     its rights of eminent domain, and (C) the date which is 48 months prior to
     the end of the Basic Lease Term or any Renewal Lease Term then in effect
     or elected by the Facility Lessee (if an event described in clause
     (iii)(a) shall be continuing at such time). The date of occurrence of an
     Event of Loss described in clause (iii)(b) above shall be the date of
     requisition of title to the Facility Site or, in the case of a requisition
     of use of the Facility Site, the date which is the scheduled expiration
     date of the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee, as the case may be (if an event described
     in clause (iii)(b) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iv) above shall be the
     date on which the Facility Lessee receives the Owner Participant's
     election made in accordance with such clause (iv) during any period when
     an event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause (v)
     above shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (v). The date
     of occurrence of an Event of Loss in clause

                                       14
<PAGE>
     (vi) above shall be ten (10) Business Days after any such cancellation,
     termination or failure to be in full force and effect as contemplated
     therein. The date of occurrence of an Event of Loss in clause (vii) above
     shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (vii).

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable by
     the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the South Point Ground Lease,
     (ii)(A) insurance proceeds, if any, payable to the Owner Lessor or the
     Owner Participant under insurance separately maintained by the Owner
     Lessor or the Owner Participant with respect to the Facility as permitted
     by Section 3(b) of Schedule 5.31 to the Participation Agreement or (B)
     proceeds of personal injury or property damage liability insurance
     maintained under any Operative Document or the South Point Ground Lease
     for the benefit of the Owner Lessor or the Owner Participant, (iii) any
     amount payable to the Owner Participant as the purchase price of the Owner
     Participant's right and interest in the Member Interest, (iv) all other
     fees expressly payable to the Owner Participant under the Operative
     Documents, (v) any payments in respect of interest, or any payments made
     on an After-Tax Basis, to the extent attributable to payments referred to
     in clause (i) through (vi) above; (vii) any amounts paid to the Owner
     Lessor as reimbursement for amounts expended pursuant to Section 20 of the
     Facility Lease; (viii) proceeds of the items referred to in clause (i)
     through (vii) above; and (ix) any rights to demand, collect, sue for, or
     otherwise receive and enforce payment of the foregoing amounts, including
     under the Calpine Guaranty, but without limiting clause (v) of this
     definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 530 MW nameplate capacity gas-fired combined
     cycle merchant power plant located near Bullhead, Arizona and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

                                       15
<PAGE>
     "FACILITY LEASE" shall mean, the Facility Lease Agreement (SP-4), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all Renewal
     Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (SP-4), dated as
     of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean South Point Energy Center, LLC.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean Owner Lessor.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion to
     lease or purchase and an informed and willing lessor or seller or supplier
     under no compulsion to lease or sell or supply the property or service in
     question, and shall, in the case of the Undivided Interest or the Owner
     Lessor's Interest, be determined (except pursuant to Section 17 of the
     Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with in
     all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the South Point Ground Lease and the obligations relating
     thereto, (iii) the Undivided Interest or the Owner Lessor's Interest, as
     the case may be, is free and clear of all Liens (other than Owner Lessor's
     Liens, Owner Participant's Liens and Indenture Trustee Liens), (iv) taking
     into account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents and the South Point
     Ground Lease. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner Lessor
     pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all

                                       16
<PAGE>
     faults" basis and shall take into account all Liens (other than Owner
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee Liens);
     provided, however, in any such case where the Owner Lessor shall be unable
     to obtain constructive possession sufficient to realize the economic
     benefit of the Owner Lessor's Interest, Fair Market Sales Value of the
     Owner Lessor's Interest shall be deemed equal to $0 (zero). If in any case
     other than in the preceding sentence the parties are unable to agree upon
     a Fair Market Sales Value of the Owner Lessor's Interest within 30 days
     after a request therefor has been made, the Fair Market Sales Value of the
     Owner Lessor's Interest shall be determined by appraisal pursuant to the
     Appraisal Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of (a) the Facility
     Lessee and (b) the Owner Lessor for the benefit of the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on or
     before the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal
     Power Act for the transfer of jurisidictional facilities, including the
     Power Marketing Agreement between CCFC and CES from CCFC to CES under
     Section 203 of the Federal Power Act in the sale/leaseback contemplated
     by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDERS" shall mean the order issued by the FERC
     determining that the Owner Lessor is an EWG.

                                       17
<PAGE>
     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(a) of the Facility Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the Ground
     Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND LEASE" shall have the meaning set forth in recital A of the
     Facility Site Lease.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance in
     any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or Optional
     Improvements, but do not include Components.

                                       18
<PAGE>
     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests of
     such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under "swaps",
     "caps", "floors", "collars", or other interest rate hedging contracts or
     similar arrangements, (ix) all Indebtedness of any other Person of the
     type referred to in clauses (i) through (viii), guaranteed by such Person
     or for which such Person shall otherwise (including pursuant to any
     keepwell, makewell or similar arrangement) become directly or indirectly
     liable, and (x) all Indebtedness of the type referred to in clauses (i)
     through (ix) above secured by (or for which the holder of such
     Indebtedness has an existing right, contingent or otherwise, to be secured
     by) any Lien on property (including accounts and contracts rights) owned
     by such Person, even though such Person has not assumed or become liable
     for the payment of such Indebtedness, the amount of such obligation being
     deemed to be the lesser of the value of such property or the amount of the
     obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

                                       19
<PAGE>
     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the Participation
     Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease or the transactions contemplated thereby, (ii)
     Claims against or any act or omission of the Lease Indenture Company or
     the Indenture Trustee, or Affiliate thereof that is not related to, or
     that is in violation of, any of such Person's representations, warranties,
     covenants or agreements in an Operative Document or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Lease Indenture Company or the Indenture Trustee specified therein,
     (iii) Taxes imposed upon the Lease Indenture Company or the Indenture
     Trustee, or any Affiliate thereof that are not indemnified against by the
     Facility Lessee pursuant to any Operative Document or (iv) Claims against
     or affecting the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof arising out of the voluntary or involuntary transfer by
     the Lease Indenture Company or the Indenture Trustee of any portion of the
     interest of the Lease Indenture Company or the Indenture Trustee in the
     Lessor Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

                                       20
<PAGE>
     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Summit Global Partners Insurance
     Services.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under the
     Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such

                                       21
<PAGE>
     transaction is considered borrowed money indebtedness of the lessee for
     tax purposes but is classified as an operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents and the South Point Ground Lease,
     including all funds advanced to the Owner Lessor by the Owner Participant,
     all installments and other payments of Periodic Rent, Supplemental Rent or
     Termination Value under the Facility Lease, condemnation awards, purchase
     price, sale proceeds, insurance proceeds and all other proceeds, rights
     and interests of any kind for or with respect to the estate, right, title
     and interest of the Owner Lessor in, to and under the Undivided Interest,
     the Ground Interest and the Operative Documents and the South Point Ground
     Lease and any of the foregoing, but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the provisions
     of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title retention
     arrangement.

                                       22
<PAGE>
     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of this
     definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject to
     redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S.  Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S.  Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S.  Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations, assets,
     financial position, results of operation or business of the Guarantor,
     including a material adverse effect on (i) the Facility, the Undivided
     Interest, the Facility Site or the Ground Interest which adversely affects
     the ability of the Guarantor to perform its obligations under the
     Operative Documents or (ii) the validity or enforceability of the
     Operative Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement), (b)
     the Indenture Estate or the Lessor Estate, the security interests in the
     Lessor Estate, or (c) with respect to the Owner Participant's (but not the
     Certificateholders') interest in the Undivided Interest, the residual

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

                                       23
<PAGE>
     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (SP-4), dated as of the Closing Date, between the Owner Lessor,
     as landlord, and the Facility Lessee, as tenant, and filed with the
     Recorder of Mohave County, Arizona and the Tribal Recorder of the Tribe.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (SP-4),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Recorder of Mohave County, Arizona and the Tribal
     Recorder of the Tribe.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any Person
     authorized by or pursuant to the organizational documents, the by-laws or
     any resolution of the Board of Directors or Executive Committee of such
     Person (whether general or specific) to execute, deliver and take actions
     on behalf of such Person in respect of any of the Operative Documents,
     (ii) in the case of a partnership, by the Chairman of the Board of
     Directors, the President or any Vice President, the Treasurer or an
     Assistant Treasurer of a corporate general partner and (iii) in the case
     of an Indenture Trustee, a certificate signed by a Responsible Officer of
     such Indenture Trustee.

                                       24
<PAGE>
     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to the
     Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an OP
     Guarantor in form and substance substantially in the form of Exhibit G to
     the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Calpine Guaranty, the OP Parent Guaranty (if any), the Certificate
     Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine or any replacement Operator appointed
     pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W.  Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at Closing,
     and as to all other matters, Thelen Reid & Priest LLP and/or Davis Wright
     & Tremaine LLP, or any other outside legal counsel reasonably acceptable
     to the Owner Participant, (ii) in form and substance (with respect to
     qualifications, exception, assumption and the like) substantially
     equivalent to the legal opinions delivered at Closing, with any material
     modification or supplements thereto to be reasonably acceptable to the
     Owner Participant, or in any such other form as may be reasonably
     acceptable to the Owner Participant, and (iii) the scope of which shall
     cover due authorization, execution, delivery and enforceability of the
     applicable agreement(s), and exemption from regulation, in each case,
     substantially in the form set forth in the opinions delivered at Closing
     with any material modifications thereto to be reasonably acceptable to the
     Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

                                       25
<PAGE>
     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other South Point
     Calpine Guaranties, the Broad River Calpine Guaranties and the RockGen
     Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other South Point
     Facility Leases, the Broad River Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other South Point Owner
     Lessors, the Broad River Owner Lessors and the RockGen Owner Lessors.

     "OTHER SOUTH POINT ASSIGNMENT AGREEMENTS " shall mean each of the
     assignment agreements executed and delivered pursuant to the Other South
     Point Participation Agreements.

     "OTHER SOUTH POINT CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine pursuant
     to the Other South Point Participation Agreements.

     "OTHER SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     South Point Participation Agreements.

     "OTHER SOUTH POINT FACILITY LEASES" shall mean the other South Point
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other South Point Owner Lessors and the Facility Lessee, pursuant to
     which the Other South Point Owner Lessors will lease the Other South Point
     Undivided Interests to the Facility Lessee.

     "OTHER SOUTH POINT FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other South
     Point Owner Lessors and the Facility Lessee pursuant to which the Other
     South Point Owner Lessors will lease the Other South Point Ground
     Interests to the Facility Lessee.

     "OTHER SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other South Point Collateral Trust Indentures.

                                       26
<PAGE>
     "OTHER SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other South Point Undivided
     Interests and the Other South Point Ground Interests to the Other South
     Point Owner Lessors, and the lease of the Other South Point Undivided
     Interests and the Other South Point Ground Interest to the Facility Lessee
     on substantially the same terms and conditions as under, and dated the
     same date as, the Overall Transaction.

     "OTHER SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other South Point Owner Lessors pursuant to the
     Other South Point Operative Documents.

     "OTHER SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South
     Point OL-2, LLC and South Point OL-3, LLC.

     "OTHER SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC and SBR OP-3, LLC.

     "OTHER SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other South Point Lease Transactions.

     "OTHER SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other South Point
     Owner Lessor, the Other South Point Lessor Manager, Other South Point
     Owner Participant, Other South Point Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (SP-1),
     Participation Agreement (SP-2) and Participation Agreement (SP-3), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) cause CCFC to assign and transfer to the
     applicable Other South Point Owner Lessors certain undivided leasehold
     interests in the Facility and the Facility Site, and (b) lease from the
     applicable Other South Point Owner Lessors such undivided leasehold
     interest in the Facility and the Facility Site pursuant to the Other South
     Point Facility Leases.

     "OTHER SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interest in the Facility not conveyed to the Owner Lessor under the
     Assignment Agreement.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the South Point Ground Lease (giving effect to
     its assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean South Point OL-4, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

                                       27
<PAGE>
     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: South Point OL-4, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Site or
     the Easement, or any part of any thereof or interest therein arising as a
     result of (i) Taxes against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     South Point Ground Lease (giving effect to its assignment to the Owner
     Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate thereof
     that is not related to, or that is in violation of, any Operative Document
     or the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Owner Lessor, the Trust Company or the Lessor Manager specified
     therein, (iii) Taxes imposed upon the Owner Lessor, the Trust Company or
     the Lessor Manager or any Affiliate thereof that are not indemnified
     against by the Facility Lessee pursuant to any Operative Document or (iv)
     Claims against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof arising out of the voluntary or
     involuntary transfer by the Owner Lessor, the Trust Company or the Lessor
     Manager of any portion of the interest of the Owner Lessor in the Owner
     Lessor's Interest, other than pursuant to the Operative Documents and the
     South Point Ground Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-4, LLC, a Delaware limited liability
     company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility Site
     or the Easement, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document or the South Point Ground Lease or the transactions
     contemplated

                                       28
<PAGE>
     thereby or that is in breach of any covenant or agreement of the Owner
     Participant set forth therein, (ii) Taxes against the Owner Participant
     that are not indemnified against by the Facility Lessee pursuant to the
     Operative Documents or (iii) Claims against or affecting the Owner
     Participant arising out of the voluntary or involuntary transfer by the
     Owner Participant of any portion of the interest of the Owner Participant
     in the Member Interest, other than any transfer (x) pursuant to the
     exercise of any of the Facility Lessee's (or any Affiliate thereof) rights
     under the Operative Documents or (y) during the continuance of a Lease
     Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to the
     multiple investment sinking fund method of analysis, and (ii) periodic
     GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and Operation
     Agreement, dated as of October 18, 2001, among the Facility Lessee, the
     Owner Lessor and the Other South Point Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated as
     of October 18, 2001, among the Facility Lessee, the Guarantor, the Owner
     Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass Through
     Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

                                       29
<PAGE>
     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site, all
     matters shown as exceptions on Schedule B to each of the Title Policies as
     in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are: (i)
     direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the South Point Ground Lease,
     as well as the rights of sublessees and/or assignees to the extent set
     forth in or expressly permitted pursuant to the Facility Lease or any
     other Operative Document, (b) as to the Facility Lessee, Owner

                                       30
<PAGE>
     Lessor's Liens, Owner Participant's Liens and Indenture Trustee's Liens,
     (c) Liens for any tax, assessment or other governmental charge, either
     secured by a bond reasonably acceptable to the Indenture Trustee and the
     Pass Through Trustees and, so long as no Lease Indenture Event of Default
     which is not a Lease Event of Default exists, the Owner Lessor, or not yet
     due or being contested in good faith and by appropriate proceedings, so
     long as (i) such proceedings shall not reasonably be expected to give rise
     to criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so long
     as an appeal or proceeding for review is being prosecuted in good faith
     and so long as (i) such proceedings shall not reasonably be expected to
     give rise to criminal liability or material civil liability on the part of
     the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, and (ii) adequate reserves consistent with GAAP
     requirements have been established and are maintained, so as to ensure
     that any amounts determined to be due will be promptly paid in full when
     such contest is determined, or are fully covered by insurance, (f) mineral
     rights the use and enjoyment of which do not materially interfere with the
     use and enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any

                                       31
<PAGE>
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, (k) the interests of the Other Owner Lessors
     and the Other Indenture Trustees in the Facility, the Facility Site and
     the Ownership and Operation Agreement, (l) the interests of the Facility
     Lessee, the Other Owner Participants, the Other Owner Lessors, the Other
     Lessor Managers, the Other Indenture Trustees, and Pass Through Trustees
     under any of the Other Operative Documents, (m) the Ownership and
     Operation Agreement, (n) the interest of the co-owners of the Facility
     as tenants in common in the Facility and the rights of such owners under
     the Ownership and Operation Agreement and (o) any rights of the Tribe with
     respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative, partnership,
     joint venture, association, joint-stock company, limited liability
     company, other entity, trust, unincorporated organization or government or
     any agency or political subdivision thereof or any other entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

     "POWER MARKETING AGREEMENT" shall mean the Power Marketing Agreement,
     dated as of October 20, 1999, by and between CES (as successor by merger
     to Calpine Power Services Company) and CCFC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A.  from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that

                                       32
<PAGE>
     has been included in the issuance or amendment of a proposed Treasury
     Regulation, (c) that is part of a bill that has been introduced into the
     House of Representatives or the Senate and which has been publicly
     endorsed by the Executive Branch or the Department of Treasury, or (d)
     with respect to which a notice of a specific proposed change in
     administrative guidance has been issued by the Internal Revenue Service or
     the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of the
     Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary

                                       33
<PAGE>
     and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
     of another Restricted Subsidiary) including Indebtedness that refinances
     Refinancing Indebtedness; provided, however, that (i) if the Indebtedness
     being refinanced is contractually subordinated in right of payment to the
     Obligations, the Refinancing Indebtedness shall be contractually
     subordinated in right of payment to such Obligations to at least the same
     extent as the Indebtedness being refinanced, (ii) the Refinancing
     Indebtedness is scheduled to mature either (a) no earlier than the
     Indebtedness being refinanced or (b) after the Stated Maturity of the
     Obligations, (iii) the Refinancing Indebtedness has an Average Life at the
     time such Refinancing Indebtedness is Incurred that is equal to or greater
     than the Average Life of the Indebtedness being refinanced and (iv) such
     Refinancing Indebtedness is in an aggregate principal amount (or if issued
     with original issue discount, an aggregate issue price) that is equal to
     or less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                       34
<PAGE>
     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2037) and October 18, 2037.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases thereafter (except for the last
     Rent Payment Period which period shall commence on May 31, 2037 and end
     on, and include, October 18, 2001), each six-month period commencing on
     each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2 of
     the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

                                       35
<PAGE>
     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of the
     four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests in
     the RockGen Facility Site conveyed to the RockGen Owner Lessors under the
     RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting on
     behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground

                                       36
<PAGE>
     Interest to the RockGen Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the RockGen Overall
     Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen Owner Lessors certain
     undivided interests in the RockGen Facility, and (b) lease from the
     applicable RockGen Owner Lessors such undivided interest in the RockGen
     Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership interests
     in the RockGen Facility conveyed to the RockGen Owner Lessors under the
     RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
     owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

                                       37
<PAGE>
     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b) of
     the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other South Point Facility Lease.

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

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT" shall mean South Point Energy Center, LLC.

     "SOUTH POINT ENERGY" shall have the meaning set forth in the first
     paragraph of the Facility Site Lease.

     "SOUTH POINT GROUND LEASE" shall mean the Amended and Restated Ground
     Lease Agreement dated as of August 4, 1999 and approved by the Bureau of
     Indian Affairs on August 19, 1999, as amended by Lease Modification No. 1
     executed by the Tribe as of May 3, 2001, and Lease Modification No. 2
     executed by the Tribe as of October 11, 2001, by and between the Tribe and
     CCFC (as successor in interest to Calpine South Point, LLC).

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section 13.2
     of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the Termination
     Value under the Facility Lease on such date, or (ii) if such date shall
     not be a Termination Date, the Termination Value under the Facility Lease
     on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

                                       38
<PAGE>
     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in
     each case, if such determination date is a Rent Payment Date, before
     taking into account any Basic Rent or Renewal Rent due on such
     determination date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of the
     Facility Site, to be dated July 24, 2001 which inter alia, will show the
     location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation and
     registration fees), taxes (including, without limitation, income taxes,
     receipts, franchise, rental, turn over sales taxes, transaction privilege
     taxes, use taxes, stamp taxes, value-added taxes, excise taxes, ad valorem
     taxes and property taxes (personal and real, tangible and intangible)),
     licenses, exports, duties, recording charges, levies, assessments,
     withholdings , fees, assessments and other charges and impositions of any
     nature, plus all related interest, penalties, fines and additions to tax,
     now or hereafter imposed by any federal, state, local or foreign
     government, the Tribe or other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

                                       39
<PAGE>
     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of the
     Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (SP-4),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TERM" with respect to the Facility Site Lease, shall have the meaning set
     forth in Section 2.1(b) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean the Consent Letter from the Tribe with
     respect to the Amended and Restated Ground Lease Agreement executed on or
     about August 4, 1999 between the Tribe, CCFC (as successor in interest to
     CPN South Point LLC, under that certain Assignment and Assumption
     Agreement of Amended and Restated Ground Lease Agreement by and between
     CPN South Point LLC as assignor and CCFC as assignee) (as amended by Lease
     Modification No. 1 dated May 3, 2001 between the Tribe and CCFC), the form
     of which is attached hereto as Exhibit M.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

                                       40
<PAGE>
     "TITLE POLICY" shall mean, the title insurance policy (#291-000-164004)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)      the reasonable costs of reproducing and printing the Operative
     Documents and the South Point Ground Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement) and
     all costs and fees, including but not limited to filing and recording fees
     and recording, transfer, mortgage, intangible and similar taxes in
     connection with the execution, delivery, filing and recording of the
     Facility Lease, the Facility Site Lease, and any other Operative Document
     and the South Point Ground Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and any other document
     required to be filed or recorded pursuant to the provisions hereof or of
     any other Operative Document and the South Point Ground Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)     the reasonable fees and expenses of Dewey Ballantine
     LLP, counsel to the Owner Participant and the Owner Lessor for their
     services rendered in connection with the negotiation, execution and
     delivery of the Participation Agreement and the other Operative Documents;

     (iii)    the reasonable fees and expenses of (a) Holland & Hart LLP
     Tribal counsel to the Facility Lessee, the Owner Lessor, the Owner
     Participant and the Initial Purchasers and (b) Fennemore Craig, Arizona
     counsel to the Facility Lessee, the Owner Lessor, the Owner Participant
     and the Initial Purchasers;

     (iv)     the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)      the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)     the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)    the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum of
     Facility Site Lease and the other applicable Operative Documents and the
     South Point Ground Lease;

                                       41
<PAGE>
     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)     the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)      the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)     the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)    the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)    the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

     (xv)     the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)    all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)  the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)    the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc.  and Calpine.

                                       42
<PAGE>
     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the South Point Ground Lease
     pursuant to the Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted by
     Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRIBE" shall mean the Fort Mojave Indian Tribe of the Fort Mojave Indian
     Reservation, a federally recognized Indian Tribe.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by
     which the value of the accumulated plan benefits under the Plan determined
     on a plan termination basis in accordance with actuarial assumptions at
     such time consistent with those prescribed by the PBGC for purposes of
     Section 4044 of ERISA, exceeds the fair market value of all plan assets
     allocable to such liabilities under Title IV of ERISA (excluding any
     accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

                                       43
<PAGE>
     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.7
<SEQUENCE>10
<FILENAME>f80168ex4-22_7.txt
<DESCRIPTION>EXHIBIT 4.22.7
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.7

                                                                 EXECUTION COPY


                         PARTICIPATION AGREEMENT (BR-1)

                          Dated as of October 18, 2001

                                      among

                   BROAD RIVER ENERGY LLC, as Facility Lessee,

                     BROAD RIVER OL-1, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-1, LLC, as Owner Participant,

            STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
                                  ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees


                               BROAD RIVER PROJECT

===============================================================================

                                       i
<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>
SECTION 1.DEFINITIONS;INTERPRETATION OF THIS PARTICIPATION AGREEMENT .....................................................   3

SECTION 2.PARTICIPATION; CLOSING DATE; TRANSACTION COSTS .................................................................   3

     Section 2.1   Agreements to Participate .............................................................................   3

     Section 2.2   Closing Date; Procedure for Participation. ............................................................   4

     Section 2.3   Transaction Costs. ....................................................................................   6

SECTION 3. REPRESENTATIONS AND WARRANTIES ................................................................................   6

     Section 3.1   Representations and Warranties of the Facility Lessee .................................................   6

     Section 3.2   Representations and Warranties of the Owner Lessor ....................................................  17

     Section 3.3   Representations and Warranties of the Lessor Manager and the Trust Company ............................  18

     Section 3.4   Representations and Warranties of the Owner Participant ...............................................  20

     Section 3.5   Representations and Warranties of Indenture Trustee and the Lease Indenture Company ...................  22

     Section 3.6   Representations, Warranties and Covenants of the Pass Through Trustees and the Pass Through
                    Company ..............................................................................................  24

SECTION 4. CLOSING CONDITIONS ............................................................................................  25

     Section 4.1   Completion of the Facility ............................................................................  27

     Section 4.2   Operative Documents ...................................................................................  27

     Section 4.3   Certificates and the Lessor Notes .....................................................................  27

     Section 4.4   Equity Investment .....................................................................................  27

     Section 4.5   Organizational Documents ..............................................................................  27

     Section 4.6   Representations and Warranties ........................................................................  27

     Section 4.7   Defaults, Events of Default, Events of Loss ...........................................................  27

     Section 4.8   Regulatory Approvals ..................................................................................  27

     Section 4.9   Consents ..............................................................................................  28

     Section 4.10  Governmental Actions ..................................................................................  29
</TABLE>

                                       i
<PAGE>


                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>

     Section 4.11  Insurance .............................................................................................  29

     Section 4.12  Ratings ...............................................................................................  29

     Section 4.13  Environmental Report ..................................................................................  29

     Section 4.14  Surveys ...............................................................................................  29

     Section 4.15  Appraisal; Condition of the Facility ..................................................................  29

     Section 4.16  Letter from the Appraiser .............................................................................  29

     Section 4.17  Other Reports .........................................................................................  30

     Section 4.18  Opinion with Respect to Certain Tax Aspects ...........................................................  30

     Section 4.19  Opinions of Counsel ...................................................................................  30

     Section 4.20  Recordings and Filings ................................................................................  30

     Section 4.21  Conditions to Closing .................................................................................  30

     Section 4.22  Taxes .................................................................................................  30

     Section 4.23  No Changes in Applicable Law ..........................................................................  31

     Section 4.24  Registered Agent for the Facility Lessee and the Owner Lessor .........................................  31

     Section 4.25  Operating Lease Treatment .............................................................................  31

     Section 4.26  Rent Adjustments ......................................................................................  31

     Section 4.27  Title Insurance .......................................................................................  31

     Section 4.28  Parent Guaranty .......................................................................................  31

     Section 4.29  Letter as to Number of Offerees .......................................................................  31

     Section 4.30  Lien Search ...........................................................................................  32

     Section 4.31  Litigation ............................................................................................  32

     Section 4.32  No Material Adverse Change ............................................................................  32

     Section 4.33  Private Placement Number ..............................................................................  32

     Section 4.34  Proceedings and Documents .............................................................................  32
</TABLE>

                                       ii
<PAGE>


                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>
     Section 4.35  No Proposed Tax Law Change ............................................................................  32

     Section 4.36  Payment of Fees and Expenses ..........................................................................  32

     Section 4.37  Corrective Ordinance ..................................................................................  32

SECTION 5.COVENANTS OF FACILITY LESSEE AND GUARANTOR .....................................................................  33

     Section 5.1   Maintenance of Existence ..............................................................................  33

     Section 5.2   Merger, Consolidation, Sale of Substantially All Assets ...............................................  33

     Section 5.3   Guaranty and Contingent Obligations ...................................................................  33

     Section 5.4   Assignment of Rights ..................................................................................  34

     Section 5.5   Lessor Manager Fees ...................................................................................  34

     Section 5.6   Conduct of Business, Properties, Etc. .................................................................  34

     Section 5.7   Obligations ...........................................................................................  34

     Section 5.8   Books, Records, Access ................................................................................  34

     Section 5.9   Other Information. ....................................................................................  35

     Section 5.10  Warranty of Title to Facility Site. ...................................................................  35

     Section 5.11  ERISA .................................................................................................  36

     Section 5.12  Certain Contracts and Agreements ......................................................................  36

     Section 5.13  Certain Costs .........................................................................................  36

     Section 5.14  Limitations on Liens ..................................................................................  37

     Section 5.15  Investments ...........................................................................................  37

     Section 5.16  Intentionally Deleted .................................................................................  37

     Section 5.17  Regulations ...........................................................................................  37

     Section 5.18  Partnerships ..........................................................................................  37

     Section 5.19  Dissolution ...........................................................................................  37

     Section 5.20  Termination of Operative Documents; Delegation of Authority. ..........................................  37
</TABLE>

                                       iii
<PAGE>


                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>

     Section 5.21  Name and Location .....................................................................................  39

     Section 5.22  Use of Facility Site ..................................................................................  39

     Section 5.23  Abandonment of Facility ...............................................................................  39

     Section 5.24  Taxes, Other Government Charges and Utility Charges ...................................................  39

     Section 5.25  Compliance with Laws, Instruments, Etc. ...............................................................  39

     Section 5.26  PUHCA .................................................................................................  40

     Section 5.27  Further Assurances ....................................................................................  40

     Section 5.28  No Subsidiaries .......................................................................................  41

     Section 5.29  Permitted Business ....................................................................................  41

     Section 5.30  Support Arrangements ..................................................................................  41

     Section 5.31  Insurance .............................................................................................  41

     Section 5.32  Tax Status ............................................................................................  41

     Section 5.33  Transmission Assets. ..................................................................................  42

SECTION 6.COVENANTSOF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER .........................................  42

     Section 6.1   Compliance with the LLC Agreement .....................................................................  42

     Section 6.2   Owner Lessor's Liens ..................................................................................  43

     Section 6.3   Amendments to Operative Documents .....................................................................  43

     Section 6.4   Transfer of the Owner Lessor's Interest ...............................................................  43

     Section 6.5   Owner Lessor; Lessor Estate ...........................................................................  43

     Section 6.6   Limitation on Indebtedness and Actions ................................................................  43

     Section 6.7   Change of Location ....................................................................................  43

     Section 6.8   Bankruptcy of Owner Lessor. ...........................................................................  43

SECTION 7. COVENANTS OF THE OWNER PARTICIPANT ............................................................................  44

     Section 7.1   Restrictions on Transfer of Member Interest. ..........................................................  44

</TABLE>

                                       iv
<PAGE>


                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>
     Section 7.2   Owner Participant's Liens .............................................................................  46

     Section 7.3   Amendments or Revocation of LLC Agreement .............................................................  46

     Section 7.4   Bankruptcy Filings ....................................................................................  46

     Section 7.5   Instructions ..........................................................................................  47

     Section 7.6   Right of First Refusal ................................................................................  47

     Section 7.7   Prohibition on Fundamental Changes ....................................................................  47

     Section 7.8   Appointment of Successor Lessor Manager ...............................................................  49

     Section 7.9   Cooperation ...........................................................................................  49

SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ..............................................  49

     Section 8.1   Indenture Trustee's Liens .............................................................................  49

     Section 8.2   Pass Through Trustees' Covenant Not to Transfer Lessor Notes ..........................................  50

SECTION 9.INDEMNIFICATION ................................................................................................  50

     Section 9.1   General Indemnity. ....................................................................................  50

     Section 9.2   General Tax Indemnity. ................................................................................  57

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ...................................................................  66

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ...................................................  66

     Section 11.1  Financing Improvements ................................................................................  66

     Section 11.2  Optional Refinancing of Lease Debt ....................................................................  68

     Section 11.3  Cooperation ...........................................................................................  69
SECTION 12 CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS .....................................  69

SECTION 13TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS ............................................  70

     Section 13.1  Transfer of the Facility Lessee Ownership. ............................................................  70

     Section 13.2  Special Facility Lessee Transfers .....................................................................  72

SECTION 14. OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS ..................................................................  73
</TABLE>

                                       v
<PAGE>


                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                            PAGE
<S>                                                                                                                         <C>
SECTION 15. MISCELLANEOUS ................................................................................................  75

     Section 15.1  Consents; Cooperation .................................................................................  75

     Section 15.2  Successor Owner Lessor ................................................................................  75

     Section 15.3  Bankruptcy of Lessor Estate ...........................................................................  75

     Section 15.4  Amendments and Waivers ................................................................................  75

     Section 15.5  Notices ...............................................................................................  75

     Section 15.6  Survival ..............................................................................................  80

     Section 15.7  Successors and Assigns ................................................................................  80

     Section 15.8  Business Day ..........................................................................................  80

     Section 15.9  Governing Law .........................................................................................  80

     Section 15.10 Severability ..........................................................................................  80

     Section 15.11 Counterparts ..........................................................................................  80

     Section 15.12 Headings and Table of Contents ........................................................................  81

     Section 15.13 Limitation of Libi1ility ..............................................................................  81

     Section 15.14 Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent. ......................................  82

     Section 15.15 Further Assurances ....................................................................................  83

     Section 15.16 Effectiveness .........................................................................................  83

     Section 15.17 Measuring Life ........................................................................................  83

     Section 15.18 No Partnership, Etc. ..................................................................................  83

     Section 15.19 Entire Agreement ......................................................................................  83

     Section 15.20 Public Utility Regulation .............................................................................  84

     Section 15.21 Confidentiality of Information ........................................................................  84

     Section 15.22 Reliance ..............................................................................................  85

     Section 15.23 Amendments, Etc. ......................................................................................  85


</TABLE>

                                      vi

<PAGE>

                               TABLE OF CONTENTS (continued)

                                                                            PAGE

                                      vii

<PAGE>

APPENDICES:

    Appendix A   Definitions and Rules of Interpretation

<TABLE>
<S>                      <C>
SCHEDULES:

    Schedule 1-A       Equity Investment
    Schedule 1-B       Indenture Trustee's Account
    Schedule 1-C       Owner Participant's Account
    Schedule 2         Pricing Assumptions
    Schedule 3.1(h)    Post-FILOT Lease Recordings, Filings and Notifications
    Schedule 3.1(m)    Environmental Matters - Hazardous Substances
    Schedule 4.20      Recording and Filings
    Schedule 5.31      Maintenance of Insurance
EXHIBITS:

    Exhibit A          Description of Facility
    Exhibit B          Form of Assignment Agreement (BR-1)
    Exhibit C          Form of Facility Lease Agreement
    Exhibit D          Form of Facility Site Lease
    Exhibit E          Intentionally Omitted
    Exhibit F          Form of Pass Through Trust Agreement
    Exhibit G          Form of OP Parent Guaranty
    Exhibit H          Form of Calpine Guaranty
    Exhibit I          Form of Collateral Trust Indenture
    Exhibit J          Form of OP Assignment and Assumption Agreement
    Exhibit K          List of Competitors
    Exhibit L          Form of Guarantor Assignment and Assumption Agreement
    Exhibit M          Form of Springing Facility Site Lease
    Exhibit N          Form of Springing Facility Site Sublease
    Exhibit O          Forms of Consents
</TABLE>

                                     viii

<PAGE>

                          PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) BROAD RIVER ENERGY LLC (herein, together with
     its successors and permitted assigns, called the "Facility Lessee"), a
     limited liability company organized under the laws of the State of
     Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (BR-1), (the "Calpine Guaranty"), (iii) BROAD
     RIVER OL-1, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-1, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its successors
     and permitted assigns, called the "Indenture Trustee", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Lease Indenture Company"), (vi) STATE STREET BANK AND TRUST
     COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
     association organized and existing under the laws of the United States,
     not in its individual capacity, except as expressly provided herein, but
     solely as trustee under each of the Pass Through Trust Agreements (herein
     in its capacity as trustee under the Pass Through Trust Agreements, the
     "Pass Through Trustees", and herein in its individual capacity, together
     with its successors and permitted assigns, the "Pass Through Company"),
     and (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and existing under the laws of the United
     States, not in its individual capacity except as expressly provided
     herein, but solely as independent manager under the LLC Agreement (herein
     in its capacity as independent manager under the LLC Agreement, together
     with its successors and permitted assigns, called the "Lessor Manager",
     and herein in its individual capacity, together with its successors and
     permitted assigns, called the "Trust Company").

                                   WITNESSETH:

          WHEREAS, in March, 2000, the County and the Facility Lessee
entered into a fee-in-lieu of taxes transaction, pursuant to which the Facility
Lessee conveyed to the County, and the County leased back to the Facility
Lessee, pursuant to the FILOT Lease, a 850 MW gas-fired simple cycle merchant
power plant located near Gaffney, South Carolina, owned by the County and more
fully described in Exhibit A hereto ("Facility");

<PAGE>

          WHEREAS, Facility Lessee desires to assign and transfer to the
Owner Lessor the Undivided Interest and the Ground Interest pursuant to the
Assignment Agreement;

          WHEREAS, the Owner Participant desires to cause the Owner
Lessor to acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from the Facility Lessee pursuant to the
Assignment Agreement, and to lease the Undivided Interest (excluding the
Facility Purchase Option) and the Ground Interest (excluding the Land Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to sublease the Undivided
Interest (excluding the Facility Purchase Option) and lease the Ground Interest
(excluding the Land Purchase Option) from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, on the Closing Date, the Facility Lessee has executed
(i) a Springing Facility Site Lease (pursuant to which, upon the Post-FILOT
Lease Conversion Date, the Springing Facility Site Lease shall become effective
and the Facility Lessee shall lease the Ground Interest to the Owner Lessor
pursuant thereto) and (ii) a Springing Facility Site Sublease (pursuant to
which, upon the Post-FILOT Lease Conversion Date, the Springing Facility Site
Sublease shall become effective and the Owner Lessor shall sublease the Ground
Interest back to the Facility Lessee pursuant thereto);

          WHEREAS, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, issue the Lessor Notes and sell such Lessor Notes to the relevant
Pass Through Trust, acquire and accept such assignment and transfer of the
Undivided Interest and the Ground Interest from Facility Lessee pursuant to the
Assignment Agreement, and lease the Undivided Interest (excluding the Land
Purchase Option) and the Ground Interest (excluding the Facility Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

                                        2

<PAGE>

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed
all of the obligations of the Facility Lessee under the Participation Agreement
and as of the Closing Date shall guarantee all of the obligations of the
Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and
          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The rules of interpretation
set forth in Appendix A shall apply to terms used in this Participation
Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee shall assign and transfer the Undivided Interest and the
     Ground Interest to the Owner Lessor on the terms and conditions set forth
     in the Assignment Agreement and the Owner Lessor agrees to acquire and
     accept such assignment and transfer of the Undivided Interest and the
     Ground Interest from Facility Lessee, and each agrees to execute and
     deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the Ground Interest (except the Land Purchase Option)
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility

                                        3

<PAGE>

     Lessee agrees to lease the Undivided Interest (except the Facility Purchase
     Option) and the corresponding Ground Interest (except the Land Purchase
     Option) from the Owner Lessor, and each agrees to execute and deliver the
     respective Facility Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the FILOT Lease
     pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement;

effective upon the occurrence of the Post-FILOT Lease Conversion Date, the
     Facility Lessee agrees to lease the Ground Interest to the Owner Lessor on
     the terms and conditions set forth in the Springing Facility Site Lease and
     the Owner Lessor agrees to sublease the Ground Interest back to the
     Facility Lessee on the terms and conditions set forth in the Springing
     Facility Site Sublease;

the Owner Lessor agrees to exercise the Purchase Options pursuant to, and to
     the extent provided in, Section 14.1 hereof; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner

                                        4

<PAGE>

     Participant shall make the Owner Participant's Commitment available not
     later than 10:00 a.m., New York City time, on the Scheduled Closing Date,
     by transferring or delivering such amount, in funds immediately available
     on such Scheduled Closing Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall
     have otherwise directed. All funds made available pursuant to Section
     2.2(b) will be held by the Owner Lessor in trust for the Owner
     Participant and shall not be part of the Indenture Estate or the Lessor
     Estate, shall be invested by the Owner Lessor in accordance with clause
     (d) below and such funds shall remain the sole property of the Owner
     Participant unless and until released by the Owner Participant and made
     available to the Owner Lessor and applied to pay the Purchase Price or
     Transaction Costs or returned to the Owner Participant, as provided in
     this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such
     date and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to
     the Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not
     occur on such date and the Owner Lessor has not returned such funds to
     the Owner Participant on or before 1:00 p.m., New York City time, on such
     date, then Calpine shall reimburse the Owner Participant for loss of the
     use of such funds at the Applicable Rate for each day, from and including
     the day that such funds were made available to the Owner Lessor by the
     Owner Participant to, but excluding the earlier of (i) the day that such
     funds have been returned to the Owner Participant pursuant to Section
     2.2(c) (funds received by the Owner Participant after 1:00 p.m., New York
     City time, of any day shall be deemed to be returned on the next
     succeeding Business Day) and (ii) the Closing Date. Subject to payment
     for the account of the Owner Participant of any reimbursement for loss of
     use of funds due to it at the Applicable Rate, any net gain realized on
     the investment of such funds (including interest) shall be paid to
     Calpine by the Owner Lessor on the earlier of (i) the date such funds are
     returned to the Owner Participant pursuant to Section 2.2(c) and (ii) the
     Closing Date. The Owner Lessor shall not be liable for any interest on or
     loss resulting from such investments and, if such funds are made
     available to the Owner Lessor and utilized to pay the Purchase Price or
     Transaction Costs on the Closing Date, Calpine shall reimburse the Owner
     Lessor for any net loss realized on the investment of such funds. If such
     funds are not so utilized, Calpine shall, in

                                        5

<PAGE>

     addition to its obligation to reimburse the Owner Participant for loss of
     use as provided above, reimburse the Owner Participant on the date such
     funds are returned to the Owner Participant for any net loss realized on
     the investment of such funds. In order to obtain funds for payment of the
     Purchase Price or Transaction Costs or to return funds made available to
     the Owner Lessor by the Owner Participant, the Owner Lessor is authorized
     to sell any investments or obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,500,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs; provided, however, that Calpine shall not be
     obligated to pay Transaction Costs incurred by the Owner Participant if
     the Overall Transaction is not consummated on the basis of the provisions
     of this Agreement due to a failure of the Owner Participant to satisfy
     any condition to the Closing required to be satisfied by the Owner
     Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware. The Facility Lessee is duly licensed or qualified and
     in good standing in each jurisdiction where the character of its
     properties or the nature of its activities makes such qualification
     necessary, and the Facility Lessee has the power and authority to (x) own
     or hold under lease the

                                        6

<PAGE>

     property it purports to own or hold under lease, (y) carry on its
     business as now being conducted and as presently proposed to be conducted
     and (z) take all actions as may be necessary to consummate the
     transactions contemplated hereunder and under the other Operative
     Documents to which each is a party. The Facility Lessee is an indirect
     wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee, in accordance with their respective terms, except as the same may
     be limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the rights of creditors
     generally and by general principles of equity.

          1.  Non-Contravention. (1) The execution, delivery and performance by
              the Facility Lessee of this Agreement and each of the other
              Operative Documents to which it is or will be a party, the
              consummation by the Facility Lessee of the transactions
              contemplated hereby and thereby, and compliance by the Facility
              Lessee with the terms and provisions hereof and thereof, do not
              and will not (i) contravene any Applicable Law binding on the
              Facility Lessee or its property, or its organizational
              documents, (ii) constitute a default by the Facility Lessee
              under, or result in the creation of any Lien upon the property
              of the Facility Lessee (other than pursuant to any Operative
              Document) under any indenture, mortgage or other material
              contract, agreement or instrument to which the Facility Lessee
              is a party or by which the Facility Lessee or any of its
              property is bound, (iii) contravene any Organic Document of the
              Facility Lessee or (iv) require the consent or approval of any
              Person which has not already been obtained, in each case with
              respect to clauses (i), (ii) and (iv) above, which would
              reasonably be expected to have a Material Adverse Effect.

      (2) Neither the assignment and transfer of the Undivided Interest and the
Ground Interest by Facility Lessee to the Owner Lessor, nor the grant by the
Owner Lessor to the Indenture Trustee of the Liens and security interests in
the Undivided Interest, the Ground Interest and the applicable Operative
Documents executed in connection therewith to secure its obligations thereunder
does or will constitute a default by the Facility Lessee or the Owner Lessors
under the Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of

                                        7

<PAGE>

     any transferee or assignee) and assuming that none of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them or any
     assignee or transferee of any of the Owner Participant (or any Affiliate
     of any such transferee or assignee) is an "electric utility" or a "public
     utility" or a "public utility holding company" or any similar entity
     subject to public utility regulation under any Applicable Law immediately
     prior to the Closing, with respect to the participation by the Owner
     Participant, the Owner Lessor in the Overall Transaction, other than (i)
     any Permit where the failure to obtain or maintain such Permit would not
     be reasonably likely to result in a Material Adverse Effect, (ii) the
     FERC Orders, (iii) as may be required under Applicable Law providing for
     the supervision or regulation of the Owner Participant, the Owner Lessor
     or any Affiliate of any of them as a result of investing, lending or
     other commercial activity in which the Owner Participant, the Owner
     Lessor or any Affiliate of any of them is or may be engaged other than
     the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of
     which would not reasonably be expected to have a Material Adverse Effect
     or involve any danger of criminal or material civil liability being
     incurred by the Owner Participant, the Owner Lessor, the Indenture
     Trustee or the Pass Through Trustees, (v) in connection with any
     modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates
     or the issuance of Additional Lessor Notes or Additional Certificates,
     (vii) as may be required in consequence of any transfer of the Member
     Interest or any transfer of the Undivided Interest or the Owner Lessor's
     Interest, or any part thereof by the Owner Lessor or the exercise by any
     such party of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the FILOT
     Lease or the ability of the Facility Lessee or such other Calpine Party
     to perform its obligations under the Operative Documents and the FILOT
     Lease to which the Facility Lessee or such other Calpine Party is or will
     be a party or (ii) if determined adversely to it, could reasonably be
     expected to have a Material Adverse Effect or otherwise materially
     adversely affect the Undivided Interest leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

                                        8

<PAGE>

Location of Chief Executive Office and Principal Place of Business, etc.   (1)
     The chief executive office and principal place of business of the
     Facility Lessee and the office where the Facility Lessee keeps its
     company records concerning the Facility, the Undivided Interest, the
     Ground Interest, the Facility Site and the Operative Documents is located
     at: c/o Calpine Corporation, 50 West San Fernando Street, 5th Floor, San
     Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical to the
condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Leasehold Interest; Liens.   (1)   On and before the Closing Date, the Facility
     Lessee has (i) good and valid leasehold interest to the Facility, free
     and clear of all Liens other than Permitted Closing Date Liens, and (ii)
     good and valid leasehold interest to the Facility Site free and clear of
     all Liens other than Permitted Closing Date Liens.

     (2)   Upon execution and delivery of the Operative Documents (other than
the Springing Operative Documents), and recording or filing (as appropriate) of
the instruments and documents referred to in Part I of Schedule 4.20 in
accordance with Section 4.20, (A) good and valid leasehold interest to the
Undivided Interest will be duly, validly and effectively conveyed and
transferred to the Owner Lessor free and clear of all Liens other than
Permitted Closing Date Liens, and (B) good and valid leasehold interest in the
Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   Upon the closing of the conveyance of the Land and the Facility
(in each case to the extent of the Owner Lessor's Percentage interest therein)
on the Post-FILOT Lease Conversion Date and recording or filing (as
appropriate) of the instruments and documents referred to in Schedule 3.1(h)
hereto (A) good and valid fee title to the Facility (to the extent of the Owner
Lessor's Percentage interest therein) will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Liens, and (B) good and valid leasehold interest in the Land (to
the extent of the Owner Lessor's Percentage) will be duly, validly and
effectively granted to the Owner Lessor upon the terms and conditions in the
corresponding Springing Facility Site Lease, free and clear of all Liens other
than Permitted Liens. Upon any other conveyance of the Facility and/or the Land
(to the extent of the Owner Lessor's Percentage) by the County to the Owner
Lessor or its designee upon the Owner Lessor's exercise of the Facility
Purchase Option and/or the Land Purchase Option, as the case may be, good and
valid fee title ownership thereof will be duly, validly and effectively vested
in the Owner Lessor, free and clear of all Liens other than Permitted Liens.

          (4)   When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or

                                        9

<PAGE>

give record notice of, the Lien in favor of the Indenture Trustee in the
Indenture Estate to the extent such Lien may be perfected by filings or
recordings.

          (5)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the FILOT Lease) or the use of or
the exercise by the Owner Lessor of its rights under Assignment Agreement or
the Facility Site Lease or the Facility Lease, in a manner which could
reasonably be expected to have a Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the FILOT Lease will not subject the Facility Lessee to
     such regulation under the Holding Company Act and do not violate any
     provision of the Holding Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters.  Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received and does not have Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site; (ii) the
Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at

                                       10

<PAGE>

which any Hazardous Substances have been generated, stored, treated or disposed
by or on behalf of the Facility Lessee or such other Calpine Party) to a
Release or threatened Release of any Hazardous Substance generated, used or
stored at or Released in, on, under or from the Facility or the Facility Site;
(iii) the Facility or the Facility Site is subject to a Lien in favor of any
Governmental Entity in response to a Release or threatened Release of Hazardous
Substances or (iv) the Facility or the Facility Site is or is asserted to be in
violation of or not in compliance with any Environmental Law, in any case with
respect to clauses (ii), (iii) or (iv), which could reasonably be expected to
have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility or
the Facility Site, or (B) at, on, under or from any other location resulting
from or arising in connection with the operation by any Person of the Facility
or the Facility Site, that in each case could reasonably be expected to have a
Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or
the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility and the Facility Site in accordance with the Operative
Documents and the FILOT Lease and the Ownership and Operation Agreement and
Environmental Laws have been obtained on behalf of the Owner Lessor or by the
Facility Lessee and they are final, in proper form, and in full force and
effect, with all appeal periods expired, and the Facility Lessee is in
compliance with the provisions of all such permits, except where the failure to
obtain, maintain the effectiveness of, or comply with such permits would not
reasonably be expected to have a Material Adverse Effect or involve any danger
of (i) foreclosure, sale, forfeiture or loss of, or imposition of a material
lien on, the Facility or the Facility Site, (ii) the impairment of the
ownership (or leasehold or easement interest in), use, operation or maintenance
of the Facility or the Facility Site in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest and the Ground Interest and based upon
     the Facility Lessee's reasonable expectations and on Applicable Law in
     effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     FILOT Lease and the rights contemplated by the Facility Lease to be made
     available under such Operative Documents and the FILOT Lease, permit on a
     commercially practicable basis during the Facility Lease Term and the
     period following the expiration or termination of the Facility Lease
     Term, as applicable, until the end of the

                                       11

<PAGE>

     Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which, either
     in any case or in the aggregate, would reasonably be expected to have a
     Material Adverse Effect.

Jurisdiction. In accordance with Section 15.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State
     of New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility and the Facility Site, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility or the
     Facility Site, (ii) the impairment of the ownership (or leasehold or
     easement interest in), use, operation or maintenance of the Facility or
     the Facility Site in any material respect, or (iii) any criminal or
     material civil liability being incurred by the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
     Through Trustees, including subjecting the Owner Participant or the Owner
     Lessor to regulation as a public utility under Applicable Law. None of
     the Calpine Parties is in default of any judgments, orders or decrees of
     any Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

                                       12

<PAGE>

Insurance.  All insurance required to be obtained pursuant to Schedule 5.31 is
    in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual Knowledge
     of the Facility Lessee, no Burdensome Buyout Event has occurred or will
     occur upon the execution and delivery of the Operative Documents and the
     Facility Lessee does not have Actual Knowledge of any event that could
     reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all services
     of public utilities necessary for use and operation of the Facility as
     currently being used and as contemplated by the applicable Operative
     Documents and the FILOT Lease, except where the failure to have any such
     services or public utilities available would not result in a material
     adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse
     Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility or the Facility Site, which would reasonably be
     expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire

                                       13

<PAGE>

     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has been
     made available under the National Flood Insurance Act of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the transactions
     contemplated hereby in good faith and without any intent to defraud
     creditors of the Facility Lessee or subsequent purchasers. The execution
     and delivery of the Operative Documents to which the Facility Lessee is a
     party will not render the Facility Lessee insolvent under GAAP or leave
     the Facility Lessee with assets whose present fair valuation of assets is
     less than the present fair valuation of the Facility Lessee's debts. As
     used in this Section 3.1(dd), "debts" includes any and all liabilities,
     whether matured or unmatured, liquidated or unliquidated, absolute, fixed
     or contingent, and whether or not such liabilities are required under
     GAAP to be shown on the Facility Lessee's balance sheet. The execution
     and delivery of the Operative Documents to which the Facility Lessee is a
     party will not leave it with property remaining in its hands which would
     constitute unreasonably small assets or capital, and the Facility Lessee
     has and, after giving effect to such transactions will have, an adequate
     amount of assets and capital to engage in its business now and in the
     future, based on the actual and anticipated needs for capital of the
     businesses anticipated to be conducted by the Facility Lessee, and based
     upon the other information described herein. After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term
     debt as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid
     or become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

                                       14

<PAGE>

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the FILOT Lease shall be or become (i) subject to regulation as a
     "public utility company," "holding company," an "affiliate" of a "holding
     company" or a "subsidiary company" of a "holding company" within the
     meaning of PUHCA or (ii) a "public utility" (except that the Facility
     Lessee will be a public utility subject to the Federal Power Act with
     authority to sell wholesale electricity at market-based rates and with
     waivers of regulations customarily granted to a public utility that sells
     wholesale power at market-based rates), a "transmitting utility," or an
     "electric utility" within the meaning of the Federal Power Act, (iii)
     subject to state regulation of rates or organizational requirements for
     electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained therein,
     in light of the circumstances under which they were made, not misleading;
     provided, that no representation or warranty is made with regard to (i)
     any projections or other forward-looking statements provided by or on
     behalf of the Facility Lessee, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, further, each of the Transaction Parties acknowledge and agree
     that (i) Calpine has heretofore provided to the Appraiser, solely in order
     to assist the Appraiser in connection with the preparation of the
     appraisal to be delivered by the Appraiser to certain of the Transaction
     Parties at the Closing, certain (1) general market information, (2)
     information about the South Carolina energy markets and (3) information
     passed along from other Persons and (ii) that the Facility Lessee makes no
     representation or warranty whatsoever with respect to the information
     described in clause (i) above except to the extent expressly set forth in
     Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Duke Electric Transmission, a division of Duke
     Energy Corporation, and has access to transmission services and ancillary
     services sufficient to sell the net generating capacity of the Facility at
     wholesale, and the Facility Lessee has the authority to sell wholesale
     electric power from the net generating capacity of such generating Facility
     at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Order referenced in clause (v) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is

                                       15

<PAGE>

     not intended to be construed as nor shall it be deemed to be a guaranty as
     to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and
     currently is capable of producing at least 850 MW of capacity and complies
     in all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

FILOT Lease. The FILOT Lease is in full force and effect and neither the
     Facility Lease nor, to the Actual Knowledge of the Facility Lessee, the
     County is in default thereunder; all of the rights, title and interest of
     the Facility Lessee, in, to and under the FILOT Lease assigned pursuant to
     the Assignment Agreement have been transferred free and clear of any and
     all Liens other than Permitted Liens. Prior to the execution and delivery
     of the Assignment Agreement by the Facility Lessee, the FILOT Lease was
     enforceable against the Facility Lessee in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the FILOT Lease by the Facility
     Lessee (i) did not and does not contravene any Applicable Law binding on
     the Facility Lessee or its property, (ii) does not constitute a default by
     the Facility Lessee under, or result in the creation of any Lien upon the
     property of the Facility Lessee (other than pursuant to any Operative
     Document) under any indenture, mortgage or other material contract,
     agreement or instrument to which the Facility Lessee is a party or by
     which the Facility Lessee or any of its property is bound, (iii) does not
     contravene any Organic Document of the Facility Lessee, (iv) does not
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect, or
     (v) does not create a Lien on the FILOT Lease; the Facility Lessee has all
     Permits with or from any Governmental Entity or under Applicable Law
     required for the performance of the FILOT Lease by the Owner Lessor or the
     Facility Lessee, other than (i) any Permit where the failure to obtain or
     maintain such Permit would not be reasonably likely to result in a
     Material Adverse Effect, (ii) the FERC Orders, (iii) as may be required
     under Applicable Law providing for the supervision or regulation of the
     Owner Participant, the Owner Lessor or any Affiliate of any of them as a
     result of investing, lending or other commercial activity in which the
     Owner Participant, the Owner Lessor or any Affiliate of any of them is or
     may be engaged other than the transactions contemplated hereby or by
     performance of the FILOT Lease upon and after the assignment thereof to
     the Owner Lessor pursuant to the Assignment Agreement, (iv) as may be
     required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, (v) in connection with any modification to or rebuilding or
     replacement of the Facility or any portion thereof that may occur in the
     future, (vi) as may be required in connection with any refinancing of the
     Lessor Notes or the Certificates or the issuance of Additional Lessor
     Notes or Additional Certificates, (vii) as may be required in consequence
     of any transfer of the Member Interest or any transfer of the Undivided
     Interest or the Owner

                                       16

<PAGE>

     Lessor's Interest, or any part thereof by the Owner Lessor or the exercise
     by any such party of dispossessory remedies under the Operative Documents
     or any relinquishment of the use or operation of the Facility by the
     Facility Lessee, (viii) appropriate filing and recording to perfect the
     Lien of the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may be
     required under any Applicable Law enacted or adopted after the date hereof.

         B.  Representations and Warranties of the Owner Lessor.  The Owner
Lessor represents and warrants that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the Owner
     Lessor is or will be a party has been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Lessor, and (ii)
     assuming the due authorization, execution and delivery of this Agreement
     by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

                                       17

<PAGE>

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the FILOT Lease or the ability of
     the Owner Lessor to perform its obligations under the FILOT Lease or the
     Operative Documents to which it is or will be a party or (ii) if
     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Owner Lessor to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor
     Estate is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 15.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

          C.  Representations and Warranties of the Lessor Manager and the
Trust Company.  The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

                                       18

<PAGE>

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against it in its
     individual capacity or as Lessor Manager, as the case may be, in
     accordance with its terms, except as may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principals of equity.

           (2) Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

                                       19

<PAGE>

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to the
     Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement
     and any other Operative Document to which the Owner Participant is or will
     be a party constitute or when executed and delivered will constitute the
     legal, valid and binding obligations of the Owner Participant, enforceable
     against the Owner Participant in accordance with their respective terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant

                                       20

<PAGE>

     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law binding on the Owner Participant, or its
     organizational documents, or contravene the provisions of, or constitute a
     default under any indenture, mortgage or other material contract,
     agreement or instrument to which the Owner Participant is a party or by
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site), and other than, with respect to the Post-FILOT Lease
     Conversion Date, the conveyances and other matters referred to in the
     definition thereof.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner

                                       21

<PAGE>

     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section 5
     of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss.  The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking
     association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Indenture Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Collateral Trust Indenture, to enter
     into and perform its obligations under the Collateral Trust Indenture,
     this Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  (i) Each of the other Operative Documents to which the Indenture
Trustee is or will be a party has been or when executed and delivered will be
duly authorized, executed and delivered by the Indenture Trustee, and (ii)
assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Indenture

                                       22

<PAGE>

Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of the Indenture Trustee in the
     Indenture Estate; provided, however, that no representation or warranty is
     made with respect to the right, power or authority of the Lease Indenture
     Company or the Indenture Trustee to act as operator of the Facility
     following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the

                                       23

<PAGE>

     ability of the Lease Indenture Company to perform its obligations under
     this Agreement or any other Operative Document to which it is or will be a
     party or could reasonably be expected to materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

          D.  Representations, Warranties and Covenants of the Pass Through
Trustees and the Pass Through Company.  The Pass Through Company and the Pass
Through Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement
     and each of the other Operative Documents to which it is or will be a
     party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the other
     Operative Documents by each party thereto other than the Pass Through
     Company or such Pass Through Trustee, as the case may be, each of the
     other Operative Documents to which the Pass Through Company or any Pass
     Through Trustee is or will be a party constitutes or when executed and
     delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be,

                                       24

<PAGE>

     of the transactions contemplated hereby and thereby, and the compliance by
     the Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the Pass Through Company upon the
     Certificates or any indenture, mortgage or other material contract,
     agreement or instrument to which the Pass Through Company is a party or by
     which the Pass Through Company or its property is bound which would
     materially adversely affect the ability of the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, to
     perform its obligations under this Agreement or the other Operative
     Documents to which it is a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     security interest of any Pass Through Trustee in the Indenture Estate;
     provided, however, that no representation is made with respect to the
     right, power or authority of the Pass Through Company or any Pass Through
     Trustee to act as operator of the Facility following a Lease Event of
     Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

           The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                       25

<PAGE>

such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                       26

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 850 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties.  The representations and warranties
of each party hereto set forth in Section 3 shall be true and correct on and
as of the Closing Date with the same effect as though made on and as of the
Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
status and the FERC Order referenced in clause (v) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                       27

<PAGE>

     F.   Consents.

          (a) All permits, licenses, approvals and consents (including
management, credit and other internal approvals of the Transaction Parties, but
excluding the Third Party Consents referred to in (b) below) necessary to
consummate the Overall Transaction and to own and operate the Facility as
currently operated shall have been duly obtained and shall be in full force and
effect and in the form and substance satisfactory to each of the Transaction
Parties.

          (b) Each Third Party Consent shall have been obtained and shall be in
full force and effect substantially in the form attached hereto as Exhibit O
which is applicable to the relevant third party granting such consent; provided
that if any Third Party Consent is not substantially in the form attached
hereto as Exhibit O, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                       28

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(v) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have a copy of the Survey (which Survey
shall be certified to the Owner Lessor and the Title Company) in form and
substance satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

                                       29

<PAGE>

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by Facility Lessee of its interest in the Undivided Interest and
the Ground Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special
counsel to the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP,
special regulatory counsel to the Facility Lessee, (d) McNair Law Firm, P.A.,
South Carolina counsel to the Facility Lessee, (e) Karen Scowcroft, Esq.,
in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP, counsel to
the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP, counsel to
the Lease Indenture Company and the Indenture Trustee, (h) Bingham Dana LLP,
counsel to the Pass Though Trustees and the Pass Through Company, and (i) Ray
Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case in form
and substance reasonably satisfactory to each Transaction Party. Each such
Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
South Carolina and Delaware and any other documents as may be reasonably
requested by counsel to the Owner Participant, the Indenture Trustee or the
Pass Through Trustees to perfect (i) the Owner Lessor's Interest, or any part
thereof or interest therein and (ii) and the Lien of the Indenture Trustee on
the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the FILOT Lease shall
have been satisfied or waived and the Owner Participant shall be satisfied that
the Facility shall be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                       30

<PAGE>

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to participate in any of the
transactions contemplated by the FILOT Lease or would materially adversely
affect the Facility or the Facility Site. On the Closing Date, each
Certificateholder's purchase of Lessor Notes shall (i) be permitted by the laws
and regulations of each jurisdiction to which such Certificateholder is
subject, (ii) not violate any Applicable Law (including Regulation U, T or X of
the Board of Governors of the Federal Reserve System) and (iii) not subject any
Certificateholder to any tax, penalty or liability under or pursuant to any
Applicable Law, which Applicable Law was not in effect on the date hereof. If
requested by any Certificateholder, such Certificateholder shall have received
an Officer's Certificate of the Owner Lessor, in form and substance
satisfactory to such Certificateholder, certifying as to such matters of fact
as such Certificateholder may reasonably specify to enable such
Certificateholder to determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee

                                       31

<PAGE>

shall have received certification from CSFB as to the number of offerees by it
of the Lessor Estate.

     I.   Lien Search.  The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to the Facility Lessee
in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the FILOT
Lease or any of the Transactions contemplated by any of the Operative Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

     K.   Corrective Ordinance.  The Facility Lessee shall have received a copy
of the Corrective Ordinance.

                                       32

<PAGE>

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets.  The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent

                                       33

<PAGE>

obligations) except (i) by reason of endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the
Facility Lessee's business, (ii) indemnities in respect of unfiled mechanics'
liens and other liens permitted by clause (d) of the definition of "Permitted
Liens", (iii) contingent obligations set forth in, or incurred in connection
with, or indemnities set forth in, the Operative Documents and the FILOT Lease,
(iv) unsecured indemnities provided, and other unsecured contingent obligations
incurred by the Facility Lessee in connection with either (x) easements
relating to its applicable interest in the Facility or the Facility Site or (y)
any contract, agreement or other document or instrument relating to the Broad
River project which is entered into in the ordinary course of the Facility
Lessee's business, (v) customary indemnities in favor of the title insurers
providing the title policies covering the Facility Site or any portion thereof
or any easement or appurtenant right relating thereto in respect of claims by
the holder of mechanics' liens, (vi) the indemnities referred to in Section 9.1
and 9.2 of the Participation Agreement or pursuant to the Tax Indemnity
Agreement and (vii) unsecured Indebtedness incurred in accordance with Section
11.1 or 11.2 hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the FILOT Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the FILOT Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     L.   Books, Records, Access.  The Facility Lessee shall maintain or cause
to be maintained adequate books, accounts and records with respect to itself,
the Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or

                                       34

<PAGE>

Lease Event of Default) expense to the Facility Lessee to inspect, the Facility
and Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be
               furnished to, the Owner Lessor, the Owner Participant and, so
               long as the Lien of the Collateral Trust Indenture has not been
               terminated or discharged, the Indenture Trustee and the Pass
               Through Trustees, and their respective authorized
               representatives from time to time such information as such
               party shall reasonably request concerning the Facility and
               Facility Site including information concerning the condition,
               operation, maintenance and use of the Facility and Facility Site
               and such other financial or operating information as it shall
               reasonably request and which is routinely made available to
               creditors of the Facility Lessee, to the extent it possesses
               such information; provided that, the Facility Lessee reserves
               the right not to provide any information that is not otherwise
               publicly available to any transferee Owner Participant (or its
               Owner Lessor) if it reasonably believes in its good faith
               judgment that such transferee Owner Participant or any Affiliate
               thereof is a competitor or is an Affiliate of a competitor of
               the Facility Lessee or its Affiliates in the competitive power
               market, unless, before receiving any such information, such
               transferee Owner Participant shall have put in place (to the
               reasonable satisfaction of the Facility Lessee) appropriate
               confidentiality arrangements.  To the extent such information
               consists of information contained in records kept by the
               Facility Lessee or any Affiliate, such information shall be
               furnished without cost to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

     M.   Warranty of Title to Facility Site.

          1.   On and after the Post-FILOT Lease Conversion Date, the Facility
               Lessee shall maintain good and valid fee, title to, or easement
               or other surface rights in, as applicable, the Facility Site,
               subject only to Permitted Liens.

          2.   The Facility Lessee shall maintain good and valid title to all
               of its other properties and assets (other than properties and
               assets disposed of in the

                                       35

<PAGE>

               ordinary course of business, including any sale, transfer or
               other disposition of any obsolete, surplus or worn out
               equipment, parts, supplies or other materials or assets to
               the extent permitted by the Operative Documents), subject
               only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the FILOT Lease, it will not enter into or become bound by any contract or
agreement providing for the sale of energy produced from the Facility, or the
purchase of services to be performed at, for or in connection with, the
Facility or any other contract or agreement relating to the Facility that (i)
has a term that extends beyond the Basic Lease Term or the scheduled expiration
of any Renewal Lease Term then in effect or elected by the Facility Lessee,
unless such contract or agreement may be terminated by the Facility Lessee
without material costs or obligation prior to the Basic Lease Term or the
scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the FILOT Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole

                                       36

<PAGE>

Amount which has become due and payable with respect to the Lessor Notes under
the Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

     N.   Investments.  The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     O.   Intentionally Deleted.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships.  The Facility Lessee shall not become a general or limited
partner in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority.

          1.   The Facility Lessee shall not without the prior written consent
               of the Owner Participant and, except as otherwise provided in
               Section 8 of the Collateral Trust Indenture and so long as the
               Lien of the Collateral Trust Indenture has not been terminated
               or discharged, the Indenture Trustee, (x) cause or consent to or
               (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document.  In addition, the
               Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of the
               FILOT Lease without the consent of the Owner Participant if the
               same would (i) subject in all cases to the provisions of clause
               (iii) below, during the Facility Lease Term, have a material
               adverse effect on the Owner Participant or the Owner Lessor
               (including, without limitation, any material decrease in their
               respective rights or any material increase in their respective
               obligations or any material increase in the liability exposure
               of the Owner Lessor or the Owner Participant, it being agreed
               that (x) in determining whether any such material adverse effect
               has occurred, the fact of the Facility Lessee's obligations
               under the Operative Documents (including paragraph (b) below)
               and of Calpine under the Calpine Guaranty shall be taken into
               account and (y) any increase in rent or any other amount payable
               by the Owner Lessor or the

                                       37

<PAGE>

               Owner Participant under the FILOT Lease that is also reflected
               to the same extent under the Facility Site Lease and does not
               remain in effect after the expiration of the then existing Basic
               Lease Term or any Renewal Term with respect to which the
               Facility Lessee shall have irrevocably exercised its renewal
               option shall not constitute or cause or be deemed to constitute
               or cause such a material adverse effect), (ii) during the period
               after the expiration or termination of the Facility Lease Term,
               have any adverse effect whatsoever on the Owner Participant or
               the Owner Lessor (including, without limitation, any increase in
               their respective obligations or decrease in their respective
               rights) or (iii) whether during or after the Facility Lease
               Term, result in any change to the length of the term of the
               FILOT Lease or in any option to renew the Facility Lease Term.
               The Facility Lessee will furnish the Owner Participant with a
               copy of the executed version thereof promptly after the
               execution thereof.  Notwithstanding anything to the contrary
               contained in the foregoing, the Facility Lessee shall not have
               any right to take any action otherwise permitted pursuant to
               this Section 5.20 if a Significant Lease Default or Lease Event
               of Default shall have occurred and be continuing.  So long as
               the Lien of the Collateral Trust Indenture has not been
               discharged, the Facility Lessee shall not take any action
               pursuant to or in accordance with the foregoing provisions of
               this Section 5.20, if such action would (i) have a material
               adverse effect on the Indenture Trustee, the Pass Through
               Trustees, the Noteholders or the Certificateholders including,
               without limitation, a material adverse effect on such Person's
               rights and remedies under the Operative Documents (it being
               agreed that (x) in determining whether any such material adverse
               effect has occurred, the fact of the Facility Lessee's
               obligations under the Operative Documents (including paragraph
               (b) below) and Calpine's obligations under the Calpine Guaranty
               shall be taken into account and (y) any increase in rent or any
               other amount payable by the Owner Lessor or the Owner
               Participant under the FILOT Lease that is also reflected to the
               same extent under the Facility Site Lease ) shall not constitute
               or cause such a material adverse effect) or (ii) result in the
               release of or loss of the first priority, perfected Lien
               (subject to Permitted Liens) on all or any material portion of
               the Owner Lessor's interest in the Facility or the Facility
               Site, except as otherwise permitted by the Operative Documents.

          2.   During the Facility Lease Term (i) the Facility Lessee shall,
               at its own expense, on behalf of the Owner Lessor, duly fulfill
               and comply with all obligations on the part of the Owner Lessor
               under or in connection with the FILOT Lease (or any extension or
               renewal thereof) at the time performance of such obligations is
               required under the FILOT Lease and (ii) in connection with the
               foregoing obligation of the Facility Lessee set forth in clause
               (i), subject to clause (a) above, the Facility Lessee shall have
               and be entitled to exercise all rights and benefits (including
               the right to enter into any amendment, modification, extension,
               termination, variance, waiver, notice or consent or any action
               with respect thereto,

                                       38

<PAGE>

               subject to the terms and conditions of the Operative Documents)
               of the Owner Lessor under the FILOT Lease.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the FILOT Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) and (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee,

                                       39

<PAGE>

the Lease Indenture Company, the Pass Through Trustees, the Pass Through
Company or any Certificateholder, (iv) the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
Pass Through Trustees, the Pass Through Company or any Certificateholder being
subjected to any unindemnified civil liability or of the Owner Participant or
the Owner Lessor being subject to regulation as a public utility under
Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site or the transactions contemplated by the Operative Documents
to which the Facility Lessee is a party and the performance of the FILOT Lease
as may be required to enable the Owner Participant, the Owner Lessor or, so
long as the Lien of the Collateral Trust Indenture shall not have been
terminated or discharged, the Indenture Trustee or the Pass Through Trustees,
as the case may be, to timely file with any Governmental Entity any reports and
obtain any licenses or permits required to be filed or obtained by the Owner
Lessor under any Operative Document or the FILOT Lease, the Owner Participant
as the owner of the Member Interest or the Indenture Trustee. The Facility
Lessee will preserve, protect, defend and enforce, or cause to be preserved,
protected, defended and enforced, the rights of itself, the Owner Lessor and
the Owner Participant under each and every Operative Document to which it is a
party (including by assignment and assumption of the rights thereunder),
including using commercially reasonable efforts to prosecute suits to enforce
any such rights and, at the request of Indenture Trustee, so long as the Lien
of the Collateral Trust Indenture has not been discharged or terminated (and
thereafter at the request of the Owner Participant), permit the Indenture
Trustee and the Owner Participant, at their respective cost and expense, to
participate in such capacity as it may choose in any such suit, any defense
thereof or in the preparation therefor; provided, however, that upon the
occurrence and during the continuance of any Lease Event of Default, if the
Indenture Trustee or the Owner Participant request that certain actions be
taken and the Facility Lessee fails to take the requested action, or to cause
the requested action to be taken within (5) Business

                                       40

<PAGE>

Days, the Indenture Trustee, so long as the Lien of the Collateral Trust
Indenture has not been discharged or terminated, and the Owner Lessor may, at
the Facility Lessee's reasonable expense, enforce, in its own name, or the
Facility Lessee's name, such rights of the Facility Lessee.

No Subsidiaries.  The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

     P.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the later of the
expiration or termination of the FILOT Lease or the Springing Facility Site
Lease, or earlier at the option of the Owner Lessor. The Facility Lessee shall
also, subject to obtaining any required third party consents, assign to the
Owner Lessor upon termination of the Facility Lease any support or similar
agreements to the extent relating to the Facility it has with third parties.

     Q.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     R.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

                                       41

<PAGE>

     S.   Transmission Assets.

          1.   If and to the extent that on the Closing Date the FERC Order
               referred to in clause (v) of the definition thereof has not been
               obtained with respect to the jurisdictional facilities referred
               to therein (which facilities are identified in Exhibit A as
               Transmission Assets (the "Transmission Assets")), the Owner
               Participant shall, upon 5 days prior written notice to the
               Facility Lessee, and subject to the grant of the aforesaid
               order, cause the Owner Lessor to acquire an undivided interest
               equal to the Owner Lessor's Percentage in the Facility Lessee's
               right, title and interest in the Transmission Assets, for a
               price equal to $1.00. Upon payment by the Owner Lessor of such
               amount, the Facility Lessee shall execute and deliver such
               documentation as is reasonably requested by the Owner Lessor to
               transfer such undivided interest in the Facility Lessee's right,
               title and interest in the Transmission Assets to the Owner
               Lessor. Upon such transfer such Undivided Interest shall be and
               shall be deemed to be an integral part of the Undivided Interest
               (to the extent constituting a portion of the Facility) and the
               Ground Interest (to the extent constituting a portion of the
               leasehold interest in the Facility Site) for all purposes of the
               Operative Documents without the necessity of amending or
               supplementing any Operative Document, subject nevertheless to
               Section 14.15 hereof.

          2.   Without limiting Section 10 hereof or Section 4.2 of the
               Facility Lease, the Facility Lessee agrees that from and after
               the Closing Date and until the earlier to occur of (A) the
               transfer referred to in clause (a) above and (B) the termination
               of the Facility Lease, the Facility Lessee shall make available
               to the Owner Lessor, for no additional compensation, such rights
               in the Transmission Assets solely to the extent as shall be
               necessary so that the representation in Section 3.1(n) will be
               correct to the same extent as if such transfer had occurred on
               the Closing Date.

II.   COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section 9.1, 9.3,
               13.1 or clause (i) of Section 13.2 of the LLC Agreement without
               the prior written consent of the Facility Lessee so long as no
               Significant Lease Default or Lease Event of Default has occurred
               and is continuing and the Indenture Trustee so long as the Lien
               of the Collateral Trust Indenture has not been terminated or
               discharged.

                                       42

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the FILOT Lease
in any manner or (c) except as provided in Section 11 hereof or Section 2.10 or
Section 5.6 of the Collateral Trust Indenture, take any action to prepay or
refund the Lessor Notes or amend any of the payment terms of the Lessor Notes
without, in each case, the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing and, in the case of clause (a) or (b), the Indenture Trustee
so long as the Lien of the Collateral Trust Indenture has not been terminated
or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other laws affecting
the rights of creditors generally unless a Lease Event of Default or a
Significant

                                       43

<PAGE>

Lease Default shall have occurred and be continuing (in which case, if the Lien
of the Collateral Trust Indenture shall not have been discharged, the Trust
Company or the Owner Lessor shall not take any such action unless the Indenture
Trustee shall have given its prior written consent to such action in its sole
discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation

                                       44

<PAGE>

     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

               Notwithstanding the foregoing, the restrictions set forth in
this Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence
     to the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                       45

<PAGE>

     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                       46

<PAGE>

respect of, the Owner Lessor under the Bankruptcy Code, or any other
applicable federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section prior to entering
into such revised agreement; provided that, for such revised offer, the Notice
Period shall be 10 Business Days from the date of such new notice, and the
Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other Broad River Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other Broad River Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                       47

<PAGE>

its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

                                       48

<PAGE>

     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agrees to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor

                                       49

<PAGE>

Manager, the Owner Lessor and the Facility Lessee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly (and in any event
within 30 days of obtaining Actual Knowledge of such Lien), at its own expense,
take such action as may be necessary to duly discharge such Indenture Trustee's
Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site or any Component or any portion of any thereof or any interest
     therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility or the Facility
     Site;

the manufacture, design, purchase, acceptance, rejection, delivery or
     condition of, or improvement to, the Facility, the Facility Site or any
     Component, or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

                                       50

<PAGE>

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the FILOT Lease requested by the Facility Lessee, or resulting from the
     actions of the Facility Lessee or in connection with any Lease Default or
     Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the FILOT Lease or the interests of the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, or under the Operative Documents or the FILOT Lease or the
     presence, use, storage, release, threatened release, transportation,
     arrangement for transportation, treatment, arrangement for treatment,
     manufacture, disposal or arrangement for disposal of any Hazardous
     Substance in, at, under or from the Facility or the Facility Site,
     including, for the avoidance of doubt, any of the foregoing existing or
     occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     County of any obligation contained in this Agreement or any other
     Operative Document or the FILOT Lease or the falsity or inaccuracy of any
     representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the FILOT Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the FILOT
     Lease (other than the Facility Lease, the Facility Site Lease, the FILOT
     Lease and the Springing Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents or the FILOT Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

                                       51

<PAGE>

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A) acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility and the Facility
     Site in compliance with the provisions of the Facility Lease and the
     Facility Site Lease, respectively, and (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Springing Facility Site Lease,
     the performance by the Facility Lessee of all obligations required to be
     performed by it thereunder or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the FILOT Lease or (ii) any violation of
     Applicable Law by any such Person except to the extent attributable to a
     violation of Applicable Law by the Facility Lessee or any other Calpine
     Party or to any breach by the Facility Lessee or such other Calpine Party
     of any covenant, representation or warranty contained in any Operative
     Document or the FILOT Lease;

               a)   as to any Indemnitee, any Claim to the extent attributable
                    to the noncompliance of such Indemnitee or a Related
                    Party, with any of the terms of, or any misrepresentation
                    or breach of warranty by such Indemnitee or Related Party
                    contained in any Operative Document made by such
                    Indemnitee or Related Party or any breach by such
                    Indemnitee or a Related Party of any covenant contained in
                    any Operative Document or any breach by such Indemnitee or
                    a Related Party of any covenant contained in any Operative
                    Document made by such Indemnitee or Related Party

                                       52

<PAGE>

                    except to the extent attributable to any breach by the
                    Facility Lessee or any other Calpine Party of any
                    covenant, representation or warranty contained in any
                    Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of an Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other

                                       53

<PAGE>

     Indemnitee shall waive its rights to indemnification (for itself and each
     Related Party thereto) in a manner reasonably acceptable to the Facility
     Lessee, to cooperate, at the sole cost and expense of the Facility Lessee,
     with insurers in exercise of their rights to investigate, defend or
     compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default shall have occurred and be
     continuing, the Facility Lessee shall have the right in its sole
     discretion, to defend or compromise any Claim for which indemnification is
     sought under this Section 9.1 which the Facility Lessee acknowledges is
     subject to indemnification hereunder; provided that no such defense or
     compromise shall involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a Lien on any part of the Facility, the
     Undivided Interest, the Ground Interest, the Facility Site, the Lessor
     Estate or the Indenture Estate or the impairment of the Facility or the
     Facility Site, in any material respect or (ii) any criminal liability
     being incurred or any material adverse effect on such Indemnitee;
     provided, further, that no Claim shall be compromised by the Facility
     Lessee on a basis that admits any criminal violation or gross negligence
     or willful misconduct on the part of such Indemnitee without the express
     written consent of such Indemnitee; and provided, further, that to the
     extent that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the FILOT Lease (giving effect to its assignment
     to the Owner Lessor pursuant to the Assignment Agreement) are part of the
     same proceeding involving such Claim, the Facility Lessee may assume
     responsibility for the contest or compromise of such Claim only if the
     same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the event
     that in the course of the investigation or defense of a claim, the
     Facility Lessee shall in good faith reasonably

                                       54

<PAGE>

     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties). Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee pursuant to the preceding provisions, but only to the
     extent that such party's participation does not in the reasonable opinion
     of counsel to the Facility Lessee interfere with such control or defense
     of such claim; provided, however, that such

                                       55

<PAGE>

     party's participation does not constitute a waiver of the indemnification
     provided in this Section 9.1; provided, further, that if and to the extent
     that (i) such Indemnitee is advised by counsel that an actual or potential
     conflict of interest exists where it is advisable for such Indemnitee to
     be represented by separate counsel or (ii) there is a risk that such
     Indemnitee may be subject to criminal liability and such Indemnitee
     informs the Facility Lessee that such Indemnitee desires to be represented
     by separate counsel, such Indemnitee shall have the right to control its
     own defense of such Claim and the reasonable fees and expenses of such
     defense (including, without limitation, the reasonable fees and expenses
     of such separate counsel) shall be borne by the Facility Lessee. So long
     as no Lease Event of Default described in clause (a), (b), (g) or (h) of
     Section 16 of the Facility Lease has occurred and be continuing, no
     Indemnitee shall enter into any settlement or other compromise with
     respect to any Claim without the prior written consent of the Facility
     Lessee unless (i) the Indemnitee waives its rights to indemnification
     hereunder or (ii) the Facility Lessee has not acknowledged their indemnity
     obligation with respect thereto and there is a significant risk that a
     default judgment will be entered against such Indemnitee. Nothing
     contained in this Section 9.1(e) shall be deemed to require an Indemnitee
     to contest any Claim or to assume responsibility for or control of any
     judicial proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of their insurers has paid in respect of such Claim; provided that,
     so long as a Significant Lease Default or Lease Event of Default shall
     have occurred and is continuing such amount may be held by the Owner
     Lessor as security for the Facility Lessee's obligations under the
     Facility Lease, the other Operative Documents and the FILOT Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the
     case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

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General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site or any portion or
     Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability of
     the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Facility Site or any portion or Component thereof, or any interest
     therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease, the Facility Site
     Lease or the Springing Facility Site Sublease or arising from the
     Facility, the Undivided Interest, the Ground Interest, the Facility Site
     or any portion or Component thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     FILOT Lease;

the conveyance of title to the Undivided Interest; or

                                       57

<PAGE>

otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of the FILOT Lease.

          Notwithstanding anything herein to the contrary and without regard to
paragraph (b) hereof, the Facility Lessee will indemnify the Owner Participant
and the Owner Lessor on an After-Tax Basis for any Taxes collected by way of
withholding (and any interest, penalties or additions to tax associated
therewith) (or for the failure to withhold taxes) imposed on the Lessor Notes
or the Additional Lessor Notes or any other payments to each Certificateholder
or the Indenture Trustee (each a "Certificateholder Indemnitee"), including any
penalties, interest, or additions to tax applicable in connection therewith;
provided, however, that if the Facility Lessee is required, for any reason, to
indemnify the Owner Participant or the Owner Lessor with respect to any failure
to withhold such tax, and the withholding tax would otherwise be an Excluded
Tax under Section 9.2(b) without regard to the first sentence of this
paragraph, then the Certificateholder Indemnitee with respect to which such
withholding was not made will pay the amount of tax not withheld to the
relevant taxing authority if such taxes remain unpaid or will reimburse the
Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the
period commencing on the date the Facility Lessee shall have made the indemnity
payment to such taxing authority and ending the earlier of the date of
repayment by such Tax Indemnitee and five Business Days after the date the
Facility Lessee demands reimbursement thereof pursuant to this sentence, and
(b) the Overdue Rate for the period thereafter to the date the Facility Lessee
actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and direct
     substitution for income taxes) or property taxes) ("Income Taxes"),
     including any such Taxes collected by way of withholding, minimum or
     alternative minimum taxes, and franchise taxes; provided that this
     exclusion (i) shall not affect any express requirement that payments be
     made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided
     that this exclusion shall not apply so long as a Lease Event of Default
     shall have occurred and be continuing;

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<PAGE>

Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the FILOT Lease (giving effect to its assignment to the Owner Lessor
     pursuant to the Assignment Agreement) and not as a result of any action or
     inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes(A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the
     Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that, under
     law in effect on the date of the transfer such Taxes exceed the amount of
     Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

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<PAGE>

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall
     have determined in good faith that compliance with any such requirement
     shall not result in any identified non-immaterial adverse effect to its
     interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the

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<PAGE>

     nature of sales, use, rental or license taxes or value added taxes (except
     to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document or the FILOT Lease are not within the scope of
     the

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<PAGE>

     independent accountant's responsibility. The fees and disbursements of
     such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to
     this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
     Lessee (x) the amount of such refund or credit (net of any Tax payable by
     the Tax Indemnitee as a result of the receipt or accrual of such refund or
     credit) plus (y) an amount equal to any United States federal, state or
     local income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility
     Lessee a Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing, such amount shall not be payable until such
     Significant Lease Default or Lease Event of Default has been cured, and
     (B) the amount payable to the Facility Lessee pursuant to this sentence
     shall not exceed the amount of the indemnity payment in respect of such
     refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and

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<PAGE>

     (y) over (B) in this Section 9.2(f) shall be carried forward and reduce
     the Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such refund or credit, the
     portion of such refund or credit that is required to be repaid or
     recaptured will be treated as Taxes for which the Facility Lessee must
     indemnify the Tax Indemnitee pursuant to this Section 9.2 without regard
     to paragraph (b) hereof. If, in connection with a refund or credit of all
     or part of any Taxes paid, reimbursed or advanced by the Facility Lessee
     pursuant to this Section 9.2, a Tax Indemnitee receives an amount
     representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which
     the Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

               (1)  the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)  the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

               (3)  the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

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<PAGE>

               In either case, the party conducting such contest shall consult
in good faith with the other party and its designated counsel with respect to
such Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

               (1)   within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)   no Significant Lease Default or Lease Event of Default
has occurred and is continuing, unless the Facility Lessee has provided
security for the indemnity payment and the expenses of contest in a manner
reasonably acceptable to the Tax Indemnitee and the Indenture Trustee, both as
to coverage and credit,

               (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)   there is no risk of imposition of any criminal penalties
or liabilities,

               (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)   the Tax Indemnitee, if it so requests has been provided
at the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

               (9)   if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to

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<PAGE>

such Tax, which admission shall be binding on the Facility Lessee unless and to
the extent such contest is determined in a manner that conclusively
demonstrates that the Facility Lessee is not so liable, and

               (10)   if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

               (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any
other claim for Taxes with respect to any other taxable year the contest of
which is effectively precluded by the Tax Indemnitee's declination to take
action with respect to the Tax Claim), and

               (2)   promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect
of such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold or fee interest, as applicable, of the Owner
     Lessor in the Facility for United States federal, state and local income
     tax purposes (if applicable), send a copy of such report, statement or
     return to the Tax Indemnitee and timely file such report, statement or
     return with the appropriate taxing authority, or (z) in all other cases,
     prepare and furnish to such Tax Indemnitee not later than 30 days prior to
     the date such report, statement or return is required to be filed
     (determined without regard to extensions) a proposed form of such report,
     statement or return for filing by the Tax Indemnitee; provided that the
     only consequence for failure to file after compliance by the Facility
     Lessee with the requirements hereof shall be a loss of indemnification
     from the Facility Lessee in respect of any Tax to the extent resulting
     from such failure.

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Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section.
     Subject to the preceding sentence, the Facility Lessee's obligations under
     this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to
     this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the Facility Lessee's rights under the
Facility Lease, Facility Site Lease and, if applicable, the Springing Facility
Site Sublease, including the right to possession, use and quiet enjoyment of
the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's Interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

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the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to
     the average life to maturity of the Lessor Notes issued on the Closing
     Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that
     there shall be no changes to the amortization schedule or interest amounts
     and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing unless the Improvements to be constructed with the
     proceeds of the Additional Lessor Notes shall cure such Significant Lease
     Default or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents and the FILOT Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

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the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing
of Improvements through the Facility Lease, the Facility Lessee shall at all
times have the right to fund Improvements to the Facility other than through
the Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which

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     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents and the FILOT Lease. The
Owner Participant will execute such agreements and documents as may be
necessary with respect to any such refinancing and will instruct the Owner
Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option,
     to re-optimize the Lease Debt to the extent permitted by the Collateral
     Trust Indenture; provided such re-optimization shall not result in a
     change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect
     any changes in the Pricing Assumptions, including without limitation, (x)
     the initial interest rate on any of the Lessor Notes which is different
     from the applicable interest rate set forth in the Pricing Assumptions,
     (y) an increase in the Transaction Costs from the amount assumed in the
     Pricing Assumptions, unless the Facility Lessee has elected to pay such
     increase, and (z) a Closing Date other than the Scheduled Closing Date;
     and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury

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     Regulations, Revenue Rulings or Revenue Procedures ("Tax Law Change")
     enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which it
     is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior

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     written consent of the Owner Lessor, the Owner Participant and, so long as
     the Lien of the Collateral Trust Indenture has not been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustees.
     Notwithstanding the foregoing, upon satisfaction of the conditions in
     paragraph (b) below, the Facility Lessee may assign the Facility Lease or
     any other Operative Document to which it is a party, or any interest
     therein to any Person, without the consent of the Owner Lessor, the Owner
     Participant, the Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the Ownership
     Interest of any non-assigning Facility Lessee), the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof), and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty or (y) Calpine's obligations under
     the Calpine Guaranty has been succeeded to in accordance with Section
     8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

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               b)   the Facility Lessee shall have paid, at no after-tax cost
                    to such parties, all reasonable documented out-of-pocket
                    expenses (including reasonable attorneys' fees and
                    expenses) of the Owner Lessor, the Lessor Manager, the
                    Owner Participant, the Indenture Trustee, the Lease
                    Indenture Company and the Pass Through Trustees in
                    connection with such assignment;

               c)   the Facility Lessee has provided the Indenture Trustee
                    with (x) an indemnity against the risk that such assignment
                    will cause a Tax Event to occur to any direct holder of any
                    Lessor Note and any Certificateholder or (y) an opinion of
                    counsel to the effect that such assignment will not cause a
                    Tax Event to occur to any direct holder of any Lessor Note
                    and any Certificateholder; and

               d)   the transfer shall not cause the Facility to become
                    "tax-exempt use property within the meaning of Section 168
                    (h) of the Code (unless the Facility Lessee shall make a
                    payment contemporaneously with such transfer that in the
                    reasonable judgment of the Owner Participant compensates
                    the Owner Participant for the adverse tax consequences
                    therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the FILOT Lease, except for obligations (including Section 9.1 and 9.2
hereof and the Tax Indemnity Agreement) surviving pursuant to the express terms
of the Operative Documents or which have otherwise accrued but not been paid as
of such date and (ii) the Owner Participant or the OP Guarantor will transfer
(by an appropriate instrument of transfer) the Member Interest to the Facility
Lessee (or its designee); provided, however, that if the Lien of the Collateral
Trust Indenture has not been terminated or discharged, such transfer shall not
be made to the Facility Lessee, but shall be

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made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS

               (a) At any time prior to the expiration or earlier termination
of the FILOT Lease, the Facility Lessee may request (which request shall be in
writing and addressed to the Owner Lessor, the Owner Participant and the
Indenture Trustee) that the Owner Lessor exercise the Purchase Options (if and
to the extent not previously exercised) and direct the County to convey the
Land (to the extent of the Owner Lessor's Percentage interest) to the Facility
Lessee upon the closing of the conveyance of the Project pursuant thereto.
Within 15 Business Days following receipt of such request, the Owner Lessor
shall exercise the Purchase Options (if and to the extent not previously
exercised) and direct the County to convey the Land (to the extent of the Owner
Lessor's Percentage interest) to the Facility Lessee upon the closing of the
conveyance of the Project pursuant thereto, if each of the following conditions
shall have been satisfied:

                    (1)   the conditions specified in the definition of
                          "Post-FILOT Lease Conversion Date" have been
                          satisfied;

                    (2)   no Lease Default or Lease Event of Default under
                          any of Sections 16(g) and 16(h) of the Facility Lease
                          has occurred and is continuing; and

                    (3)   no Significant Lease Default or Lease Event of
                          Default shall have occurred and be continuing or
                          would result from the occurrence of the Post-FILOT
                          Lease Conversion Date.

          Notwithstanding the foregoing, the Facility Lessee shall be entitled
 to make the foregoing request of the Owner Lessor and to receive a conveyance
of the Land (to the extent of the Owner Lessor's Percentage interest) only if,
concurrently with such request and receipt, the Facility Lessee also makes such
request of the Other Broad River Owner Lessors and receives their respective
interests in the Land pursuant to the Other Broad River Operative Documents.

(b)   If the request of the Facility Lessee referred to in paragraph (a) above
states (and provides information constituting a reasonable basis for such
statement) (A) that the conditions specified

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in paragraph (a) above have been satisfied or will be (and are capable of
being) timely satisfied, (B) that the FILOT Lease is likely to terminate or
cease to be in full force and effect before the Owner Lessor has exercised the
Purchase Options if such exercise does not occur within a period of time which
shall not be less than ten (10) Business Days from the date of the Owner
Lessor's receipt of such notice, and (C) that such notice is being given
pursuant to this Section 14(b) in anticipation of a possible exercise by the
Facility Lessee of the Purchase Options, then the Owner Lessor (or in lieu
thereof, the Owner Participant) shall respond to such notice within five (5)
Business Days after its receipt of such notice (provided that if the Facility
Lessee or the Owner Lessor shall have Actual Knowledge that a termination of
the FILOT Lease by the County is reasonably likely to occur within a time frame
shorter than the time frame of the foregoing notice provisions, the Person
having such Actual Knowledge will promptly advise the other Person of the
relevant information known to it, and thereafter the parties will proceed with
the notices to each other hereunder as promptly as commercially practicable
using all reasonable efforts). The written notice from the Owner Lessor
referred to above shall be one with which the Owner Lessor (or the Owner
Participant) either shall concur in all material facts asserted by the Facility
Lessee in its notice or shall dispute in good faith one or more of such
material facts and shall set forth the Owner Lessor's (or the Owner
Participant's or Indenture Trustee's) position (and in reasonable detail, the
basis therefor) in respect thereof. If the Owner Lessor (or the Owner
Participant) does not provide such notice in dispute of one or more material
facts so asserted by the Facility Lessee within the time period provided above,
the Facility Lessee shall be entitled, to the extent permitted by Applicable
Law, to exercise the foregoing Purchase Options (if and to the extent not
previously exercised) and direct the County to convey (to the extent of the
Owner Lessor's Percentage interest) the Land to the Facility Lessee and the
Project (other than the Land) to the Owner Lessor. Notwithstanding the
foregoing, the determination whether the conditions set forth in paragraph (a)
above have been or shall be capable of being timely satisfied shall be made by
the Owner Lessor and (if the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee (without the necessity of obtaining the
consent of any of the Noteholders or the Pass Through Trustees), provided that
either the Owner Lessor, the Owner Participant or the Indenture Trustee has
notified the Facility Lessee of the dispute referred to above.

     The Owner Lessor agrees not to exercise the Purchase Options other than as
contemplated above unless (i) there has occurred and is continuing at the time
of its election to exercise the same as contemplated by Section 10.02 of the
FILOT Lease a Lease Event of Default and the Owner Lessor or, if the Lien of
the Collateral Trust Indenture has at the time not been discharged, the
Indenture Trustee has commenced the enforcement of remedies under Section 17 of
the Facility Lease, or (ii) in the judgment of the Owner Participant the FILOT
Lease is likely to terminate or cease to be in full force and effect before the
Owner Lessor has exercised the Purchase Options.

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III.   MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document,
the performance of the FILOT Lease or the FILOT Lease (subject to any
applicable consent required by the County).

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 15.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 15.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

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<PAGE>

          Broad River Energy, LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-1, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

                                       76

<PAGE>

     with a copy to:

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, New York  10036
          Telephone:  (212) 382-7255
          Facsimile:  (212) 382-9033
          Attention:  Managing Director

                                       77

<PAGE>

          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto.
          In addition,

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<PAGE>

          the Facility Lessee shall (unless otherwise
          directed by the applicable Rating Agency) provide to each
          Rating Agency a copy of any information, report or notice it
          gives to the Indenture Trustee hereunder or any other
          Operative Documents.

                                       79

<PAGE>

Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the FILOT Lease regardless of any investigation
made by any such party or on behalf of any such party. In addition, the
indemnifications by the Facility Lessee under Sections 9.1 and 9.2 of this
Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the Facility
Site Lease and the Calpine Guaranty, shall expressly survive the expiration or
early termination (in either case, for whatever reason) of the Facility Lease
or the transfer or other disposition of the respective interests of the Owner
Participant, the Owner Lessor, the Lessor Manager, the Lease Indenture Company,
the Indenture Trustee, the Pass Through Trustees and the Certificateholders in,
to and under this Agreement, the Assignment Agreement and the other Operative
Documents and the FILOT Lease. Except as expressly provided above or in Section
22.3 of the Facility Lease, the Tax Indemnity Agreement or as otherwise
expressly provided in the Operative Documents, the representations, warranties,
covenants and agreements of the Transaction Parties under the Operative
Documents shall terminate and be of no further force and effect effective upon
the expiration or earlier termination of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts.  This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

                                       80

<PAGE>

Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the FILOT Lease, as to all of which
     the other parties hereto agree to look solely to the Indenture Estate and
     the Lessor Estate, respectively; provided, however, that the Lease
     Indenture Company and the Pass Through Trust Company shall be liable
     hereunder for their own negligence or willful misconduct or for a breach
     of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                       81

<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in its sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.
The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and to
     the nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the FILOT Lease (except as otherwise provided therein), or
     the subject matter hereof or thereof or any of the transactions
     contemplated hereby or thereby brought by any of the parties hereto or
     their successors or assigns; (ii) hereby irrevocably agrees that all
     claims in respect of such action or proceeding may be heard and determined
     in such New York State court, or in such federal court; and (iii) to the
     extent permitted by Applicable Law, hereby irrevocably waives, and agrees
     not to assert, by way of motion, as a defense, or otherwise, in any such
     suit, action or proceeding any claim that it is not personally subject to
     the jurisdiction of the above-named courts, that the suit, action or
     proceeding is brought in an inconvenient forum, that the venue of the
     suit, action or proceeding is improper or that this Agreement, the other
     Operative Documents, or the subject matter hereof or thereof may not be
     enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                       82

<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee designate,
     appoint and empower National Registered Agents, Inc., 440 Ninth Avenue,
     5th Floor, New York, New York 10001, and the Owner Lessor designates,
     appoints and empowers CT Corporation System, with an office at 111 Eighth
     Avenue, New York, New York 10011, as its authorized agent to receive for
     and on its behalf service of any summons, complaint or other legal process
     in any such action, suit or proceeding in the State of New York for so
     long as any obligation of the Facility Lessee or the Owner Lessor, as
     applicable, shall remain outstanding hereunder or under any of the other
     Operative Documents or with respect to the Facility Lessee for so long as
     it has any obligations remaining under the FILOT Lease. The Facility
     Lessee shall grant an irrevocable power of attorney to CT Corporation
     System, in respect of such appointment and shall maintain such power of
     attorney in full force and effect for so long as any obligation of the
     Facility Lessee shall remain outstanding hereunder or under any of the
     Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness.  This Agreement has been dated as of the date first above
written for convenience only.  This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life.  If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W.  Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                       83

<PAGE>

the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 15.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     15.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of
     Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 15.21; or

as may be necessary or desirable in connection with the enforcement of remedies
    by any party to any of the Operative Documents.

                                       84

<PAGE>

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

Reliance.  Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 15.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                       85

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                              BROAD RIVER ENERGY LLC,
                              a Delaware limited liability company

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   BROAD RIVER OL-1 LLC, a Delaware limited
                                   liability company

                                   By: WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION
                                   not in its individual capacity but solely as
                                   Lessor Manager

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

                                   SBR OP-1 LLC, a Delaware limited liability
                                   company

                                   By: WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION
                                   not in its individual capacity but solely as
                                   Lessor Manager

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

                                   WELLS FARGO BANK NORTHWEST,
                                   NATIONAL ASSOCIATION,
                              not in its individual capacity, except as
                              expressly provided herein, but soly as Lessor
                              Manager

                              By:  _______________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   STATE STREET BANK AND TRUST
                                   COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION
                              not in its individual capacity, except to the
                              extent expressly provided herein, but solely as
                              Indenture Trustee under the Collateral Trust
                              Indenture

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

                                   STATE STREET BANK AND TRUST COMPANY OF
                                   CONNECTICUT, NATIONAL ASSOCIATION
                              not in its individual capacity, except to the
                              extent expressly provided herein, but solely as
                              Pass Through Trustees under the Pass Through
                              Trust Agreement

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                                   CALPINE CORPORATION
                                                    a Delaware corporation

                                   By: ___________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used
     in an Operative Document and not defined therein or in this Appendix A
     but in another Operative Document shall have the meaning herein or
     therein provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit,
     schedule or other attachment to, such Operative Document unless, in any
     such case, otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or
     laws varying, consolidating or replacing the same from time to time,
     and a reference to a statute includes all regulations, policies,
     protocols, codes, proclamations and ordinances issued or otherwise
     applicable under that statute unless, in any such case, otherwise
     expressly provided in any such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such
     document, schedule, exhibit, instrument or agreement unless otherwise
     specified in such definition or in the context in which such reference
     is used;

     (h)  a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to
     time;
                                        2

<PAGE>

     (i)  if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any
     particular date been executed and delivered and such document,
     instrument or agreement is attached as an exhibit to the Participation
     Agreement (as hereinafter defined), such reference shall be deemed to
     be to such form and, following such execution and delivery and subject
     to paragraph (g) above, to the document, instrument or agreement as so
     executed and delivered;

     (j)  a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed
     due and payable, on the next succeeding Business Day with the same
     effect as if the same was exercised or made on such date or day
     (without, in the case of any such payment, the payment or accrual of
     any interest or other late payment or charge, provided such payment is
     made on such next succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof;

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof;
     and

     (o)  a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or
     referable to an enumeration of specific matters, to matters similar to
     those specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in
     Section 3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                        3

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of
     Additional Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost
     of any Required or Non-Severable Improvement financed pursuant to
     Section 11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under
     common control with such particular Person and (b) any Person
     beneficially owning or holding, directly or indirectly, 10% or more of
     any class of voting or equity interest of such first Person or any
     corporation of which such first Person beneficially owns or holds, in
     the aggregate, directly or indirectly, 10% or more of any class of
     voting or equity interest. For purposes of this definition, "control"
     when used with respect to any particular Person shall mean the power to
     direct the management and policies of such Person, directly or
     indirectly, whether through the ownership of voting securities, by
     contract or otherwise, and the terms "controlling" and "controlled"
     have meanings correlative to the foregoing; provided, however, that
     under no circumstances shall the Lease Indenture Company be considered
     to be an Affiliate of either the Indenture Trustee or any
     Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease
     Indenture Company, nor shall the Lease Indenture Company, the Indenture
     Trustee, solely because any Operative Document contemplates that any of
     them may request or act at the instruction of any such Person or such
     Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual
     or constructive) of such payment, which net increase shall be
     calculated by taking into account any reduction in such Taxes resulting
     from any Tax benefits realized or to be realized by the recipient as a
     result of such payment, shall be equal to the amount required to be
     paid. In calculating the amount payable by reason of this provision,
     all income taxes payable and tax benefits realized or to be realized
     shall be determined on the assumptions that (i) the recipient shall be
     subject to the applicable income taxes at the highest marginal tax
     rates then applicable to corporate taxpayers taxed on the same basis as
     the recipient that are in effect in the applicable jurisdictions at the
     time such amount is received or properly accrued, and

                                        4

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations,
     orders, ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting
     or building Permit, (a) that is necessary at any given time in light of
     the stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents and the FILOT
     Lease, to sell electricity therefrom, to enter into any Operative
     Document or to consummate any transaction contemplated thereby, or (b)
     that is necessary so that none of the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholder nor any Affiliate of any of
     them may be deemed by any Governmental Entity to be subject to
     regulation under PUHCA or under any other Applicable Law relating to
     electric utilities, generators, wholesalers or retailers, in each case
     as a result of the operation of the Facility or the sale of electricity
     therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or
     Fair Market Rental Value during any period when a Lease Event of
     Default shall have occurred and be continuing), an appraisal conducted
     by an appraiser or appraisers in accordance with the following
     procedures. Within ten (10) Business Days of written notice from the
     initiating party of the commencement of an Appraisal Procedure, the
     Owner Participant and the Facility Lessee will each appoint one
     Independent Appraiser, which Independent Appraisers shall attempt to
     agree upon the Fair Market Sales Value or Fair Market Rental Value that
     is the subject of the appraisal. If either the Owner Participant or the
     Facility Lessee does not appoint its appraiser within such ten Business
     Day period, the determination of the other appraiser shall be
     conclusive and binding on the Owner Participant and the Facility
     Lessee. If the appraisers appointed by the Owner Participant and the
     Facility Lessee are unable to agree upon the value, period, amount or
     other determination in question within thirty (30) days, such
     appraisers shall jointly appoint a third Independent Appraiser or, if

                                        5

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations
     of the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the
     middle determination, in which case the determination of the most
     disparate appraiser shall be excluded, and the average of the remaining
     two determinations shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. Any appraisal determined in
     accordance with the foregoing must be delivered within thirty (30) days
     after the date on which the last of the appraisers is appointed
     pursuant to the process set forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNED FILOT DOCUMENTS" with respect to the Facility Site Lease and
     the Springing Facility Site Lease, shall have the meaning set forth in
     the recitals to the Facility Site Lease and the Springing Facility Site
     Lease, respectively.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (BR-1) dated
     as of the Closing Date between the Facility Lessee and the Owner
     Lessor, substantially in the form of Exhibit B to the Participation
     Agreement duly completed, executed and delivered on the Closing Date
     pursuant to which the Owner Lessor will acquire the Undivided Interest
     and the Ground Interest from the Facility Lessee.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $75,000,000.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means,
     as at the time of determination, the present value (discounted at the
     rate of interest set forth or implicit in the terms of such lease (or,
     if not practicable to determine such rate, the weighted average rate of
     interest borne by the Certificates outstanding under the Pass Through
     Trust Agreement (calculated, in the event of the issuance of any
     original issue discount Lessor Notes, based on the imputed interest
     rate with respect thereto)), compounded annually) of the total
     obligations of the lessee for rental payments during the remaining term
     of the lease included in such Sale/Leaseback Transaction (including any
     period for which such lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date
     of determination to the dates of each successive scheduled principal
     payment of such Indebtedness or scheduled redemption or similar payment
     with respect to such Indebtedness or Preferred Stock multiplied by (B)
     the amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
     amended from time to time, 11 U. S.C. [sec] 101 et seq.

                                        6

<PAGE>

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any
     similar Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner,
     as applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER" shall mean Broad River Energy LLC.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of
     the Facility Lease upon the exercise of a termination option by the
     Facility Lessee.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New
     York, the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section
     3.1 of the Calpine Guaranty.

     "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment
     Agreement (BR-1) dated as of the Closing Date in favor of the
     Beneficiaries, substantially in the form of Exhibit H to the
     Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

                                        7

<PAGE>

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set
forth in Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of
Certificates, and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any certificates issued in replacement therefor pursuant to
     Section 3.3, 3.4 or 3.5 of the Pass Through Trust Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether
     or not discoverable), statutory liability, property damage, bodily
     injury or death), obligation, loss, settlement, damage, penalty, claim,
     action, suit, proceeding (whether civil or criminal), judgment,
     penalty, fine and other legal or administrative sanction, judicial or
     administrative proceeding, cost, expense or disbursement, including
     reasonable legal, investigation and expert fees, expenses and
     reasonable related charges, of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

                                        8

<PAGE>

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of
     the Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and
     the financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust,
     Mortgage, Security Agreement and Fixture Filing (BR-1), dated as of the
     Closing Date, between the Owner Lessor and the Indenture Trustee, in
     substantially the form of Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Springing Facility Site Lease,
     shall have the meaning specified in Section 2.1(a) of the Springing
     Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to
     the extent constituting Improvements or spare parts while being held
     for future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as
     estimated), after eliminating (i) all inter-company items between the
     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and
     other properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii)
     excess of cost over fair value of assets of businesses acquired, as
     determined in good faith by the Board of Directors; (iv) any
     revaluation or other write-up in value of assets subsequent to December
     31, 1993 as a result of a change in the method of valuation in
     accordance with GAAP; (v) unamortized debt discount and expenses and
     other unamortized deferred charges, goodwill, patents, trademarks,
     service marks, trade names, copyrights, licenses, organization or
     developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous
     fund established for the purpose of redemption or other

                                        9

<PAGE>

     retirement of Capital Stock to the extent such obligation is not reflected
     in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any
     particular time its corporate trust business shall be principally
     administered.

          "CORRECTIVE ORDINANCE" shall mean that certain ordinance
authorizing the Assignment Agreement and adopted by the County on October 1,
2001 pursuant to a public hearing held September 24, 2001.

     "COUNTY" shall mean Cherokee County, South Carolina.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or
     similar official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on
     Schedule 2 of the Facility Lease, and, if such date of determination is
     a Rent Payment Date, Periodic Rent due on that date (to the extent
     payable in arrears) minus (ii) the sum of (A) the Equity Portion of
     Termination Value and (B) if such date of determination is a Rent
     Payment Date, the Equity Portion of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

                                       10

<PAGE>

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     Phase 1 and Phase II reports of the Engineering Consultant, dated
     October 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence
     of any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or
     remediation, (ii) give rise to any obligation or liability of any
     nature (whether civil or criminal, arising under a theory of negligence
     or strict liability, or otherwise) under any Environmental Law, (iii)
     create or constitute a public or private nuisance or trespass, or (iv)
     constitute a violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Roy F. Weston, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local
     laws, ordinances, rules, orders, statutes, decrees, judgments,
     injunctions, directives, permits, licenses, approvals, codes,
     regulations, common or decisional law (including principles of tort,
     negligence, trespass, nuisance, strict liability, contribution and
     indemnification) or other requirement of any Governmental Entity
     relating to the environment, the safety or health of human beings or
     other living organisms, natural resources or toxic, explosive,
     corrosive, flammable, infectious, radioactive or other Hazardous
     Substances, as each may from time to time be amended, supplemented or
     supplanted.

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment Report, dated October 10, 2001, prepared by the
     Environmental Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect
     thereto on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any
determination of Termination Value or amount determined by reference to
Termination Value payable pursuant to the Operative Documents, shall mean an
amount equal to the excess, if any, of (i) the

                                      11

<PAGE>

Termination Value set forth opposite the Termination Date corresponding to
such date of determination on Schedule 2 of the Facility Lease, and, if such
date of determination is a Rent Payment Date, Periodic Rent due on that date
(to the extent payable in arrears) over (ii) the balance, including scheduled
(in accordance with the payment terms of the Lessor Notes) accrued interest, on
the Lessor Notes scheduled (in accordance with the payment terms of the Lessor
Notes) to be outstanding on such date of determination corresponding to the
Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within
     the meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii)
     as a result of the Facility Lessee or a Subsidiary of the Facility
     Lessee being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)   the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that
     renders the Facility permanently unfit for normal use or which does not
     satisfy the preconditions for repair of the Facility set forth in
     Section 10 of the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an
     agreed constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner
     Lessor, prior to the Post-FILOT Lease Conversion Date, of the Undivided
     Interest or the Ground Interest, or, from and after the Post-FILOT
     Lease Conversion Date, of title to the Undivided Interest, in each case
     following exhaustion of all permitted appeals or an election by the
     Facility Lessee in its discretion not to pursue such appeals or rights;
     provided that no such contest (or exercise) shall extend beyond the
     earlier of the date which is (x) six months after the loss of such
     leasehold interest or title, or (y) 48 months prior to the end of the
     Basic Lease Term or any Renewal Lease Term then in effect or elected by
     the Facility Lessee or (b) Requisition of use of, or leasehold interest
     represented by the Undivided Interest or the Ground Interest or, upon
     or following the Post-FILOT Lease Conversion Date, title to, the
     Undivided Interest or the Ground Interest by any Governmental Entity
     that shall have resulted in the loss of possession of the Undivided
     Interest or all or any part of the Ground Interest that is required for
     the use or operation of the Facility; provided that in any case
     involving Requisition of use of the Facility, or all or any part of the
     Facility Site that is required for the use or operation, of the
     Facility, but not of the Owner Lessor's Undivided Interest or the
     Ground Interest or (from and after the Post-FILOT Lease Conversion
     Date) the Facility Lessee's title to the Ground Interest, such event
     shall be an Event of Loss only if

                                      12

<PAGE>

     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described
     below, subjection of the Owner Participant or the Owner Lessor to any
     public utility regulation of any Governmental Entity or law which in
     the reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and the FILOT Lease and not, in
     any event, as a result of (a) investments, loans or other business
     activities of the Owner Participant or any of its Affiliates in respect
     of equipment or facilities similar in nature to the Facility or any
     part thereof or in any other electrical, cogeneration or other energy
     or utility related equipment or facilities or the general business or
     other activities of the Owner Participant or any of its Affiliates or
     the nature of any of the properties or assets from time to time owned,
     leased, operated, managed or otherwise used or made available for use
     by the Owner Participant or any of its Affiliates or (b) a failure of
     the Owner Participant to perform routine, administrative or ministerial
     actions the performance of which would not subject the Owner
     Participant or any of its Affiliates to any material adverse
     consequence (in the reasonable opinion of such Owner Participant acting
     in good faith); provided that the Facility Lessee and the Owner Lessor
     and Owner Participant agree to cooperate and to take reasonable
     measures to alleviate the source or consequence of any regulation
     constituting an Event of Loss under this paragraph (iv), so long as
     there shall be no adverse consequences to the Owner Lessor or Owner
     Participant as a result of such cooperation or the taking of reasonable
     measures (the events and circumstances described herein this paragraph
     (iv), a "Regulatory Event of Loss"); or

          (v)    if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Order shall not have been obtained and become
     final within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to
     have a material adverse effect on the Owner Participant or subject the
     Owner Participant or the Owner Lessor to regulation as a public utility
     company or a holding company under the Holding Company Act;

          (vi)   if elected by the Owner Participant, in the event that
     the FERC Order set forth in clause (v) of the definition of "FERC
     Orders" herein shall not have been obtained and become final within
     ninety (90) days of the Closing Date, such election to be conditioned
     upon receipt of a reasoned legal opinion of nationally recognized
     independent counsel (Owner Participant's outside counsel at Closing to
     be deemed to meet such qualifications) that any pending proceeding, if
     adversely determined, would reasonably be expected to have a material
     adverse effect on the Owner Participant or the Owner Lessor; or

                                      13

<PAGE>

          (vii)  the FILOT Lease shall have been cancelled or terminated
     or shall otherwise cease to be in full force and effect otherwise than
     by reason of (a) an event constituting a Lease Event of Default or (b)
     the occurrence of the Post-FILOT Lease Conversion Date.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the
     Owner Lessor, the Owner Participant, the Indenture Trustee and the Pass
     Through Trustees pursuant to Section 10.1 of the Facility Lease that it
     does not elect to rebuild the Facility pursuant to Section 10.3 of the
     Facility Lease but to pay Termination Value and terminate the Facility
     Lease pursuant to Section 10.2 thereof, or the date an Event of Loss is
     deemed to occur pursuant to the last sentence of Section 10.1 of the
     Facility Lease. The date of occurrence of an Event of Loss described in
     clause (iii)(a) above shall be the earlier of (A) the date which is six
     months following the loss of title, (B) the date upon which the
     Facility Lessee shall have concluded all efforts to contest such loss
     of title or exercise its rights of eminent domain, and (C) the date
     which is 48 months prior to the end of the Basic Lease Term or any
     Renewal Lease Term then in effect or elected by the Facility Lessee (if
     an event described in clause (iii)(a) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iii)(b) above shall be the date of requisition of title to the
     Facility Site or, in the case of a requisition of use of the Facility
     Site, the date which is the scheduled expiration date of the Basic
     Lease Term or any Renewal Lease Term then in effect or elected by the
     Facility Lessee, as the case may be (if an event described in clause
     (iii)(b) shall be continuing at such time). The date of occurrence of
     an Event of Loss described in clause (iv) above shall be the date on
     which the Facility Lessee receives the Owner Participant's election
     made in accordance with such clause (iv) during any period when an
     event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause
     (v) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (v).
     The date of occurrence of an Event of Loss in clause (vi) above shall
     be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (vi). The
     date of occurrence of an Event of Loss in clause (vii) shall be ten
     (10) Business Days after the date of such termination, cancellation or
     failure to be in full force and effect.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental
     Rent and whether or not a Lease Event of Default exists) payable to
     either the Owner Lessor, the Lessor Manager, the Trust Company, or the
     Owner Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to
     Section 2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and
     any payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the FILOT Lease, (ii)(A)
     insurance proceeds, if any, payable to the Owner Lessor or the Owner
     Participant under insurance separately maintained by the Owner Lessor
     or the Owner Participant

                                      14

<PAGE>

     with respect to the Facility as permitted by Section 3(b) of Schedule 5.31
     to the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative Document
     or the FILOT Lease for the benefit of the Owner Lessor or the Owner
     Participant, (iii) any amount payable to the Owner Participant as the
     purchase price of the Owner Participant's right and interest in the Member
     Interest, (iv) all other fees expressly payable to the Owner Participant
     under the Operative Documents, (v) any payments in respect of interest, or
     any payments made on an After-Tax Basis, to the extent attributable to
     payments referred to in clause (i) through (vi) above; (vii) any amounts
     paid to the Owner Lessor as reimbursement for amounts expended pursuant
     to Section 20 of the Facility Lease; (viii) proceeds of the items referred
     to in clause (i) through (vii) above; and (ix) any rights to demand,
     collect, sue for, or otherwise receive and enforce payment of the foregoing
     amounts, including under the Calpine Guaranty, but without limiting
     clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 850 MW nameplate capacity gas-fired simple
     cycle merchant power plant located in Gaffney, South Carolina and more
     fully described in Exhibit A to the Participation Agreement. The
     Facility does not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (BR-1), dated
     as of October 18, 2001, between the Owner Lessor and the Facility
     Lessee, substantially in the form of Exhibit C to the Participation
     Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean
     the term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to
     the Participation Agreement.

     "FACILITY PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided
     fee interest (to the extent of the Owner Lessor's Percentage) in all of
     or a portion of the Project, other than the portion thereof
     constituting the Land.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      15

<PAGE>

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (BR-1), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean, with respect to the Facility Site
     Lease, Broad River Energy LLC, and with respect to the Springing
     Facility Site Lease, shall mean Owner Lessor.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean, with respect to the Facility Site
     Lease, Owner Lessor, and with respect to the Springing Facility Site
     Lease, shall mean Broad River Energy LLC.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease and Section 4.1 of the Springing Facility Site
     Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or
     cash price obtainable in an arm's-length lease, sale or supply,
     respectively, between an informed and willing lessee or purchaser under
     no compulsion to lease or purchase and an informed and willing lessor
     or seller or supplier under no compulsion to lease or sell or supply
     the property or service in question, and shall, in the case of the
     Undivided Interest or the Owner Lessor's Interest, be determined
     (except pursuant to Section 17 of the Facility Lease or as otherwise
     provided below or in the Operative Documents) on the basis and
     assumption that (i) the conditions contained in Sections 7 and 8 of the
     Facility Lease shall have been complied with in all respects, (ii) the
     lessee or buyer shall have rights in, or an assignment of, the
     Operative Documents to which the Owner Lessor is a party and the FILOT
     Lease and the obligations relating thereto, (iii) the Undivided
     Interest or the Owner Lessor's Interest, as the case may be, is free
     and clear of all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens), (iv) taking into
     account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents. If the Fair Market
     Sales Value of the Owner Lessor's Interest is to be determined during
     the continuance of a Lease Event of Default or in connection with the
     exercise of remedies by the Owner Lessor pursuant to Section 17 of the
     Facility Lease, such value shall be determined by an Independent
     Appraiser appointed solely by the Owner Lessor on an "as-is",
     "where-is" and "with all faults" basis and shall take into account all
     Liens (other than Owner Lessor's Liens, Owner Participant's Liens and
     Indenture Trustee Liens); provided, however, in any such case where the
     Owner Lessor shall be unable to obtain constructive possession
     sufficient to realize the economic benefit of the Owner Lessor's
     Interest, Fair Market Sales Value of the Owner Lessor's Interest shall
     be deemed equal to $0 (zero). If in any case other than in the
     preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a
     request therefor has been made, the Fair Market Sales Value of the
     Owner Lessor's

                                      16

<PAGE>

     Interest shall be determined by appraisal pursuant to the Appraisal
     Procedures. Any fair market value determination of a Severable Improvement
     shall take into consideration any liens or encumbrances to which the
     Severable Improvement being appraised is subject and which are being
     assumed by the transferee.

     "FACILITY SITE SUBLEASE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Springing Facility Site Sublease.

     "FASB 13" shall mean the Statement of the Financial Accounting
     Standards Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting
     Standards Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as
     amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the
     United States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of the Facility Lessee
     and Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on
     or before the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the
     sale/leaseback pursuant to Section 204 of the Federal Power Act or
     blanket authorization to issue securities and assume obligations under
     such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal
     Power Act for the transfer of jurisidictional facilities in the
     sale/leaseback contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner Lessor is an EWG.

     "FILOT LEASE" shall mean the Lease Agreement dated March 1, 2000 by and
     between the County and Facility Lessee, together with the Inducement
     Agreement.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

                                      17

<PAGE>

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of
     the Springing Facility Site Lease.

     "FMV RENEWAL LEASE OPTION" with respect to the Initial Term, shall have
     the meaning set forth in Section 2.2(a)(iii) of the Springing Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Springing Facility Site
     Lease, shall have the meaning set forth in Section 19.3 of the
     Springing Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental
     Entity and shall include those citing, environmental and operating
     permits and licenses (including the Applicable Permits) that are
     required for the use and operation of the Facility, the Undivided
     Interest (if any), the Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any
     board, commission, department, division, organ, instrumentality, court
     or agency of any thereof.

     "GROUND INTEREST" shall mean, prior to the Post-FILOT Lease Conversion
     Date, the Owner Lessor's 25% undivided leasehold interest in the
     Facility Site, and upon and after the Post-FILOT Lease Conversion Date,
     the Owner Lessor's 25% undivided leasehold interest in the Facility
     Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an
     assignment and assumption agreement in form and substance substantially
     in the form of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

                                      18

<PAGE>

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred,"
     "Incurrence" and "Incurring" shall each have a correlative meaning;
     provided, however, that any amendment, modification or waiver of any
     provision of any document pursuant to which Indebtedness was previously
     Incurred shall not be deemed to be an Incurrence of Indebtedness as
     long as (i) such amendment, modification or waiver does not (A)
     increase the principal or premium thereof or interest rate thereon, (B)
     change to an earlier date the Stated Maturity thereof or the date of
     any scheduled or required principal payment thereon or the time or
     circumstances under which such Indebtedness may or shall be redeemed,
     (C) if such Indebtedness is contractually subordinated in right of
     payment to the Obligations, modify or affect, in any manner adverse to
     the Beneficiaries, such subordination or (D) if the Guarantor is the
     obligor thereon, provide that a Restricted Subsidiary shall be an
     obligor and (ii) such Indebtedness would, after giving effect to such
     amendment, modification or waiver as if it were an Incurrence, comply
     with clause (i) of the first proviso to the definition of "Refinancing
     Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person
     evidenced by bonds, debentures, notes or other similar instruments,
     (iii) all obligations of such Person to pay the deferred purchase price
     of property or services, (iv) all indebtedness created or arising under
     any conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies
     of the seller or lender under such agreement in the event of default
     are limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such
     capital stock or other equity interests, (viii) all net obligations
     under "swaps", "caps", "floors", "collars", or other interest rate
     hedging contracts or similar arrangements, (ix) all Indebtedness of any
     other Person of the type referred to in clauses (i) through (viii),
     guaranteed by such Person or for which such Person shall otherwise
     (including pursuant to any keepwell, makewell or similar arrangement)
     become directly or indirectly liable, and (x) all Indebtedness of the
     type referred to in clauses (i) through (ix) above secured by (or for
     which the holder of such Indebtedness has an existing right, contingent
     or otherwise, to be secured by) any Lien on property (including
     accounts and contracts rights) owned by such Person, even though such
     Person has not assumed or become liable for the payment of such

                                      19

<PAGE>

     Indebtedness, the amount of such obligation being deemed to be the
     lesser of the value of such property or the amount of the obligation so
     secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Springing Facility Site Lease.

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f)
     of the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity,
     except as expressly provided herein, but solely as Indenture Trustee
     under the Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of
     the Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may
     from time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     that are not related to, or that are in violation of, any Operative
     Document or the FILOT Lease or the transactions contemplated thereby,
     (ii) Claims against or any act or omission of the Lease Indenture
     Company or the Indenture Trustee, or Affiliate thereof that is not
     related to, or that is in violation of, any of such Person's
     representations, warranties, covenants or agreements in an Operative
     Document or the transactions contemplated thereby or that is in breach
     of any covenant or agreement of the Lease Indenture Company or the
     Indenture Trustee specified therein, (iii) Taxes imposed upon the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the
     interest of the Lease Indenture Company or the Indenture Trustee in the
     Lessor Estate, other than pursuant to the Operative Documents.

                                      20

<PAGE>

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INDUCEMENT AGREEMENT" shall mean the Inducement Agreement and Millage
     Agreement dated June 15, 1999, between the County and the Facility
     Lessee.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Springing Facility Site
     Sublease, shall have the meaning set forth in Section 2.1(a) of the
     Springing Facility Site Sublease.

     "INITIAL TERM" with respect to the Springing Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Springing Facility
     Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating
     Agency's generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "LAND" shall have the meaning thereof set forth in the FILOT Lease.

     "LAND PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided
     fee interest (to the extent of the Owner Lessor's Percentage) in the
     Land.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT Rate" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

                                      21

<PAGE>

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust
     Company of Connecticut, National Association, in its individual
     capacity under the Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination
     value or similar amount payable by the lessee under such lease and
      (iii) the principal amount of financial obligations under any synthetic
     lease, tax retention operating lease, off-balance sheet loan or similar
     off-balance sheet financing product where such transaction is
     considered borrowed money indebtedness of the lessee for tax purposes
     but is classified as an operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease and
     with respect to the Springing Facility Site Lease or Springing Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 15.3 of the Facility Site Lease
     and with respect to the Springing Facility Site Lease or Springing
     Facility Site Sublease, shall have the meaning set forth in Section
     16.4 of the Springing Facility Site Lease or Section 15.3 of the
     Springing Facility Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility
     Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility
     Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to
     the Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,

                                      22

<PAGE>

     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents and the FILOT Lease and any of the
     foregoing, but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an
     independent manager under the LLC Agreement and each other Person that
     may from time to time be acting as Independent Manager in accordance
     with the provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the
     context may require, the Initial Lessor Notes and Additional Lessor
     Notes, each issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however,
     that any Note held by the Facility Lessee, the Guarantor or any
     Affiliate of either such party shall not be considered outstanding for
     purposes of this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject
     to redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all
     principal and interest payments scheduled to become due in respect of
     such Lessor Note, after the date of such redemption calculated using a
     discount rate equal to the sum of (i) the yield to maturity on the U.S.
     Treasury security having an average life equal to the remaining average
     life of such Lessor Note and trading in the secondary market at the
     price closest to par and (ii) 50 basis points; provided, however, that
     if there is no U.S. Treasury security having an average life equal to
     the remaining average life of such Lessor Note, such discount rate
     shall be calculated using a yield to maturity interpolated or
     extrapolated on a straight-line basis (rounding to the nearest calendar
     month, if necessary) from the yields to maturity for two U.S. Treasury
     securities having average lives most closely

                                      23

<PAGE>

     corresponding to the remaining life of such Lessor Note and trading in the
     secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its
     obligations under the Operative Documents or (ii) the validity or
     enforceability of the Operative Documents, (b) the Indenture Estate or
     the Lessor Estate, the security interests in the Lessor Estate, or (c)
     with respect to the Owner Participant's (but not the
     Certificateholders') interest in the Undivided Interest, the residual
     value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (BR-1), dated as of the Closing Date, between the
     Owner Lessor, as landlord, and the Facility Lessee, as tenant, and
     filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
      (BR-1), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Office of the Cherokee County Clerk of
     Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE LEASE" shall mean the Memorandum
     of Springing Facility Site Lease (BR-1), dated as of the Closing Date,
     between the Facility Lessee, as landlord, and the Owner Lessor, as
     tenant, and filed with the Office of the Cherokee County Clerk of
     Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE SUBLEASE" shall mean the
     Memorandum of Springing Facility Site Sublease (BR-1), dated as of the
     Closing Date, between the Owner Lessor, as sublandlord, and the
     Facility Lessee, as subtenant, and filed with the Office of the
     Cherokee County Clerk of Court.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan
     (as defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

                                      24

<PAGE>

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating
     Officer, the Chief Financial Officer, the Treasurer, the Secretary, any
     Assistant Treasurer, any Assistant Secretary or the Controller or
     Principal Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice
     President, the Treasurer or an Assistant Treasurer of a corporate
     general partner and (iii) in the case of an Indenture Trustee, a
     certificate signed by a Responsible Officer of such Indenture Trustee.

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation
     Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited
     Liability Company Agreement, dated as of October 1, 2001, between
     Newcourt Capital USA Inc. and the Lessor Manager, pursuant to which the
     Owner Participant shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing
     Date in favor of the Facility Lessee, the Owner Lessor, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders, or (ii) any other guaranty
     agreement provided by an OP Guarantor in form and substance
     substantially in the form of Exhibit G to the Participation Agreement.

                                      25

<PAGE>

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the
     Facility Site Lease, the Springing Facility Site Lease, the Springing
     Facility Site Sublease, the Collateral Trust Indenture, the Lessor
     Notes, the Pass Through Trust Agreements, the LLC Agreement, the Tax
     Indemnity Agreement, the Tri-Party Agreement, the Calpine Guaranty, the
     OP Parent Guaranty (if any), the Certificate Purchase Agreement and the
     Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any
     replacement Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal
     counsel of Calpine, as to matters contained in such opinions delivered
     at Closing, and as to all other matters, Thelen Reid & Priest LLP
     and/or Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and
     the like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other
     form as may be reasonably acceptable to the Owner Participant, and
      (iii) the scope of which shall cover due authorization, execution,
     delivery and enforceability of the applicable agreement(s), and
     exemption from regulation, in each case, substantially in the form set
     forth in the opinions delivered at Closing with any material
     modifications thereto to be reasonably acceptable to the Owner
     Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.2 of the Facility Lease.

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements
     applicable to any of its authorized shares of capital stock; with
     respect to any Person that is a limited partnership, its certificate of
     limited partnership and partnership agreement; with respect to any
     Person that is a limited liability company, its certificate of
     formation and its limited liability company agreement, in each case, as
     from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time; and with respect to
     any Person that is a business trust, its certificate of business trust
     and its trust agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time.

     "OTHER BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the
     assignment agreements executed and delivered pursuant to the Other
     Broad River Participation Agreements.

     "OTHER BROAD RIVER CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine
     pursuant to the Other Broad River Participation Agreements.

                                      26

<PAGE>

     "OTHER BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the
     Other Broad River Participation Agreements.

     "OTHER BROAD RIVER FACILITY LEASES" shall mean the other Broad River
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other Broad River Owner Lessors and the Facility Lessee, pursuant
     to which the Other Broad River Owner Lessors will lease the Other South
     Point Undivided Interests to the Facility Lessee.

     "OTHER BROAD RIVER FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other
     Broad River Owner Lessors and the Facility Lessee pursuant to which the
     Other Broad River Owner Lessors will sublease the Other Broad River
     Ground Interests to the Facility Lessee.

     "OTHER BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under
     the Facility Site Lease.

     "OTHER BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other Broad River Collateral Trust Indentures.

     "OTHER BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other Broad River
     Undivided Interests and the Other Broad River Ground Interests to the
     Other Broad River Owner Lessors, and the lease by the Other Broad River
     Owner Lessors of the Other Broad River Undivided Interests and the
     Other Broad River Ground Interests to the Facility Lessee on
     substantially the same terms and conditions as under, and dated the
     same date as, the Overall Transaction.

     "OTHER BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other Broad River Owner Lessors
     pursuant to the Other Broad River Operative Documents.

     "OTHER BROAD RIVER OWNER LESSORS " shall mean Broad River OL-2, LLC,
     Broad River OL-3, LLC and Broad River OL-4, LLC.

     "OTHER BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "OTHER BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other Broad River Lease Transactions.

     "OTHER BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other Broad River
     Owner Lessor, the Other Broad River Lessor Manager, Other Broad River
     Owner Participant, Other Broad River Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (BR-2),
     Participation Agreement (BR-3) and Participation Agreement (BR-4), each
     dated as of the Closing Date, pursuant to which, among other things,
     the Facility Lessee has agreed to (a) assign and transfer to the
     applicable Other Broad River Owner Lessors certain

                                      27

<PAGE>

     undivided leasehold interests in the Facility and the Facility Site,
     and (b) lease from the applicable Other Broad River Owner Lessors such
     undivided leasehold interest in the Facility and the Facility Site
     pursuant to the Other Broad River Facility Leases and the Other Broad
     River Facility Site Leases, respectively.

     "OTHER BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest (or, upon or following the Post-FILOT Lease
     Conversion Date, the fee interest) in the Facility not conveyed to the
     Owner Lessor under the Assignment Agreement (or, in the case of the fee
     interest, pursuant to the transactions contemplated by Article XIV of
     the Participation Agreement and the Other Broad River Participation
     Agreement).

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other Broad
     River Calpine Guaranties, the South Point Calpine Guaranties and the
     RockGen Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other Broad River
     Facility Leases, the South Point Facility Leases and the RockGen
     Facility Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other Broad River
     Owner Lessors, the South Point Owner Lessors and the RockGen Owner
     Lessors.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated
     by the Operative Documents and the FILOT Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime
     commercial lending rate of the Chase Manhattan Bank (as publicly
     announced to be effect from time to time, such rate to be adjusted
     automatically, without notice, on the effective date of any change in
     such rate) plus 1%.

     "OWNER LESSOR" shall mean Broad River OL-1, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest,
     National Association, Salt Lake City, Utah, ABA # 121-000-248, Account:
     Corporate Trust Services, Account # 051-0922115, Credit to: Broad River
     OL-1, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title
     and interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility
     Sites, or any part of any thereof or interest therein arising as a
     result of (i) Taxes against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     FILOT Lease (giving effect to its assignment to the Owner Lessor
     pursuant to the Assignment Agreement) or the transactions contemplated
     thereby, (ii) Claims against or any act or omission of the Owner
     Lessor, the Trust Company or the Lessor Manager or Affiliate thereof
     that is not related to, or that is in violation of, any Operative
     Document or the FILOT Lease (giving

                                      28

<PAGE>

     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby or that is in breach
     of any covenant or agreement of the Owner Lessor, the Trust Company or the
     Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents and the FILOT Lease.

     "OWNER LESSOR'S Percentage" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-1, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on
     Schedule 1-C to the Participation Agreement, or such other account of
     the Owner Participant, as the Owner Participant may from time to time
     specify in a notice to the Indenture Trustee pursuant to Section 9.5 of
     the Collateral Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Sites, or any part of any thereof or interest therein arising
     as a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document or the transactions contemplated thereby or that is
     in breach of any covenant or agreement of the Owner Participant set
     forth therein, (ii) Taxes against the Owner Participant that are not
     indemnified against by the Facility Lessee pursuant to the Operative
     Documents or (iii) Claims against or affecting the Owner Participant
     arising out of the voluntary or involuntary transfer by the Owner
     Participant of any portion of the interest of the Owner Participant in
     the Member Interest, other than any transfer (x) pursuant to the
     exercise of any of the Facility Lessee's (or any Affiliate thereof)
     rights under the Operative Documents or (y) during the continuance of a
     Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other Broad River Owner Lessors.

                                      29

<PAGE>

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated as
     of October 18, 2001, among the Facility Lessee, the Guarantor, the Owner
     Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass Through
     Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site, all
     matters shown as exceptions on Schedule B to each of the Title Policies as
     in effect on the Closing Date.

                                       30

<PAGE>

     "PERMITTED INVESTMENTS" shall mean investments in securities that are: (i)
     direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the FILOT Lease, as well as the
     rights of sublessees and/or assignees to the extent set forth in or
     expressly permitted pursuant to the Facility Lease or any other Operative
     Document, (b) as to the Facility Lessee, Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect, or
     (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material

                                       31

<PAGE>

     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, (e) Liens
     arising out of judgments or awards, but only so long as an appeal or
     proceeding for review is being prosecuted in good faith and so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, or are fully covered by insurance, (f) mineral rights the use
     and enjoyment of which do not materially interfere with the use and
     enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens, deposits
     or pledges to secure statutory obligations or performance of bids,
     tenders, contracts (other than for the repayment of borrowed money) or
     leases, or for purposes of like general nature in the ordinary course of
     its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholders, and would not otherwise reasonably be
     expected to have a Material Adverse Effect, (k) the interests of the Other
     Broad River Owner Lessors and the Other Broad River Indenture Trustees in
     the Facility, the Facility Site and the Ownership and Operation Agreement,
     (l) the interests of the Facility Lessee, the Other Broad River Owner
     Participants, the Other Broad River Owner Lessors, the Other Broad River
     Lessor Managers, the Other Broad River Indenture Trustees, and Pass
     Through Trustees under any of the Other Broad River Operative Documents,
     (m) the Ownership and Operation Agreement, (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement and (o)
     the rights of the County with respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative, partnership,
     joint venture, association, joint-stock company, limited liability
     company, other entity, trust, unincorporated organization or government or
     any agency or political subdivision thereof or any other entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the

                                       32

<PAGE>

     Facility Lessee or a Subsidiary of the Facility Lessee or an ERISA
     Affiliate, and each such plan for the five year period immediately
     following the latest date on which Facility Lessee, or a Subsidiary of
     Facility Lessee or an ERISA Affiliate maintained, contributed to or had an
     obligation to contribute to such plan.

     "POST-FILOT LEASE CONVERSION DATE" shall mean the date on which all of the
     following events shall have occurred:

          (a)  the closing of the sale of an undivided fee interest in the Land
     (to the extent of the Owner Lessor's Percentage) by the County to the
     Facility Lessee upon exercise by the Owner Lessor of the Land Purchase
     Option and the designation by the Owner Lessor to the County of the
     Facility Lessee (or its designee) as the entity to which an undivided fee
     interest in the Land (to such extent) is to be conveyed, pursuant to which
     title to the Land (to such extent) vests in the Facility Lessee, and the
     termination of the FILOT Lease pursuant to Section 10.02 thereof;

          (b)  the closing of the sale of an undivided fee interest in the
     Facility by the County to the Owner Lessor upon exercise by the Owner
     Lessor of the Facility Purchase Option, pursuant to which good and valid
     fee title an undivided fee interest to the Facility (to the extent of the
     Owner Lessor's Percentage) vests in the Owner Lessor;

          (c)  the commencement of the full force and effectiveness of the
     Springing Facility Site Lease and the Springing Facility Site Sublease;

          (d)  except for the termination of the FILOT Lease and the Facility
     Site Lease, no Operative Document shall cease to be in full force and
     effect as a result of the transactions in clauses (a), (b) or (c) above;

          (e)  receipt by the Owner Lessor, the Owner Participant and (if the
     Lien of the Collateral Trust Indenture has not been discharged) the
     Indenture Trustee of the following (1) evidence of the obtaining of all
     Governmental Approvals and third-party consents which are reasonably
     necessary or advisable in connection with the transactions referred to in
     clauses (a) through (d) above, (2) evidence satisfactory to the Indenture
     Trustee (including without limitation, evidence that all filings and
     recordings, if any, necessary under Applicable Law shall have been duly
     made and all filing, recordation, transfer and other fees payable in
     connection therewith shall have been paid) that the Lien of the Collateral
     Trust Indenture on the Indenture Estate shall continue in full force and
     effect and with the same priority following the consummation of such
     transactions, and (3) appropriate endorsements, reasonably satisfactory to
     such Persons, to required property title insurance policies to reflect the
     new fee owners of the Land and the other portions of the Project.

          (f)  the receipt by the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture has not been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees, of opinions of
     counsel with respect to the accomplishment of the foregoing matters and
     other matters substantially similar to these covered by the opinions of
     counsel to the Facility Lessee rendered on the Closing Date,

                                       33

<PAGE>

     which opinions shall be satisfactory in form and substance to the Owner
     Participant and, so long as the Lien of the Collateral Trust Indenture has
     not been terminated or discharged, the Indenture Trustee and the Pass
     Through Trustees.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROJECT" shall have the meaning set forth in the FILOT Lease.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in administrative guidance has been issued by the Internal Revenue
     Service or the Department of Treasury and which has been published in the
     Federal Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

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<PAGE>

     "PURCHASE OPTION" shall mean, collectively, the Facility Purchase Option
     and the Land Purchase Option.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of the
     Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary
     and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
     of another Restricted Subsidiary) including Indebtedness that refinances
     Refinancing Indebtedness; provided, however, that (i) if the Indebtedness
     being refinanced is contractually subordinated in right of payment to the
     Obligations, the Refinancing Indebtedness shall be contractually
     subordinated in right of payment to such Obligations to at least the same
     extent as the Indebtedness being refinanced, (ii) the Refinancing
     Indebtedness is scheduled to mature either (a) no earlier than the
     Indebtedness being refinanced or (b) after the Stated Maturity of the
     Obligations, (iii) the Refinancing Indebtedness has an Average Life at the
     time such Refinancing Indebtedness is Incurred that is equal to or greater
     than the Average Life of the Indebtedness being refinanced and (iv) such
     Refinancing Indebtedness is in an aggregate principal amount (or if issued
     with original issue discount, an aggregate issue price) that is equal to
     or less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the

                                       35

<PAGE>

     Guarantor or a Restricted Subsidiary that refinances Indebtedness of an
     Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL TERM" with respect to the Springing Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(b).

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Springing Facility Site Lease, shall
     have the meaning set forth in Section 2.2(b) of the Springing Facility
     Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases

                                       36

<PAGE>

     thereafter (except for the last Rent Payment Period which period shall
     commence on May 31, 2031 and end on, and include, October 18, 2031, each
     six-month period commencing on each Rent Payment Date through and
     including the following May 30 or November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2 of
     the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

     "ROCKGEN" shall mean RockGen Energy LLC.

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of the
     four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

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<PAGE>

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests in
     the RockGen Facility Site conveyed to the RockGen Owner Lessors under the
     RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting on
     behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground Interest to the RockGen
     Facility Lessee on substantially the same terms and conditions as under,
     and dated the same date as, the RockGen Overall Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen

                                       38

<PAGE>

     Owner Lessors certain undivided interests in the RockGen Facility, and (b)
     lease from the applicable RockGen Owner Lessors such undivided interest in
     the RockGen Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership interests
     in the RockGen Facility conveyed to the RockGen Owner Lessors under the
     RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Sringing
     Facility Site Lease, shall have the meaning set forth in Section
     2.2(a)(ii) of the Springing Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b) of
     the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other Broad River Facility Lease.

                                       39

<PAGE>

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Springing Facility Site
     Lease, shall have the meaning set forth in Section 14.1 of the Springing
     Facility Site Lease.

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner Lessor
     will lease the applicable South Point Ground Interests to South Point
     Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner Lessor
     will lease the applicable South Point Ground Interest to the South Point
     Facility Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Assignment Agreements.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving the
     assignment and transfer of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Owner Lessors, and the
     simultaneous lease of the South Point Undivided Interests and South Point
     Ground Interests to the South Point Facility Lessee

                                       40

<PAGE>

     on substantially the same terms and conditions as under, and dated the
     same date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3) and
     Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee has
     agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the South Point Facility
     and the South Point Facility Site, and (b) lease from the applicable South
     Point Owner Lessors such undivided leasehold interest in the South Point
     Facility and the South Point Facility Site pursuant to the South Point
     Facility Leases and the South Point Facility Site Leases, respectively.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests (or upon the Post-FILOT Lease Conversion Date, undivided fee
     interests) in the Broad River Facility conveyed to the South Point Owner
     Lessors under the South Point Assignment Agreement.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section 13.2
     of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)  (i) if the determination shall be a Termination Date, the Termination
     Value under the Facility Lease on such date, or (ii) if such date shall
     not be a Termination Date, the Termination Value under the Facility Lease
     on the immediately succeeding Termination Date; plus

                                       41

<PAGE>

     (b)  (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)  the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

     "SPRINGING FACILITY SITE LEASE" shall mean the Springing Facility Site
     Lease (BR-1) dated as of October 18, 2001 by and between the Facility
     Lessee and Owner Lessor pursuant to which the Facility Lessee shall lease
     the Ground Interest to the Owner Lessor.

     "SPRINGING FACILITY SITE SUBLEASE" shall mean the Springing Facility Site
     Sublease (BR-1) dated as of October 18, 2001, by and between Owner Lessor
     and Facility Lessee pursuant to which the Owner Lessor shall sublease the
     Ground Interest back to the Facility Lessee.

     "SPRINGING OPERATIVE DOCUMENTS" shall mean, the Springing Facility Site
     Lease and the Springing Facility Site Sublease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

               "Survey" shall mean the ALTA/ACSM As-Built Land Title Survey of
the Facility Site, to be dated July 21, 2001 and revised October 18, 2001,
which inter alia, will show the location of the Facility Site.

                                       42

<PAGE>

     "TAX" or "TAXES" shall mean all fees (including license, documentation and
     registration fees), taxes (including, without limitation, income taxes,
     receipts, franchise, rental, turn over sales taxes, use taxes, stamp
     taxes, value-added taxes, excise taxes, ad valorem taxes and property
     taxes (personal and real, tangible and intangible)), licenses, exports,
     duties, recording charges, levies, assessments, withholdings, fees,
     assessments and other charges and impositions of any nature, plus all
     related interest, penalties, fines and additions to tax, now or hereafter
     imposed by any federal, state, local or foreign government or other taxing
     authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of the
     Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (BR-1),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Springing Facility Site Lease,
     shall have, collectively, the meaning set forth in Section 18.1 of the
     Springing Facility Site Lease.

     "TERM" with respect to the Facility Site Lease, shall have the meaning set
     forth in Section 2.1(a) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

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<PAGE>

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the form
     of which is attached hereto as Exhibit O: (a) Consent and Agreement from
     Carolina Power and Light Company ("CP&L") with respect to the Power and
     Purchase Agreement, dated as of December 31, 1998 (as amended), between
     CP&L and the Facility Lessee: (b) Consent and Agreement from CP&L with
     respect to the Power Purchase Agreement, dated as of July 7, 2000 (as
     amended), between CP&L and the Facility Lessee; and (c) Consent and
     Agreement from Duke Electric Transmission, a division of Duke Energy
     Corporation ("Duke") with respect to the Interconnection Agreement, dated
     as of February 5, 2000 (as amended), between Duke and the Facility Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean Lawyers Title Insurance Corporation.

     "TITLE POLICY" shall mean, the title insurance policy (#FT027141.01214)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)      the reasonable costs of reproducing and printing the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and all costs and fees,
     including but not limited to filing and recording fees and recording,
     transfer, mortgage, intangible and similar taxes in connection with the
     execution, delivery, filing and recording of the Facility Lease, the
     Facility Site Lease, and any other Operative Document and any other
     document required to be filed or recorded pursuant to the provisions
     hereof or of any other Operative Document and the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or as otherwise
     reasonably required by the Owner Lessor or the Indenture Trustee and
     surveyor fees;

     (ii)     the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)    the reasonable fees and expenses of McNair Law Firm, P.A., South
     Carolina, counsel to the Facility Leasee;

                                       44

<PAGE>

     (iv)     the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)      the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)     the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)    the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the FILOT Lease;

     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)     the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)      the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)     the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)    the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)    the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

                                       45

<PAGE>

     (xv)     the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)    all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)  the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;

     (xix)    the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the FILOT Lease pursuant to the
     Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted by
     Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRI-PARTY AGREEMENT" shall mean the Tri-Party Agreement, Consent,
     Acknowledgement and Notice dated as of October 1, 2001 by and among the
     County, the Facility Lessee, the Owner Lessor and the Other Broad River
     Owner Lessors.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

                                       46

<PAGE>

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest (or, upon and following the Post-FILOT Lease Conversion Date, the
     Owner Lessor's 25% undivided fee interest) in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by
     which the value of the accumulated plan benefits under the Plan determined
     on a plan termination basis in accordance with actuarial assumptions at
     such time consistent with those prescribed by the PBGC for purposes of
     Section 4044 of ERISA, exceeds the fair market value of all plan assets
     allocable to such liabilities under Title IV of ERISA (excluding any
     accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       47

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.8
<SEQUENCE>11
<FILENAME>f80168ex4-22_8.txt
<DESCRIPTION>EXHIBIT 4.22.8
<TEXT>
<PAGE>
                                                                  EXHIBIT 4.22.8


                                                                  EXECUTION COPY

                         PARTICIPATION AGREEMENT (BR-2)

                          Dated as of October 18, 2001

                                      among

                   BROAD RIVER ENERGY LLC, as Facility Lessee,

                     BROAD RIVER OL-2, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-2, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees

                               BROAD RIVER PROJECT

===============================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ....    3

SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS .................    3

  Section 2.1.  Agreements to Participate .................................    3

  Section 2.2.  Closing Date; Procedure for Participation .................    4

  Section 2.3.  Transaction Costs .........................................    6

SECTION 3. REPRESENTATIONS AND WARRANTIES .................................    6

  Section 3.1.  Representations and Warranties of the Facility Lessee .....    6

  Section 3.2.  Representations and Warranties of the Owner Lessor ........   17

  Section 3.3.  Representations and Warranties of the Lessor Manager and
                the Trust Company .........................................   18

  Section 3.4.  Representations and Warranties of the Owner Participant ...   20

  Section 3.5.  Representations and Warranties of Indenture Trustee and
                the Lease Indenture Company ...............................   22

  Section 3.6.  Representations, Warranties and Covenants of the Pass
                Through Trustees and the Pass Through Company .............   22

SECTION 4. CLOSING CONDITIONS .............................................   25

  Section 4.1.  Completion of the Facility ................................   27

  Section 4.2.  Operative Documents .......................................   27

  Section 4.3.  Certificates and the Lessor Notes .........................   27

  Section 4.4.  Equity Investment .........................................   27

  Section 4.5.  Organizational Documents ..................................   27

  Section 4.6.  Representations and Warranties ............................   27

  Section 4.7.  Defaults, Events of Default, Events of Loss ...............   27

  Section 4.8.  Regulatory Approvals ......................................   27

  Section 4.9.  Consents ..................................................   28

  Section 4.10. Governmental Actions ......................................   29
</TABLE>


                                        i
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
  Section 4.11. Insurance .................................................   29

  Section 4.12. Ratings ...................................................   29

  Section 4.13. Environmental Report ......................................   29

  Section 4.14. Surveys ...................................................   29

  Section 4.15. Appraisal; Condition of the Facility ......................   29

  Section 4.16. Letter from the Appraiser .................................   29

  Section 4.17. Other Reports .............................................   30

  Section 4.18. Opinion with Respect to Certain Tax Aspects ...............   30

  Section 4.19. Opinions of Counsel .......................................   30

  Section 4.20. Recordings and Filings ....................................   30

  Section 4.21. Conditions to Closing .....................................   30

  Section 4.22. Taxes .....................................................   30

  Section 4.23. No Changes in Applicable Law ..............................   31

  Section 4.24. Registered Agent for the Facility Lessee and the Owner
                Lessor ....................................................   31

  Section 4.25. Operating Lease Treatment .................................   31

  Section 4.26. Rent Adjustments ..........................................   31

  Section 4.27. Title Insurance ...........................................   31

  Section 4.28. Parent Guaranty ...........................................   31

  Section 4.29. Letter as to Number of Offerees ...........................   31

  Section 4.30. Lien Search ...............................................   32

  Section 4.31. Litigation ................................................   32

  Section 4.32. No Material Adverse Change ................................   32

  Section 4.33. Private Placement Number ..................................   32

  Section 4.34. Proceedings and Documents .................................   32
</TABLE>


                                       ii
<PAGE>
                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
  Section 4.35. No Proposed Tax Law Change ................................   32

  Section 4.36. Payment of Fees and Expenses ..............................   32

  Section 4.37. Corrective Ordinance ......................................   32

SECTION 5. COVENANTS OF FACILITY LESSEE AND GUARANTOR .....................   33

  Section 5.1.  Maintenance of Existence ..................................   33

  Section 5.2.  Merger, Consolidation, Sale of Substantially All Assets ...   33

  Section 5.3.  Guaranty and Contingent Obligations .......................   33

  Section 5.4.  Assignment of Rights ......................................   34

  Section 5.5.  Lessor Manager Fees .......................................   34

  Section 5.6.  Conduct of Business, Properties, Etc ......................   34

  Section 5.7.  Obligations ...............................................   34

  Section 5.8.  Books, Records, Access ....................................   34

  Section 5.9.  Other Information .........................................   35

  Section 5.10. Warranty of Title to Facility Site ........................   35

  Section 5.11. ERISA .....................................................   36

  Section 5.12. Certain Contracts and Agreements ..........................   36

  Section 5.13. Certain Costs .............................................   36

  Section 5.14. Limitations on Liens ......................................   37

  Section 5.15. Investments ...............................................   37

  Section 5.16. Intentionally Deleted .....................................   37

  Section 5.17. Regulations ...............................................   37

  Section 5.18. Partnerships ..............................................   37

  Section 5.19. Dissolution ...............................................   37

  Section 5.20. Termination of Operative Documents; Delegation
                of Authority ..............................................   37
</TABLE>


                                       iii
<PAGE>
                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
  Section 5.21. Name and Location .........................................   39

  Section 5.22. Use of Facility Site ......................................   39

  Section 5.23. Abandonment of Facility ...................................   39

  Section 5.24. Taxes, Other Government Charges and Utility Charges .......   39

  Section 5.25. Compliance with Laws, Instruments, Etc ....................   39

  Section 5.26. PUHCA .....................................................   40

  Section 5.27. Further Assurances ........................................   40

  Section 5.28. No Subsidiaries ...........................................   41

  Section 5.29. Permitted Business ........................................   41

  Section 5.30. Support Arrangements ......................................   41

  Section 5.31. Insurance .................................................   41

  Section 5.32. Tax Status ................................................   41

  Section 5.33. Transmission Assets .......................................   42

SECTION 6. COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE
           LESSOR MANAGER .................................................   42

  Section 6.1.  Compliance with the LLC Agreement .........................   42

  Section 6.2.  Owner Lessor's Liens ......................................   43

  Section 6.3.  Amendments to Operative Documents .........................   43

  Section 6.4.  Transfer of the Owner Lessor's Interest ...................   43

  Section 6.5.  Owner Lessor; Lessor Estate ...............................   43

  Section 6.6.  Limitation on Indebtedness and Actions ....................   43

  Section 6.7.  Change of Location ........................................   43

  Section 6.8.  Bankruptcy of Owner Lessor ................................   43

SECTION 7. COVENANTS OF THE OWNER PARTICIPANT .............................   44

  Section 7.1.  Restrictions on Transfer of Member Interest ...............   44
</TABLE>


                                       iv
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
  Section 7.2.  Owner Participant's Liens .................................   46

  Section 7.3.  Amendments or Revocation of LLC Agreement .................   46

  Section 7.4.  Bankruptcy Filings ........................................   46

  Section 7.5.  Instructions ..............................................   47

  Section 7.6.  Right of First Refusal ....................................   47

  Section 7.7.  Prohibition on Fundamental Changes ........................   47

  Section 7.8.  Appointment of Successor Lessor Manager ...................   49

  Section 7.9.  Cooperation ...............................................   49

SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH
           TRUSTEES .......................................................   49

  Section 8.1.  Indenture Trustee's Liens .................................   49

  Section 8.2.  Pass Through Trustees' Covenant Not to Transfer Lessor
                Notes .....................................................   50

SECTION 9. INDEMNIFICATION ................................................   50

  Section 9.1.  General Indemnity .........................................   50

  Section 9.2.  General Tax Indemnity .....................................   57

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ....................   66

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ....   66

  Section 11.1. Financing Improvements ....................................   66

  Section 11.2. Optional Refinancing of Lease Debt ........................   68

  Section 11.3. Cooperation ...............................................   69

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND
            OTHER AMOUNTS .................................................   69

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE
            TRANSFERS .....................................................   70

  Section 13.1. Transfer of the Facility Lessee Ownership .................   70

  Section 13.2. Special Facility Lessee Transfers .........................   72

SECTION 14. OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS ...................   73
</TABLE>


                                        v
<PAGE>
                          TABLE OF CONTENTS(continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
SECTION 15. MISCELLANEOUS .................................................   75

  Section 15.1.  Consents; Cooperation ....................................   75

  Section 15.2.  Successor Owner Lessor ...................................   75

  Section 15.3.  Bankruptcy of Lessor Estate ..............................   75

  Section 15.4.  Amendments and Waivers ...................................   75

  Section 15.5.  Notices ..................................................   75

  Section 15.6.  Survival .................................................   80

  Section 15.7.  Successors and Assigns ...................................   80

  Section 15.8.  Business Day .............................................   80

  Section 15.9.  Governing Law ............................................   80

  Section 15.10. Severability .............................................   80

  Section 15.11. Counterparts .............................................   80

  Section 15.12. Headings and Table of Contents ...........................   81

  Section 15.13. Limitation of Liability ..................................   81

  Section 15.14. Consent to Jurisdiction; Waiver of Trial by Jury;
                 Process Agent ............................................   82

  Section 15.15. Further Assurances .......................................   83

  Section 15.16. Effectiveness ............................................   83

  Section 15.17. Measuring Life ...........................................   83

  Section 15.18. No Partnership, Etc ......................................   83

  Section 15.19. Entire Agreement .........................................   83

  Section 15.20. Public Utility Regulation ................................   84

  Section 15.21. Confidentiality of Information ...........................   84

  Section 15.22. Reliance .................................................   85

  Section 15.23. Amendments, Etc ..........................................   85
</TABLE>


                                       vi
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
</TABLE>


                                       vii
<PAGE>
<TABLE>
<S>                 <C>
APPENDICES:

     Appendix A          Definitions and Rules of Interpretation

SCHEDULES:

     Schedule 1-A        Equity Investment
     Schedule 1-B        Indenture Trustee's Account
     Schedule 1-C        Owner Participant's Account
     Schedule 2          Pricing Assumptions
     Schedule 3.1(h)     Post-FILOT Lease Recordings, Filings and Notifications
     Schedule 3.1(m)     Environmental Matters - Hazardous Substances
     Schedule 4.20       Recording and Filings
     Schedule 5.31       Maintenance of Insurance

EXHIBITS:

     Exhibit A           Description of Facility
     Exhibit B           Form of Assignment Agreement (BR-2)
     Exhibit C           Form of Facility Lease Agreement
     Exhibit D           Form of Facility Site Lease
     Exhibit E           Intentionally Omitted
     Exhibit F           Form of Pass Through Trust Agreement
     Exhibit G           Form of OP Parent Guaranty
     Exhibit H           Form of Calpine Guaranty
     Exhibit I           Form of Collateral Trust Indenture
     Exhibit J           Form of OP Assignment and Assumption Agreement
     Exhibit K           List of Competitors
     Exhibit L           Form of Guarantor Assignment and Assumption Agreement
     Exhibit M           Form of Springing Facility Site Lease
     Exhibit N           Form of Springing Facility Site Sublease
     Exhibit O           Forms of Consents
</TABLE>


                                      viii
<PAGE>
                             PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) BROAD RIVER ENERGY LLC (herein, together
     with its successors and permitted assigns, called the "Facility Lessee"),
     a limited liability company organized under the laws of the State of
     Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (BR-2), (the "Calpine Guaranty"), (iii) BROAD
     RIVER OL-2, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-2, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity except as expressly provided herein, but solely as independent
     manager under the LLC Agreement (herein in its capacity as independent
     manager under the LLC Agreement, together with its successors and
     permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, in March, 2000, the County and the Facility Lessee entered
into a fee-in-lieu of taxes transaction, pursuant to which the Facility Lessee
conveyed to the County, and the County leased back to the Facility Lessee,
pursuant to the FILOT Lease, a 850 MW gas-fired simple cycle merchant power
plant located near Gaffney, South Carolina, owned by the County and more fully
described in Exhibit A hereto ("Facility");
<PAGE>
          WHEREAS, Facility Lessee desires to assign and transfer to the
Owner Lessor the Undivided Interest and the Ground Interest pursuant to the
Assignment Agreement;

          WHEREAS, the Owner Participant desires to cause the Owner
Lessor to acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from the Facility Lessee pursuant to the
Assignment Agreement, and to lease the Undivided Interest (excluding the
Facility Purchase Option) and the Ground Interest (excluding the Land Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to sublease the Undivided
Interest (excluding the Facility Purchase Option) and lease the Ground Interest
(excluding the Land Purchase Option) from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, on the Closing Date, the Facility Lessee has executed
(i) a Springing Facility Site Lease (pursuant to which, upon the Post-FILOT
Lease Conversion Date, the Springing Facility Site Lease shall become effective
and the Facility Lessee shall lease the Ground Interest to the Owner Lessor
pursuant thereto) and (ii) a Springing Facility Site Sublease (pursuant to
which, upon the Post-FILOT Lease Conversion Date, the Springing Facility Site
Sublease shall become effective and the Owner Lessor shall sublease the Ground
Interest back to the Facility Lessee pursuant thereto);

          WHEREAS, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, issue the Lessor Notes and sell such Lessor Notes to the relevant
Pass Through Trust, acquire and accept such assignment and transfer of the
Undivided Interest and the Ground Interest from Facility Lessee pursuant to the
Assignment Agreement, and lease the Undivided Interest (excluding the Land
Purchase Option) and the Ground Interest (excluding the Facility Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the
Lessor Notes to the relevant Pass Through Trust and to grant to the Indenture
Trustee liens and security interests in the Indenture Estate to secure its
obligations thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

                                      2
<PAGE>
          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has
guaranteed all of the obligations of the Facility Lessee under the
Participation Agreement and as of the Closing Date shall guarantee all of the
obligations of the Facility Lessee under the other Operative Documents to which
the Facility Lessee is a party; and

          WHEREAS, the parties hereto desire to consummate the
transactions contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of
this Agreement, and in reliance on the agreements, representations and
warranties made herein, the parties agree to participate in the transactions
described in this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee shall assign and transfer the Undivided Interest and the
     Ground Interest to the Owner Lessor on the terms and conditions set
     forth in the Assignment Agreement and the Owner Lessor agrees to acquire
     and accept such assignment and transfer of the Undivided Interest and the
     Ground Interest from Facility Lessee, and each agrees to execute and
     deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the Ground Interest (except the Land Purchase
     Option) to the Facility Lessee on the terms and conditions set forth in
     the Facility Lease and Facility Site Lease; the Facility

                                      3
<PAGE>
     Lessee agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the corresponding Ground Interest (except the Land
     Purchase Option) from the Owner Lessor, and each agrees to execute and
     deliver the respective Facility Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the FILOT Lease
     pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement;

effective upon the occurrence of the Post-FILOT Lease Conversion Date, the
     Facility Lessee agrees to lease the Ground Interest to the Owner Lessor
     on the terms and conditions set forth in the Springing Facility Site
     Lease and the Owner Lessor agrees to sublease the Ground Interest back to
     the Facility Lessee on the terms and conditions set forth in the
     Springing Facility Site Sublease;

the Owner Lessor agrees to exercise the Purchase Options pursuant to, and to
     the extent provided in, Section 14.1 hereof; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner

                                      4
<PAGE>
     Participant shall make the Owner Participant's Commitment available not
     later than 10:00 a.m., New York City time, on the Scheduled Closing Date,
     by transferring or delivering such amount, in funds immediately available
     on such Scheduled Closing Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner
     Lessor in accordance with Section 2.2(b), the Closing does not occur on
     such date and the Owner Lessor is unable to return such funds to the
     Owner Participant on such date, the Owner Lessor shall, subject to
     Section 2.2(c) above, use reasonable efforts to invest such funds from
     time to time at the written direction of Calpine, and at Calpine's sole
     expense and risk, in Permitted Investments until such funds can be
     returned to the Owner Participant. If, on the Scheduled Closing Date, the
     Owner Participant has made the Owner Participant's Commitment available
     to the Owner Lessor in accordance with Section 2.2(b), the Closing does
     not occur on such date and the Owner Lessor has not returned such funds
     to the Owner Participant on or before 1:00 p.m., New York City time, on
     such date, then Calpine shall reimburse the Owner Participant for loss of
     the use of such funds at the Applicable Rate for each day, from and
     including the day that such funds were made available to the Owner Lessor
     by the Owner Participant to, but excluding the earlier of (i) the day
     that such funds have been returned to the Owner Participant pursuant to
     Section 2.2(c) (funds received by the Owner Participant after 1:00 p.m.,
     New York City time, of any day shall be deemed to be returned on the next
     succeeding Business Day) and (ii) the Closing Date. Subject to payment
     for the account of the Owner Participant of any reimbursement for loss of
     use of funds due to it at the Applicable Rate, any net gain realized on
     the investment of such funds (including interest) shall be paid to
     Calpine by the Owner Lessor on the earlier of (i) the date such funds are
     returned to the Owner Participant pursuant to Section 2.2(c) and (ii) the
     Closing Date. The Owner Lessor shall not be liable for any interest on or
     loss resulting from such investments and, if such funds are made
     available to the Owner Lessor and utilized to pay the Purchase Price or
     Transaction Costs on the Closing Date, Calpine shall reimburse the Owner
     Lessor for any net loss realized on the investment of such funds. If such
     funds are not so utilized, Calpine shall, in

                                      5
<PAGE>
     addition to its obligation to reimburse the Owner Participant for loss
     of use as provided above, reimburse the Owner Participant on the date
     such funds are returned to the Owner Participant for any net loss
     realized on the investment of such funds. In order to obtain funds for
     payment of the Purchase Price or Transaction Costs or to return funds
     made available to the Owner Lessor by the Owner Participant, the Owner
     Lessor is authorized to sell any investments or obligations purchased as
     aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,500,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs; provided, however, that Calpine shall not be
     obligated to pay Transaction Costs incurred by the Owner Participant if
     the Overall Transaction is not consummated on the basis of the provisions
     of this Agreement due to a failure of the Owner Participant to satisfy
     any condition to the Closing required to be satisfied by the Owner
     Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware. The Facility Lessee is duly licensed or qualified and
     in good standing in each jurisdiction where the character of its
     properties or the nature of its activities makes such qualification
     necessary, and the Facility Lessee has the power and authority to (x) own
     or hold under lease the

                                      6
<PAGE>
     property it purports to own or hold under lease, (y) carry on its
     business as now being conducted and as presently proposed to be conducted
     and (z) take all actions as may be necessary to consummate the
     transactions contemplated hereunder and under the other Operative
     Documents to which each is a party. The Facility Lessee is an indirect
     wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee, in accordance with their respective terms, except as the same may
     be limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the rights of creditors
     generally and by general principles of equity.

          1.   Non-Contravention. (1) The execution, delivery and
               performance by the Facility Lessee of this Agreement and each
               of the other Operative Documents to which it is or will be a
               party, the consummation by the Facility Lessee of the
               transactions contemplated hereby and thereby, and compliance
               by the Facility Lessee with the terms and provisions hereof
               and thereof, do not and will not (i) contravene any Applicable
               Law binding on the Facility Lessee or its property, or its
               organizational documents, (ii) constitute a default by the
               Facility Lessee under, or result in the creation of any Lien
               upon the property of the Facility Lessee (other than pursuant
               to any Operative Document) under any indenture, mortgage or
               other material contract, agreement or instrument to which the
               Facility Lessee is a party or by which the Facility Lessee or
               any of its property is bound, (iii) contravene any Organic
               Document of the Facility Lessee or (iv) require the consent or
               approval of any Person which has not already been obtained, in
               each case with respect to clauses (i), (ii) and (iv) above,
               which would reasonably be expected to have a Material Adverse
               Effect.

          (2)   Neither the assignment and transfer of the Undivided Interest
and the Ground Interest by Facility Lessee to the Owner Lessor, nor
the grant by the Owner Lessor to the Indenture Trustee of the Liens and
security interests in the Undivided Interest, the Ground Interest and the
applicable Operative Documents executed in connection therewith to secure its
obligations thereunder does or will constitute a default by the Facility Lessee
or the Owner Lessors under the Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of

                                      7
<PAGE>
     any transferee or assignee) and assuming that none of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them or any
     assignee or transferee of any of the Owner Participant (or any Affiliate
     of any such transferee or assignee) is an "electric utility" or a "public
     utility" or a "public utility holding company" or any similar entity
     subject to public utility regulation under any Applicable Law immediately
     prior to the Closing, with respect to the participation by the Owner
     Participant, the Owner Lessor in the Overall Transaction, other than (i)
     any Permit where the failure to obtain or maintain such Permit would not
     be reasonably likely to result in a Material Adverse Effect, (ii) the
     FERC Orders, (iii) as may be required under Applicable Law providing for
     the supervision or regulation of the Owner Participant, the Owner Lessor
     or any Affiliate of any of them as a result of investing, lending or
     other commercial activity in which the Owner Participant, the Owner
     Lessor or any Affiliate of any of them is or may be engaged other than
     the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of
     which would not reasonably be expected to have a Material Adverse Effect
     or involve any danger of criminal or material civil liability being
     incurred by the Owner Participant, the Owner Lessor, the Indenture
     Trustee or the Pass Through Trustees, (v) in connection with any
     modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates
     or the issuance of Additional Lessor Notes or Additional Certificates,
     (vii) as may be required in consequence of any transfer of the Member
     Interest or any transfer of the Undivided Interest or the Owner Lessor's
     Interest, or any part thereof by the Owner Lessor or the exercise by any
     such party of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against
     the Facility Lessee or any other Calpine Party before any Governmental
     Entity which (i) questions the validity of the Operative Documents and
     the FILOT Lease or the ability of the Facility Lessee or such other
     Calpine Party to perform its obligations under the Operative Documents
     and the FILOT Lease to which the Facility Lessee or such other Calpine
     Party is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to have a Material Adverse Effect or otherwise
     materially adversely affect the Undivided Interest leased by the Facility
     Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

                                      8
<PAGE>
Location of Chief Executive Office and Principal Place of Business, etc. (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site and the Operative Documents is located at: c/o Calpine
     Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Leasehold Interest; Liens. (1) On and before the Closing Date, the Facility
     Lessee has (i) good and valid leasehold interest to the Facility, free
     and clear of all Liens other than Permitted Closing Date Liens, and (ii)
     good and valid leasehold interest to the Facility Site free and clear of
     all Liens other than Permitted Closing Date Liens.

     (2)  Upon execution and delivery of the Operative Documents (other than
the Springing Operative Documents), and recording or filing (as appropriate) of
the instruments and documents referred to in Part I of Schedule 4.20 in
accordance with Section 4.20, (A) good and valid leasehold interest to the
Undivided Interest will be duly, validly and effectively conveyed and
transferred to the Owner Lessor free and clear of all Liens other than
Permitted Closing Date Liens, and (B) good and valid leasehold interest in the
Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)  Upon the closing of the conveyance of the Land and the Facility
(in each case to the extent of the Owner Lessor's Percentage interest therein)
on the Post-FILOT Lease Conversion Date and recording or filing (as
appropriate) of the instruments and documents referred to in Schedule 3.1(h)
hereto (A) good and valid fee title to the Facility (to the extent of the Owner
Lessor's Percentage interest therein) will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Liens, and (B) good and valid leasehold interest in the Land (to
the extent of the Owner Lessor's Percentage) will be duly, validly and
effectively granted to the Owner Lessor upon the terms and conditions in the
corresponding Springing Facility Site Lease, free and clear of all Liens other
than Permitted Liens. Upon any other conveyance of the Facility and/or the Land
(to the extent of the Owner Lessor's Percentage) by the County to the Owner
Lessor or its designee upon the Owner Lessor's exercise of the Facility
Purchase Option and/or the Land Purchase Option, as the case may be, good and
valid fee title ownership thereof will be duly, validly and effectively vested
in the Owner Lessor, free and clear of all Liens other than Permitted Liens.

          (4)  When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or

                                      9
<PAGE>
give record notice of, the Lien in favor of the Indenture Trustee in the
Indenture Estate to the extent such Lien may be perfected by filings or
recordings.

          (5)  None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the FILOT Lease) or the use of or
the exercise by the Owner Lessor of its rights under Assignment Agreement or
the Facility Site Lease or the Facility Lease, in a manner which could
reasonably be expected to have a Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the
     purpose of purchasing or carrying margin stock (as defined in Regulations
     T, U or X of the Federal Reserve Board), and no part of the proceeds of
     Lessor Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the FILOT Lease will not subject the Facility Lessee to
     such regulation under the Holding Company Act and do not violate any
     provision of the Holding Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters.  Except as set forth in Schedule 3.1(m):

          (1)  The Facility Lessee has not received and does not have Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site; (ii) the
Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at

                                     10
<PAGE>
which any Hazardous Substances have been generated, stored, treated or disposed
by or on behalf of the Facility Lessee or such other Calpine Party) to a
Release or threatened Release of any Hazardous Substance generated, used or
stored at or Released in, on, under or from the Facility or the Facility Site;
(iii) the Facility or the Facility Site is subject to a Lien in favor of any
Governmental Entity in response to a Release or threatened Release of Hazardous
Substances or (iv) the Facility or the Facility Site is or is asserted to be in
violation of or not in compliance with any Environmental Law, in any case with
respect to clauses (ii), (iii) or (iv), which could reasonably be expected to
have a Material Adverse Effect;

          (2)  The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)  To the Facility Lessee's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility or
the Facility Site, or (B) at, on, under or from any other location resulting
from or arising in connection with the operation by any Person of the Facility
or the Facility Site, that in each case could reasonably be expected to have a
Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or
the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)  All environmental permits necessary to own, operate, lease or
maintain the Facility and the Facility Site in accordance with the Operative
Documents and the FILOT Lease and the Ownership and Operation Agreement and
Environmental Laws have been obtained on behalf of the Owner Lessor or by the
Facility Lessee and they are final, in proper form, and in full force and
effect, with all appeal periods expired, and the Facility Lessee is in
compliance with the provisions of all such permits, except where the failure to
obtain, maintain the effectiveness of, or comply with such permits would not
reasonably be expected to have a Material Adverse Effect or involve any danger
of (i) foreclosure, sale, forfeiture or loss of, or imposition of a material
lien on, the Facility or the Facility Site, (ii) the impairment of the
ownership (or leasehold or easement interest in), use, operation or maintenance
of the Facility or the Facility Site in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest and the Ground Interest and based upon
     the Facility Lessee's reasonable expectations and on Applicable Law in
     effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     FILOT Lease and the rights contemplated by the Facility Lease to be made
     available under such Operative Documents and the FILOT Lease, permit on a
     commercially practicable basis during the Facility Lease Term and the
     period following the expiration or termination of the Facility Lease
     Term, as applicable, until the end of the

                                     11
<PAGE>
     Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which, either
     in any case or in the aggregate, would reasonably be expected to have a
     Material Adverse Effect.

Jurisdiction. In accordance with Section 15.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State
     of New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility and the Facility Site, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility or the
     Facility Site, (ii) the impairment of the ownership (or leasehold or
     easement interest in), use, operation or maintenance of the Facility or
     the Facility Site in any material respect, or (iii) any criminal or
     material civil liability being incurred by the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
     Through Trustees, including subjecting the Owner Participant or the Owner
     Lessor to regulation as a public utility under Applicable Law. None of
     the Calpine Parties is in default of any judgments, orders or decrees of
     any Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the
     Lessor Notes under the Collateral Trust Indenture and the Certificates
     under the Pass Through Trust Agreements will be exempt from, or will not
     involve any transaction which is subject to, the prohibitions of either
     Section 406 of ERISA or Section 4975 of the Code and will not involve any
     transaction in connection with which a penalty could be imposed under
     Section 502(i) of ERISA or a tax could be imposed pursuant to Section
     4975 of the Code.

                                     12
<PAGE>
Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of
     the Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual
     Knowledge of the Facility Lessee, no Burdensome Buyout Event has occurred
     or will occur upon the execution and delivery of the Operative Documents
     and the Facility Lessee does not have Actual Knowledge of any event that
     could reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the FILOT Lease, except where the failure to have
     any such services or public utilities available would not result in a
     material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse
     Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement
     agreements, declarations, development agreements or recorded restrictions
     or covenants relating to the Facility or the Facility Site, which would
     reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to
     the Facility or the Facility Site, in either case, in any manner which
     would reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire

                                     13
<PAGE>
     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation,
     maintenance, leasing and financing of the Facility and Facility Site and
     activities incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has been
     made available under the National Flood Insurance Act of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby in good faith and without any intent to
     defraud creditors of the Facility Lessee or subsequent purchasers. The
     execution and delivery of the Operative Documents to which the Facility
     Lessee is a party will not render the Facility Lessee insolvent under GAAP
     or leave the Facility Lessee with assets whose present fair valuation of
     assets is less than the present fair valuation of the Facility Lessee's
     debts. As used in this Section 3.1(dd), "debts" includes any and all
     liabilities, whether matured or unmatured, liquidated or unliquidated,
     absolute, fixed or contingent, and whether or not such liabilities are
     required under GAAP to be shown on the Facility Lessee's balance sheet.
     The execution and delivery of the Operative Documents to which the
     Facility Lessee is a party will not leave it with property remaining in
     its hands which would constitute unreasonably small assets or capital, and
     the Facility Lessee has and, after giving effect to such transactions will
     have, an adequate amount of assets and capital to engage in its business
     now and in the future, based on the actual and anticipated needs for
     capital of the businesses anticipated to be conducted by the Facility
     Lessee, and based upon the other information described herein. After
     giving effect to the transactions contemplated under the Operative
     Documents, the Facility Lessee will be able to pay all of its debts and
     liabilities, including unrecorded contingent liabilities, as they mature,
     the Facility Lessee will have positive cash flow after paying all of its
     scheduled and anticipated debt as it matures, and the Facility Lessee will
     realize sufficient monies from current assets in the ordinary and usual
     course of business to pay recurring current debt, short-term debt and
     long-term debt as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid
     or become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

                                     14
<PAGE>
Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the FILOT Lease shall be or become (i) subject to regulation as a
     "public utility company," "holding company," an "affiliate" of a "holding
     company" or a "subsidiary company" of a "holding company" within the
     meaning of PUHCA or (ii) a "public utility" (except that the Facility
     Lessee will be a public utility subject to the Federal Power Act with
     authority to sell wholesale electricity at market-based rates and with
     waivers of regulations customarily granted to a public utility that sells
     wholesale power at market-based rates), a "transmitting utility," or an
     "electric utility" within the meaning of the Federal Power Act, (iii)
     subject to state regulation of rates or organizational requirements for
     electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained therein,
     in light of the circumstances under which they were made, not misleading;
     provided, that no representation or warranty is made with regard to (i)
     any projections or other forward-looking statements provided by or on
     behalf of the Facility Lessee, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, further, each of the Transaction Parties acknowledge and agree
     that (i) Calpine has heretofore provided to the Appraiser, solely in order
     to assist the Appraiser in connection with the preparation of the
     appraisal to be delivered by the Appraiser to certain of the Transaction
     Parties at the Closing, certain (1) general market information, (2)
     information about the South Carolina energy markets and (3) information
     passed along from other Persons and (ii) that the Facility Lessee makes no
     representation or warranty whatsoever with respect to the information
     described in clause (i) above except to the extent expressly set forth in
     Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Duke Electric Transmission, a division of Duke
     Energy Corporation, and has access to transmission services and ancillary
     services sufficient to sell the net generating capacity of the Facility at
     wholesale, and the Facility Lessee has the authority to sell wholesale
     electric power from the net generating capacity of such generating
     Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Order referenced in clause (v) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is

                                     15
<PAGE>
     not intended to be construed as nor shall it be deemed to be a guaranty
     as to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and
     currently is capable of producing at least 850 MW of capacity and complies
     in all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

FILOT Lease. The FILOT Lease is in full force and effect and neither the
     Facility Lease nor, to the Actual Knowledge of the Facility Lessee, the
     County is in default thereunder; all of the rights, title and interest of
     the Facility Lessee, in, to and under the FILOT Lease assigned pursuant to
     the Assignment Agreement have been transferred free and clear of any and
     all Liens other than Permitted Liens. Prior to the execution and delivery
     of the Assignment Agreement by the Facility Lessee, the FILOT Lease was
     enforceable against the Facility Lessee in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the FILOT Lease by the Facility
     Lessee (i) did not and does not contravene any Applicable Law binding on
     the Facility Lessee or its property, (ii) does not constitute a default by
     the Facility Lessee under, or result in the creation of any Lien upon the
     property of the Facility Lessee (other than pursuant to any Operative
     Document) under any indenture, mortgage or other material contract,
     agreement or instrument to which the Facility Lessee is a party or by
     which the Facility Lessee or any of its property is bound, (iii) does not
     contravene any Organic Document of the Facility Lessee, (iv) does not
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect, or
     (v) does not create a Lien on the FILOT Lease; the Facility Lessee has all
     Permits with or from any Governmental Entity or under Applicable Law
     required for the performance of the FILOT Lease by the Owner Lessor or the
     Facility Lessee, other than (i) any Permit where the failure to obtain or
     maintain such Permit would not be reasonably likely to result in a
     Material Adverse Effect, (ii) the FERC Orders, (iii) as may be required
     under Applicable Law providing for the supervision or regulation of the
     Owner Participant, the Owner Lessor or any Affiliate of any of them as a
     result of investing, lending or other commercial activity in which the
     Owner Participant, the Owner Lessor or any Affiliate of any of them is or
     may be engaged other than the transactions contemplated hereby or by
     performance of the FILOT Lease upon and after the assignment thereof to
     the Owner Lessor pursuant to the Assignment Agreement, (iv) as may be
     required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, (v) in connection with any modification to or rebuilding or
     replacement of the Facility or any portion thereof that may occur in the
     future, (vi) as may be required in connection with any refinancing of the
     Lessor Notes or the Certificates or the issuance of Additional Lessor
     Notes or Additional Certificates, (vii) as may be required in consequence
     of any transfer of the Member Interest or any transfer of the Undivided
     Interest or the Owner

                                     16
<PAGE>
     Lessor's Interest, or any part thereof by the Owner Lessor or the
     exercise by any such party of dispossessory remedies under the Operative
     Documents or any relinquishment of the use or operation of the Facility by
     the Facility Lessee, (viii) appropriate filing and recording to perfect
     the Lien of the Collateral Trust Indenture, if required, and the ownership
     and leasehold interests conveyed pursuant to this Agreement, or (ix) as
     may be required under any Applicable Law enacted or adopted after the date
     hereof.

          B.   Representations and Warranties of the Owner Lessor. The Owner
Lessor represents and warrants that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of
     which the Owner Participant is the sole member, and has the power and
     authority to enter into and perform its obligations under this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Lessor, and
     (ii) assuming the due authorization, execution and delivery of this
     Agreement by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

                                     17
<PAGE>
Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the FILOT Lease or the ability of
     the Owner Lessor to perform its obligations under the FILOT Lease or the
     Operative Documents to which it is or will be a party or (ii) if
     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Owner Lessor to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 15.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

          C.   Representations and Warranties of the Lessor Manager and the
Trust Company. The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

                                     18
<PAGE>
Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against it in its
     individual capacity or as Lessor Manager, as the case may be, in
     accordance with its terms, except as may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principals of equity.

          (2)  Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

                                     19
<PAGE>
Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against
     the Trust Company either in its individual capacity or as Lessor Manager,
     as the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered
     or sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement
     and any other Operative Document to which the Owner Participant is or will
     be a party constitute or when executed and delivered will constitute the
     legal, valid and binding obligations of the Owner Participant, enforceable
     against the Owner Participant in accordance with their respective terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant

                                     20
<PAGE>
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law binding on the Owner Participant, or its
     organizational documents, or contravene the provisions of, or constitute a
     default under any indenture, mortgage or other material contract,
     agreement or instrument to which the Owner Participant is a party or by
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site), and other than, with respect to the Post-FILOT Lease
     Conversion Date, the conveyances and other matters referred to in the
     definition thereof.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding
     against the Owner Participant before any Governmental Entity which (i)
     questions the validity of the Operative Documents or the ability of the
     Owner Participant to perform its obligations under the Operative Documents
     to which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly,
     constitutes or is deemed to constitute assets (within the meaning of ERISA
     and any applicable rules, regulations and court decisions thereunder) of
     any "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner

                                     21
<PAGE>
     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section 5
     of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the
other Operative Documents by each party thereto other than the Indenture

                                     22
<PAGE>
Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of the Indenture Trustee in the
     Indenture Estate; provided, however, that no representation or warranty is
     made with respect to the right, power or authority of the Lease Indenture
     Company or the Indenture Trustee to act as operator of the Facility
     following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the

                                     23
<PAGE>
     ability of the Lease Indenture Company to perform its obligations under
     this Agreement or any other Operative Document to which it is or will be a
     party or could reasonably be expected to materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
Trustees and the Pass Through Company. The Pass Through Company and the Pass
Through Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement
     and each of the other Operative Documents to which it is or will be a
     party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the
     other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or will
     be a party, the consummation by the Pass Through Company, in its
     individual capacity or as Pass Through Trustee, as the case may be,

                                     24
<PAGE>
     of the transactions contemplated hereby and thereby, and the compliance
     by the Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the Pass Through Company upon the
     Certificates or any indenture, mortgage or other material contract,
     agreement or instrument to which the Pass Through Company is a party or by
     which the Pass Through Company or its property is bound which would
     materially adversely affect the ability of the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, to
     perform its obligations under this Agreement or the other Operative
     Documents to which it is a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     security interest of any Pass Through Trustee in the Indenture Estate;
     provided, however, that no representation is made with respect to the
     right, power or authority of the Pass Through Company or any Pass Through
     Trustee to act as operator of the Facility following a Lease Event of
     Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor,
the Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the
Pass Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                     25
<PAGE>
such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                     26
<PAGE>
Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 850 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and warranties of
each party hereto set forth in Section 3 shall be true and correct on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
status and the FERC Order referenced in clause (v) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                     27
<PAGE>
     F.   Consents.

          (a)  All permits, licenses, approvals and consents (including
management, credit and other internal approvals of the Transaction Parties, but
excluding the Third Party Consents referred to in (b) below) necessary to
consummate the Overall Transaction and to own and operate the Facility as
currently operated shall have been duly obtained and shall be in full force and
effect and in the form and substance satisfactory to each of the Transaction
Parties.

          (b)  Each Third Party Consent shall have been obtained and
shall be in full force and effect substantially in the form attached hereto as
Exhibit O which is applicable to the relevant third party granting such
consent; provided that if any Third Party Consent is not substantially in the
form attached hereto as Exhibit O, an authorized officer of Calpine shall
provide a certificate to the Owner Lessor, the Indenture Trustee and the Pass
Through Trustee certifying that any differences between the form of such
consent attached hereto and the executed version are not materially adverse to
any of the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                     28
<PAGE>
Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(v) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have a copy of the Survey (which Survey
shall be certified to the Owner Lessor and the Title Company) in form and
substance satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

                                     29
<PAGE>
Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by Facility Lessee of its interest in the Undivided Interest and
the Ground Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special
counsel to the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP,
special regulatory counsel to the Facility Lessee, (d) McNair Law Firm, P.A.,
South Carolina counsel to the Facility Lessee, (e) Karen Scowcroft, Esq.,
in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP, counsel to
the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP, counsel to
the Lease Indenture Company and the Indenture Trustee, (h) Bingham Dana LLP,
counsel to the Pass Though Trustees and the Pass Through Company, and (i) Ray
Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case in form
and substance reasonably satisfactory to each Transaction Party. Each such
Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
South Carolina and Delaware and any other documents as may be reasonably
requested by counsel to the Owner Participant, the Indenture Trustee or the
Pass Through Trustees to perfect (i) the Owner Lessor's Interest, or any part
thereof or interest therein and (ii) and the Lien of the Indenture Trustee on
the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the FILOT Lease shall
have been satisfied or waived and the Owner Participant shall be satisfied that
the Facility shall be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                     30
<PAGE>
No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to participate in any of the
transactions contemplated by the FILOT Lease or would materially adversely
affect the Facility or the Facility Site. On the Closing Date, each
Certificateholder's purchase of Lessor Notes shall (i) be permitted by the laws
and regulations of each jurisdiction to which such Certificateholder is
subject, (ii) not violate any Applicable Law (including Regulation U, T or X of
the Board of Governors of the Federal Reserve System) and (iii) not subject any
Certificateholder to any tax, penalty or liability under or pursuant to any
Applicable Law, which Applicable Law was not in effect on the date hereof. If
requested by any Certificateholder, such Certificateholder shall have received
an Officer's Certificate of the Owner Lessor, in form and substance
satisfactory to such Certificateholder, certifying as to such matters of fact
as such Certificateholder may reasonably specify to enable such
Certificateholder to determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee

                                     31
<PAGE>
shall have received certification from CSFB as to the number of offerees by it
of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to the Facility Lessee
in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the FILOT
Lease or any of the Transactions contemplated by any of the Operative
Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

     K.   Corrective Ordinance. The Facility Lessee shall have received a copy
of the Corrective Ordinance.

                                     32
<PAGE>
COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent

                                   33
<PAGE>
obligations) except (i) by reason of endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the
Facility Lessee's business, (ii) indemnities in respect of unfiled mechanics'
liens and other liens permitted by clause (d) of the definition of "Permitted
Liens", (iii) contingent obligations set forth in, or incurred in connection
with, or indemnities set forth in, the Operative Documents and the FILOT Lease,
(iv) unsecured indemnities provided, and other unsecured contingent obligations
incurred by the Facility Lessee in connection with either (x) easements
relating to its applicable interest in the Facility or the Facility Site or (y)
any contract, agreement or other document or instrument relating to the Broad
River project which is entered into in the ordinary course of the Facility
Lessee's business, (v) customary indemnities in favor of the title insurers
providing the title policies covering the Facility Site or any portion thereof
or any easement or appurtenant right relating thereto in respect of claims by
the holder of mechanics' liens, (vi) the indemnities referred to in Section 9.1
and 9.2 of the Participation Agreement or pursuant to the Tax Indemnity
Agreement and (vii) unsecured Indebtedness incurred in accordance with Section
11.1 or 11.2 hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the FILOT Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the FILOT Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     L.   Books, Records, Access. The Facility Lessee shall maintain or cause
to be maintained adequate books, accounts and records with respect to itself,
the Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or

                                     34
<PAGE>
Lease Event of Default) expense to the Facility Lessee to inspect, the Facility
and Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be
               furnished to, the Owner Lessor, the Owner Participant and, so
               long as the Lien of the Collateral Trust Indenture has not been
               terminated or discharged, the Indenture Trustee and the Pass
               Through Trustees, and their respective authorized
               representatives from time to time such information as such
               party shall reasonably request concerning the Facility and
               Facility Site including information concerning the condition,
               operation, maintenance and use of the Facility and Facility
               Site and such other financial or operating information as it
               shall reasonably request and which is routinely made available
               to creditors of the Facility Lessee, to the extent it
               possesses such information; provided that, the Facility Lessee
               reserves the right not to provide any information that is not
               otherwise publicly available to any transferee Owner
               Participant (or its Owner Lessor) if it reasonably believes in
               its good faith judgment that such transferee Owner Participant
               or any Affiliate thereof is a competitor or is an Affiliate of
               a competitor of the Facility Lessee or its Affiliates in the
               competitive power market, unless, before receiving any such
               information, such transferee Owner Participant shall have put
               in place (to the reasonable satisfaction of the Facility
               Lessee) appropriate confidentiality arrangements. To the
               extent such information consists of information contained in
               records kept by the Facility Lessee or any Affiliate, such
               information shall be furnished without cost to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the Owner
Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture Trustee
promptly in writing of the occurrence of any Significant Lease Default, Lease
Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

     M.   Warranty of Title to Facility Site.

          1.   On and after the Post-FILOT Lease Conversion Date,
               the Facility Lessee shall maintain good and valid fee, title
               to, or easement or other surface rights in, as applicable, the
               Facility Site, subject only to Permitted Liens.

          2.   The Facility Lessee shall maintain good and valid
               title to all of its other properties and assets (other than
               properties and assets disposed of in the

                                     35
<PAGE>
               ordinary course of business, including any sale, transfer or
               other disposition of any obsolete, surplus or worn out
               equipment, parts, supplies or other materials or assets to the
               extent permitted by the Operative Documents), subject only to
               Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the FILOT Lease, it will not enter into or become bound by any contract or
agreement providing for the sale of energy produced from the Facility, or the
purchase of services to be performed at, for or in connection with, the
Facility or any other contract or agreement relating to the Facility that (i)
has a term that extends beyond the Basic Lease Term or the scheduled expiration
of any Renewal Lease Term then in effect or elected by the Facility Lessee,
unless such contract or agreement may be terminated by the Facility Lessee
without material costs or obligation prior to the Basic Lease Term or the
scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the FILOT Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole

                                     36
<PAGE>
Amount which has become due and payable with respect to the Lessor Notes under
the Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

     N.   Investments. The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     O.   Intentionally Deleted.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority.

          1.   The Facility Lessee shall not without the prior written consent
               of the Owner Participant and, except as otherwise provided in
               Section 8 of the Collateral Trust Indenture and so long as the
               Lien of the Collateral Trust Indenture has not been terminated
               or discharged, the Indenture Trustee, (x) cause or consent to
               or (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document. In addition,
               the Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of
               the FILOT Lease without the consent of the Owner Participant
               if the same would (i) subject in all cases to the provisions
               of clause (iii) below, during the Facility Lease Term, have a
               material adverse effect on the Owner Participant or the Owner
               Lessor (including, without limitation, any material decrease
               in their respective rights or any material increase in their
               respective obligations or any material increase in the
               liability exposure of the Owner Lessor or the Owner
               Participant, it being agreed that (x) in determining whether
               any such material adverse effect has occurred, the fact of the
               Facility Lessee's obligations under the Operative Documents
               (including paragraph (b) below) and of Calpine under the
               Calpine Guaranty shall be taken into account and (y) any
               increase in rent or any other amount payable by the Owner
               Lessor or the

                                     37
<PAGE>
               Owner Participant under the FILOT Lease that is also
               reflected to the same extent under the Facility Site Lease and
               does not remain in effect after the expiration of the then
               existing Basic Lease Term or any Renewal Term with respect to
               which the Facility Lessee shall have irrevocably exercised its
               renewal option shall not constitute or cause or be deemed to
               constitute or cause such a material adverse effect), (ii)
               during the period after the expiration or termination of the
               Facility Lease Term, have any adverse effect whatsoever on the
               Owner Participant or the Owner Lessor (including, without
               limitation, any increase in their respective obligations or
               decrease in their respective rights) or (iii) whether during
               or after the Facility Lease Term, result in any change to the
               length of the term of the FILOT Lease or in any option to
               renew the Facility Lease Term. The Facility Lessee will
               furnish the Owner Participant with a copy of the executed
               version thereof promptly after the execution thereof.
               Notwithstanding anything to the contrary contained in the
               foregoing, the Facility Lessee shall not have any right to
               take any action otherwise permitted pursuant to this Section
               5.20 if a Significant Lease Default or Lease Event of Default
               shall have occurred and be continuing. So long as the Lien of
               the Collateral Trust Indenture has not been discharged, the
               Facility Lessee shall not take any action pursuant to or in
               accordance with the foregoing provisions of this Section 5.20,
               if such action would (i) have a material adverse effect on the
               Indenture Trustee, the Pass Through Trustees, the Noteholders
               or the Certificateholders including, without limitation, a
               material adverse effect on such Person's rights and remedies
               under the Operative Documents (it being agreed that (x) in
               determining whether any such material adverse effect has
               occurred, the fact of the Facility Lessee's obligations under
               the Operative Documents (including paragraph (b) below) and
               Calpine's obligations under the Calpine Guaranty shall be
               taken into account and (y) any increase in rent or any other
               amount payable by the Owner Lessor or the Owner Participant
               under the FILOT Lease that is also reflected to the same
               extent under the Facility Site Lease ) shall not constitute or
               cause such a material adverse effect) or (ii) result in the
               release of or loss of the first priority, perfected Lien
               (subject to Permitted Liens) on all or any material portion of
               the Owner Lessor's interest in the Facility or the Facility
               Site, except as otherwise permitted by the Operative Documents.

          2.   During the Facility Lease Term (i) the Facility Lessee shall, at
               its own expense, on behalf of the Owner Lessor, duly fulfill
               and comply with all obligations on the part of the Owner
               Lessor under or in connection with the FILOT Lease (or any
               extension or renewal thereof) at the time performance of such
               obligations is required under the FILOT Lease and (ii) in
               connection with the foregoing obligation of the Facility
               Lessee set forth in clause (i), subject to clause (a) above,
               the Facility Lessee shall have and be entitled to exercise all
               rights and benefits (including the right to enter into any
               amendment, modification, extension, termination, variance,
               waiver, notice or consent or any action with respect thereto,

                                     38
<PAGE>
               subject to the terms and conditions of the Operative
               Documents) of the Owner Lessor under the FILOT Lease.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the FILOT Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) and (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee,

                                     39
<PAGE>
the Lease Indenture Company, the Pass Through Trustees, the Pass Through
Company or any Certificateholder, (iv) the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
Pass Through Trustees, the Pass Through Company or any Certificateholder being
subjected to any unindemnified civil liability or of the Owner Participant or
the Owner Lessor being subject to regulation as a public utility under
Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site or the transactions contemplated by the Operative Documents
to which the Facility Lessee is a party and the performance of the FILOT Lease
as may be required to enable the Owner Participant, the Owner Lessor or, so
long as the Lien of the Collateral Trust Indenture shall not have been
terminated or discharged, the Indenture Trustee or the Pass Through Trustees,
as the case may be, to timely file with any Governmental Entity any reports and
obtain any licenses or permits required to be filed or obtained by the Owner
Lessor under any Operative Document or the FILOT Lease, the Owner Participant
as the owner of the Member Interest or the Indenture Trustee. The Facility
Lessee will preserve, protect, defend and enforce, or cause to be preserved,
protected, defended and enforced, the rights of itself, the Owner Lessor and
the Owner Participant under each and every Operative Document to which it is a
party (including by assignment and assumption of the rights thereunder),
including using commercially reasonable efforts to prosecute suits to enforce
any such rights and, at the request of Indenture Trustee, so long as the Lien
of the Collateral Trust Indenture has not been discharged or terminated (and
thereafter at the request of the Owner Participant), permit the Indenture
Trustee and the Owner Participant, at their respective cost and expense, to
participate in such capacity as it may choose in any such suit, any defense
thereof or in the preparation therefor; provided, however, that upon the
occurrence and during the continuance of any Lease Event of Default, if the
Indenture Trustee or the Owner Participant request that certain actions be
taken and the Facility Lessee fails to take the requested action, or to cause
the requested action to be taken within (5) Business

                                     40
<PAGE>
Days, the Indenture Trustee, so long as the Lien of the Collateral Trust
Indenture has not been discharged or terminated, and the Owner Lessor may, at
the Facility Lessee's reasonable expense, enforce, in its own name, or the
Facility Lessee's name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

     P.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the later of the
expiration or termination of the FILOT Lease or the Springing Facility Site
Lease, or earlier at the option of the Owner Lessor.  The Facility Lessee shall
also, subject to obtaining any required third party consents, assign to the
Owner Lessor upon termination of the Facility Lease any support or similar
agreements to the extent relating to the Facility it has with third parties.

     Q.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     R.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

                                      41
<PAGE>
     S.   Transmission Assets.

          1.   If and to the extent that on the Closing Date the FERC Order
               referred to in clause (v) of the definition thereof has not
               been obtained with respect to the jurisdictional facilities
               referred to therein (which facilities are identified in
               Exhibit A as Transmission Assets (the "Transmission Assets")),
               the Owner Participant shall, upon 5 days prior written notice
               to the Facility Lessee, and subject to the grant of the
               aforesaid order, cause the Owner Lessor to acquire an
               undivided interest equal to the Owner Lessor's Percentage in
               the Facility Lessee's right, title and interest in the
               Transmission Assets, for a price equal to $1.00. Upon payment
               by the Owner Lessor of such amount, the Facility Lessee shall
               execute and deliver such documentation as is reasonably
               requested by the Owner Lessor to transfer such undivided
               interest in the Facility Lessee's right, title and interest in
               the Transmission Assets to the Owner Lessor. Upon such
               transfer such Undivided Interest shall be and shall be deemed
               to be an integral part of the Undivided Interest (to the
               extent constituting a portion of the Facility) and the Ground
               Interest (to the extent constituting a portion of the
               leasehold interest in the Facility Site) for all purposes of
               the Operative Documents without the necessity of amending or
               supplementing any Operative Document, subject nevertheless to
               Section 14.15 hereof.

          2.   Without limiting Section 10 hereof or Section 4.2 of
               the Facility Lease, the Facility Lessee agrees that from and
               after the Closing Date and until the earlier to occur of (A)
               the transfer referred to in clause (a) above and (B) the
               termination of the Facility Lease, the Facility Lessee shall
               make available to the Owner Lessor, for no additional
               compensation, such rights in the Transmission Assets solely to
               the extent as shall be necessary so that the representation in
               Section 3.1(n) will be correct to the same extent as if such
               transfer had occurred on the Closing Date.

II.  COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section
               9.1, 9.3, 13.1 or clause (i) of Section 13.2 of the LLC
               Agreement without the prior written consent of the Facility
               Lessee so long as no Significant Lease Default or Lease Event
               of Default has occurred and is continuing and the Indenture
               Trustee so long as the Lien of the Collateral Trust Indenture
               has not been terminated or discharged.

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<PAGE>
Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the FILOT Lease
in any manner or (c) except as provided in Section 11 hereof or Section 2.10 or
Section 5.6 of the Collateral Trust Indenture, take any action to prepay or
refund the Lessor Notes or amend any of the payment terms of the Lessor Notes
without, in each case, the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing and, in the case of clause (a) or (b), the Indenture Trustee
so long as the Lien of the Collateral Trust Indenture has not been terminated
or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

     B.   Bankruptcy of Owner Lessor.

          Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other laws affecting
the rights of creditors generally unless a Lease Event of Default or a
Significant

                                     43
<PAGE>
Lease Default shall have occurred and be continuing (in which case, if the Lien
of the Collateral Trust Indenture shall not have been discharged, the Trust
Company or the Owner Lessor shall not take any such action unless the Indenture
Trustee shall have given its prior written consent to such action in its sole
discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation

                                     44
<PAGE>
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in
this Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                     45
<PAGE>
     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                     46
<PAGE>
respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section prior to entering
into such revised agreement; provided that, for such revised offer, the Notice
Period shall be 10 Business Days from the date of such new notice, and the
Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other Broad River Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other Broad River Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                     47
<PAGE>
its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

                                     48
<PAGE>
     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agrees to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor

                                     49
<PAGE>
Manager, the Owner Lessor and the Facility Lessee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly (and in any event
within 30 days of obtaining Actual Knowledge of such Lien), at its own expense,
take such action as may be necessary to duly discharge such Indenture Trustee's
Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site or any Component or any portion of any thereof or any interest
     therein;
the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility or the Facility
     Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site or any Component,
     or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

                                     50
<PAGE>
any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the FILOT Lease requested by the Facility Lessee, or resulting from the
     actions of the Facility Lessee or in connection with any Lease Default or
     Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the FILOT Lease or the interests of the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, or under the Operative Documents or the FILOT Lease or the
     presence, use, storage, release, threatened release, transportation,
     arrangement for transportation, treatment, arrangement for treatment,
     manufacture, disposal or arrangement for disposal of any Hazardous
     Substance in, at, under or from the Facility or the Facility Site,
     including, for the avoidance of doubt, any of the foregoing existing or
     occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     County of any obligation contained in this Agreement or any other
     Operative Document or the FILOT Lease or the falsity or inaccuracy of any
     representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the FILOT Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the FILOT
     Lease (other than the Facility Lease, the Facility Site Lease, the FILOT
     Lease and the Springing Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents or the FILOT Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

                                     51
<PAGE>
Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility and the Facility
     Site in compliance with the provisions of the Facility Lease and the
     Facility Site Lease, respectively, and (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Springing Facility Site Lease,
     the performance by the Facility Lessee of all obligations required to be
     performed by it thereunder or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the FILOT Lease or (ii) any violation of
     Applicable Law by any such Person except to the extent attributable to a
     violation of Applicable Law by the Facility Lessee or any other Calpine
     Party or to any breach by the Facility Lessee or such other Calpine Party
     of any covenant, representation or warranty contained in any Operative
     Document or the FILOT Lease;

               a)   as to any Indemnitee, any Claim to the extent attributable
                    to the noncompliance of such Indemnitee or a Related
                    Party, with any of the terms of, or any misrepresentation
                    or breach of warranty by such Indemnitee or Related Party
                    contained in any Operative Document made by such
                    Indemnitee or Related Party or any breach by such
                    Indemnitee or a Related Party of any covenant contained in
                    any Operative Document or any breach by such Indemnitee or
                    a Related Party of any covenant contained in any Operative
                    Document made by such Indemnitee or Related Party

                                     52
<PAGE>
                    except to the extent attributable to any breach by the
                    Facility Lessee or any other Calpine Party of any
                    covenant, representation or warranty contained in any
                    Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section
     9.2 hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative
     Documents and distributable by it thereunder;

a Claim arising out of an Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be
paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other

                                       53
<PAGE>
     Indemnitee shall waive its rights to indemnification (for itself and each
     Related Party thereto) in a manner reasonably acceptable to the Facility
     Lessee, to cooperate, at the sole cost and expense of the Facility
     Lessee, with insurers in exercise of their rights to investigate, defend
     or compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this
     Section 9.1, and no payment hereunder by the Facility Lessee to an
     Indemnitee shall be deemed to constitute a waiver or release of any right
     or remedy that the Facility Lessee may have against any such Indemnitee
     for actual damages resulting directly from the failure or delay of such
     Indemnitee to give the Facility Lessee such notice. Subject to the
     foregoing, any amount payable to any Indemnitee pursuant to this Section
     9.1 shall be paid within thirty (30) days after receipt of such written
     demand therefor from such Indemnitee, accompanied by a certificate of
     such Indemnitee stating in reasonable detail the basis for the
     indemnification thereby sought and (if such Indemnitee is not a party
     hereto) an agreement to be bound by the terms hereof as if such
     Indemnitee were such a party. The foregoing shall not, however,
     constitute an obligation to disclose confidential information of any kind
     without the execution of an appropriate confidentiality agreement.
     Promptly after the Facility Lessee receives notification of such Claim
     accompanied by a written statement describing in reasonable detail the
     Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default shall have occurred and be continuing, the Facility
     Lessee shall have the right in its sole discretion, to defend or
     compromise any Claim for which indemnification is sought under this
     Section 9.1 which the Facility Lessee acknowledges is subject to
     indemnification hereunder; provided that no such defense or compromise
     shall involve any danger of (i) foreclosure, sale, forfeiture or loss of,
     or imposition of a Lien on any part of the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site, the Lessor Estate or
     the Indenture Estate or the impairment of the Facility or the Facility
     Site, in any material respect or (ii) any criminal liability being
     incurred or any material adverse effect on such Indemnitee; provided,
     further, that no Claim shall be compromised by the Facility Lessee on a
     basis that admits any criminal violation or gross negligence or willful
     misconduct on the part of such Indemnitee without the express written
     consent of such Indemnitee; and provided, further, that to the extent
     that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the FILOT Lease (giving effect to its assignment
     to the Owner Lessor pursuant to the Assignment Agreement) are part of the
     same proceeding involving such Claim, the Facility Lessee may assume
     responsibility for the contest or compromise of such Claim only if the
     same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the
     event that in the course of the investigation or defense of a claim, the
     Facility Lessee shall in good faith reasonably

                                       54
<PAGE>
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee
     of such fact; and, in such case, any acknowledgment, theretofore made by
     the Facility Lessee of liability with respect to such claim under this
     Section 9.1 shall be deemed revoked, and the Facility Lessee may
     thereupon cease to defend such claim; provided that (i) the Facility
     Lessee shall have given the Indemnitee reasonable prior notice of its
     intention to renounce such acknowledgment, (ii) the Facility Lessee's
     conduct regarding the defense of such claim or any decision to withdraw
     from such defense shall not prejudice or have prejudiced the Indemnitee's
     ability to contest such claim (taking into account, among other things,
     the timing of the Facility Lessee's withdrawal and the theory or theories
     upon which the Facility Lessee shall have based its defense), and (iii)
     the Facility Lessee shall have given such Indemnitee all materials,
     documents and records relating to its defense of such claim as such
     Indemnitee shall have reasonably requested in connection with the
     assumption by such Indemnitee of the defense of such claim at the cost
     and expense of the Facility Lessee. In the event that the Facility Lessee
     shall cease to defend any claim pursuant to the preceding sentence, the
     Facility Lessee shall indemnify each Indemnitee, without regard to any
     exclusion that might otherwise apply hereunder, to the extent that the
     actions of the Facility Lessee in defending such claim or the manner or
     time of the Facility Lessee's election to withdraw from the defense of
     such claim shall have caused such Indemnitee to incur any loss, cost,
     liability or expense which such Indemnitee would not have incurred had
     the Facility Lessee not ceased to defend such claim in such manner or
     such time. If the Facility Lessee elects, subject to the foregoing, to
     compromise or defend any such asserted liability, it may do so at its own
     expense and by counsel selected by it. Upon the Facility Lessee's
     election to compromise or defend such asserted liability and prompt
     notification to such Indemnitee of its intent to do so, such Indemnitee
     shall cooperate at the Facility Lessee's expense with all reasonable
     requests of the Facility Lessee in connection therewith and will provide
     the Facility Lessee with all information not within the control of the
     Facility Lessee as is reasonably available to such Indemnitee which the
     Facility Lessee may reasonably request; provided, however, that such
     Indemnitee shall not, unless otherwise required by Applicable Law, be
     obligated to disclose to the Facility Lessee or any other Person, or
     permit the Facility Lessee or any other Person to examine (i) any income
     tax returns of the Owner Participant or (ii) any confidential information
     or pricing information not generally accessible by the public possessed
     by the Owner Participant (and, in the event that any such information is
     made available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to
     the related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without
     reservation of rights against such Indemnitee), no additional legal fees
     or expenses of such Indemnitee in connection with the defense of such
     Claim shall be indemnified hereunder unless such fees or expenses were
     incurred at the request of the Facility Lessee or such insurers.
     Notwithstanding the foregoing, an Indemnitee may participate at its own
     expense in any judicial proceeding controlled by the Facility Lessee
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such

                                       55
<PAGE>
     party's participation does not constitute a waiver of the
     indemnification provided in this Section 9.1; provided, further, that if
     and to the extent that (i) such Indemnitee is advised by counsel that an
     actual or potential conflict of interest exists where it is advisable for
     such Indemnitee to be represented by separate counsel or (ii) there is a
     risk that such Indemnitee may be subject to criminal liability and such
     Indemnitee informs the Facility Lessee that such Indemnitee desires to be
     represented by separate counsel, such Indemnitee shall have the right to
     control its own defense of such Claim and the reasonable fees and
     expenses of such defense (including, without limitation, the reasonable
     fees and expenses of such separate counsel) shall be borne by the
     Facility Lessee. So long as no Lease Event of Default described in clause
     (a), (b), (g) or (h) of Section 16 of the Facility Lease has occurred and
     be continuing, no Indemnitee shall enter into any settlement or other
     compromise with respect to any Claim without the prior written consent of
     the Facility Lessee unless (i) the Indemnitee waives its rights to
     indemnification hereunder or (ii) the Facility Lessee has not
     acknowledged their indemnity obligation with respect thereto and there is
     a significant risk that a default judgment will be entered against such
     Indemnitee. Nothing contained in this Section 9.1(e) shall be deemed to
     require an Indemnitee to contest any Claim or to assume responsibility
     for or control of any judicial proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee
     (so long as no Lease Event of Default shall have occurred and be
     continuing), such insurer shall be subrogated to the rights and remedies
     of the Indemnitee on whose behalf such Claim was paid to the extent of
     such payment (other than rights of such Indemnitee under insurance
     policies maintained at its own expense) with respect to the transaction
     or event giving rise to such Claim. Should an Indemnitee receive any
     refund, in whole or in part, with respect to any Claim paid by the
     Facility Lessee hereunder, it shall promptly pay over to the Facility
     Lessee the lesser of (i) the amount refunded reduced by the amount of any
     Tax incurred by reason of the receipt or accrual of such refund and
     increased by the amount of any Tax (but not in excess of the amount of
     such reduction) saved as a result of such payment or (ii) the amount the
     Facility Lessee or any of their insurers has paid in respect of such
     Claim; provided that, so long as a Significant Lease Default or Lease
     Event of Default shall have occurred and is continuing such amount may be
     held by the Owner Lessor as security for the Facility Lessee's
     obligations under the Facility Lease, the other Operative Documents and
     the FILOT Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under
     this Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on
     the Owner Participant, the Owner Lessor, or such Transaction Party, as
     the case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

                                       56
<PAGE>
General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof,
     a "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or
     with respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site or any portion or
     Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability
     of the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the
     Facility, the Facility Site or any portion or Component thereof, or any
     interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease, the Facility Site
     Lease or the Springing Facility Site Sublease or arising from the
     Facility, the Undivided Interest, the Ground Interest, the Facility Site
     or any portion or Component thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     FILOT Lease;

the conveyance of title to the Undivided Interest; or

                                       57
<PAGE>
otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of the FILOT Lease.

          Notwithstanding anything herein to the contrary and without
regard to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed
     on, based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and
     direct substitution for income taxes) or property taxes) ("Income
     Taxes"), including any such Taxes collected by way of withholding,
     minimum or alternative minimum taxes, and franchise taxes; provided that
     this exclusion (i) shall not affect any express requirement that payments
     be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee
     that are attributable to any act, event or omission by such Tax Indemnitee
     that occurs after expiration or other termination of the Facility Lease
     and surrender of the Undivided Interest to the Owner Lessor or its
     successors (or in the case of a Certificateholder Indemnitee, Taxes
     imposed for any period after the repayment of the Lease Debt) in
     accordance with the Facility Lease, (as opposed to any act, event or
     omission occurring prior to or simultaneous with such expiration,
     termination or surrender (or, in the case of a Certificateholder
     Indemnitee, such repayment)), provided that this exclusion shall not
     apply so long as a Lease Event of Default shall have occurred and be
     continuing;

                                       58
<PAGE>
Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the FILOT Lease (giving effect to its assignment to the Owner Lessor
     pursuant to the Assignment Agreement) and not as a result of any action
     or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any
     Operative Document except to the extent attributable to any breach by the
     Facility Lessee or any other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

Taxes(A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the
     Owner Lessor or the Owner Participant, the Owner Participant of all or
     part of its Member Interest or Undivided Interest, (2) in the case of the
     Owner Lessor or the Owner Participant, the Owner Lessor of all or part of
     its interest in the Facility or the Facility Site (other than to a
     successor Lessor Manager), or (3) in the case of the Indenture Trustee,
     the Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that,
     under law in effect on the date of the transfer such Taxes exceed the
     amount of Taxes that would be indemnified hereunder had there been no
     such assignment, sale, transfer or other voluntary disposition, unless
     such transfer or disposition occurs during the continuance of a Lease
     Event of Default or is otherwise pursuant to the Facility Lessee's
     exercise of its rights under the Operative Documents; provided that this
     exclusion shall not apply with respect to any initial syndication of
     interests in the Owner Participant accomplished prior to December 29,
     2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

                                       59
<PAGE>
Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a
     grantor trust or other conduit entity for federal, state or local income
     tax purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax
     Indemnitee timely written notice of such requirement and the Tax
     Indemnitee shall have determined in good faith that compliance with any
     such requirement shall not result in any identified non-immaterial
     adverse effect to its interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of
     any of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the

                                       60
<PAGE>
     nature of sales, use, rental or license taxes or value added taxes
     (except to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the
     Tax Indemnitee describing in reasonable detail the Taxes for which the
     Tax Indemnitee is demanding payment and the computation of such Taxes),
     (B) subject to paragraph (g) below, in the case of amounts which are
     being contested pursuant to such paragraph (g), at the time and in
     accordance with a final determination of such contest or (C) in the case
     of any indemnity demand for which the Facility Lessee has requested
     review and determination pursuant to paragraph (d) below, the completion
     of such review and determination; provided, however, in no event later
     than the date which is one Business Day prior to the date on which such
     Taxes are required to be paid to the applicable taxing authority. Any
     amount payable to the Facility Lessee pursuant to paragraph (e) or (f)
     below shall be paid promptly after the Tax Indemnitee realizes a Tax
     Benefit giving rise to a payment under paragraph (e) or receives a refund
     or credit giving rise to a payment under paragraph (f), as the case may
     be, and shall be accompanied by a statement of the Tax Indemnitee
     computing in reasonable detail the amount of such payment. Upon the final
     determination of any contest pursuant to paragraph (g) below in respect
     of any Taxes for which the Facility Lessee has made a Tax Advance, the
     amount of the Facility Lessee's obligation under paragraph (a) above
     shall be determined as if such Tax Advance had not been made. Any
     obligation of the Facility Lessee under this Section 9.2 and the Tax
     Indemnitee's obligation to repay the Tax Advance will be satisfied first
     by set off against each other, and any difference owing by either party
     will be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto
     agree that the independent public accounting firm's sole responsibility
     shall be to verify the computation of any payment pursuant to this
     Section 9.2 and that matters of interpretation of this Participation
     Agreement or any other Operative Document or the FILOT Lease are not
     within the scope of the

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     independent accountant's responsibility. The fees and disbursements of
     such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment
     provided under this Section 9.2(e) shall be deferred until the
     Significant Lease Default or Lease Event of Default has been cured), such
     Tax Indemnitee shall pay to the Facility Lessee the lesser of (A) (y) the
     amount of such Tax Benefit, plus (z) an amount equal to any United States
     federal, state or local income tax benefit resulting to the Tax
     Indemnitee from the payment under clause (y) above and this clause (z)
     (determined using the same assumptions as set forth in the second
     sentence under the definition of After-Tax Basis) and (B) the amount of
     the indemnity paid pursuant to this Section 9.2 giving rise to such Tax
     Benefit; provided, however, that any excess of (A) over (B) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such Tax Benefit, the portion of such Tax Benefit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to
     this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
     Lessee (x) the amount of such refund or credit (net of any Tax payable by
     the Tax Indemnitee as a result of the receipt or accrual of such refund
     or credit) plus (y) an amount equal to any United States federal, state
     or local income tax benefit realized by such Tax Indemnitee by reason of
     such payment to the Facility Lessee (determined using the same
     assumptions as set forth in the second sentence under the definition of
     After-Tax Basis); provided that (A) if at the time such payment is due to
     the Facility Lessee a Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing, such amount shall not be payable
     until such Significant Lease Default or Lease Event of Default has been
     cured, and (B) the amount payable to the Facility Lessee pursuant to this
     sentence shall not exceed the amount of the indemnity payment in respect
     of such refunded or credited Taxes that was made by the Facility Lessee.
     Any excess of (x) and

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<PAGE>
     (y) over (B) in this Section 9.2(f) shall be carried forward and reduce
     the Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such refund or credit, the
     portion of such refund or credit that is required to be repaid or
     recaptured will be treated as Taxes for which the Facility Lessee must
     indemnify the Tax Indemnitee pursuant to this Section 9.2 without regard
     to paragraph (b) hereof. If, in connection with a refund or credit of all
     or part of any Taxes paid, reimbursed or advanced by the Facility Lessee
     pursuant to this Section 9.2, a Tax Indemnitee receives an amount
     representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which
     the Facility Lessee may be liable for indemnity hereunder (a "Tax
     Claim"), such Tax Indemnitee shall give the Facility Lessee written
     notice of such Tax Claim promptly after its receipt, and shall furnish
     the Facility Lessee with copies of such Tax Claim and all other writings
     received from the taxing authority to the extent relating to such claim;
     provided that failure to so notify the Facility Lessee shall not relieve
     the Facility Lessee of any obligation to indemnify the Tax Indemnitee
     hereunder except to the extent that such failure effectively precludes
     the ability to conduct a contest hereunder (and without limiting any
     damage claim or remedy the Facility Lessee may otherwise have for such
     failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be
     pursued in the name of the Facility Lessee and may be segregated
     procedurally from tax claims for which the Facility Lessee is not
     obligated to indemnify the Tax Indemnitee or (B) the Tax Indemnitee
     requests that the Facility Lessee control such contest. In the case of
     all other Tax Claims, the Tax Indemnitee will contest the Tax Claim if
     the Facility Lessee shall request that the Tax be contested (subject to
     subsection (g)(iii) below), and the following rules shall apply with
     respect to such contest:

               (1)   the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)   the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

               (3)   the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

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<PAGE>
          In either case, the party conducting such contest shall
consult in good faith with the other party and its designated counsel with
respect to such Tax Claim and shall provide the other party with copies of any
reports or claims (or extracts therefrom) issued by the relevant auditing
agents or taxing authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section
     9.2, and the Facility Lessee shall be required to pay the applicable
     Taxes without contest, unless:

               (1)  within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)  no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)  there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)  there is no risk of imposition of any criminal penalties
or liabilities,

               (5)  if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)  the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

               (7)  the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)  in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

               (9)  if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to

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<PAGE>
such Tax, which admission shall be binding on the Facility Lessee unless and to
the extent such contest is determined in a manner that conclusively
demonstrates that the Facility Lessee is not so liable, and

               (10) if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the
     Facility Lessee shall not be permitted to contest) a Tax Claim and may in
     its sole discretion settle or compromise any contest with respect to such
     Tax Claim without the Facility Lessee's consent if the Tax Indemnitee:

               (1)  waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)  promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such
     report, statement or return for filing by the Facility Lessee in such
     manner as will show the leasehold or fee interest, as applicable, of the
     Owner Lessor in the Facility for United States federal, state and local
     income tax purposes (if applicable), send a copy of such report,
     statement or return to the Tax Indemnitee and timely file such report,
     statement or return with the appropriate taxing authority, or (z) in all
     other cases, prepare and furnish to such Tax Indemnitee not later than 30
     days prior to the date such report, statement or return is required to be
     filed (determined without regard to extensions) a proposed form of such
     report, statement or return for filing by the Tax Indemnitee; provided
     that the only consequence for failure to file after compliance by the
     Facility Lessee with the requirements hereof shall be a loss of
     indemnification from the Facility Lessee in respect of any Tax to the
     extent resulting from such failure.

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<PAGE>
Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this
     Section 9.2 prior to making any payment to such Tax Indemnitee under this
     Section. Subject to the preceding sentence, the Facility Lessee's
     obligations under this Section 9.2 shall inure to the benefit of each and
     every Tax Indemnitee without regard to whether such Tax Indemnitee is a
     party to this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the Facility Lessee's rights under the
Facility Lease, Facility Site Lease and, if applicable, the Springing Facility
Site Sublease, including the right to possession, use and quiet enjoyment of
the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's Interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

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<PAGE>
the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B)
     will be fully repaid out of additional Basic Rent, as adjusted pursuant
     to the Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be
     made to protect the Owner Participant's Net Economic Return; provided
     that there shall be no changes to the amortization schedule or interest
     amounts and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent
     incurred in connection with any financing or refinancing pursuant to this
     Section 11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents and the FILOT Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

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<PAGE>
the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing
of Improvements through the Facility Lease, the Facility Lessee shall at all
times have the right to fund Improvements to the Facility other than through
the Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which

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<PAGE>
     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction
Parties that the Calpine Guaranty covers the additional indebtedness
contemplated by this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents and the FILOT Lease. The
Owner Participant will execute such agreements and documents as may be
necessary with respect to any such refinancing and will instruct the Owner
Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt to the extent permitted by the Collateral
     Trust Indenture; provided such re-optimization shall not result in a
     change to average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect
     any enactment, promulgation, release or adoption of, amendment to or
     change in the Code, Treasury

                                       69
<PAGE>
     Regulations, Revenue Rulings or Revenue Procedures ("Tax Law Change")
     enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which
     it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility
     Lessee's GAAP accounting purposes and/or (y) minimize the present value
     to the Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee
     467 Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior

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     written consent of the Owner Lessor, the Owner Participant and, so long
     as the Lien of the Collateral Trust Indenture has not been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustees.
     Notwithstanding the foregoing, upon satisfaction of the conditions in
     paragraph (b) below, the Facility Lessee may assign the Facility Lease or
     any other Operative Document to which it is a party, or any interest
     therein to any Person, without the consent of the Owner Lessor, the Owner
     Participant, the Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the
     Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in
     writing its obligations under the Calpine Guaranty or (y) Calpine's
     obligations under the Calpine Guaranty has been succeeded to in
     accordance with Section 8.4(b) thereof, the transferee of Calpine shall
     own, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the
     Ownership Interest of any non-assigning Facility Lessee) and the Calpine
     Guaranty shall remain in full force and effect and (B) satisfaction of
     the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall
     continue in effect, pursuant to an assignment and assumption agreement in
     form and substance satisfactory to the Owner Participant, Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received
     an Opinion of Counsel as to such assignment and assumption agreement and
     the satisfaction of the requirements and conditions set forth in this
     Section 13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

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               b)   the Facility Lessee shall have paid, at
                    no after-tax cost to such parties, all reasonable
                    documented out-of-pocket expenses (including reasonable
                    attorneys' fees and expenses) of the Owner Lessor, the
                    Lessor Manager, the Owner Participant, the Indenture
                    Trustee, the Lease Indenture Company and the Pass Through
                    Trustees in connection with such assignment;

               c)   the Facility Lessee has provided the Indenture Trustee with
                    (x) an indemnity against the risk that such assignment will
                    cause a Tax Event to occur to any direct holder of any
                    Lessor Note and any Certificateholder or (y) an opinion of
                    counsel to the effect that such assignment will not cause a
                    Tax Event to occur to any direct holder of any Lessor Note
                    and any Certificateholder; and

               d)   the transfer shall not cause the Facility to become
                    "tax-exempt use property within the meaning of Section
                    168(h) of the Code (unless the Facility Lessee shall make a
                    payment contemporaneously with such transfer that in the
                    reasonable judgment of the Owner Participant compensates
                    the Owner Participant for the adverse tax consequences
                    therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the FILOT Lease, except for obligations (including Section 9.1 and 9.2
hereof and the Tax Indemnity Agreement) surviving pursuant to the express terms
of the Operative Documents or which have otherwise accrued but not been paid as
of such date and (ii) the Owner Participant or the OP Guarantor will transfer
(by an appropriate instrument of transfer) the Member Interest to the Facility
Lessee (or its designee); provided, however, that if the Lien of the Collateral
Trust Indenture has not been terminated or discharged, such transfer shall not
be made to the Facility Lessee, but shall be

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<PAGE>
made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS

          (a) At any time prior to the expiration or earlier termination
of the FILOT Lease, the Facility Lessee may request (which request shall be in
writing and addressed to the Owner Lessor, the Owner Participant and the
Indenture Trustee) that the Owner Lessor exercise the Purchase Options (if and
to the extent not previously exercised) and direct the County to convey the
Land (to the extent of the Owner Lessor's Percentage interest) to the Facility
Lessee upon the closing of the conveyance of the Project pursuant thereto.
Within 15 Business Days following receipt of such request, the Owner Lessor
shall exercise the Purchase Options (if and to the extent not previously
exercised) and direct the County to convey the Land (to the extent of the Owner
Lessor's Percentage interest) to the Facility Lessee upon the closing of the
conveyance of the Project pursuant thereto, if each of the following conditions
shall have been satisfied:

                    (1)   the conditions specified in the definition of
                          "Post-FILOT Lease Conversion Date" have been
                          satisfied;

                    (2)   no Lease Default or Lease Event of Default under any
                          of Sections 16(g) and 16(h) of the Facility Lease
                          has occurred and is continuing; and

                    (3)   no Significant Lease Default or
                          Lease Event of Default shall have occurred and be
                          continuing or would result from the occurrence of
                          the Post-FILOT Lease Conversion Date.

     Notwithstanding the foregoing, the Facility Lessee shall be entitled to
make the foregoing request of the Owner Lessor and to receive a conveyance of
the Land (to the extent of the Owner Lessor's Percentage interest) only if,
concurrently with such request and receipt, the Facility Lessee also makes such
request of the Other Broad River Owner Lessors and receives their respective
interests in the Land pursuant to the Other Broad River Operative Documents.

(b)  If the request of the Facility Lessee referred to in paragraph (a) above
states (and provides information constituting a reasonable basis for such
statement) (A) that the conditions specified

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<PAGE>
in paragraph (a) above have been satisfied or will be (and are capable of
being) timely satisfied, (B) that the FILOT Lease is likely to terminate or
cease to be in full force and effect before the Owner Lessor has exercised the
Purchase Options if such exercise does not occur within a period of time which
shall not be less than ten (10) Business Days from the date of the Owner
Lessor's receipt of such notice, and (C) that such notice is being given
pursuant to this Section 14(b) in anticipation of a possible exercise by the
Facility Lessee of the Purchase Options, then the Owner Lessor (or in lieu
thereof, the Owner Participant) shall respond to such notice within five (5)
Business Days after its receipt of such notice (provided that if the Facility
Lessee or the Owner Lessor shall have Actual Knowledge that a termination of
the FILOT Lease by the County is reasonably likely to occur within a time frame
shorter than the time frame of the foregoing notice provisions, the Person
having such Actual Knowledge will promptly advise the other Person of the
relevant information known to it, and thereafter the parties will proceed with
the notices to each other hereunder as promptly as commercially practicable
using all reasonable efforts). The written notice from the Owner Lessor
referred to above shall be one with which the Owner Lessor (or the Owner
Participant) either shall concur in all material facts asserted by the Facility
Lessee in its notice or shall dispute in good faith one or more of such
material facts and shall set forth the Owner Lessor's (or the Owner
Participant's or Indenture Trustee's) position (and in reasonable detail, the
basis therefor) in respect thereof. If the Owner Lessor (or the Owner
Participant) does not provide such notice in dispute of one or more material
facts so asserted by the Facility Lessee within the time period provided above,
the Facility Lessee shall be entitled, to the extent permitted by Applicable
Law, to exercise the foregoing Purchase Options (if and to the extent not
previously exercised) and direct the County to convey (to the extent of the
Owner Lessor's Percentage interest) the Land to the Facility Lessee and the
Project (other than the Land) to the Owner Lessor. Notwithstanding the
foregoing, the determination whether the conditions set forth in paragraph (a)
above have been or shall be capable of being timely satisfied shall be made by
the Owner Lessor and (if the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee (without the necessity of obtaining the
consent of any of the Noteholders or the Pass Through Trustees), provided that
either the Owner Lessor, the Owner Participant or the Indenture Trustee has
notified the Facility Lessee of the dispute referred to above.

     The Owner Lessor agrees not to exercise the Purchase Options other than
as contemplated above unless (i) there has occurred and is continuing at the
time of its election to exercise the same as contemplated by Section 10.02 of
the FILOT Lease a Lease Event of Default and the Owner Lessor or, if the Lien
of the Collateral Trust Indenture has at the time not been discharged, the
Indenture Trustee has commenced the enforcement of remedies under Section 17 of
the Facility Lease, or (ii) in the judgment of the Owner Participant the FILOT
Lease is likely to terminate or cease to be in full force and effect before the
Owner Lessor has exercised the Purchase Options.

                                       74
<PAGE>
III.   MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document,
the performance of the FILOT Lease or the FILOT Lease (subject to any
applicable consent required by the County).

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 15.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 15.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

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<PAGE>
          Broad River Energy, LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention: Senior Counsel
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California 95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California 95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-2, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

                                       76
<PAGE>
          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York 10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

                                       77
<PAGE>
          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department


          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto.
          In addition,

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<PAGE>
          the Facility Lessee shall (unless otherwise
          directed by the applicable Rating Agency) provide to each
          Rating Agency a copy of any information, report or notice it
          gives to the Indenture Trustee hereunder or any other
          Operative Documents.

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Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the FILOT Lease regardless of any investigation
made by any such party or on behalf of any such party. In addition, the
indemnifications by the Facility Lessee under Sections 9.1 and 9.2 of this
Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the Facility
Site Lease and the Calpine Guaranty, shall expressly survive the expiration or
early termination (in either case, for whatever reason) of the Facility Lease
or the transfer or other disposition of the respective interests of the Owner
Participant, the Owner Lessor, the Lessor Manager, the Lease Indenture Company,
the Indenture Trustee, the Pass Through Trustees and the Certificateholders in,
to and under this Agreement, the Assignment Agreement and the other Operative
Documents and the FILOT Lease. Except as expressly provided above or in Section
22.3 of the Facility Lease, the Tax Indemnity Agreement or as otherwise
expressly provided in the Operative Documents, the representations, warranties,
covenants and agreements of the Transaction Parties under the Operative
Documents shall terminate and be of no further force and effect effective upon
the expiration or earlier termination of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business
Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders
     shall have any obligation or duty to the Facility Lessee or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents to which such Person is a party, and none of the
     Owner Participant, the Owner Lessor, the Indenture Trustee, the Lease
     Indenture Company, the Pass Through Trustees, the Pass Through Company or
     the Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through
     Trustees, the Pass Through Company, the Certificateholders or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents, and neither the Facility Lessee nor any other
     Calpine Party (except Calpine to the extent set forth in the Calpine
     Guaranty) shall be liable for performance by any other party hereto of
     such other party's obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the FILOT Lease, as to all of which
     the other parties hereto agree to look solely to the Indenture Estate and
     the Lessor Estate, respectively; provided, however, that the Lease
     Indenture Company and the Pass Through Trust Company shall be liable
     hereunder for their own negligence or willful misconduct or for a breach
     of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or
     consent to any change or amendment to, any of the Operative Documents)

                                       81
<PAGE>
     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein
     or in the Collateral Trust Indenture or as otherwise required by
     Applicable Law, have any obligation to) request the approval or
     instruction of the Pass Through Trustees as the holder of the Lessor
     Notes, and the Pass Through Trustees may in its sole discretion (but
     shall not, except as otherwise provided in the Operative Documents or as
     otherwise required by Applicable Law, have any obligation to) request the
     approval of the Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement
     (other than an amendment solely effecting a transfer of the Owner
     Participant's interest in the Lessor Estate) and deliver true, complete
     and fully executed copies to the Facility Lessee of any amendment or
     supplement to the LLC Agreement. No amendment or supplement to the LLC
     Agreement that would reasonably be expected to materially adversely
     affect the interests of the Facility Lessee or the Indenture Trustee
     shall become effective without the written consent of the Indenture
     Trustee and the Facility Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and
     to the nonexclusive jurisdiction of the United States District Court for
     the Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the FILOT Lease (except as otherwise provided therein), or
     the subject matter hereof or thereof or any of the transactions
     contemplated hereby or thereby brought by any of the parties hereto or
     their successors or assigns; (ii) hereby irrevocably agrees that all
     claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is
     not personally subject to the jurisdiction of the above-named courts,
     that the suit, action or proceeding is brought in an inconvenient forum,
     that the venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF
     THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE
     PARTIES HERETO OR THEIR SUCCESSORS OR ASSIGNS.

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<PAGE>
By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office
     at 111 Eighth Avenue, New York, New York 10011, as its authorized agent
     to receive for and on its behalf service of any summons, complaint or
     other legal process in any such action, suit or proceeding in the State
     of New York for so long as any obligation of the Facility Lessee or the
     Owner Lessor, as applicable, shall remain outstanding hereunder or under
     any of the other Operative Documents or with respect to the Facility
     Lessee for so long as it has any obligations remaining under the FILOT
     Lease. The Facility Lessee shall grant an irrevocable power of attorney
     to CT Corporation System, in respect of such appointment and shall
     maintain such power of attorney in full force and effect for so long as
     any obligation of the Facility Lessee shall remain outstanding hereunder
     or under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is
shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                       83
<PAGE>
the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 15.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     15.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of
     such proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 15.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

                                       84
<PAGE>
          The foregoing obligation as to confidentiality and non-use
shall survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 15.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                       85
<PAGE>
          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                         BROAD RIVER ENERGY LLC,
                         a Delaware limited liability company

                              By: _________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              BROAD RIVER OL-2 LLC, a Delaware limited
                              liability company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager



                              By: _________________________________
                              Name:
                              Title:
                              Date:



                              SBR OP-2 LLC, a Delaware limited liability
                              company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: _________________________________
                              Name:
                              Title:
                              Date:

                              WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION,
                         not in its individual capacity, except as expressly
                         provided herein, but solely as Lessor Manager

                              By: _________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION
                         not in its individual capacity,
                         except to the extent expressly
                         provided herein, but solely as
                         Indenture Trustee under the
                         Collateral Trust Indenture

                              By: _________________________________
                              Name:
                              Title:
                              Date:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION
                         not in its individual capacity,
                         except to the extent expressly
                         provided herein, but solely as Pass
                         Through Trustees under the Pass
                         Through Trust Agreement

                              By: _________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
                              CALPINE CORPORATION
                              a Delaware corporation

                              By: _________________________________
                              Name:
                              Title:
                              Date:
<PAGE>
     APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but
     in another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)  a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;
<PAGE>
     (i)  if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)  a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless "Business
      Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof;

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)  a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                       2
<PAGE>
     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or other
     employee whose responsibilities include the administration of the Overall
     Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is
     received or properly accrued, and

                                       3
<PAGE>
     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents and the FILOT
     Lease, to sell electricity therefrom, to enter into any Operative
     Document or to consummate any transaction contemplated thereby, or (b)
     that is necessary so that none of the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholder nor any Affiliate of any of them may be
     deemed by any Governmental Entity to be subject to regulation under PUHCA
     or under any other Applicable Law relating to electric utilities,
     generators, wholesalers or retailers, in each case as a result of the
     operation of the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten
     (10) Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal.
     If either the Owner Participant or the Facility Lessee does not appoint
     its appraiser within such ten Business Day period, the determination of
     the other appraiser shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. If the appraisers appointed by the
     Owner Participant and the Facility Lessee are unable to agree upon the
     value, period, amount or other determination in question within thirty
     (30) days, such appraisers shall jointly appoint a third Independent
     Appraiser or, if

                                       4
<PAGE>
     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNED FILOT DOCUMENTS" with respect to the Facility Site Lease and
     the Springing Facility Site Lease, shall have the meaning set forth in
     the recitals to the Facility Site Lease and the Springing Facility Site
     Lease, respectively.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (BR-2) dated
     as of the Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B to the Participation Agreement
     duly completed, executed and delivered on the Closing Date pursuant to
     which the Owner Lessor will acquire the Undivided Interest and the Ground
     Interest from the Facility Lessee.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $75,000,000.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U.S.C.[sec] 101 et seq.

                                       5
<PAGE>
     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of the
     Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER" shall mean Broad River Energy LLC.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

    "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment Agreement
    (BR-2) dated as of the Closing Date in favor of the Beneficiaries,
    substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

                                       6
<PAGE>
     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any certificates issued in replacement therefor pursuant to
     Section 3.3, 3.4 or 3.5 of the Pass Through Trust Agreement.

     "CLAIM(S)" individually or collectively as the context may require, shall
     mean any liability (including in respect of negligence (whether passive
     or active or other torts), strict or absolute liability in tort or
     otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

                                       7
<PAGE>
     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage,
     Security Agreement and Fixture Filing (BR-2), dated as of the Closing
     Date, between the Owner Lessor and the Indenture Trustee, in
     substantially the form of Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Springing Facility Site Lease,
     shall have the meaning specified in Section 2.1(a) of the Springing
     Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the Guarantor and
     its Subsidiaries and (ii) all current maturities of long-term
     Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii) excess
     of cost over fair value of assets of businesses acquired, as determined
     in good faith by the Board of Directors; (iv) any revaluation or other
     write-up in value of assets subsequent to December 31, 1993 as a result
     of a change in the method of valuation in accordance with GAAP; (v)
     unamortized debt discount and expenses and other unamortized deferred
     charges, goodwill, patents, trademarks, service marks, trade names,
     copyrights, licenses, organization or developmental expenses and other
     intangible items; (vi) treasury stock; and (vii) any cash set apart and
     held in a sinking or other analogous fund established for the purpose of
     redemption or other

                                       8
<PAGE>
     retirement of Capital Stock to the extent such obligation is not
     reflected in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

               "CORRECTIVE ORDINANCE" shall mean that certain ordinance
authorizing the Assignment Agreement and adopted by the County on October 1,
2001 pursuant to a public hearing held September 24, 2001.

     "COUNTY" shall mean Cherokee County, South Carolina.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule
     2 of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears) minus (ii) the sum of (A) the Equity Portion of Termination
     Value and (B) if such date of determination is a Rent Payment Date, the
     Equity Portion of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time or
     both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section 1(a)
     of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

                                       9
<PAGE>
     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the Phase
     1 and Phase II reports of the Engineering Consultant, dated October 12,
     2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Roy F. Weston, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment Report, dated October 10, 2001, prepared by the Environmental
     Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the

                                       10
<PAGE>
Termination Value set forth opposite the Termination Date corresponding to
such date of determination on Schedule 2 of the Facility Lease, and, if such
date of determination is a Rent Payment Date, Periodic Rent due on that date
(to the extent payable in arrears) over (ii) the balance, including scheduled
(in accordance with the payment terms of the Lessor Notes) accrued interest, on
the Lessor Notes scheduled (in accordance with the payment terms of the Lessor
Notes) to be outstanding on such date of determination corresponding to the
Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)   the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor,
     prior to the Post-FILOT Lease Conversion Date, of the Undivided Interest
     or the Ground Interest, or, from and after the Post-FILOT Lease
     Conversion Date, of title to the Undivided Interest, in each case
     following exhaustion of all permitted appeals or an election by the
     Facility Lessee in its discretion not to pursue such appeals or rights;
     provided that no such contest (or exercise) shall extend beyond the
     earlier of the date which is (x) six months after the loss of such
     leasehold interest or title, or (y) 48 months prior to the end of the
     Basic Lease Term or any Renewal Lease Term then in effect or elected by
     the Facility Lessee or (b) Requisition of use of, or leasehold interest
     represented by the Undivided Interest or the Ground Interest or, upon or
     following the Post-FILOT Lease Conversion Date, title to, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall
     have resulted in the loss of possession of the Undivided Interest or all
     or any part of the Ground Interest that is required for the use or
     operation of the Facility; provided that in any case involving
     Requisition of use of the Facility, or all or any part of the Facility
     Site that is required for the use or operation, of the Facility, but not
     of the Owner Lessor's Undivided Interest or the Ground Interest or (from
     and after the Post-FILOT Lease Conversion Date) the Facility Lessee's
     title to the Ground Interest, such event shall be an Event of Loss only if

                                       11
<PAGE>
     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and the FILOT Lease and not, in
     any event, as a result of (a) investments, loans or other business
     activities of the Owner Participant or any of its Affiliates in respect
     of equipment or facilities similar in nature to the Facility or any part
     thereof or in any other electrical, cogeneration or other energy or
     utility related equipment or facilities or the general business or other
     activities of the Owner Participant or any of its Affiliates or the
     nature of any of the properties or assets from time to time owned,
     leased, operated, managed or otherwise used or made available for use by
     the Owner Participant or any of its Affiliates or (b) a failure of the
     Owner Participant to perform routine, administrative or ministerial
     actions the performance of which would not subject the Owner Participant
     or any of its Affiliates to any material adverse consequence (in the
     reasonable opinion of such Owner Participant acting in good faith);
     provided that the Facility Lessee and the Owner Lessor and Owner
     Participant agree to cooperate and to take reasonable measures to
     alleviate the source or consequence of any regulation constituting an
     Event of Loss under this paragraph (iv), so long as there shall be no
     adverse consequences to the Owner Lessor or Owner Participant as a result
     of such cooperation or the taking of reasonable measures (the events and
     circumstances described herein this paragraph (iv), a "Regulatory Event
     of Loss"); or

          (v)   if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Order shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

          (vi)   if elected by the Owner Participant, in the event that
     the FERC Order set forth in clause (v) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor; or

                                       12
<PAGE>
          (vii)   the FILOT Lease shall have been cancelled or terminated
     or shall otherwise cease to be in full force and effect otherwise than by
     reason of (a) an event constituting a Lease Event of Default or (b) the
     occurrence of the Post-FILOT Lease Conversion Date.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) above shall be the date on which the Facility
     Lessee receives the Owner Participant's election made in accordance with
     such clause (v). The date of occurrence of an Event of Loss in clause
     (vi) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (vi).
     The date of occurrence of an Event of Loss in clause (vii) shall be ten
     (10) Business Days after the date of such termination, cancellation or
     failure to be in full force and effect.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the FILOT Lease, (ii)(A)
     insurance proceeds, if any, payable to the Owner Lessor or the Owner
     Participant under insurance separately maintained by the Owner Lessor or
     the Owner Participant

                                       13
<PAGE>
     with respect to the Facility as permitted by Section 3(b) of Schedule
     5.31 to the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document or the FILOT Lease for the benefit of the Owner Lessor or the
     Owner Participant, (iii) any amount payable to the Owner Participant as
     the purchase price of the Owner Participant's right and interest in the
     Member Interest, (iv) all other fees expressly payable to the Owner
     Participant under the Operative Documents, (v) any payments in respect of
     interest, or any payments made on an After-Tax Basis, to the extent
     attributable to payments referred to in clause (i) through (vi) above;
     (vii) any amounts paid to the Owner Lessor as reimbursement for amounts
     expended pursuant to Section 20 of the Facility Lease; (viii) proceeds of
     the items referred to in clause (i) through (vii) above; and (ix) any
     rights to demand, collect, sue for, or otherwise receive and enforce
     payment of the foregoing amounts, including under the Calpine Guaranty,
     but without limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 850 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Gaffney, South Carolina and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (BR-2), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided fee
     interest (to the extent of the Owner Lessor's Percentage) in all of or a
     portion of the Project, other than the portion thereof constituting the
     Land.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                       14
<PAGE>
     "FACILITY SITE LEASE" shall mean the Facility Site Lease (BR-2), dated as
     of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean, with respect to the Facility Site
     Lease, Broad River Energy LLC, and with respect to the Springing Facility
     Site Lease, shall mean Owner Lessor.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean, with respect to the Facility Site
     Lease, Owner Lessor, and with respect to the Springing Facility Site
     Lease, shall mean Broad River Energy LLC.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease and Section 4.1 of the Springing Facility Site
     Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the FILOT Lease and the obligations relating thereto, (iii) the
     Undivided Interest or the Owner Lessor's Interest, as the case may be, is
     free and clear of all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens), (iv) taking into
     account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents. If the Fair Market
     Sales Value of the Owner Lessor's Interest is to be determined during the
     continuance of a Lease Event of Default or in connection with the
     exercise of remedies by the Owner Lessor pursuant to Section 17 of the
     Facility Lease, such value shall be determined by an Independent
     Appraiser appointed solely by the Owner Lessor on an "as-is", "where-is"
     and "with all faults" basis and shall take into account all Liens (other
     than Owner Lessor's Liens, Owner Participant's Liens and Indenture
     Trustee Liens); provided, however, in any such case where the Owner
     Lessor shall be unable to obtain constructive possession sufficient to
     realize the economic benefit of the Owner Lessor's Interest, Fair Market
     Sales Value of the Owner Lessor's Interest shall be deemed equal to $0
     (zero). If in any case other than in the preceding sentence the parties
     are unable to agree upon a Fair Market Sales Value of the Owner Lessor's
     Interest within 30 days after a request therefor has been made, the Fair
     Market Sales Value of the Owner Lessor's

                                       15
<PAGE>
     Interest shall be determined by appraisal pursuant to the Appraisal
     Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FACILITY SITE SUBLEASE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Springing Facility Site Sublease.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)   a determination by FERC of EWG status of the Facility Lessee and
      Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on or
     before the Closing Date;

          (iii)   either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)   an approval from FERC under Section 203 of the Federal
      Power Act for the transfer of jurisidictional facilities in the
     sale/leaseback contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner Lessor is an EWG.

     "FILOT LEASE" shall mean the Lease Agreement dated March 1, 2000 by and
     between the County and Facility Lessee, together with the Inducement
     Agreement.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

                                       16
<PAGE>
     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Springing Facility Site Lease.

     "FMV RENEWAL LEASE OPTION" with respect to the Initial Term, shall have
     the meaning set forth in Section 2.2(a)(iii) of the Springing Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Springing Facility Site Lease,
     shall have the meaning set forth in Section 19.3 of the Springing
     Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean, prior to the Post-FILOT Lease Conversion
     Date, the Owner Lessor's 25% undivided leasehold interest in the Facility
     Site, and upon and after the Post-FILOT Lease Conversion Date, the Owner
     Lessor's 25% undivided leasehold interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

                                       17
<PAGE>
     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such

                                       18
<PAGE>
     Indebtedness, the amount of such obligation being deemed to be the lesser
     of the value of such property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Springing Facility Site Lease.

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     FILOT Lease or the transactions contemplated thereby, (ii) Claims against
     or any act or omission of the Lease Indenture Company or the Indenture
     Trustee, or Affiliate thereof that is not related to, or that is in
     violation of, any of such Person's representations, warranties, covenants
     or agreements in an Operative Document or the transactions contemplated
     thereby or that is in breach of any covenant or agreement of the Lease
     Indenture Company or the Indenture Trustee specified therein, (iii) Taxes
     imposed upon the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof that are not indemnified against by the Facility Lessee
     pursuant to any Operative Document or (iv) Claims against or affecting
     the Lease Indenture Company or the Indenture Trustee, or any Affiliate
     thereof arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the interest
     of the Lease Indenture Company or the Indenture Trustee in the Lessor
     Estate, other than pursuant to the Operative Documents.

                                       19
<PAGE>
     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INDUCEMENT AGREEMENT" shall mean the Inducement Agreement and Millage
     Agreement dated June 15, 1999, between the County and the Facility Lessee.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Springing Facility Site
     Sublease, shall have the meaning set forth in Section 2.1(a) of the
     Springing Facility Site Sublease.

     "INITIAL TERM" with respect to the Springing Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Springing Facility
     Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "LAND" shall have the meaning thereof set forth in the FILOT Lease.

     "LAND PURCHASE OPTION" shall mean the right of the Owner Lessor, pursuant
     to Section 10.02 of the FILOT Lease, to acquire an undivided fee interest
     (to the extent of the Owner Lessor's Percentage) in the Land.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

                                       20
<PAGE>
     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under
     the Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such transaction is considered borrowed
     money indebtedness of the lessee for tax purposes but is classified as an
     operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease and with
     respect to the Springing Facility Site Lease or Springing Facility Site
     Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease and with
     respect to the Springing Facility Site Lease or Springing Facility Site
     Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,

                                       21
<PAGE>
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and the FILOT Lease and any of the foregoing,
     but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely

                                       22
<PAGE>
     corresponding to the remaining life of such Lessor Note and trading in
     the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents, (b) the Indenture Estate or the Lessor Estate,
     the security interests in the Lessor Estate, or (c) with respect to the
     Owner Participant's (but not the Certificateholders') interest in the
     Undivided Interest, the residual value or remaining useful life of the
     Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (BR-2), dated as of the Closing Date, between the Owner
     Lessor, as landlord, and the Facility Lessee, as tenant, and filed with
     the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (BR-2),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE LEASE" shall mean the Memorandum
     of Springing Facility Site Lease (BR-2), dated as of the Closing Date,
     between the Facility Lessee, as landlord, and the Owner Lessor, as
     tenant, and filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE SUBLEASE" shall mean the
     Memorandum of Springing Facility Site Sublease (BR-2), dated as of the
     Closing Date, between the Owner Lessor, as sublandlord, and the Facility
     Lessee, as subtenant, and filed with the Office of the Cherokee County
     Clerk of Court.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

                                       23
<PAGE>
     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an
     OP Guarantor in form and substance substantially in the form of Exhibit G
     to the Participation Agreement.

                                       24
<PAGE>
     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Springing Facility Site Lease, the Springing Facility
     Site Sublease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Tri-Party Agreement, the Calpine Guaranty, the OP Parent Guaranty (if
     any), the Certificate Purchase Agreement and the Ownership and Operation
     Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any replacement
     Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the
     assignment agreements executed and delivered pursuant to the Other Broad
     River Participation Agreements.

     "OTHER BROAD RIVER CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine
     pursuant to the Other Broad River Participation Agreements.

                                       25
<PAGE>
     "OTHER BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     Broad River Participation Agreements.

     "OTHER BROAD RIVER FACILITY LEASES" shall mean the other Broad River
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other Broad River Owner Lessors and the Facility Lessee, pursuant to
     which the Other Broad River Owner Lessors will lease the Other South
     Point Undivided Interests to the Facility Lessee.

     "OTHER BROAD RIVER FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other Broad
     River Owner Lessors and the Facility Lessee pursuant to which the Other
     Broad River Owner Lessors will sublease the Other Broad River Ground
     Interests to the Facility Lessee.

     "OTHER BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other Broad River Collateral Trust Indentures.

     "OTHER BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other Broad River Undivided
     Interests and the Other Broad River Ground Interests to the Other Broad
     River Owner Lessors, and the lease by the Other Broad River Owner Lessors
     of the Other Broad River Undivided Interests and the Other Broad River
     Ground Interests to the Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the Overall
     Transaction.

     "OTHER BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other Broad River Owner Lessors pursuant
     to the Other Broad River Operative Documents.

     "OTHER BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-3, LLC and Broad River OL-4, LLC.

     "OTHER BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "OTHER BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other Broad River Lease Transactions.

     "OTHER BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other Broad River
     Owner Lessor, the Other Broad River Lessor Manager, Other Broad River
     Owner Participant, Other Broad River Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (BR-1),
     Participation Agreement (BR-3) and Participation Agreement (BR-4), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) assign and transfer to the applicable
     Other Broad River Owner Lessors certain

                                       26
<PAGE>
     undivided leasehold interests in the Facility and the Facility Site, and
     (b) lease from the applicable Other Broad River Owner Lessors such
     undivided leasehold interest in the Facility and the Facility Site
     pursuant to the Other Broad River Facility Leases and the Other Broad
     River Facility Site Leases, respectively.

     "OTHER BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest (or, upon or following the Post-FILOT Lease Conversion
     Date, the fee interest) in the Facility not conveyed to the Owner Lessor
     under the Assignment Agreement (or, in the case of the fee interest,
     pursuant to the transactions contemplated by Article XIV of the
     Participation Agreement and the Other Broad River Participation
     Agreement).

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other Broad River
     Calpine Guaranties, the South Point Calpine Guaranties and the RockGen
     Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other Broad River
     Facility Leases, the South Point Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other Broad River
     Owner Lessors, the South Point Owner Lessors and the RockGen Owner
     Lessors.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the FILOT Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean Broad River OL-2, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: Broad River OL-2, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby, (ii) Claims against
     or any act or omission of the Owner Lessor, the Trust Company or the
     Lessor Manager or Affiliate thereof that is not related to, or that is in
     violation of, any Operative Document or the FILOT Lease (giving

                                       27
<PAGE>
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby or that is in breach
     of any covenant or agreement of the Owner Lessor, the Trust Company or
     the Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents and the FILOT Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-2, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility
     Sites, or any part of any thereof or interest therein arising as a result
     of (i) Claims against or any act or omission of the Owner Participant
     that is not related to, or that is in violation of, any Operative
     Document or the transactions contemplated thereby or that is in breach of
     any covenant or agreement of the Owner Participant set forth therein,
     (ii) Taxes against the Owner Participant that are not indemnified against
     by the Facility Lessee pursuant to the Operative Documents or (iii)
     Claims against or affecting the Owner Participant arising out of the
     voluntary or involuntary transfer by the Owner Participant of any portion
     of the interest of the Owner Participant in the Member Interest, other
     than any transfer (x) pursuant to the exercise of any of the Facility
     Lessee's (or any Affiliate thereof) rights under the Operative Documents
     or (y) during the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other Broad River Owner Lessors.

                                       28
<PAGE>
     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of
     October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass
     Through Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

                                       29
<PAGE>
     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the FILOT Lease, as well as
     the rights of sublessees and/or assignees to the extent set forth in or
     expressly permitted pursuant to the Facility Lease or any other Operative
     Document, (b) as to the Facility Lessee, Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or
     being contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that
     any taxes, assessments or other charges determined to be due will be
     promptly paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to
     criminal liability or material

                                       30
<PAGE>
     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, (e) Liens
     arising out of judgments or awards, but only so long as an appeal or
     proceeding for review is being prosecuted in good faith and so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, and (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, or are fully covered by insurance, (f) mineral rights the use
     and enjoyment of which do not materially interfere with the use and
     enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil
     liability on the part of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other Broad River Owner Lessors and the Other Broad
     River Indenture Trustees in the Facility, the Facility Site and the
     Ownership and Operation Agreement, (l) the interests of the Facility
     Lessee, the Other Broad River Owner Participants, the Other Broad River
     Owner Lessors, the Other Broad River Lessor Managers, the Other Broad
     River Indenture Trustees, and Pass Through Trustees under any of the
     Other Broad River Operative Documents, (m) the Ownership and Operation
     Agreement, (n) the interest of the co-owners of the Facility as tenants
     in common in the Facility and the rights of such owners under the
     Ownership and Operation Agreement and (o) the rights of the County with
     respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the

                                       31
<PAGE>
     Facility Lessee or a Subsidiary of the Facility Lessee or an ERISA
     Affiliate, and each such plan for the five year period immediately
     following the latest date on which Facility Lessee, or a Subsidiary of
     Facility Lessee or an ERISA Affiliate maintained, contributed to or had an
     obligation to contribute to such plan.

     "POST-FILOT LEASE CONVERSION DATE" shall mean the date on which all of
     the following events shall have occurred:

          (a)   the closing of the sale of an undivided fee interest in
     the Land (to the extent of the Owner Lessor's Percentage) by the County
     to the Facility Lessee upon exercise by the Owner Lessor of the Land
     Purchase Option and the designation by the Owner Lessor to the County of
     the Facility Lessee (or its designee) as the entity to which an undivided
     fee interest in the Land (to such extent) is to be conveyed, pursuant to
     which title to the Land (to such extent) vests in the Facility Lessee,
     and the termination of the FILOT Lease pursuant to Section 10.02 thereof;

          (b)   the closing of the sale of an undivided fee interest in
     the Facility by the County to the Owner Lessor upon exercise by the Owner
     Lessor of the Facility Purchase Option, pursuant to which good and valid
     fee title an undivided fee interest to the Facility (to the extent of the
     Owner Lessor's Percentage) vests in the Owner Lessor;

          (c)   the commencement of the full force and effectiveness of the
     Springing Facility Site Lease and the Springing Facility Site Sublease;

          (d)   except for the termination of the FILOT Lease and the
     Facility Site Lease, no Operative Document shall cease to be in full
     force and effect as a result of the transactions in clauses (a), (b) or
     (c) above;

          (e)   receipt by the Owner Lessor, the Owner Participant and (if
     the Lien of the Collateral Trust Indenture has not been discharged) the
     Indenture Trustee of the following (1) evidence of the obtaining of all
     Governmental Approvals and third-party consents which are reasonably
     necessary or advisable in connection with the transactions referred to in
     clauses (a) through (d) above, (2) evidence satisfactory to the Indenture
     Trustee (including without limitation, evidence that all filings and
     recordings, if any, necessary under Applicable Law shall have been duly
     made and all filing, recordation, transfer and other fees payable in
     connection therewith shall have been paid) that the Lien of the
     Collateral Trust Indenture on the Indenture Estate shall continue in full
     force and effect and with the same priority following the consummation of
     such transactions, and (3) appropriate endorsements, reasonably
     satisfactory to such Persons, to required property title insurance
     policies to reflect the new fee owners of the Land and the other portions
     of the Project.

          (f)   the receipt by the Owner Participant and, so long as the
     Lien of the Collateral Trust Indenture has not been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustees, of
     opinions of counsel with respect to the accomplishment of the foregoing
     matters and other matters substantially similar to these covered by the
     opinions of counsel to the Facility Lessee rendered on the Closing Date,

                                       32
<PAGE>
     which opinions shall be satisfactory in form and substance to the Owner
     Participant and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, the Indenture Trustee and the Pass
     Through Trustees.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROJECT" shall have the meaning set forth in the FILOT Lease.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in administrative guidance has been issued by the Internal Revenue
     Service or the Department of Treasury and which has been published in the
     Federal Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

                                       33
<PAGE>
     "PURCHASE OPTION" shall mean, collectively, the Facility Purchase Option
     and the Land Purchase Option.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
     refinances Indebtedness of another Restricted Subsidiary) including
     Indebtedness that refinances Refinancing Indebtedness; provided, however,
     that (i) if the Indebtedness being refinanced is contractually
     subordinated in right of payment to the Obligations, the Refinancing
     Indebtedness shall be contractually subordinated in right of payment to
     such Obligations to at least the same extent as the Indebtedness being
     refinanced, (ii) the Refinancing Indebtedness is scheduled to mature
     either (a) no earlier than the Indebtedness being refinanced or (b) after
     the Stated Maturity of the Obligations, (iii) the Refinancing
     Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average
     Life of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the

                                       34
<PAGE>
     Guarantor or a Restricted Subsidiary that refinances Indebtedness of an
     Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL TERM" with respect to the Springing Facility Site Sublease,
     shall have the meaning set forth in Section 2.1(b).

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Springing Facility Site Lease, shall
     have the meaning set forth in Section 2.2(b) of the Springing Facility
     Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases

                                       35
<PAGE>
     thereafter (except for the last Rent Payment Period which period shall
     commence on May 31, 2031 and end on, and include, October 18, 2031, each
     six-month period commencing on each Rent Payment Date through and
     including the following May 30 or November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

     "ROCKGEN" shall mean RockGen Energy LLC.

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

                                       36
<PAGE>
     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests
     in the RockGen Facility Site conveyed to the RockGen Owner Lessors under
     the RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting
     on behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground Interest to the RockGen
     Facility Lessee on substantially the same terms and conditions as under,
     and dated the same date as, the RockGen Overall Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen

                                       37
<PAGE>
     Owner Lessors certain undivided interests in the RockGen Facility, and
     (b) lease from the applicable RockGen Owner Lessors such undivided
     interest in the RockGen Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the RockGen Facility conveyed to the RockGen Owner Lessors
     under the RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Sringing
     Facility Site Lease, shall have the meaning set forth in Section
     2.2(a)(ii) of the Springing Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other Broad River Facility Lease.

                                       38
<PAGE>
     "SIGNIFICANT SUBSIDIARY" means any Subsidiary (other than an Unrestricted
     Subsidiary) that would be a "Significant Subsidiary" of the Guarantor
     within the meaning of Rule 1-02 under Regulation S-X promulgated by the
     SEC.

     "SITE LEASE EVENT OF DEFAULT" with respect to the Springing Facility Site
     Lease, shall have the meaning set forth in Section 14.1 of the Springing
     Facility Site Lease.

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     South Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner
     Lessor will lease the applicable South Point Ground Interests to South
     Point Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner
     Lessor will lease the applicable South Point Ground Interest to the South
     Point Facility Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Assignment Agreements.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and
     the South Point Ground Interests to the South Point Owner Lessors, and
     the simultaneous lease of the South Point Undivided Interests and South
     Point Ground Interests to the South Point Facility Lessee

                                       39
<PAGE>
     on substantially the same terms and conditions as under, and dated the
     same date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3)
     and Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee
     has agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the South Point Facility
     and the South Point Facility Site, and (b) lease from the applicable
     South Point Owner Lessors such undivided leasehold interest in the South
     Point Facility and the South Point Facility Site pursuant to the South
     Point Facility Leases and the South Point Facility Site Leases,
     respectively.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests (or upon the Post-FILOT Lease Conversion Date, undivided fee
     interests) in the Broad River Facility conveyed to the South Point Owner
     Lessors under the South Point Assignment Agreement.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)  (i)   if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

                                       40
<PAGE>
     (b)  (i)   any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)  the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

     "SPRINGING FACILITY SITE LEASE" shall mean the Springing Facility Site
     Lease (BR-2) dated as of October 18, 2001 by and between the Facility
     Lessee and Owner Lessor pursuant to which the Facility Lessee shall lease
     the Ground Interest to the Owner Lessor.

     "SPRINGING FACILITY SITE SUBLEASE" shall mean the Springing Facility Site
     Sublease (BR-2) dated as of October 18, 2001, by and between Owner Lessor
     and Facility Lessee pursuant to which the Owner Lessor shall sublease the
     Ground Interest back to the Facility Lessee.

     "SPRINGING OPERATIVE DOCUMENTS" shall mean, the Springing Facility Site
     Lease and the Springing Facility Site Sublease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

               "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of
the Facility Site, to be dated July 21, 2001 and revised October 18, 2001,
which inter alia, will show the location of the Facility Site.

                                       41
<PAGE>
     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (BR-2),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Springing Facility Site
     Lease, shall have, collectively, the meaning set forth in Section 18.1 of
     the Springing Facility Site Lease.

     "TERM" with respect to the Facility Site Lease, shall have the meaning
     set forth in Section 2.1(a) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

                                       42
<PAGE>
     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit O: (a) Consent and Agreement
     from Carolina Power and Light Company ("CP&L") with respect to the Power
     and Purchase Agreement, dated as of December 31, 1998 (as amended),
     between CP&L and the Facility Lessee: (b) Consent and Agreement from CP&L
     with respect to the Power Purchase Agreement, dated as of July 7, 2000
     (as amended), between CP&L and the Facility Lessee; and (c) Consent and
     Agreement from Duke Electric Transmission, a division of Duke Energy
     Corporation ("Duke") with respect to the Interconnection Agreement, dated
     as of February 5, 2000 (as amended), between Duke and the Facility Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean Lawyers Title Insurance Corporation.

     "TITLE POLICY" shall mean, the title insurance policy (#FT027141.01214)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)   the reasonable costs of reproducing and printing the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and all costs and
     fees, including but not limited to filing and recording fees and
     recording, transfer, mortgage, intangible and similar taxes in connection
     with the execution, delivery, filing and recording of the Facility Lease,
     the Facility Site Lease, and any other Operative Document and any other
     document required to be filed or recorded pursuant to the provisions
     hereof or of any other Operative Document and the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or as otherwise
     reasonably required by the Owner Lessor or the Indenture Trustee and
     surveyor fees;

     (ii)   the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of McNair Law Firm, P.A., South
     Carolina, counsel to the Facility Leasee;

                                       43
<PAGE>
     (iv)   the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)   the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)   the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the FILOT Lease;

     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)   the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)   the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)   the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

                                       44
<PAGE>
     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)   the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the FILOT Lease pursuant to the
     Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRI-PARTY AGREEMENT" shall mean the Tri-Party Agreement, Consent,
     Acknowledgement and Notice dated as of October 1, 2001 by and among the
     County, the Facility Lessee, the Owner Lessor and the Other Broad River
     Owner Lessors.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

                                       45
<PAGE>
     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     leasehold interest (or, upon and following the Post-FILOT Lease
     Conversion Date, the Owner Lessor's 25% undivided fee interest) in the
     Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       46

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.9
<SEQUENCE>12
<FILENAME>f80168ex4-22_9.txt
<DESCRIPTION>EXHIBIT 4.22.9
<TEXT>
<PAGE>
                                                                  Exhibit 4.22.9

                                                                  EXECUTION COPY

                         PARTICIPATION AGREEMENT (BR-3)

                          Dated as of October 18, 2001

                                      among

                  BROAD RIVER ENERGY LLC, as Facility Lessee,

                    BROAD RIVER OL-3, LLC, as Owner Lessor,

    WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-3, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees

                              BROAD RIVER PROJECT

===============================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>

SECTION 1.  DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ...........   3

SECTION 2.PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ..........................   3

  Section 2.1   Agreements to Participate .........................................   3

  Section 2.2   Closing Date; Procedure for Participation. ........................   4

  Section 2.3   Transaction Costs. ................................................   6

SECTION 3.REPRESENTATIONS AND WARRANTIES ..........................................   6

  Section 3.1   Representations and Warranties of the Facility Lessee ..............  6

  Section 3.2   Representations and Warranties of the Owner Lessor ................  17

  Section 3.3   Representations and Warranties of the Lessor Manager
                 and the Trust Company ............................................  18

  Section 3.4.  Representations and Warranties of the Owner Participant ...........  20

  Section 3.5.  Representations and Warranties of Indenture Trustee and
                 the Lease Indenture Company ......................................  22

  Section 3.6   Representations, Warranties and Covenants of the Pass
                Through Trustees and the Pass Through Company .....................  24

SECTION 4.CLOSING CONDITIONS ......................................................  25

  Section 4.1   Completion of the Facility ........................................  27

  Section 4.2   Operative Documents ............................................... 27

  Section 4.3   Certificates and the Lessor Notes ................................. 27

  Section 4.4   Equity Investment ................................................. 27

  Section 4.5   Organizational Documents .......................................... 27

  Section 4.6   Representations and Warranties .................................... 27

  Section 4.7   Defaults, Events of Default, Events of Loss ....................... 27

  Section 4.8   Regulatory Approvals .............................................. 27

  Section 4.9   Consents .......................................................... 28

  Section 4.10  Governmental Actions .............................................. 29
</TABLE>
                                       i

<PAGE>

                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>
  Section 4.11  Insurance ......................................................... 29

  Section 4.12  Ratings ........................................................... 29

  Section 4.13  Environmental Report .............................................. 29

  Section 4.14  Surveys ........................................................... 29

  Section 4.15  Appraisal; Condition of the Facility .............................. 29

  Section 4.16  Letter from the Appraiser ......................................... 29

  Section 4.17  Other Reports ..................................................... 30

  Section 4.18  Opinion with Respect to Certain Tax Aspects ....................... 30

  Section 4.19  Opinions of Counsel ............................................... 30

  Section 4.20  Recordings and Filings ............................................ 30

  Section 4.21  Conditions to Closing ............................................. 30

  Section 4.22  Taxes ............................................................. 30

  Section 4.23  No Changes in Applicable Law ...................................... 31

  Section 4.24. Registered Agent for the Facility Lessee and the Owner
                Lessor ............................................................ 31

  Section 4.25  Operating Lease Treatment ......................................... 31

  Section 4.26  Rent Adjustments .................................................. 31

  Section 4.27  Title Insurance ................................................... 31

  Section 4.28  Parent Guaranty ................................................... 31

  Section 4.29  Letter as to Number of Offerees ................................... 31

  Section 4.30  Lien Search ....................................................... 32

  Section 4.31  Litigation ........................................................ 32

  Section 4.32  No Material Adverse Change ........................................ 32

  Section 4.33  Private Placement Number .......................................... 32

  Section 4.34  Proceedings and Documents ......................................... 32
</TABLE>
                                       ii

<PAGE>

                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>

  Section 4.35  No Proposed Tax Law Change                                          32

  Section 4.36  Payment of Fees and Expenses ...................................... 32

  Section 4.37  Corrective Ordinance .............................................. 32

SECTION 5 COVENANTS OF FACILITY LESSEE AND GUARANTOR .............................. 33

  Section 5.1   Maintenance of Existence .......................................... 33

  Section 5.2.  Merger, Consolidation, Sale of Substantially All Assets ........... 33

  Section 5.3   Guaranty and Contingent Obligations ............................... 33

  Section 5.4   Assignment of Rights .............................................. 34

  Section 5.5   Lessor Manager Fees ............................................... 34

  Section 5.6   Conduct of Business, Properties, Etc. ............................. 34

  Section 5.7   Obligations ....................................................... 34

  Section 5.8   Books, Records, Access ............................................ 34

  Section 5.9   Other Information. ................................................ 35

  Section 5.10  Warranty of Title to Facility Site. ............................... 35

  Section 5.11  ERISA ............................................................. 36

  Section 5.12  Certain Contracts and Agreements .................................. 36

  Section 5.13  Certain Costs ..................................................... 36

  Section 5.14  Limitations on Liens .............................................. 37

  Section 5.15  Investments ....................................................... 37

  Section 5.16  Intentionally Deleted. ............................................ 37

  Section 5.17  Regulations ....................................................... 37

  Section 5.18  Partnerships ...................................................... 37

  Section 5.19  Dissolution ....................................................... 37

  Section 5.20  Termination of Operative Documents; Delegation of
                Authority ......................................................... 37
</TABLE>
                                       iii

<PAGE>

                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>

  Section 5.21  Name and Location ................................................. 39

  Section 5.22  Use of Facility Site .............................................. 39

  Section 5.23  Abandonment of Facility ........................................... 39

  Section 5.24  Taxes, Other Government Charges and Utility Charges ............... 39

  Section 5.25  Compliance with Laws, Instruments, Etc. ........................... 39

  Section 5.26  PUHCA ............................................................. 40

  Section 5.27  Further Assurances ................................................ 40

  Section 5.28  No Subsidiaries ................................................... 41

  Section 5.29  Permitted Business ................................................ 41

  Section 5.30  Support Arrangements .............................................. 41

  Section 5.31  Insurance ......................................................... 41

  Section 5.32  Tax Status ........................................................ 41

  Section 5.33  Transmission Assets. .............................................. 42

SECTION 6.COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE
           LESSOR MANAGER ......................................................... 42

  Section 6.1   Compliance with the LLC Agreement ................................. 42

  Section 6.2   Owner Lessor's Liens .............................................. 43

  Section 6.3   Amendments to Operative Documents ................................. 43

  Section 6.4   Transfer of the Owner Lessor's Interest ........................... 43

  Section 6.5   Owner Lessor; Lessor Estate ....................................... 43

  Section 6.6   Limitation on Indebtedness and Actions ............................ 43

  Section 6.7   Change of Location ................................................ 43

  Section 6.8   Bankruptcy of Owner Lessor. ....................................... 43

SECTION 7.COVENANTS OF THE OWNER PARTICIPANT ...................................... 44

  Section 7.1   Restrictions on Transfer of Member Interest. ...................... 44
</TABLE>
                                       iv

<PAGE>

                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>


  Section 7.2   Owner Participant's Liens ......................................... 46

  Section 7.3   Amendments or Revocation of LLC Agreement ......................... 46

  Section 7.4   Bankruptcy Filings ................................................ 46

  Section 7.5   Instructions ...................................................... 47

  Section 7.6   Right of First Refusal ............................................ 47

  Section 7.7   Prohibition on Fundamental Changes ................................ 47

  Section 7.8   Appointment of Successor Lessor Manager ........................... 49

  Section 7.9   Cooperation ....................................................... 49

SECTION 8 COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH
          TRUSTEES ................................................................ 49

  Section 8.1   Indenture Trustee's Liens ......................................... 49

  Section 8.2   Pass Through Trustees' Covenant Not to Transfer Lessor
                Notes ............................................................. 50

SECTION 9 INDEMNIFICATION ......................................................... 50

  Section 9.1   General Indemnity. ................................................ 50

  Section 9.2   General Tax Indemnity. ............................................ 57

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ............................ 66

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ............ 66

  Section 11.1  Financing Improvements ............................................ 66

  Section 11.2  Optional Refinancing of Lease Debt ................................ 68

  Section 11.3  Cooperation ....................................................... 69

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE
            OTHER AMOUNTS ......................................................... 69

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE
            AND TRANSFERS ......................................................... 70

  Section 13.1  Transfer of the Facility Lessee Ownership. ........................ 70

  Section 13.2  Special Facility Lessee Transfers ................................. 72

SECTION 14 OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS ............................ 73
</TABLE>
                                       v

<PAGE>

                                TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>


SECTION 15 MISCELLANEOUS .......................................................... 75

  Section 15.1  Consents; Cooperation ............................................. 75

  Section 15.2  Successor Owner Lessor ............................................ 75

  Section 15.3  Bankruptcy of Lessor Estate ....................................... 75

  Section 15.4  Amendments and Waivers ............................................ 75

  Section 15.5  Notices ........................................................... 75

  Section 15.6  Survival .......................................................... 80

  Section 15.7  Successors and Assigns ............................................ 80

  Section 15.8  Business Day ...................................................... 80

  Section 15.9  Governing Law ..................................................... 80

  Section 15.10 Severability ...................................................... 80

  Section 15.11 Counterparts ...................................................... 80

  Section 15.12 Headings and Table of Contents .................................... 81

  Section 15.13 Limitation of Liability. .......................................... 81

  Section 15.14 Consent to Jurisdiction; Waiver of Trial by Jury;
                Process Agent ..................................................... 82

  Section 15.15 Further Assurances ................................................ 83

  Section 15.16 Effectiveness ..................................................... 83

  Section 15.17 Measuring Life .................................................... 83

  Section 15.18 No Partnership, Etc. .............................................. 83

  Section 15.19 Entire Agreement .................................................. 83

  Section 15.20 Public Utility Regulation ......................................... 84

  Section 15.21 Confidentiality of Information .................................... 84

  Section 15.22 Reliance .......................................................... 85

  Section 15.23 Amendments, Etc. .................................................. 85

</TABLE>

                                      vi

<PAGE>

                            TABLE OF CONTENTS (continued)

                                                                   PAGE

                                      vii

<PAGE>

APPENDICES:

          Appendix A   Definitions and Rules of Interpretation

<TABLE>
<S>                     <C>
SCHEDULES:

     Schedule 1-A       Equity Investment
     Schedule 1-B       Indenture Trustee's Account
     Schedule 1-C       Owner Participant's Account
     Schedule 2         Pricing Assumptions
     Schedule 3.1(h)    Post-FILOT Lease Recordings, Filings and
                           Notifications
     Schedule 3.1(m)    Environmental Matters - Hazardous Substances
     Schedule 4.20      Recording and Filings
     Schedule 5.31      Maintenance of Insurance
EXHIBITS:

     Exhibit A          Description of Facility
     Exhibit B          Form of Assignment Agreement (BR-3)
     Exhibit C          Form of Facility Lease Agreement
     Exhibit D          Form of Facility Site Lease
     Exhibit E          Intentionally Omitted
     Exhibit F          Form of Pass Through Trust Agreement
     Exhibit G          Form of OP Parent Guaranty
     Exhibit H          Form of Calpine Guaranty
     Exhibit I          Form of Collateral Trust Indenture
     Exhibit J          Form of OP Assignment and Assumption Agreement
     Exhibit K          List of Competitors
     Exhibit L          Form of Guarantor Assignment and Assumption Agreement
     Exhibit M          Form of Springing Facility Site Lease
     Exhibit N          Form of Springing Facility Site Sublease
     Exhibit O          Forms of Consents
</TABLE>

                                      viii

<PAGE>

                           PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) BROAD RIVER ENERGY LLC (herein, together with
     its successors and permitted assigns, called the "Facility Lessee"), a
     limited liability company organized under the laws of the State of
     Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (BR-3), (the "Calpine Guaranty"), (iii) BROAD
     RIVER OL-3, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-3, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its successors
     and permitted assigns, called the "Indenture Trustee", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Lease Indenture Company"), (vi) STATE STREET BANK AND TRUST
     COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
     association organized and existing under the laws of the United States,
     not in its individual capacity, except as expressly provided herein, but
     solely as trustee under each of the Pass Through Trust Agreements (herein
     in its capacity as trustee under the Pass Through Trust Agreements, the
     "Pass Through Trustees", and herein in its individual capacity, together
     with its successors and permitted assigns, the "Pass Through Company"),
     and (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and existing under the laws of the United
     States, not in its individual capacity except as expressly provided
     herein, but solely as independent manager under the LLC Agreement (herein
     in its capacity as independent manager under the LLC Agreement, together
     with its successors and permitted assigns, called the "Lessor Manager",
     and herein in its individual capacity, together with its successors and
     permitted assigns, called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, in March, 2000, the County and the Facility Lessee entered
into a fee-in-lieu of taxes transaction, pursuant to which the Facility Lessee
conveyed to the County, and the County leased back to the Facility Lessee,
pursuant to the FILOT Lease, a 850 MW gas-fired simple cycle merchant power
plant located near Gaffney, South Carolina, owned by the County and more fully
described in Exhibit A hereto ("Facility");

<PAGE>

          WHEREAS, Facility Lessee desires to assign and transfer to the Owner
Lessor the Undivided Interest and the Ground Interest pursuant to the
Assignment Agreement;

          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
acquire and accept such assignment and transfer of the Undivided Interest and
the Ground Interest from the Facility Lessee pursuant to the Assignment
Agreement, and to lease the Undivided Interest (excluding the Facility Purchase
Option) and the Ground Interest (excluding the Land Purchase Option) to the
Facility Lessee pursuant to the Facility Lease and the Facility Site Lease,
respectively;

          WHEREAS, the Facility Lessee desires to sublease the Undivided
Interest (excluding the Facility Purchase Option) and lease the Ground Interest
(excluding the Land Purchase Option) from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, on the Closing Date, the Facility Lessee has executed (i) a
Springing Facility Site Lease (pursuant to which, upon the Post-FILOT Lease
Conversion Date, the Springing Facility Site Lease shall become effective and
the Facility Lessee shall lease the Ground Interest to the Owner Lessor
pursuant thereto) and (ii) a Springing Facility Site Sublease (pursuant to
which, upon the Post-FILOT Lease Conversion Date, the Springing Facility Site
Sublease shall become effective and the Owner Lessor shall sublease the Ground
Interest back to the Facility Lessee pursuant thereto);

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from Facility Lessee pursuant to the
Assignment Agreement, and lease the Undivided Interest (excluding the Land
Purchase Option) and the Ground Interest (excluding the Facility Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the
Lessor Notes to the relevant Pass Through Trust and to grant to the Indenture
Trustee liens and security interests in the Indenture Estate to secure its
obligations thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
 on the Closing Date;

                                      2

<PAGE>

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed all
of the obligations of the Facility Lessee under the Participation Agreement and
as of the Closing Date shall guarantee all of the obligations of the Facility
Lessee under the other Operative Documents to which the Facility Lessee is a
party; and

          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The rules of interpretation
set forth in Appendix A shall apply to terms used in this Participation
Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee shall assign and transfer the Undivided Interest and the
     Ground Interest to the Owner Lessor on the terms and conditions set forth
     in the Assignment Agreement and the Owner Lessor agrees to acquire and
     accept such assignment and transfer of the Undivided Interest and the
     Ground Interest from Facility Lessee, and each agrees to execute and
     deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the Ground Interest (except the Land Purchase Option)
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility

                                      3

<PAGE>

     Lessee agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the corresponding Ground Interest (except the Land
     Purchase Option) from the Owner Lessor, and each agrees to execute and
     deliver the respective Facility Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the FILOT Lease
     pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement;

effective upon the occurrence of the Post-FILOT Lease Conversion Date, the
     Facility Lessee agrees to lease the Ground Interest to the Owner Lessor on
     the terms and conditions set forth in the Springing Facility Site Lease
     and the Owner Lessor agrees to sublease the Ground Interest back to the
     Facility Lessee on the terms and conditions set forth in the Springing
     Facility Site Sublease;

the Owner Lessor agrees to exercise the Purchase Options pursuant to, and to
     the extent provided in, Section 14.1 hereof; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner

                                      4

<PAGE>

     Participant shall make the Owner Participant's Commitment available not
     later than 10:00 a.m., New York City time, on the Scheduled Closing Date,
     by transferring or delivering such amount, in funds immediately available
     on such Scheduled Closing Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c) above, use reasonable efforts to invest such funds from time to
     time at the written direction of Calpine, and at Calpine's sole expense
     and risk, in Permitted Investments until such funds can be returned to the
     Owner Participant. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not occur
     on such date and the Owner Lessor has not returned such funds to the Owner
     Participant on or before 1:00 p.m., New York City time, on such date, then
     Calpine shall reimburse the Owner Participant for loss of the use of such
     funds at the Applicable Rate for each day, from and including the day that
     such funds were made available to the Owner Lessor by the Owner
     Participant to, but excluding the earlier of (i) the day that such funds
     have been returned to the Owner Participant pursuant to Section 2.2(c)
     (funds received by the Owner Participant after 1:00 p.m., New York City
     time, of any day shall be deemed to be returned on the next succeeding
     Business Day) and (ii) the Closing Date. Subject to payment for the
     account of the Owner Participant of any reimbursement for loss of use of
     funds due to it at the Applicable Rate, any net gain realized on the
     investment of such funds (including interest) shall be paid to Calpine by
     the Owner Lessor on the earlier of (i) the date such funds are returned to
     the Owner Participant pursuant to Section 2.2(c) and (ii) the Closing
     Date. The Owner Lessor shall not be liable for any interest on or loss
     resulting from such investments and, if such funds are made available to
     the Owner Lessor and utilized to pay the Purchase Price or Transaction
     Costs on the Closing Date, Calpine shall reimburse the Owner Lessor for
     any net loss realized on the investment of such funds. If such funds are
     not so utilized, Calpine shall, in

                                      5

<PAGE>

     addition to its obligation to reimburse the Owner Participant for loss of
     use as provided above, reimburse the Owner Participant on the date such
     funds are returned to the Owner Participant for any net loss realized on
     the investment of such funds. In order to obtain funds for payment of the
     Purchase Price or Transaction Costs or to return funds made available to
     the Owner Lessor by the Owner Participant, the Owner Lessor is authorized
     to sell any investments or obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,500,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs; provided, however, that Calpine shall not be
     obligated to pay Transaction Costs incurred by the Owner Participant if
     the Overall Transaction is not consummated on the basis of the provisions
     of this Agreement due to a failure of the Owner Participant to satisfy any
     condition to the Closing required to be satisfied by the Owner
     Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Delaware. The Facility Lessee is duly licensed or qualified and
     in good standing in each jurisdiction where the character of its
     properties or the nature of its activities makes such qualification
     necessary, and the Facility Lessee has the power and authority to (x) own
     or hold under lease the

                                      6

<PAGE>

     property it purports to own or hold under lease, (y) carry on its business
     as now being conducted and as presently proposed to be conducted and (z)
     take all actions as may be necessary to consummate the transactions
     contemplated hereunder and under the other Operative Documents to which
     each is a party. The Facility Lessee is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee, in accordance with their respective terms, except as the same may
     be limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the rights of creditors
     generally and by general principles of equity.

               1.   Non-Contravention.   (1)   The execution, delivery and
                    performance by the Facility Lessee of this Agreement and
                    each of the other Operative Documents to which it is or
                    will be a party, the consummation by the Facility Lessee of
                    the transactions contemplated hereby and thereby, and
                    compliance by the Facility Lessee with the terms and
                    provisions hereof and thereof, do not and will not (i)
                    contravene any Applicable Law binding on the Facility
                    Lessee or its property, or its organizational documents,
                    (ii) constitute a default by the Facility Lessee under, or
                    result in the creation of any Lien upon the property of the
                    Facility Lessee (other than pursuant to any Operative
                    Document) under any indenture, mortgage or other material
                    contract, agreement or instrument to which the Facility
                    Lessee is a party or by which the Facility Lessee or any of
                    its property is bound, (iii) contravene any Organic
                    Document of the Facility Lessee or (iv) require the consent
                    or approval of any Person which has not already been
                    obtained, in each case with respect to clauses (i), (ii)
                    and (iv) above, which would reasonably be expected to have
                    a Material Adverse Effect.

              (2)   Neither the assignment and transfer of the Undivided
Interest and the Ground Interest by Facility Lessee to the Owner Lessor, nor
the grant by the Owner Lessor to the Indenture Trustee of the Liens and
security interests in the Undivided Interest, the Ground Interest and the
applicable Operative Documents executed in connection therewith to secure its
obligations thereunder does or will constitute a default by the Facility Lessee
or the Owner Lessors under the Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of

                                      7

<PAGE>

     any transferee or assignee) and assuming that none of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them or any
     assignee or transferee of any of the Owner Participant (or any Affiliate
     of any such transferee or assignee) is an "electric utility" or a "public
     utility" or a "public utility holding company" or any similar entity
     subject to public utility regulation under any Applicable Law immediately
     prior to the Closing, with respect to the participation by the Owner
     Participant, the Owner Lessor in the Overall Transaction, other than (i)
     any Permit where the failure to obtain or maintain such Permit would not
     be reasonably likely to result in a Material Adverse Effect, (ii) the FERC
     Orders, (iii) as may be required under Applicable Law providing for the
     supervision or regulation of the Owner Participant, the Owner Lessor or
     any Affiliate of any of them as a result of investing, lending or other
     commercial activity in which the Owner Participant, the Owner Lessor or
     any Affiliate of any of them is or may be engaged other than the
     transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of which
     would not reasonably be expected to have a Material Adverse Effect or
     involve any danger of criminal or material civil liability being incurred
     by the Owner Participant, the Owner Lessor, the Indenture Trustee or the
     Pass Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any relinquishment
     of the use or operation of the Facility by the Facility Lessee, (viii)
     appropriate filing and recording to perfect the Lien of the Collateral
     Trust Indenture, if required, and the ownership and leasehold interests
     conveyed pursuant to this Agreement, or (ix) as may be required under any
     Applicable Law enacted or adopted after the date hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the FILOT
     Lease or the ability of the Facility Lessee or such other Calpine Party to
     perform its obligations under the Operative Documents and the FILOT Lease
     to which the Facility Lessee or such other Calpine Party is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to have a Material Adverse Effect or otherwise materially adversely affect
     the Undivided Interest leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

                                      8

<PAGE>

Location of Chief Executive Office and Principal Place of Business, etc. (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site and the Operative Documents is located at: c/o Calpine
     Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical to the
condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Leasehold Interest; Liens.   (1)   On and before the Closing Date, the Facility
     Lessee has (i) good and valid leasehold interest to the Facility, free and
     clear of all Liens other than Permitted Closing Date Liens, and (ii) good
     and valid leasehold interest to the Facility Site free and clear of all
     Liens other than Permitted Closing Date Liens.

     (2)   Upon execution and delivery of the Operative Documents (other
than the Springing Operative Documents), and recording or filing (as
appropriate) of the instruments and documents referred to in Part I of Schedule
4.20 in accordance with Section 4.20, (A) good and valid leasehold interest to
the Undivided Interest will be duly, validly and effectively conveyed and
transferred to the Owner Lessor free and clear of all Liens other than
Permitted Closing Date Liens, and (B) good and valid leasehold interest in the
Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   Upon the closing of the conveyance of the Land and the Facility
(in each case to the extent of the Owner Lessor's Percentage interest therein)
on the Post-FILOT Lease Conversion Date and recording or filing (as
appropriate) of the instruments and documents referred to in Schedule 3.1(h)
hereto (A) good and valid fee title to the Facility (to the extent of the Owner
Lessor's Percentage interest therein) will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Liens, and (B) good and valid leasehold interest in the Land (to
the extent of the Owner Lessor's Percentage) will be duly, validly and
effectively granted to the Owner Lessor upon the terms and conditions in the
corresponding Springing Facility Site Lease, free and clear of all Liens other
than Permitted Liens. Upon any other conveyance of the Facility and/or the Land
(to the extent of the Owner Lessor's Percentage) by the County to the Owner
Lessor or its designee upon the Owner Lessor's exercise of the Facility
Purchase Option and/or the Land Purchase Option, as the case may be, good and
valid fee title ownership thereof will be duly, validly and effectively vested
in the Owner Lessor, free and clear of all Liens other than Permitted Liens.

          (4)   When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or

                                      9

<PAGE>

give record notice of, the Lien in favor of the Indenture Trustee in the
Indenture Estate to the extent such Lien may be perfected by filings or
recordings.

          (5)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the FILOT Lease) or the use of or
the exercise by the Owner Lessor of its rights under Assignment Agreement or
the Facility Site Lease or the Facility Lease, in a manner which could
reasonably be expected to have a Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party, directly
     or indirectly, for the purpose of buying or carrying any margin stock
     within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility company,"
     a "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party and the
     performance of the FILOT Lease will not subject the Facility Lessee to
     such regulation under the Holding Company Act and do not violate any
     provision of the Holding Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same, in any such case, in violation of the registration
     requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received and does not have Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility or the Facility Site; (ii) the
Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at

                                      10

<PAGE>

which any Hazardous Substances have been generated, stored, treated or disposed
by or on behalf of the Facility Lessee or such other Calpine Party) to a
Release or threatened Release of any Hazardous Substance generated, used or
stored at or Released in, on, under or from the Facility or the Facility Site;
(iii) the Facility or the Facility Site is subject to a Lien in favor of any
Governmental Entity in response to a Release or threatened Release of Hazardous
Substances or (iv) the Facility or the Facility Site is or is asserted to be in
violation of or not in compliance with any Environmental Law, in any case with
respect to clauses (ii), (iii) or (iv), which could reasonably be expected to
have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility or
the Facility Site, or (B) at, on, under or from any other location resulting
from or arising in connection with the operation by any Person of the Facility
or the Facility Site, that in each case could reasonably be expected to have a
Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or
the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility and the Facility Site in accordance with the Operative
Documents and the FILOT Lease and the Ownership and Operation Agreement and
Environmental Laws have been obtained on behalf of the Owner Lessor or by the
Facility Lessee and they are final, in proper form, and in full force and
effect, with all appeal periods expired, and the Facility Lessee is in
compliance with the provisions of all such permits, except where the failure to
obtain, maintain the effectiveness of, or comply with such permits would not
reasonably be expected to have a Material Adverse Effect or involve any danger
of (i) foreclosure, sale, forfeiture or loss of, or imposition of a material
lien on, the Facility or the Facility Site, (ii) the impairment of the
ownership (or leasehold or easement interest in), use, operation or maintenance
of the Facility or the Facility Site in any material respect, or (iii) any
criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through
Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest and the Ground Interest and based upon the Facility
     Lessee's reasonable expectations and on Applicable Law in effect on and as
     of the Closing Date, the rights and interests made available to the Owner
     Lessor pursuant to the Operative Documents and the FILOT Lease and the
     rights contemplated by the Facility Lease to be made available under such
     Operative Documents and the FILOT Lease, permit on a commercially
     practicable basis during the Facility Lease Term and the period following
     the expiration or termination of the Facility Lease Term, as applicable,
     until the end of the

                                      11

<PAGE>

     Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii) as
     of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made to
     the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns
     or pursuant to any assessment received by it (other than Taxes and
     assessments the payment of which is being contested in good faith by such
     Person and with respect to which appropriate accounting reserves have to
     the extent required by GAAP been set aside) and neither the Facility
     Lessee nor any other Calpine Party has any Actual Knowledge of any actual
     or proposed assessment in connection therewith which, either in any case
     or in the aggregate, would reasonably be expected to have a Material
     Adverse Effect.

Jurisdiction. In accordance with Section 15.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State of
     New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility and the Facility Site, except where the
     noncompliance would not reasonably be expected to have a Material Adverse
     Effect or involve any danger of (i) foreclosure, sale, forfeiture or loss
     of, or imposition of a material lien on, the Facility or the Facility
     Site, (ii) the impairment of the ownership (or leasehold or easement
     interest in), use, operation or maintenance of the Facility or the
     Facility Site in any material respect, or (iii) any criminal or material
     civil liability being incurred by the Owner Participant, the Owner Lessor,
     the Lessor Manager, the Indenture Trustee or the Pass Through Trustees,
     including subjecting the Owner Participant or the Owner Lessor to
     regulation as a public utility under Applicable Law. None of the Calpine
     Parties is in default of any judgments, orders or decrees of any
     Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

                                      12

<PAGE>

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual Knowledge
     of the Facility Lessee, no Burdensome Buyout Event has occurred or will
     occur upon the execution and delivery of the Operative Documents and the
     Facility Lessee does not have Actual Knowledge of any event that could
     reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the FILOT Lease, except where the failure to have
     any such services or public utilities available would not result in a
     material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse
     Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility or the Facility Site, which would reasonably be
     expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire

                                      13

<PAGE>

     underwriters or other body exercising similar functions, except, in either
     case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has been
     made available under the National Flood Insurance Act of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the transactions
     contemplated hereby in good faith and without any intent to defraud
     creditors of the Facility Lessee or subsequent purchasers. The execution
     and delivery of the Operative Documents to which the Facility Lessee is a
     party will not render the Facility Lessee insolvent under GAAP or leave
     the Facility Lessee with assets whose present fair valuation of assets is
     less than the present fair valuation of the Facility Lessee's debts. As
     used in this Section 3.1(dd), "debts" includes any and all liabilities,
     whether matured or unmatured, liquidated or unliquidated, absolute, fixed
     or contingent, and whether or not such liabilities are required under GAAP
     to be shown on the Facility Lessee's balance sheet. The execution and
     delivery of the Operative Documents to which the Facility Lessee is a
     party will not leave it with property remaining in its hands which would
     constitute unreasonably small assets or capital, and the Facility Lessee
     has and, after giving effect to such transactions will have, an adequate
     amount of assets and capital to engage in its business now and in the
     future, based on the actual and anticipated needs for capital of the
     businesses anticipated to be conducted by the Facility Lessee, and based
     upon the other information described herein. After giving effect to the
     transactions contemplated under the Operative Documents, the Facility
     Lessee will be able to pay all of its debts and liabilities, including
     unrecorded contingent liabilities, as they mature, the Facility Lessee
     will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term debt
     as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv) of
     the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

                                      14

<PAGE>

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance and the consummation of the
     transactions contemplated by the Operative Documents and the performance
     of the FILOT Lease shall be or become (i) subject to regulation as a
     "public utility company," "holding company," an "affiliate" of a "holding
     company" or a "subsidiary company" of a "holding company" within the
     meaning of PUHCA or (ii) a "public utility" (except that the Facility
     Lessee will be a public utility subject to the Federal Power Act with
     authority to sell wholesale electricity at market-based rates and with
     waivers of regulations customarily granted to a public utility that sells
     wholesale power at market-based rates), a "transmitting utility," or an
     "electric utility" within the meaning of the Federal Power Act, (iii)
     subject to state regulation of rates or organizational requirements for
     electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained therein,
     in light of the circumstances under which they were made, not misleading;
     provided, that no representation or warranty is made with regard to (i)
     any projections or other forward-looking statements provided by or on
     behalf of the Facility Lessee, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, further, each of the Transaction Parties acknowledge and agree
     that (i) Calpine has heretofore provided to the Appraiser, solely in order
     to assist the Appraiser in connection with the preparation of the
     appraisal to be delivered by the Appraiser to certain of the Transaction
     Parties at the Closing, certain (1) general market information, (2)
     information about the South Carolina energy markets and (3) information
     passed along from other Persons and (ii) that the Facility Lessee makes no
     representation or warranty whatsoever with respect to the information
     described in clause (i) above except to the extent expressly set forth in
     Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Duke Electric Transmission, a division of Duke
     Energy Corporation, and has access to transmission services and ancillary
     services sufficient to sell the net generating capacity of the Facility at
     wholesale, and the Facility Lessee has the authority to sell wholesale
     electric power from the net generating capacity of such generating
     Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Order referenced in clause (v) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is

                                      15

<PAGE>

     not intended to be construed as nor shall it be deemed to be a guaranty as
     to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and
     currently is capable of producing at least 850 MW of capacity and complies
     in all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

FILOT Lease. The FILOT Lease is in full force and effect and neither the
     Facility Lease nor, to the Actual Knowledge of the Facility Lessee, the
     County is in default thereunder; all of the rights, title and interest of
     the Facility Lessee, in, to and under the FILOT Lease assigned pursuant to
     the Assignment Agreement have been transferred free and clear of any and
     all Liens other than Permitted Liens. Prior to the execution and delivery
     of the Assignment Agreement by the Facility Lessee, the FILOT Lease was
     enforceable against the Facility Lessee in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the FILOT Lease by the Facility
     Lessee (i) did not and does not contravene any Applicable Law binding on
     the Facility Lessee or its property, (ii) does not constitute a default by
     the Facility Lessee under, or result in the creation of any Lien upon the
     property of the Facility Lessee (other than pursuant to any Operative
     Document) under any indenture, mortgage or other material contract,
     agreement or instrument to which the Facility Lessee is a party or by
     which the Facility Lessee or any of its property is bound, (iii) does not
     contravene any Organic Document of the Facility Lessee, (iv) does not
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect, or
     (v) does not create a Lien on the FILOT Lease; the Facility Lessee has all
     Permits with or from any Governmental Entity or under Applicable Law
     required for the performance of the FILOT Lease by the Owner Lessor or the
     Facility Lessee, other than (i) any Permit where the failure to obtain or
     maintain such Permit would not be reasonably likely to result in a
     Material Adverse Effect, (ii) the FERC Orders, (iii) as may be required
     under Applicable Law providing for the supervision or regulation of the
     Owner Participant, the Owner Lessor or any Affiliate of any of them as a
     result of investing, lending or other commercial activity in which the
     Owner Participant, the Owner Lessor or any Affiliate of any of them is or
     may be engaged other than the transactions contemplated hereby or by
     performance of the FILOT Lease upon and after the assignment thereof to
     the Owner Lessor pursuant to the Assignment Agreement, (iv) as may be
     required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, (v) in connection with any modification to or rebuilding or
     replacement of the Facility or any portion thereof that may occur in the
     future, (vi) as may be required in connection with any refinancing of the
     Lessor Notes or the Certificates or the issuance of Additional Lessor
     Notes or Additional Certificates, (vii) as may be required in consequence
     of any transfer of the Member Interest or any transfer of the Undivided
     Interest or the Owner

                                      16

<PAGE>

     Lessor's Interest, or any part thereof by the Owner Lessor or the exercise
     by any such party of dispossessory remedies under the Operative Documents
     or any relinquishment of the use or operation of the Facility by the
     Facility Lessee, (viii) appropriate filing and recording to perfect the
     Lien of the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may be
     required under any Applicable Law enacted or adopted after the date
     hereof.

          B.   Representations and Warranties of the Owner Lessor. The Owner
Lessor represents and warrants that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc.   (1)   (i) This Agreement and each of
     the other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Lessor, and
     (ii) assuming the due authorization, execution and delivery of this
     Agreement by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Owner Lessor to act as operator of the Facility following a Lease
     Event of Default or the expiration or termination of the Facility Lease.

                                      17

<PAGE>

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the FILOT Lease or the ability of
     the Owner Lessor to perform its obligations under the FILOT Lease or the
     Operative Documents to which it is or will be a party or (ii) if
     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Owner Lessor to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 15.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

          C.   Representations and Warranties of the Lessor Manager and the
Trust Company. The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative
     Documents to which it is a party.

                                      18

<PAGE>

Due Authorization, Enforceability; etc.   (1)   (i) The LLC Agreement has been
     duly authorized, executed and delivered by the Trust Company, and (ii)
     assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may
     be, of the LLC Agreement, this Agreement or the other Operative Documents
     to which the Trust Company or the Lessor Manager is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

                                      19

<PAGE>

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement
     and any other Operative Document to which the Owner Participant is or will
     be a party constitute or when executed and delivered will constitute the
     legal, valid and binding obligations of the Owner Participant, enforceable
     against the Owner Participant in accordance with their respective terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant

                                      20

<PAGE>

     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law binding on the Owner Participant, or its
     organizational documents, or contravene the provisions of, or constitute a
     default under any indenture, mortgage or other material contract,
     agreement or instrument to which the Owner Participant is a party or by
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site or
     any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site), and other than, with respect to the Post-FILOT Lease
     Conversion Date, the conveyances and other matters referred to in the
     definition thereof.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would violate the
     Securities Act, but without prejudice, however, to the right of the Owner

                                      21

<PAGE>

     Participant at all times to sell or otherwise dispose of all or any part
     of such Member Interest under an exemption from registration available
     under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section 5
     of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc.   (1)   (i) This Agreement has been
     duly authorized, executed and delivered by the Indenture Trustee and the
     Lease Indenture Company, and (ii) assuming the due authorization,
     execution and delivery of this Agreement by each party hereto other than
     the Indenture Trustee and the Lease Indenture Company, this Agreement
     constitutes a legal, valid and binding obligation of the Lease Indenture
     Company and the Indenture Trustee, enforceable against the Lease Indenture
     Company or the Indenture Trustee, as the case may be, in accordance with
     its terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the
other Operative Documents by each party thereto other than the Indenture

                                      22

<PAGE>

Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of the Indenture Trustee in the
     Indenture Estate; provided, however, that no representation or warranty is
     made with respect to the right, power or authority of the Lease Indenture
     Company or the Indenture Trustee to act as operator of the Facility
     following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the

                                      23

<PAGE>

     ability of the Lease Indenture Company to perform its obligations under
     this Agreement or any other Operative Document to which it is or will be a
     party or could reasonably be expected to materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     Lien of the Indenture Trustee on the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
Trustees and the Pass Through Company. The Pass Through Company and the Pass
Through Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement
     and each of the other Operative Documents to which it is or will be a
     party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company
     or any Pass Through Trustee is or will be a party has been or when
     executed and delivered will be duly authorized, executed and delivered by
     the Pass Through Company or such Pass Through Trustee, as the case may be,
     and (B) assuming the due authorization, execution and delivery of each of
     the other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be,

                                      24

<PAGE>

     of the transactions contemplated hereby and thereby, and the compliance by
     the Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the Pass Through Company upon the
     Certificates or any indenture, mortgage or other material contract,
     agreement or instrument to which the Pass Through Company is a party or by
     which the Pass Through Company or its property is bound which would
     materially adversely affect the ability of the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, to
     perform its obligations under this Agreement or the other Operative
     Documents to which it is a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     security interest of any Pass Through Trustee in the Indenture Estate;
     provided, however, that no representation is made with respect to the
     right, power or authority of the Pass Through Company or any Pass Through
     Trustee to act as operator of the Facility following a Lease Event of
     Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                      25

<PAGE>

such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                      26

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 850 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

          E.   Representations and Warranties. The representations and
warranties of each party hereto set forth in Section 3 shall be true and
correct on and as of the Closing Date with the same effect as though made on
and as of the Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
status and the FERC Order referenced in clause (v) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                      27

<PAGE>

     F.   Consents.

          (a)   All permits, licenses, approvals and consents (including
management, credit and other internal approvals of the Transaction Parties, but
excluding the Third Party Consents referred to in (b) below) necessary to
consummate the Overall Transaction and to own and operate the Facility as
currently operated shall have been duly obtained and shall be in full force and
effect and in the form and substance satisfactory to each of the Transaction
Parties.

          (b)   Each Third Party Consent shall have been obtained and shall be
in full force and effect substantially in the form attached hereto as Exhibit O
which is applicable to the relevant third party granting such consent; provided
that if any Third Party Consent is not substantially in the form attached
hereto as Exhibit O, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                      28

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(v) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have a copy of the Survey (which Survey
shall be certified to the Owner Lessor and the Title Company) in form and
substance satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

          G.   Letter from the Appraiser. Each of the Owner Lessor and the
Manager shall have received a satisfactory letter of the Appraiser setting
forth the conclusions of the Closing Appraisal as to the fair market value and
remaining economic useful life of the Facility as of the Closing Date and the
methodology of determination thereof.

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<PAGE>

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by Facility Lessee of its interest in the Undivided Interest and
the Ground Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special
counsel to the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP,
special regulatory counsel to the Facility Lessee, (d) McNair Law Firm, P.A.,
South Carolina counsel to the Facility Lessee, (e) Karen Scowcroft, Esq.,
in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP, counsel to
the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP, counsel to
the Lease Indenture Company and the Indenture Trustee, (h) Bingham Dana LLP,
counsel to the Pass Though Trustees and the Pass Through Company, and (i) Ray
Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case in form
and substance reasonably satisfactory to each Transaction Party. Each such
Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

          H.   Recordings and Filings. All filings and recordings listed on
Schedule 4.20 hereto shall have been duly made and all filing, recordation,
transfer and other fees payable in connection therewith shall have been paid;
and the filing of all precautionary financing statements under the Uniform
Commercial Code of South Carolina and Delaware and any other documents as may
be reasonably requested by counsel to the Owner Participant, the Indenture
Trustee or the Pass Through Trustees to perfect (i) the Owner Lessor's
Interest, or any part thereof or interest therein and (ii) and the Lien of the
Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the FILOT Lease shall
have been satisfied or waived and the Owner Participant shall be satisfied that
the Facility shall be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

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<PAGE>

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or the Owner Lessor to participate in any of the
transactions contemplated by the FILOT Lease or would materially adversely
affect the Facility or the Facility Site. On the Closing Date, each
Certificateholder's purchase of Lessor Notes shall (i) be permitted by the laws
and regulations of each jurisdiction to which such Certificateholder is
subject, (ii) not violate any Applicable Law (including Regulation U, T or X of
the Board of Governors of the Federal Reserve System) and (iii) not subject any
Certificateholder to any tax, penalty or liability under or pursuant to any
Applicable Law, which Applicable Law was not in effect on the date hereof. If
requested by any Certificateholder, such Certificateholder shall have received
an Officer's Certificate of the Owner Lessor, in form and substance
satisfactory to such Certificateholder, certifying as to such matters of fact
as such Certificateholder may reasonably specify to enable such
Certificateholder to determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G
hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee

                                      31

<PAGE>

shall have received certification from CSFB as to the number of offerees by it
of the Lessor Estate.

          I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to the Facility Lessee
in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or the FILOT
Lease or any of the Transactions contemplated by any of the Operative
Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

          J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

          K.   Corrective Ordinance. The Facility Lessee shall have received a
copy of the Corrective Ordinance.

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<PAGE>

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent

                                      33

<PAGE>

obligations) except (i) by reason of endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the
Facility Lessee's business, (ii) indemnities in respect of unfiled mechanics'
liens and other liens permitted by clause (d) of the definition of "Permitted
Liens", (iii) contingent obligations set forth in, or incurred in connection
with, or indemnities set forth in, the Operative Documents and the FILOT Lease,
(iv) unsecured indemnities provided, and other unsecured contingent obligations
incurred by the Facility Lessee in connection with either (x) easements
relating to its applicable interest in the Facility or the Facility Site or (y)
any contract, agreement or other document or instrument relating to the Broad
River project which is entered into in the ordinary course of the Facility
Lessee's business, (v) customary indemnities in favor of the title insurers
providing the title policies covering the Facility Site or any portion thereof
or any easement or appurtenant right relating thereto in respect of claims by
the holder of mechanics' liens, (vi) the indemnities referred to in Section 9.1
and 9.2 of the Participation Agreement or pursuant to the Tax Indemnity
Agreement and (vii) unsecured Indebtedness incurred in accordance with Section
11.1 or 11.2 hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the FILOT Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the FILOT Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

          L.   Books, Records, Access. The Facility Lessee shall maintain or
cause to be maintained adequate books, accounts and records with respect to
itself, the Facility and Facility Site and prepare all financial statements
required hereunder in accordance with GAAP and in compliance with the
regulations of any Governmental Entity having jurisdiction thereof, and permit
employees, agents and representatives of the Owner Lessor, the Owner
Participant, and, so long as the Lien of the Collateral Trust Indenture shall
have not been terminated or discharged, the Indenture Trustee, the Pass Through
Trustees and the Certificateholders, and such parties' independent consultants,
at all reasonable times during normal business hours and upon reasonable prior
notice and at no risk or (except during the existence of a Lease Default or

                                      34

<PAGE>

Lease Event of Default) expense to the Facility Lessee to inspect, the Facility
and Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

Other Information.

               1.   The Facility Lessee shall furnish, or shall cause to be
                    furnished to, the Owner Lessor, the Owner Participant and,
                    so long as the Lien of the Collateral Trust Indenture has
                    not been terminated or discharged, the Indenture Trustee
                    and the Pass Through Trustees, and their respective
                    authorized representatives from time to time such
                    information as such party shall reasonably request
                    concerning the Facility and Facility Site including
                    information concerning the condition, operation,
                    maintenance and use of the Facility and Facility Site and
                    such other financial or operating information as it shall
                    reasonably request and which is routinely made available to
                    creditors of the Facility Lessee, to the extent it
                    possesses such information; provided that, the Facility
                    Lessee reserves the right not to provide any information
                    that is not otherwise publicly available to any transferee
                    Owner Participant (or its Owner Lessor) if it reasonably
                    believes in its good faith judgment that such transferee
                    Owner Participant or any Affiliate thereof is a competitor
                    or is an Affiliate of a competitor of the Facility Lessee
                    or its Affiliates in the competitive power market, unless,
                    before receiving any such information, such transferee
                    Owner Participant shall have put in place (to the
                    reasonable satisfaction of the Facility Lessee) appropriate
                    confidentiality arrangements. To the extent such
                    information consists of information contained in records
                    kept by the Facility Lessee or any Affiliate, such
                    information shall be furnished without cost to the
                    recipient.

               (b)  The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

M.   Warranty of Title to Facility Site.

               1.   On and after the Post-FILOT Lease Conversion Date, the
                    Facility Lessee shall maintain good and valid fee, title
                    to, or easement or other surface rights in, as applicable,
                    the Facility Site, subject only to Permitted Liens.

               2.   The Facility Lessee shall maintain good and valid title to
                    all of its other properties and assets (other than
                    properties and assets disposed of in the

                                      35

<PAGE>

                    ordinary course of business, including any sale, transfer
                    or other disposition of any obsolete, surplus or worn out
                    equipment, parts, supplies or other materials or assets to
                    the extent permitted by the Operative Documents), subject
                    only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the Internal
Revenue Service to the effect that such Plan (and trust, if any) meets the
requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at all
times be in compliance in all material respects with applicable provisions of
ERISA and the Code, and (b) within fifteen (15) days after (i) the occurrence
of any reportable event (as defined in Section 4043(c) of ERISA) with respect
to any Plan, (ii) the complete or partial withdrawal by the Facility Lessee or
any ERISA Affiliate from any Multiemployer Plan, (iii) to the extent the
Facility Lessee or any ERISA Affiliate is notified that any Multiemployer Plan
has entered reorganization status, has become insolvent, or has terminated (or
any Multiemployer Plan notifies the Facility Lessee or any ERISA Affiliate of
its intent to terminate) under Section 4041A of ERISA, (iv) the institution of
any action to terminate a Plan in a distress termination under Section 4041(c)
of ERISA, or (v) in the case of the breach of any other covenant contained in
this Section 5.11, the Facility Lessee shall report such occurrence or breach
to the Indenture Trustee, the Pass Through Trustees, the Owner Lessor and the
Owner Participant and furnish such information as such Persons may reasonably
request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the FILOT Lease, it will not enter into or become bound by any contract or
agreement providing for the sale of energy produced from the Facility, or the
purchase of services to be performed at, for or in connection with, the
Facility or any other contract or agreement relating to the Facility that (i)
has a term that extends beyond the Basic Lease Term or the scheduled expiration
of any Renewal Lease Term then in effect or elected by the Facility Lessee,
unless such contract or agreement may be terminated by the Facility Lessee
without material costs or obligation prior to the Basic Lease Term or the
scheduled expiration of such Renewal Lease Term, as the case may be or (ii)
results in any lien, encumbrance, restriction or agreement relating to the
Facility which extends beyond the expiration of the Facility Lease Term or
which binds the Facility or the owner of the Facility beyond the expiration of
the Facility Lease Term; provided that nothing in this Section 5.12 shall
prevent the Operator from entering agreements to operate the Facility in
accordance with the Operative Documents and the FILOT Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole

                                      36

<PAGE>

Amount which has become due and payable with respect to the Lessor Notes under
the Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

          N.   Investments. The Facility Lessee shall not make or permit to
remain outstanding any advances, loans or extensions of credit to, or purchase
or own any stock, bonds, notes, debentures or other securities of any Person,
except Permitted Investments.

          O.   Intentionally Deleted.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority.

               1.   The Facility Lessee shall not without the prior written
                    consent of the Owner Participant and, except as otherwise
                    provided in Section 8 of the Collateral Trust Indenture and
                    so long as the Lien of the Collateral Trust Indenture has
                    not been terminated or discharged, the Indenture Trustee,
                    (x) cause or consent to or (y) acquiesce in any amendment,
                    modification, extension, termination, variance or waiver of
                    timely compliance with any terms or conditions of any
                    Operative Document. In addition, the Facility Lessee shall
                    not enter into or acquiesce in any amendment, modification,
                    extension, termination, variance or waiver of timely
                    compliance with any terms or provisions of the FILOT Lease
                    without the consent of the Owner Participant if the same
                    would (i) subject in all cases to the provisions of clause
                    (iii) below, during the Facility Lease Term, have a
                    material adverse effect on the Owner Participant or the
                    Owner Lessor (including, without limitation, any material
                    decrease in their respective rights or any material
                    increase in their respective obligations or any material
                    increase in the liability exposure of the Owner Lessor or
                    the Owner Participant, it being agreed that (x) in
                    determining whether any such material adverse effect has
                    occurred, the fact of the Facility Lessee's obligations
                    under the Operative Documents (including paragraph (b)
                    below) and of Calpine under the Calpine Guaranty shall be
                    taken into account and (y) any increase in rent or any
                    other amount payable by the Owner Lessor or the

                                      37

<PAGE>

                    Owner Participant under the FILOT Lease that is also
                    reflected to the same extent under the Facility Site Lease
                    and does not remain in effect after the expiration of the
                    then existing Basic Lease Term or any Renewal Term with
                    respect to which the Facility Lessee shall have irrevocably
                    exercised its renewal option shall not constitute or cause
                    or be deemed to constitute or cause such a material adverse
                    effect), (ii) during the period after the expiration or
                    termination of the Facility Lease Term, have any adverse
                    effect whatsoever on the Owner Participant or the Owner
                    Lessor (including, without limitation, any increase in
                    their respective obligations or decrease in their
                    respective rights) or (iii) whether during or after the
                    Facility Lease Term, result in any change to the length of
                    the term of the FILOT Lease or in any option to renew the
                    Facility Lease Term.  The Facility Lessee will furnish the
                    Owner Participant with a copy of the executed version
                    thereof promptly after the execution thereof.
                    Notwithstanding anything to the contrary contained in the
                    foregoing, the Facility Lessee shall not have any right to
                    take any action otherwise permitted pursuant to this
                    Section 5.20 if a Significant Lease Default or Lease Event
                    of Default shall have occurred and be continuing. So long
                    as the Lien of the Collateral Trust Indenture has not been
                    discharged, the Facility Lessee shall not take any action
                    pursuant to or in accordance with the foregoing provisions
                    of this Section 5.20, if such action would (i) have a
                    material adverse effect on the Indenture Trustee, the Pass
                    Through Trustees, the Noteholders or the Certificateholders
                    including, without limitation, a material adverse effect on
                    such Person's rights and remedies under the Operative
                    Documents (it being agreed that (x) in determining whether
                    any such material adverse effect has occurred, the fact of
                    the Facility Lessee's obligations under the Operative
                    Documents (including paragraph (b) below) and Calpine's
                    obligations under the Calpine Guaranty shall be taken into
                    account and (y) any increase in rent or any other amount
                    payable by the Owner Lessor or the Owner Participant under
                    the FILOT Lease that is also reflected to the same extent
                    under the Facility Site Lease ) shall not constitute or
                    cause such a material adverse effect) or (ii) result in the
                    release of or loss of the first priority, perfected Lien
                    (subject to Permitted Liens) on all or any material portion
                    of the Owner Lessor's interest in the Facility or the
                    Facility Site, except as otherwise permitted by the
                    Operative Documents.

               2.   During the Facility Lease Term (i) the Facility Lessee
                    shall, at its own expense, on behalf of the Owner Lessor,
                    duly fulfill and comply with all obligations on the part of
                    the Owner Lessor under or in connection with the FILOT
                    Lease (or any extension or renewal thereof) at the time
                    performance of such obligations is required under the FILOT
                    Lease and (ii) in connection with the foregoing obligation
                    of the Facility Lessee set forth in clause (i), subject to
                    clause (a) above, the Facility Lessee shall have and be
                    entitled to exercise all rights and benefits (including the
                    right to enter into any amendment, modification, extension,
                    termination, variance, waiver, notice or consent or any
                    action with respect thereto,

                                      38

<PAGE>

                    subject to the terms and conditions of the Operative
                    Documents) of the Owner Lessor under the FILOT Lease.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the FILOT Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are established and
maintained in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall
have been made, and (b) any tax, assessment or other charge determined to be
due, together with any interest or penalties thereon, is immediately paid after
resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) and (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee,

                                      39

<PAGE>

the Lease Indenture Company, the Pass Through Trustees, the Pass Through
Company or any Certificateholder, (iv) the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
Pass Through Trustees, the Pass Through Company or any Certificateholder being
subjected to any unindemnified civil liability or of the Owner Participant or
the Owner Lessor being subject to regulation as a public utility under
Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site or the transactions contemplated by the Operative Documents
to which the Facility Lessee is a party and the performance of the FILOT Lease
as may be required to enable the Owner Participant, the Owner Lessor or, so
long as the Lien of the Collateral Trust Indenture shall not have been
terminated or discharged, the Indenture Trustee or the Pass Through Trustees,
as the case may be, to timely file with any Governmental Entity any reports and
obtain any licenses or permits required to be filed or obtained by the Owner
Lessor under any Operative Document or the FILOT Lease, the Owner Participant
as the owner of the Member Interest or the Indenture Trustee. The Facility
Lessee will preserve, protect, defend and enforce, or cause to be preserved,
protected, defended and enforced, the rights of itself, the Owner Lessor and
the Owner Participant under each and every Operative Document to which it is a
party (including by assignment and assumption of the rights thereunder),
including using commercially reasonable efforts to prosecute suits to enforce
any such rights and, at the request of Indenture Trustee, so long as the Lien
of the Collateral Trust Indenture has not been discharged or terminated (and
thereafter at the request of the Owner Participant), permit the Indenture
Trustee and the Owner Participant, at their respective cost and expense, to
participate in such capacity as it may choose in any such suit, any defense
thereof or in the preparation therefor; provided, however, that upon the
occurrence and during the continuance of any Lease Event of Default, if the
Indenture Trustee or the Owner Participant request that certain actions be
taken and the Facility Lessee fails to take the requested action, or to cause
the requested action to be taken within (5) Business

                                      40

<PAGE>

Days, the Indenture Trustee, so long as the Lien of the Collateral Trust
Indenture has not been discharged or terminated, and the Owner Lessor may, at
the Facility Lessee's reasonable expense, enforce, in its own name, or the
Facility Lessee's name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

          P.   Support Arrangements. The Facility Lessee agrees that, to the
extent that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the later of the
expiration or termination of the FILOT Lease or the Springing Facility Site
Lease, or earlier at the option of the Owner Lessor. The Facility Lessee shall
also, subject to obtaining any required third party consents, assign to the
Owner Lessor upon termination of the Facility Lease any support or similar
agreements to the extent relating to the Facility it has with third parties.

          Q.   Insurance. The Facility Lessee shall comply with the covenants
set forth in Schedule 5.31.

          R.   Tax Status. The Facility Lessee and each Person owning an
Ownership Interest therein will not voluntarily take any action to cause the
Facility Lessee to be subject to taxation as a separate entity for federal
income tax purposes.

                                      41

<PAGE>

          S.   Transmission Assets.

               1.   If and to the extent that on the Closing Date the FERC
                    Order referred to in clause (v) of the definition thereof
                    has not been obtained with respect to the jurisdictional
                    facilities referred to therein (which facilities are
                    identified in Exhibit A as Transmission Assets (the
                    "Transmission Assets")), the Owner Participant shall, upon
                    5 days prior written notice to the Facility Lessee, and
                    subject to the grant of the aforesaid order, cause the
                    Owner Lessor to acquire an undivided interest equal to the
                    Owner Lessor's Percentage in the Facility Lessee's right,
                    title and interest in the Transmission Assets, for a price
                    equal to $1.00. Upon payment by the Owner Lessor of such
                    amount, the Facility Lessee shall execute and deliver such
                    documentation as is reasonably requested by the Owner
                    Lessor to transfer such undivided interest in the Facility
                    Lessee's right, title and interest in the Transmission
                    Assets to the Owner Lessor. Upon such transfer such
                    Undivided Interest shall be and shall be deemed to be an
                    integral part of the Undivided Interest (to the extent
                    constituting a portion of the Facility) and the Ground
                    Interest (to the extent constituting a portion of the
                    leasehold interest in the Facility Site) for all purposes
                    of the Operative Documents without the necessity of
                    amending or supplementing any Operative Document, subject
                    nevertheless to Section 14.15 hereof.

               2.   Without limiting Section 10 hereof or Section 4.2 of the
                    Facility Lease, the Facility Lessee agrees that from and
                    after the Closing Date and until the earlier to occur of
                    (A) the transfer referred to in clause (a) above and (B)
                    the termination of the Facility Lease, the Facility Lessee
                    shall make available to the Owner Lessor, for no additional
                    compensation, such rights in the Transmission Assets solely
                    to the extent as shall be necessary so that the
                    representation in Section 3.1(n) will be correct to the
                    same extent as if such transfer had occurred on the Closing
                    Date.

II.   COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

               1.   not amend, supplement, or otherwise modify Section 9.1,
                    9.3, 13.1 or clause (i) of Section 13.2 of the LLC
                    Agreement without the prior written consent of the Facility
                    Lessee so long as no Significant Lease Default or Lease
                    Event of Default has occurred and is continuing and the
                    Indenture Trustee so long as the Lien of the Collateral
                    Trust Indenture has not been terminated or discharged.

                                      42

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the FILOT Lease
in any manner or (c) except as provided in Section 11 hereof or Section 2.10 or
Section 5.6 of the Collateral Trust Indenture, take any action to prepay or
refund the Lessor Notes or amend any of the payment terms of the Lessor Notes
without, in each case, the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing and, in the case of clause (a) or (b), the Indenture Trustee
so long as the Lien of the Collateral Trust Indenture has not been terminated
or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

          B.   Bankruptcy of Owner Lessor.

               Each of the Trust Company, the Lessor Manager and the Owner
Lessor hereby agrees severally and as to itself only that it shall not
voluntarily take any action that shall, or cause any action to be taken that is
intended to, submit the Owner Lessor, as debtor, to any proceeding under any
Applicable Law involving bankruptcy, insolvency, reorganization or other laws
affecting the rights of creditors generally unless a Lease Event of Default or
a Significant

                                      43

<PAGE>

Lease Default shall have occurred and be continuing (in which case, if the Lien
of the Collateral Trust Indenture shall not have been discharged, the Trust
Company or the Owner Lessor shall not take any such action unless the Indenture
Trustee shall have given its prior written consent to such action in its sole
discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation

                                      44

<PAGE>

     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in this
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and

                                      45

<PAGE>

     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations hereunder
     and under each other Operative Document to which such transferor or OP
     Guarantor is a party or by which such transferor Owner Participant or OP
     Guarantor is bound to the extent such obligations are expressly assumed by
     a Transferee meeting the requirements of this Section 7.1; provided,
     however, that in no event shall any such transfer waive or release the
     transferor or its OP Guarantor from any liability accruing or existing in
     respect of any period occurring on or prior to or occurring simultaneously
     with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                      46

<PAGE>

respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that such terms are revised in any way that changes the agreement for
sale, lease, conveyance or transfer such that the terms of the sale are less
favorable to the Owner Participant (it being understood and agreed that any
reduction in the price or a change in the terms of payment thereof in a manner
beneficial to the potential purchaser shall be deemed to be less favorable to
the Owner Participant), the Owner Participant shall again comply with the
notice and right of first refusal provisions of this Section prior to entering
into such revised agreement; provided that, for such revised offer, the Notice
Period shall be 10 Business Days from the date of such new notice, and the
Agreement Period shall not exceed 45 days from the date of the Facility
Lessee's notice accepting such new terms.

               Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other Broad River Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other Broad River Facility Lease.

          C.   Prohibition on Fundamental Changes. If the Owner Participant is
an entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                      47

<PAGE>

its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities
related thereto.

                                      48

<PAGE>

          D.   Appointment of Successor Lessor Manager. Notwithstanding any
other provision of this Agreement, a successor Lessor Manager shall not be
appointed by the Owner Participant without the consent of the Facility Lessee
and, so long as the Lien of the Collateral Trust Indenture has not been
terminated or discharged and the Indenture Trustee unless such successor Lessor
Manager (a) meets the requirements of the LLC Agreement, (b) has a combined
capital and surplus of at least $150 million, and (c) the Facility Lessee and,
so long as Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee, shall have received at the expense of
Facility Lessee on an After-Tax Basis: (i) an opinion or opinions of counsel,
such counsel and such opinion to be reasonably acceptable to such parties, to
the effect that no regulatory consents or approvals are required, or (ii) such
other documentation reasonably satisfactory to the Facility Lessee or the
Indenture Trustee as the case may be.

          E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agrees to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor

                                      49

<PAGE>

Manager, the Owner Lessor and the Facility Lessee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly (and in any event
within 30 days of obtaining Actual Knowledge of such Lien), at its own expense,
take such action as may be necessary to duly discharge such Indenture Trustee's
Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass Through Trustees, and their respective Affiliates,
     successors, assigns, agents, directors, officers and employees (each an
     "Indemnitee") against any and all Claims (whether or not any of the
     transactions contemplated by the Operative Documents are consummated)
     imposed on, incurred or suffered by or asserted against any Indemnitee in
     any way relating to or resulting from or arising out of or attributable
     to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site or any Component or any portion of any thereof or any interest
     therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility or the Facility
     Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site or any Component,
     or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

                                      50

<PAGE>

any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the FILOT Lease requested by the Facility Lessee, or resulting from the
     actions of the Facility Lessee or in connection with any Lease Default or
     Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents, the FILOT Lease or the interests of the Owner
     Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
     Trustees, or under the Operative Documents or the FILOT Lease or the
     presence, use, storage, release, threatened release, transportation,
     arrangement for transportation, treatment, arrangement for treatment,
     manufacture, disposal or arrangement for disposal of any Hazardous
     Substance in, at, under or from the Facility or the Facility Site,
     including, for the avoidance of doubt, any of the foregoing existing or
     occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     County of any obligation contained in this Agreement or any other
     Operative Document or the FILOT Lease or the falsity or inaccuracy of any
     representation, warranty or obligation of any such Person contained in
     this Agreement or any other Operative Document or the FILOT Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the FILOT
     Lease (other than the Facility Lease, the Facility Site Lease, the FILOT
     Lease and the Springing Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents or the FILOT Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

                                      51

<PAGE>

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility and the Facility
     Site in compliance with the provisions of the Facility Lease and the
     Facility Site Lease, respectively, and (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Springing Facility Site Lease,
     the performance by the Facility Lessee of all obligations required to be
     performed by it thereunder or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the FILOT Lease or (ii) any violation of
     Applicable Law by any such Person except to the extent attributable to a
     violation of Applicable Law by the Facility Lessee or any other Calpine
     Party or to any breach by the Facility Lessee or such other Calpine Party
     of any covenant, representation or warranty contained in any Operative
     Document or the FILOT Lease;

               a)   as to any Indemnitee, any Claim to the extent attributable
                    to the noncompliance of such Indemnitee or a Related Party,
                    with any of the terms of, or any misrepresentation or
                    breach of warranty by such Indemnitee or Related Party
                    contained in any Operative Document made by such Indemnitee
                    or Related Party or any breach by such Indemnitee or a
                    Related Party of any covenant contained in any Operative
                    Document or any breach by such Indemnitee or a Related
                    Party of any covenant contained in any Operative Document
                    made by such Indemnitee or Related Party

                                      52

<PAGE>

                    except to the extent attributable to any breach by the
                    Facility Lessee or any other Calpine Party of any covenant,
                    representation or warranty contained in any Operative
                    Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of an Indenture Default or Lease Indenture Event of Default
     that is not also (or attributable to) a Lease Default or Lease Event of
     Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be
paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other

                                      53

<PAGE>

     Indemnitee shall waive its rights to indemnification (for itself and each
     Related Party thereto) in a manner reasonably acceptable to the Facility
     Lessee, to cooperate, at the sole cost and expense of the Facility Lessee,
     with insurers in exercise of their rights to investigate, defend or
     compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default shall have occurred and be
     continuing, the Facility Lessee shall have the right in its sole
     discretion, to defend or compromise any Claim for which indemnification is
     sought under this Section 9.1 which the Facility Lessee acknowledges is
     subject to indemnification hereunder; provided that no such defense or
     compromise shall involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a Lien on any part of the Facility, the
     Undivided Interest, the Ground Interest, the Facility Site, the Lessor
     Estate or the Indenture Estate or the impairment of the Facility or the
     Facility Site, in any material respect or (ii) any criminal liability
     being incurred or any material adverse effect on such Indemnitee;
     provided, further, that no Claim shall be compromised by the Facility
     Lessee on a basis that admits any criminal violation or gross negligence
     or willful misconduct on the part of such Indemnitee without the express
     written consent of such Indemnitee; and provided, further, that to the
     extent that other Claims unrelated to the transactions contemplated by the
     Operative Documents and the FILOT Lease (giving effect to its assignment
     to the Owner Lessor pursuant to the Assignment Agreement) are part of the
     same proceeding involving such Claim, the Facility Lessee may assume
     responsibility for the contest or compromise of such Claim only if the
     same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the event
     that in the course of the investigation or defense of a claim, the
     Facility Lessee shall in good faith reasonably

                                      54

<PAGE>

     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee of
     such fact; and, in such case, any acknowledgment, theretofore made by the
     Facility Lessee of liability with respect to such claim under this Section
     9.1 shall be deemed revoked, and the Facility Lessee may thereupon cease
     to defend such claim; provided that (i) the Facility Lessee shall have
     given the Indemnitee reasonable prior notice of its intention to renounce
     such acknowledgment, (ii) the Facility Lessee's conduct regarding the
     defense of such claim or any decision to withdraw from such defense shall
     not prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the Facility
     Lessee's withdrawal and the theory or theories upon which the Facility
     Lessee shall have based its defense), and (iii) the Facility Lessee shall
     have given such Indemnitee all materials, documents and records relating
     to its defense of such claim as such Indemnitee shall have reasonably
     requested in connection with the assumption by such Indemnitee of the
     defense of such claim at the cost and expense of the Facility Lessee. In
     the event that the Facility Lessee shall cease to defend any claim
     pursuant to the preceding sentence, the Facility Lessee shall indemnify
     each Indemnitee, without regard to any exclusion that might otherwise
     apply hereunder, to the extent that the actions of the Facility Lessee in
     defending such claim or the manner or time of the Facility Lessee's
     election to withdraw from the defense of such claim shall have caused such
     Indemnitee to incur any loss, cost, liability or expense which such
     Indemnitee would not have incurred had the Facility Lessee not ceased to
     defend such claim in such manner or such time. If the Facility Lessee
     elects, subject to the foregoing, to compromise or defend any such
     asserted liability, it may do so at its own expense and by counsel
     selected by it. Upon the Facility Lessee's election to compromise or
     defend such asserted liability and prompt notification to such Indemnitee
     of its intent to do so, such Indemnitee shall cooperate at the Facility
     Lessee's expense with all reasonable requests of the Facility Lessee in
     connection therewith and will provide the Facility Lessee with all
     information not within the control of the Facility Lessee as is reasonably
     available to such Indemnitee which the Facility Lessee may reasonably
     request; provided, however, that such Indemnitee shall not, unless
     otherwise required by Applicable Law, be obligated to disclose to the
     Facility Lessee or any other Person, or permit the Facility Lessee or any
     other Person to examine (i) any income tax returns of the Owner
     Participant or (ii) any confidential information or pricing information
     not generally accessible by the public possessed by the Owner Participant
     (and, in the event that any such information is made available, the
     Facility Lessee shall treat such information as confidential and shall
     take all actions reasonably requested by such Indemnitee for purposes of
     obtaining a stipulation from all parties to the related proceeding
     providing for the confidential treatment of such information from all such
     parties). Where the Facility Lessee, or the insurers under a policy of
     insurance maintained by the Facility Lessee undertakes the defense of such
     Indemnitee with respect to a Claim (with counsel reasonably satisfactory
     to such Indemnitee and without reservation of rights against such
     Indemnitee), no additional legal fees or expenses of such Indemnitee in
     connection with the defense of such Claim shall be indemnified hereunder
     unless such fees or expenses were incurred at the request of the Facility
     Lessee or such insurers. Notwithstanding the foregoing, an Indemnitee may
     participate at its own expense in any judicial proceeding controlled by
     the Facility Lessee pursuant to the preceding provisions, but only to the
     extent that such party's participation does not in the reasonable opinion
     of counsel to the Facility Lessee interfere with such control or defense
     of such claim; provided, however, that such

                                      55

<PAGE>

     party's participation does not constitute a waiver of the indemnification
     provided in this Section 9.1; provided, further, that if and to the extent
     that (i) such Indemnitee is advised by counsel that an actual or potential
     conflict of interest exists where it is advisable for such Indemnitee to
     be represented by separate counsel or (ii) there is a risk that such
     Indemnitee may be subject to criminal liability and such Indemnitee
     informs the Facility Lessee that such Indemnitee desires to be represented
     by separate counsel, such Indemnitee shall have the right to control its
     own defense of such Claim and the reasonable fees and expenses of such
     defense (including, without limitation, the reasonable fees and expenses
     of such separate counsel) shall be borne by the Facility Lessee. So long
     as no Lease Event of Default described in clause (a), (b), (g) or (h) of
     Section 16 of the Facility Lease has occurred and be continuing, no
     Indemnitee shall enter into any settlement or other compromise with
     respect to any Claim without the prior written consent of the Facility
     Lessee unless (i) the Indemnitee waives its rights to indemnification
     hereunder or (ii) the Facility Lessee has not acknowledged their indemnity
     obligation with respect thereto and there is a significant risk that a
     default judgment will be entered against such Indemnitee. Nothing
     contained in this Section 9.1(e) shall be deemed to require an Indemnitee
     to contest any Claim or to assume responsibility for or control of any
     judicial proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of their insurers has paid in respect of such Claim; provided that,
     so long as a Significant Lease Default or Lease Event of Default shall
     have occurred and is continuing such amount may be held by the Owner
     Lessor as security for the Facility Lessee's obligations under the
     Facility Lease, the other Operative Documents and the FILOT Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the
     case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

                                      56

<PAGE>

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site or any portion or
     Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability of
     the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Facility Site or any portion or Component thereof, or any interest
     therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease, the Facility Site
     Lease or the Springing Facility Site Sublease or arising from the
     Facility, the Undivided Interest, the Ground Interest, the Facility Site
     or any portion or Component thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
     FILOT Lease;

the conveyance of title to the Undivided Interest; or

                                      57

<PAGE>

otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of the FILOT Lease.

          Notwithstanding anything herein to the contrary and without regard to
paragraph (b) hereof, the Facility Lessee will indemnify the Owner Participant
and the Owner Lessor on an After-Tax Basis for any Taxes collected by way of
withholding (and any interest, penalties or additions to tax associated
therewith) (or for the failure to withhold taxes) imposed on the Lessor Notes
or the Additional Lessor Notes or any other payments to each Certificateholder
or the Indenture Trustee (each a "Certificateholder Indemnitee"), including any
penalties, interest, or additions to tax applicable in connection therewith;
provided, however, that if the Facility Lessee is required, for any reason, to
indemnify the Owner Participant or the Owner Lessor with respect to any failure
to withhold such tax, and the withholding tax would otherwise be an Excluded
Tax under Section 9.2(b) without regard to the first sentence of this
paragraph, then the Certificateholder Indemnitee with respect to which such
withholding was not made will pay the amount of tax not withheld to the
relevant taxing authority if such taxes remain unpaid or will reimburse the
Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the
period commencing on the date the Facility Lessee shall have made the indemnity
payment to such taxing authority and ending the earlier of the date of
repayment by such Tax Indemnitee and five Business Days after the date the
Facility Lessee demands reimbursement thereof pursuant to this sentence, and
(b) the Overdue Rate for the period thereafter to the date the Facility Lessee
actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and direct
     substitution for income taxes) or property taxes) ("Income Taxes"),
     including any such Taxes collected by way of withholding, minimum or
     alternative minimum taxes, and franchise taxes; provided that this
     exclusion (i) shall not affect any express requirement that payments be
     made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee
     that are attributable to any act, event or omission by such Tax Indemnitee
     that occurs after expiration or other termination of the Facility Lease
     and surrender of the Undivided Interest to the Owner Lessor or its
     successors (or in the case of a Certificateholder Indemnitee, Taxes
     imposed for any period after the repayment of the Lease Debt) in
     accordance with the Facility Lease, (as opposed to any act, event or
     omission occurring prior to or simultaneous with such expiration,
     termination or surrender (or, in the case of a Certificateholder
     Indemnitee, such repayment)), provided that this exclusion shall not apply
     so long as a Lease Event of Default shall have occurred and be continuing;

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Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the FILOT Lease (giving effect to its assignment to the Owner Lessor
     pursuant to the Assignment Agreement) and not as a result of any action or
     inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee
     is a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the
     Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that, under
     law in effect on the date of the transfer such Taxes exceed the amount of
     Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

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Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall
     have determined in good faith that compliance with any such requirement
     shall not result in any identified non-immaterial adverse effect to its
     interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly
     required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee
     is not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the

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     nature of sales, use, rental or license taxes or value added taxes (except
     to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all
     such payments are made on an After-Tax Basis. Each payment required to be
     made by the Facility Lessee to a Tax Indemnitee pursuant to this Section
     9.2 shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii)
     where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary
     for the accounting firm to conduct such review and determination (but not
     tax returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document or the FILOT Lease are not within the scope of
     the

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     independent accountant's responsibility. The fees and disbursements of
     such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility
     Lessee a Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing, such amount shall not be payable until such
     Significant Lease Default or Lease Event of Default has been cured, and
     (B) the amount payable to the Facility Lessee pursuant to this sentence
     shall not exceed the amount of the indemnity payment in respect of such
     refunded or credited Taxes that was made by the Facility Lessee. Any
     excess of (x) and

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     (y) over (B) in this Section 9.2(f) shall be carried forward and reduce
     the Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such refund or credit, the
     portion of such refund or credit that is required to be repaid or
     recaptured will be treated as Taxes for which the Facility Lessee must
     indemnify the Tax Indemnitee pursuant to this Section 9.2 without regard
     to paragraph (b) hereof. If, in connection with a refund or credit of all
     or part of any Taxes paid, reimbursed or advanced by the Facility Lessee
     pursuant to this Section 9.2, a Tax Indemnitee receives an amount
     representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

          (1)   the Tax Indemnitee will control the contest of such Tax Claim
(acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

          (2)   the decisions regarding what actions to be taken shall be made
by the Tax Indemnitee in its sole judgment, and

          (3)   the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without the Facility Lessee's prior written consent except
as provided in paragraph (g)(iv) below.

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          In either case, the party conducting such contest shall consult in
good faith with the other party and its designated counsel with respect to such
Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

          (1)   within 30 days after written notice by the Tax Indemnitee to
the Facility Lessee of such Tax Claim (or such shorter period, to be specified
by the Tax Indemnitee in such notice, as required for taking action with
respect to such Tax Claim), the Facility Lessee shall request in writing to the
Tax Indemnitee that such Tax Claim be contested,

          (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

          (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

          (4)   there is no risk of imposition of any criminal penalties or
liabilities,

          (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

          (6)   the Facility Lessee agrees to pay (and pays on demand) and with
no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

          (7)   the Tax Indemnitee, if it so requests has been provided at the
Facility Lessee's sole expense with an opinion, reasonably acceptable to such
Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

          (8)   in the case of a judicial appeal, the appeal is not to the U.S.
Supreme Court,

          (9)   if such contest is controlled by the Facility Lessee, prior to
commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity
pursuant to this Section 9.2 with respect to

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<PAGE>

such Tax, which admission shall be binding on the Facility Lessee unless and to
the extent such contest is determined in a manner that conclusively
demonstrates that the Facility Lessee is not so liable, and

          (10)   if the subject matter of such claim shall be of a continuing
or recurring nature and shall have previously been decided pursuant to this
paragraph (g), there shall have been a change in law after such previously
decided claim and such Tax Indemnitee receives, at the Facility Lessee's sole
cost, an opinion of counsel selected by such Tax Indemnitee and reasonably
acceptable to the Facility Lessee to the effect that such change is favorable
to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

          (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

          (2)   promptly repays to the Facility Lessee any Tax Advance and any
amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold or fee interest, as applicable, of the Owner
     Lessor in the Facility for United States federal, state and local income
     tax purposes (if applicable), send a copy of such report, statement or
     return to the Tax Indemnitee and timely file such report, statement or
     return with the appropriate taxing authority, or (z) in all other cases,
     prepare and furnish to such Tax Indemnitee not later than 30 days prior to
     the date such report, statement or return is required to be filed
     (determined without regard to extensions) a proposed form of such report,
     statement or return for filing by the Tax Indemnitee; provided that the
     only consequence for failure to file after compliance by the Facility
     Lessee with the requirements hereof shall be a loss of indemnification
     from the Facility Lessee in respect of any Tax to the extent resulting
     from such failure.

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Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section.
     Subject to the preceding sentence, the Facility Lessee's obligations under
     this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to
     this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the Facility Lessee's rights under the
Facility Lease, Facility Site Lease and, if applicable, the Springing Facility
Site Sublease, including the right to possession, use and quiet enjoyment of
the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's Interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no obligation to accept
such Additional Equity Investment; and (y) the conditions set forth below and
in Section 2.12 of the Collateral Trust Indenture shall have been satisfied.
The obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any
financing of Improvements through the issuance of such Additional Lessor Notes
under the Collateral Trust Indenture being called a "Supplemental Financing")
is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

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the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that
     there shall be no changes to the amortization schedule or interest amounts
     and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents and the FILOT Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

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the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which

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     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents and the FILOT Lease. The
Owner Participant will execute such agreements and documents as may be
necessary with respect to any such refinancing and will instruct the Owner
Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt to the extent permitted by the Collateral Trust
     Indenture; provided such re-optimization shall not result in a change to
     average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury

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     Regulations, Revenue Rulings or Revenue Procedures ("Tax Law Change")
     enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which it
     is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior

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     written consent of the Owner Lessor, the Owner Participant and, so long as
     the Lien of the Collateral Trust Indenture has not been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustees.
     Notwithstanding the foregoing, upon satisfaction of the conditions in
     paragraph (b) below, the Facility Lessee may assign the Facility Lease or
     any other Operative Document to which it is a party, or any interest
     therein to any Person, without the consent of the Owner Lessor, the Owner
     Participant, the Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the Ownership
     Interest of any non-assigning Facility Lessee), the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof), and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty or (y) Calpine's obligations under
     the Calpine Guaranty has been succeeded to in accordance with Section
     8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

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<PAGE>

               b)   the Facility Lessee shall have paid, at no after-tax cost
                    to such parties, all reasonable documented out-of-pocket
                    expenses (including reasonable attorneys' fees and
                    expenses) of the Owner Lessor, the Lessor Manager, the
                    Owner Participant, the Indenture Trustee, the Lease
                    Indenture Company and the Pass Through Trustees in
                    connection with such assignment;

               c)   the Facility Lessee has provided the Indenture Trustee with
                    (x) an indemnity against the risk that such assignment will
                    cause a Tax Event to occur to any direct holder of any
                    Lessor Note and any Certificateholder or (y) an opinion of
                    counsel to the effect that such assignment will not cause a
                    Tax Event to occur to any direct holder of any Lessor Note
                    and any Certificateholder; and

               d)   the transfer shall not cause the Facility to become
                    "tax-exempt use property within the meaning of Section
                    168(h) of the Code (unless the Facility Lessee shall make a
                    payment contemporaneously with such transfer that in the
                    reasonable judgment of the Owner Participant compensates
                    the Owner Participant for the adverse tax consequences
                    therefrom).

          F.   Special Facility Lessee Transfers. Upon the occurrence and
during the continuance of a Special Lessee Transfer Event, the Facility Lessee
(or its designee as provided below) may (a) terminate the Facility Lease in
accordance with its terms, or (b) upon not less than 30 days' written notice to
the Owner Participant, the Indenture Trustee and the Pass Through Trustees,
purchase subject to the limitations set forth in Section 7.1, all of the Member
Interest (any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents
and the FILOT Lease, except for obligations (including Section 9.1 and 9.2
hereof and the Tax Indemnity Agreement) surviving pursuant to the express terms
of the Operative Documents or which have otherwise accrued but not been paid as
of such date and (ii) the Owner Participant or the OP Guarantor will transfer
(by an appropriate instrument of transfer) the Member Interest to the Facility
Lessee (or its designee); provided, however, that if the Lien of the Collateral
Trust Indenture has not been terminated or discharged, such transfer shall not
be made to the Facility Lessee, but shall be

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<PAGE>

made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS

          (a)   At any time prior to the expiration or earlier termination of
the FILOT Lease, the Facility Lessee may request (which request shall be in
writing and addressed to the Owner Lessor, the Owner Participant and the
Indenture Trustee) that the Owner Lessor exercise the Purchase Options (if and
to the extent not previously exercised) and direct the County to convey the
Land (to the extent of the Owner Lessor's Percentage interest) to the Facility
Lessee upon the closing of the conveyance of the Project pursuant thereto.
Within 15 Business Days following receipt of such request, the Owner Lessor
shall exercise the Purchase Options (if and to the extent not previously
exercised) and direct the County to convey the Land (to the extent of the Owner
Lessor's Percentage interest) to the Facility Lessee upon the closing of the
conveyance of the Project pursuant thereto, if each of the following conditions
shall have been satisfied:

               (1)  the conditions specified in the definition of "Post-FILOT
                    Lease Conversion Date" have been satisfied;

               (2)  no Lease Default or Lease Event of Default under any of
                    Sections 16(g) and 16(h) of the Facility Lease has occurred
                    and is continuing; and

               (3)  no Significant Lease Default or Lease Event of Default
                    shall have occurred and be continuing or would result from
                    the occurrence of the Post-FILOT Lease Conversion Date.

          Notwithstanding the foregoing, the Facility Lessee shall be entitled
to make the foregoing request of the Owner Lessor and to receive a conveyance
of the Land (to the extent of the Owner Lessor's Percentage interest) only if,
concurrently with such request and receipt, the Facility Lessee also makes such
request of the Other Broad River Owner Lessors and receives their respective
interests in the Land pursuant to the Other Broad River Operative Documents.

(b)   If the request of the Facility Lessee referred to in paragraph (a) above
states (and provides information constituting a reasonable basis for such
statement) (A) that the conditions specified

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in paragraph (a) above have been satisfied or will be (and are capable of
being) timely satisfied, (B) that the FILOT Lease is likely to terminate or
cease to be in full force and effect before the Owner Lessor has exercised the
Purchase Options if such exercise does not occur within a period of time which
shall not be less than ten (10) Business Days from the date of the Owner
Lessor's receipt of such notice, and (C) that such notice is being given
pursuant to this Section 14(b) in anticipation of a possible exercise by the
Facility Lessee of the Purchase Options, then the Owner Lessor (or in lieu
thereof, the Owner Participant) shall respond to such notice within five (5)
Business Days after its receipt of such notice (provided that if the Facility
Lessee or the Owner Lessor shall have Actual Knowledge that a termination of
the FILOT Lease by the County is reasonably likely to occur within a time frame
shorter than the time frame of the foregoing notice provisions, the Person
having such Actual Knowledge will promptly advise the other Person of the
relevant information known to it, and thereafter the parties will proceed with
the notices to each other hereunder as promptly as commercially practicable
using all reasonable efforts). The written notice from the Owner Lessor
referred to above shall be one with which the Owner Lessor (or the Owner
Participant) either shall concur in all material facts asserted by the Facility
Lessee in its notice or shall dispute in good faith one or more of such
material facts and shall set forth the Owner Lessor's (or the Owner
Participant's or Indenture Trustee's) position (and in reasonable detail, the
basis therefor) in respect thereof. If the Owner Lessor (or the Owner
Participant) does not provide such notice in dispute of one or more material
facts so asserted by the Facility Lessee within the time period provided above,
the Facility Lessee shall be entitled, to the extent permitted by Applicable
Law, to exercise the foregoing Purchase Options (if and to the extent not
previously exercised) and direct the County to convey (to the extent of the
Owner Lessor's Percentage interest) the Land to the Facility Lessee and the
Project (other than the Land) to the Owner Lessor. Notwithstanding the
foregoing, the determination whether the conditions set forth in paragraph (a)
above have been or shall be capable of being timely satisfied shall be made by
the Owner Lessor and (if the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee (without the necessity of obtaining the
consent of any of the Noteholders or the Pass Through Trustees), provided that
either the Owner Lessor, the Owner Participant or the Indenture Trustee has
notified the Facility Lessee of the dispute referred to above.

          The Owner Lessor agrees not to exercise the Purchase Options other
than as contemplated above unless (i) there has occurred and is continuing at
the time of its election to exercise the same as contemplated by Section 10.02
of the FILOT Lease a Lease Event of Default and the Owner Lessor or, if the
Lien of the Collateral Trust Indenture has at the time not been discharged, the
Indenture Trustee has commenced the enforcement of remedies under Section 17 of
the Facility Lease, or (ii) in the judgment of the Owner Participant the FILOT
Lease is likely to terminate or cease to be in full force and effect before the
Owner Lessor has exercised the Purchase Options.

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III.   MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document,
the performance of the FILOT Lease or the FILOT Lease (subject to any
applicable consent required by the County).

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 15.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 15.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

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<PAGE>

               Broad River Energy, LLC
               c/o Calpine Northbrook Office
               650 Dundee Road, Suite 350
               Northbrook, IL 60062
               Attention: Senior Counsel
               Telephone: (847) 559-9800
               Facsimile: (847) 559-1805

               with a copy to:

                    Calpine Corporation
                    50 West San Fernando Street, 5th Floor
                    San Jose, California 95113
                    Attention: Asset Manager and General Counsel
                    Telephone: (408) 995-5115
                    Facsimile: (408) 995-0505

          If to the Guarantor:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California 95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

               If to the Owner Lessor, the Trust Company or the Lessor Manager:

               c/o Wells Fargo Bank Northwest, National Association
               MAC U1254-031
               79 South Main Street
               Salt Lake City, UT 84111
               Telephone: (801) 246-5630
               Facsimile: (801) 246-5053
               Attention: Corporate Trust Services

               If to the Owner Participant:

               SBR OP-3, LLC
               c/o Wells Fargo Bank Northwest, National Association
               MAC U1254-031
               79 South Main Street
               Salt Lake City, UT 84111
               Telephone: (801) 246-5630
               Facsimile: (801) 246-5053
               Attention: Corporate Trust Services

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<PAGE>

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York 10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

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<PAGE>

               If to the Indenture Trustee:

               State Street Bank and Trust Company of Connecticut, National
                  Association
               225 Asylum Street, Goodwin Square
               Hartford, CT 06103
               Telephone No.: (860) 244-1822
               Facsimile No.: (860) 244-1889
               Attention: Corporate Trust Department

                    with a copy to:

               State Street Bank and Trust Company of California, National
                  Association
               633 West 5th Street, 12th floor
               Los Angeles, California 90071
               Telephone No.: (213) 362-7373
               Facsimile No.: (213) 362-7357
                    Attention: Corporate Trust Department

               If to the Pass Through Trustees:

               State Street Bank and Trust Company of Connecticut, National
                  Association
               225 Asylum Street, Goodwin Square
               Hartford, CT 06103
               Telephone No.: (860) 244-1822
               Facsimile No.: (860) 244-1889
               Attention: Corporate Trust Department

                    with a copy to:

               State Street Bank and Trust Company of California, National
                  Association
               633 West 5th Street, 12th floor
               Los Angeles, California 90071
               Telephone No.: (213) 362-7373
               Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Manager:

               Credit Suisse First Boston
               Eleven Madison Avenue
               New York, New York 10010
               Telephone No.: (212) 325-2000
               Attention: Richard O'Day

               A copy of all notices provided for herein shall be sent by the
               party giving such notice to each of the other parties hereto. In
               addition,

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<PAGE>

               the Facility Lessee shall (unless otherwise directed by the
               applicable Rating Agency) provide to each Rating Agency a copy
               of any information, report or notice it gives to the Indenture
               Trustee hereunder or any other Operative Documents.

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Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents and the FILOT Lease regardless of any investigation
made by any such party or on behalf of any such party. In addition, the
indemnifications by the Facility Lessee under Sections 9.1 and 9.2 of this
Agreement, subject to Sections 9.1(b) and 9.2(b), respectively, the Facility
Site Lease and the Calpine Guaranty, shall expressly survive the expiration or
early termination (in either case, for whatever reason) of the Facility Lease
or the transfer or other disposition of the respective interests of the Owner
Participant, the Owner Lessor, the Lessor Manager, the Lease Indenture Company,
the Indenture Trustee, the Pass Through Trustees and the Certificateholders in,
to and under this Agreement, the Assignment Agreement and the other Operative
Documents and the FILOT Lease. Except as expressly provided above or in Section
22.3 of the Facility Lease, the Tax Indemnity Agreement or as otherwise
expressly provided in the Operative Documents, the representations, warranties,
covenants and agreements of the Transaction Parties under the Operative
Documents shall terminate and be of no further force and effect effective upon
the expiration or earlier termination of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business
Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the FILOT Lease, as to all of which
     the other parties hereto agree to look solely to the Indenture Estate and
     the Lessor Estate, respectively; provided, however, that the Lease
     Indenture Company and the Pass Through Trust Company shall be liable
     hereunder for their own negligence or willful misconduct or for a breach
     of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

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<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in its sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and to
     the nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, and the FILOT Lease (except as otherwise provided therein), or
     the subject matter hereof or thereof or any of the transactions
     contemplated hereby or thereby brought by any of the parties hereto or
     their successors or assigns; (ii) hereby irrevocably agrees that all
     claims in respect of such action or proceeding may be heard and determined
     in such New York State court, or in such federal court; and (iii) to the
     extent permitted by Applicable Law, hereby irrevocably waives, and agrees
     not to assert, by way of motion, as a defense, or otherwise, in any such
     suit, action or proceeding any claim that it is not personally subject to
     the jurisdiction of the above-named courts, that the suit, action or
     proceeding is brought in an inconvenient forum, that the venue of the
     suit, action or proceeding is improper or that this Agreement, the other
     Operative Documents, or the subject matter hereof or thereof may not be
     enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

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<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee designate,
     appoint and empower National Registered Agents, Inc., 440 Ninth Avenue,
     5th Floor, New York, New York 10001, and the Owner Lessor designates,
     appoints and empowers CT Corporation System, with an office at 111 Eighth
     Avenue, New York, New York 10011, as its authorized agent to receive for
     and on its behalf service of any summons, complaint or other legal process
     in any such action, suit or proceeding in the State of New York for so
     long as any obligation of the Facility Lessee or the Owner Lessor, as
     applicable, shall remain outstanding hereunder or under any of the other
     Operative Documents or with respect to the Facility Lessee for so long as
     it has any obligations remaining under the FILOT Lease. The Facility
     Lessee shall grant an irrevocable power of attorney to CT Corporation
     System, in respect of such appointment and shall maintain such power of
     attorney in full force and effect for so long as any obligation of the
     Facility Lessee shall remain outstanding hereunder or under any of the
     Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is
shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing,

                                      83

<PAGE>

the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 15.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     15.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 15.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

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<PAGE>

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 15.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                      85

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized.

                    BROAD RIVER ENERGY LLC,
                    a Delaware limited liability company

                         By: _______________________________
                         Name:
                         Title:
                         Date:

<PAGE>

                    BROAD RIVER OL-3 LLC, a Delaware limited
                    liability company

                    By: WELLS FARGO BANK NORTHWEST,
                    NATIONAL ASSOCIATION
                    not in its individual capacity but solely as
                    Lessor Manager

                    By: _______________________________
                    Name:
                    Title:
                    Date:

                    SBR OP-3 LLC, a Delaware limited liability
                    company

                    By: WELLS FARGO BANK NORTHWEST,
                    NATIONAL ASSOCIATION
                    not in its individual capacity but solely as
                    Lessor Manager

                    By: _______________________________
                    Name:
                    Title:
                    Date:

                    WELLS FARGO BANK NORTHWEST,
                    NATIONAL ASSOCIATION,
               not in its individual capacity, except as expressly
               provided herein, but solely as Lessor Manager

                    By: _______________________________
                    Name:
                    Title:
                    Date:

<PAGE>

                    STATE STREET BANK AND TRUST
                    COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION
               not in its individual capacity, except to the extent
               expressly provided herein, but solely as Indenture Trustee
               under the Collateral Trust Indenture

                    By: _______________________________
                    Name:
                    Title:
                    Date:

                    STATE STREET BANK AND TRUST
                    COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION
               not in its individual capacity, except to the extent
               expressly provided herein, but solely as Pass Through
               Trustees under the Pass Through Trust Agreement

                    By: _______________________________
                    Name:
                    Title:
                    Date:

<PAGE>

                    CALPINE CORPORATION
                                      a Delaware corporation

                    By: _______________________________
                    Name:
                    Title:
                    Date:

<PAGE>

     APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but in
     another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect of
     an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in any
     such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other section,
     paragraph or other part substituted therefor from time to time;

<PAGE>

     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or words
     of similar import shall, whether or not so expressly stated, be deemed to
     be a reference to the satisfaction, release and discharge in full and
     cancellation of the Lien of the Collateral Trust Indenture or the
     Collateral Documents, as the case may be, in accordance with the express
     provisions thereof;

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and other
     words of similar import shall, unless the context requires otherwise,
     refer to the whole of the applicable document and not to any particular
     article, section, subsection, paragraph or clause thereof; and

     (o)   a reference to "including" shall mean including without limiting the
     generality of any description preceding such term, and for purposes hereof
     and of each Operative Document the rule of ejusdem generis shall not be
     applicable to limit a general statement, followed by or referable to an
     enumeration of specific matters, to matters similar to those specifically
     mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured debt
     of which is rated at least A by

                                      2

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued by
     the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to finance
     all or a portion of the Owner Lessor's Percentage of the cost of any
     Required or Non-Severable Improvement financed pursuant to Section 11.1 of
     the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any Person
     directly or indirectly controlling, controlled by or under common control
     with such particular Person and (b) any Person beneficially owning or
     holding, directly or indirectly, 10% or more of any class of voting or
     equity interest of such first Person or any corporation of which such
     first Person beneficially owns or holds, in the aggregate, directly or
     indirectly, 10% or more of any class of voting or equity interest. For
     purposes of this definition, "control" when used with respect to any
     particular Person shall mean the power to direct the management and
     policies of such Person, directly or indirectly, whether through the
     ownership of voting securities, by contract or otherwise, and the terms
     "controlling" and "controlled" have meanings correlative to the foregoing;
     provided, however, that under no circumstances shall the Lease Indenture
     Company be considered to be an Affiliate of either the Indenture Trustee
     or any Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease Indenture
     Company, nor shall the Lease Indenture Company, the Indenture Trustee,
     solely because any Operative Document contemplates that any of them may
     request or act at the instruction of any such Person or such Person's
     Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is received
     or properly accrued, and

                                      3

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of the
     Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use the
     Facility, the Undivided Interest (if any), the Ground Interest or Facility
     Site as contemplated by the Operative Documents and the FILOT Lease, to
     sell electricity therefrom, to enter into any Operative Document or to
     consummate any transaction contemplated thereby, or (b) that is necessary
     so that none of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of the
     Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten (10)
     Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal. If
     either the Owner Participant or the Facility Lessee does not appoint its
     appraiser within such ten Business Day period, the determination of the
     other appraiser shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. If the appraisers appointed by the Owner
     Participant and the Facility Lessee are unable to agree upon the value,
     period, amount or other determination in question within thirty (30) days,
     such appraisers shall jointly appoint a third Independent Appraiser or, if

                                      4

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of the
     Granting Clause of the Collateral Trust Indenture.

     "ASSIGNED FILOT DOCUMENTS" with respect to the Facility Site Lease and the
     Springing Facility Site Lease, shall have the meaning set forth in the
     recitals to the Facility Site Lease and the Springing Facility Site Lease,
     respectively.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (BR-3) dated as
     of the Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B to the Participation Agreement duly
     completed, executed and delivered on the Closing Date pursuant to which
     the Owner Lessor will acquire the Undivided Interest and the Ground
     Interest from the Facility Lessee.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $75,000,000.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate of
     interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee for
     rental payments during the remaining term of the lease included in such
     Sale/Leaseback Transaction (including any period for which such lease has
     been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to any
     Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
     sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
     amended from time to time, 11 U.S.C. [sec] 101 et seq.

                                      5

<PAGE>

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of the
     Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER" shall mean Broad River Energy LLC.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in accordance
     with Section 13.1 or Section 13.2, as the case may be, of the Facility
     Lease upon the exercise of a termination option by the Facility Lessee.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required by
     law, regulation or executive order to be closed in New York, New York, the
     city and the state in which the Corporate Trust Office of the Indenture
     Trustee is located or the city and state in which the Pass Through
     Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment Agreement
     (BR-3) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

                                      6

<PAGE>

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any certificates issued in replacement therefor pursuant to
     Section 3.3, 3.4 or 3.5 of the Pass Through Trust Agreement.

     "CLAIM(S)" individually or collectively as the context may require, shall
     mean any liability (including in respect of negligence (whether passive or
     active or other torts), strict or absolute liability in tort or otherwise,
     warranty, latent or other defects (regardless of whether or not
     discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges, of
     whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner
     Lessor's Interest.

                                      7

<PAGE>

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage,
     Security Agreement and Fixture Filing (BR-3), dated as of the Closing
     Date, between the Owner Lessor and the Indenture Trustee, in substantially
     the form of Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Springing Facility Site Lease,
     shall have the meaning specified in Section 2.1(a) of the Springing
     Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature that
     may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination, means
     the aggregate amount of consolidated liabilities of the Guarantor and its
     consolidated Restricted Subsidiaries which may properly be classified as
     current liabilities (including taxes accrued as estimated), after
     eliminating (i) all inter-company items between the Guarantor and its
     Subsidiaries and (ii) all current maturities of long-term Indebtedness,
     all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of determination,
     as applied to the Guarantor, the total amount of Consolidated assets (less
     accumulated depreciation or amortization, allowances for doubtful
     receivables, other applicable reserves and other properly deductible
     items) under GAAP which would appear on a Consolidated balance sheet of
     the Guarantor and its Subsidiaries, determined in accordance with GAAP,
     and after giving effect to purchase accounting and after deducting
     therefrom, to the extent otherwise included, the amounts of: (i)
     Consolidated Current Liabilities; (ii) minority interests in consolidated
     Restricted Subsidiaries held by Persons other than the Guarantor or a
     Restricted Subsidiary; (iii) excess of cost over fair value of assets of
     businesses acquired, as determined in good faith by the Board of
     Directors; (iv) any revaluation or other write-up in value of assets
     subsequent to December 31, 1993 as a result of a change in the method of
     valuation in accordance with GAAP; (v) unamortized debt discount and
     expenses and other unamortized deferred charges, goodwill, patents,
     trademarks, service marks, trade names, copyrights, licenses, organization
     or developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous fund
     established for the purpose of redemption or other

                                      8

<PAGE>

     retirement of Capital Stock to the extent such obligation is not reflected
     in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

          "CORRECTIVE ORDINANCE" shall mean that certain ordinance authorizing
the Assignment Agreement and adopted by the County on October 1, 2001 pursuant
to a public hearing held September 24, 2001.

     "COUNTY" shall mean Cherokee County, South Carolina.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule 2
     of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears) minus (ii) the sum of (A) the Equity Portion of Termination Value
     and (B) if such date of determination is a Rent Payment Date, the Equity
     Portion of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time or
     both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section 1(a)
     of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

                                      9

<PAGE>

     "DOLLARS" or the sign "$" shall mean United States dollars or other lawful
     currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the Phase 1
     and Phase II reports of the Engineering Consultant, dated October 12,
     2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether civil
     or criminal, arising under a theory of negligence or strict liability, or
     otherwise) under any Environmental Law, (iii) create or constitute a
     public or private nuisance or trespass, or (iv) constitute a violation of
     or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Roy F. Weston, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment Report, dated October 10, 2001, prepared by the Environmental
     Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date the
     difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent
     Payment Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the

                                      10

<PAGE>

Termination Value set forth opposite the Termination Date
corresponding to such date of determination on Schedule 2 of the
Facility Lease, and, if such date of determination is a Rent Payment
Date, Periodic Rent due on that date (to the extent payable in
arrears) over (ii) the balance, including scheduled (in accordance
with the payment terms of the Lessor Notes) accrued interest, on the
Lessor Notes scheduled (in accordance with the payment terms of the
Lessor Notes) to be outstanding on such date of determination
corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee being
     or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)     the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders the
     Facility permanently unfit for normal use or which does not satisfy the
     preconditions for repair of the Facility set forth in Section 10 of the
     Facility Lease; or

          (ii)    any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any Governmental
     Entity that shall have resulted in loss by the Owner Lessor, prior to the
     Post-FILOT Lease Conversion Date, of the Undivided Interest or the Ground
     Interest, or, from and after the Post-FILOT Lease Conversion Date, of
     title to the Undivided Interest, in each case following exhaustion of all
     permitted appeals or an election by the Facility Lessee in its discretion
     not to pursue such appeals or rights; provided that no such contest (or
     exercise) shall extend beyond the earlier of the date which is (x) six
     months after the loss of such leasehold interest or title, or (y) 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee or (b) Requisition of use
     of, or leasehold interest represented by the Undivided Interest or the
     Ground Interest or, upon or following the Post-FILOT Lease Conversion
     Date, title to, the Undivided Interest or the Ground Interest by any
     Governmental Entity that shall have resulted in the loss of possession of
     the Undivided Interest or all or any part of the Ground Interest that is
     required for the use or operation of the Facility; provided that in any
     case involving Requisition of use of the Facility, or all or any part of
     the Facility Site that is required for the use or operation, of the
     Facility, but not of the Owner Lessor's Undivided Interest or the Ground
     Interest or (from and after the Post-FILOT Lease Conversion Date) the
     Facility Lessee's title to the Ground Interest, such event shall be an
     Event of Loss only if

                                      11

<PAGE>

     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)    if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below, subjection
     of the Owner Participant or the Owner Lessor to any public utility
     regulation of any Governmental Entity or law which in the reasonable
     opinion of the Owner Participant is burdensome, or the subjection of the
     Owner Participant's or the Owner Lessor's interest in the Facility Lease
     to any rate of return regulation by any Governmental Entity, in either
     case by reason of the participation of the Owner Lessor, the Owner
     Participant or the OP Guarantor in the transactions contemplated by the
     Operative Documents and the FILOT Lease and not, in any event, as a result
     of (a) investments, loans or other business activities of the Owner
     Participant or any of its Affiliates in respect of equipment or facilities
     similar in nature to the Facility or any part thereof or in any other
     electrical, cogeneration or other energy or utility related equipment or
     facilities or the general business or other activities of the Owner
     Participant or any of its Affiliates or the nature of any of the
     properties or assets from time to time owned, leased, operated, managed or
     otherwise used or made available for use by the Owner Participant or any
     of its Affiliates or (b) a failure of the Owner Participant to perform
     routine, administrative or ministerial actions the performance of which
     would not subject the Owner Participant or any of its Affiliates to any
     material adverse consequence (in the reasonable opinion of such Owner
     Participant acting in good faith); provided that the Facility Lessee and
     the Owner Lessor and Owner Participant agree to cooperate and to take
     reasonable measures to alleviate the source or consequence of any
     regulation constituting an Event of Loss under this paragraph (iv), so
     long as there shall be no adverse consequences to the Owner Lessor or
     Owner Participant as a result of such cooperation or the taking of
     reasonable measures (the events and circumstances described herein this
     paragraph (iv), a "Regulatory Event of Loss"); or

          (v)     if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Order shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

          (vi)    if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (v) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor; or

                                      12

<PAGE>

          (vii)   the FILOT Lease shall have been cancelled or terminated or
     shall otherwise cease to be in full force and effect otherwise than by
     reason of (a) an event constituting a Lease Event of Default or (b) the
     occurrence of the Post-FILOT Lease Conversion Date.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or exercise
     its rights of eminent domain, and (C) the date which is 48 months prior to
     the end of the Basic Lease Term or any Renewal Lease Term then in effect
     or elected by the Facility Lessee (if an event described in clause
     (iii)(a) shall be continuing at such time). The date of occurrence of an
     Event of Loss described in clause (iii)(b) above shall be the date of
     requisition of title to the Facility Site or, in the case of a requisition
     of use of the Facility Site, the date which is the scheduled expiration
     date of the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee, as the case may be (if an event described
     in clause (iii)(b) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iv) above shall be the
     date on which the Facility Lessee receives the Owner Participant's
     election made in accordance with such clause (iv) during any period when
     an event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause (v)
     above shall be the date on which the Facility Lessee receives the Owner
     Participant's election made in accordance with such clause (v). The date
     of occurrence of an Event of Loss in clause (vi) above shall be the date
     on which the Facility Lessee receives the Owner Participant's election
     made in accordance with such clause (vi). The date of occurrence of an
     Event of Loss in clause (vii) shall be ten (10) Business Days after the
     date of such termination, cancellation or failure to be in full force and
     effect.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable by
     the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the FILOT Lease, (ii)(A) insurance
     proceeds, if any, payable to the Owner Lessor or the Owner Participant
     under insurance separately maintained by the Owner Lessor or the Owner
     Participant

                                      13

<PAGE>

     with respect to the Facility as permitted by Section 3(b) of Schedule 5.31
     to the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document or the FILOT Lease for the benefit of the Owner Lessor or the
     Owner Participant, (iii) any amount payable to the Owner Participant as
     the purchase price of the Owner Participant's right and interest in the
     Member Interest, (iv) all other fees expressly payable to the Owner
     Participant under the Operative Documents, (v) any payments in respect of
     interest, or any payments made on an After-Tax Basis, to the extent
     attributable to payments referred to in clause (i) through (vi) above;
     (vii) any amounts paid to the Owner Lessor as reimbursement for amounts
     expended pursuant to Section 20 of the Facility Lease; (viii) proceeds of
     the items referred to in clause (i) through (vii) above; and (ix) any
     rights to demand, collect, sue for, or otherwise receive and enforce
     payment of the foregoing amounts, including under the Calpine Guaranty,
     but without limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of the
     Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "Exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 850 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Gaffney, South Carolina and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (BR-3), dated as
     of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all Renewal
     Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided fee
     interest (to the extent of the Owner Lessor's Percentage) in all of or a
     portion of the Project, other than the portion thereof constituting the
     Land.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      14

<PAGE>

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (BR-3), dated as
     of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean, with respect to the Facility Site
     Lease, Broad River Energy LLC, and with respect to the Springing Facility
     Site Lease, shall mean Owner Lessor.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean, with respect to the Facility Site
     Lease, Owner Lessor, and with respect to the Springing Facility Site
     Lease, shall mean Broad River Energy LLC.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of the
     Facility Site Lease and Section 4.1 of the Springing Facility Site Lease.

     "FAIR MARKET RENTAL VALUE" or "Fair Market Sales Value" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion to
     lease or purchase and an informed and willing lessor or seller or supplier
     under no compulsion to lease or sell or supply the property or service in
     question, and shall, in the case of the Undivided Interest or the Owner
     Lessor's Interest, be determined (except pursuant to Section 17 of the
     Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with in
     all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the FILOT Lease and the obligations relating thereto, (iii) the
     Undivided Interest or the Owner Lessor's Interest, as the case may be, is
     free and clear of all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens), (iv) taking into account
     the remaining term of the Facility Site Lease, and (v) in the case the
     Fair Market Rental Value, taking into account the terms of the Facility
     Lease and the other Operative Documents. If the Fair Market Sales Value of
     the Owner Lessor's Interest is to be determined during the continuance of
     a Lease Event of Default or in connection with the exercise of remedies by
     the Owner Lessor pursuant to Section 17 of the Facility Lease, such value
     shall be determined by an Independent Appraiser appointed solely by the
     Owner Lessor on an "as-is", "where-is" and "with all faults" basis and
     shall take into account all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens); provided, however, in
     any such case where the Owner Lessor shall be unable to obtain
     constructive possession sufficient to realize the economic benefit of the
     Owner Lessor's Interest, Fair Market Sales Value of the Owner Lessor's
     Interest shall be deemed equal to $0 (zero). If in any case other than in
     the preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a request
     therefor has been made, the Fair Market Sales Value of the Owner Lessor's

                                      15

<PAGE>

     Interest shall be determined by appraisal pursuant to the Appraisal
     Procedures. Any fair market value determination of a Severable Improvement
     shall take into consideration any liens or encumbrances to which the
     Severable Improvement being appraised is subject and which are being
     assumed by the transferee.

     "FACILITY SITE SUBLEASE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Springing Facility Site Sublease.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)     a determination by FERC of EWG status of the Facility Lessee
     and Owner Lessor and the Owner Participant;

          (ii)    an approval from FERC for the Facility Lessee to sell power at
     market-based rates under Section 205 of the FPA effective on or before the
     Closing Date;

          (iii)   either an approval by FERC of the issuance of securities and
     the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)    Intentionally Omitted; and

          (v)     an approval from FERC under Section 203 of the Federal Power
     Act for the transfer of jurisidictional facilities in the sale/leaseback
     contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner Lessor is an EWG.

     "FILOT LEASE" shall mean the Lease Agreement dated March 1, 2000 by and
     between the County and Facility Lessee, together with the
     Inducement Agreement.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of the
     Tax Indemnity Agreement.

                                      16

<PAGE>

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility Site
     Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Springing Facility Site Lease.

     "FMV RENEWAL LEASE OPTION" with respect to the Initial Term, shall have
     the meaning set forth in Section 2.2(a)(iii) of the Springing Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Springing Facility Site Lease,
     shall have the meaning set forth in Section 19.3 of the Springing Facility
     Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents, approvals,
     waivers, exceptions, variances, filings, permits, orders, licenses,
     exemptions and declarations of or with any Governmental Entity and shall
     include those citing, environmental and operating permits and licenses
     (including the Applicable Permits) that are required for the use and
     operation of the Facility, the Undivided Interest (if any), the Ground
     Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean, prior to the Post-FILOT Lease Conversion
     Date, the Owner Lessor's 25% undivided leasehold interest in the Facility
     Site, and upon and after the Post-FILOT Lease Conversion Date, the Owner
     Lessor's 25% undivided leasehold interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance in
     any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act of
     1935, as amended.

                                      17

<PAGE>

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or Optional
     Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests of
     such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under "swaps",
     "caps", "floors", "collars", or other interest rate hedging contracts or
     similar arrangements, (ix) all Indebtedness of any other Person of the
     type referred to in clauses (i) through (viii), guaranteed by such Person
     or for which such Person shall otherwise (including pursuant to any
     keepwell, makewell or similar arrangement) become directly or indirectly
     liable, and (x) all Indebtedness of the type referred to in clauses (i)
     through (ix) above secured by (or for which the holder of such
     Indebtedness has an existing right, contingent or otherwise, to be secured
     by) any Lien on property (including accounts and contracts rights) owned
     by such Person, even though such Person has not assumed or become liable
     for the payment of such

                                      18

<PAGE>

     Indebtedness, the amount of such obligation being deemed to be the lesser
     of the value of such property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Springing Facility Site Lease.

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting Clause
     of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices to
     the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the Participation
     Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     FILOT Lease or the transactions contemplated thereby, (ii) Claims against
     or any act or omission of the Lease Indenture Company or the Indenture
     Trustee, or Affiliate thereof that is not related to, or that is in
     violation of, any of such Person's representations, warranties, covenants
     or agreements in an Operative Document or the transactions contemplated
     thereby or that is in breach of any covenant or agreement of the Lease
     Indenture Company or the Indenture Trustee specified therein, (iii) Taxes
     imposed upon the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof that are not indemnified against by the Facility Lessee
     pursuant to any Operative Document or (iv) Claims against or affecting the
     Lease Indenture Company or the Indenture Trustee, or any Affiliate thereof
     arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the interest
     of the Lease Indenture Company or the Indenture Trustee in the Lessor
     Estate, other than pursuant to the Operative Documents.

                                      19

<PAGE>

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INDUCEMENT AGREEMENT" shall mean the Inducement Agreement and Millage
     Agreement dated June 15, 1999, between the County and the Facility Lessee.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Springing Facility Site
     Sublease, shall have the meaning set forth in Section 2.1(a) of the
     Springing Facility Site Sublease.

     "INITIAL TERM" with respect to the Springing Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Springing Facility
     Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d) of
     the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "LAND" shall have the meaning thereof set forth in the FILOT Lease.

     "LAND PURCHASE OPTION" shall mean the right of the Owner Lessor, pursuant
     to Section 10.02 of the FILOT Lease, to acquire an undivided fee interest
     (to the extent of the Owner Lessor's Percentage) in the Land.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

                                      20

<PAGE>

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under the
     Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such transaction is considered borrowed
     money indebtedness of the lessee for tax purposes but is classified as an
     operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease and with
     respect to the Springing Facility Site Lease or Springing Facility Site
     Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall have
     the meaning set forth in Section 15.3 of the Facility Site Lease and with
     respect to the Springing Facility Site Lease or Springing Facility Site
     Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other payments
     of Periodic Rent, Supplemental Rent or Termination Value under the
     Facility Lease, condemnation awards, purchase price, sale proceeds,

                                      21

<PAGE>

     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and the FILOT Lease and any of the foregoing,
     but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the provisions
     of the LLC Agreement.

     "LESSOR NOTE(s)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title retention
     arrangement.

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of this
     definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject to
     redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely

                                      22

<PAGE>

     corresponding to the remaining life of such Lessor Note and trading in the
     secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations, assets,
     financial position, results of operation or business of the Guarantor,
     including a material adverse effect on (i) the Facility, the Undivided
     Interest, the Facility Site or the Ground Interest which adversely affects
     the ability of the Guarantor to perform its obligations under the
     Operative Documents or (ii) the validity or enforceability of the
     Operative Documents, (b) the Indenture Estate or the Lessor Estate, the
     security interests in the Lessor Estate, or (c) with respect to the Owner
     Participant's (but not the Certificateholders') interest in the Undivided
     Interest, the residual value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (BR-3), dated as of the Closing Date, between the Owner Lessor,
     as landlord, and the Facility Lessee, as tenant, and filed with the Office
     of the Cherokee County Clerk of Court.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (BR-3),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE LEASE" shall mean the Memorandum of
     Springing Facility Site Lease (BR-3), dated as of the Closing Date,
     between the Facility Lessee, as landlord, and the Owner Lessor, as tenant,
     and filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE SUBLEASE" shall mean the Memorandum
     of Springing Facility Site Sublease (BR-3), dated as of the Closing Date,
     between the Owner Lessor, as sublandlord, and the Facility Lessee, as
     subtenant, and filed with the Office of the Cherokee County Clerk of
     Court.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

                                      23

<PAGE>

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any Person
     authorized by or pursuant to the organizational documents, the by-laws or
     any resolution of the Board of Directors or Executive Committee of such
     Person (whether general or specific) to execute, deliver and take actions
     on behalf of such Person in respect of any of the Operative Documents,
     (ii) in the case of a partnership, by the Chairman of the Board of
     Directors, the President or any Vice President, the Treasurer or an
     Assistant Treasurer of a corporate general partner and (iii) in the case
     of an Indenture Trustee, a certificate signed by a Responsible Officer of
     such Indenture Trustee.

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to the
     Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an OP
     Guarantor in form and substance substantially in the form of Exhibit G to
     the Participation Agreement.

                                      24

<PAGE>

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Springing Facility Site Lease, the Springing Facility Site
     Sublease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Tri-Party Agreement, the Calpine Guaranty, the OP Parent Guaranty (if
     any), the Certificate Purchase Agreement and the Ownership and Operation
     Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any replacement
     Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at Closing,
     and as to all other matters, Thelen Reid & Priest LLP and/or Davis Wright
     & Tremaine LLP, or any other outside legal counsel reasonably acceptable
     to the Owner Participant, (ii) in form and substance (with respect to
     qualifications, exception, assumption and the like) substantially
     equivalent to the legal opinions delivered at Closing, with any material
     modification or supplements thereto to be reasonably acceptable to the
     Owner Participant, or in any such other form as may be reasonably
     acceptable to the Owner Participant, and (iii) the scope of which shall
     cover due authorization, execution, delivery and enforceability of the
     applicable agreement(s), and exemption from regulation, in each case,
     substantially in the form set forth in the opinions delivered at Closing
     with any material modifications thereto to be reasonably acceptable to the
     Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time.

     "OTHER BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the
     assignment agreements executed and delivered pursuant to the Other Broad
     River Participation Agreements.

     "OTHER BROAD RIVER CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine pursuant
     to the Other Broad River Participation Agreements.

                                      25

<PAGE>

     "OTHER BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     Broad River Participation Agreements.

     "OTHER BROAD RIVER FACILITY LEASES" shall mean the other Broad River
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other Broad River Owner Lessors and the Facility Lessee, pursuant to
     which the Other Broad River Owner Lessors will lease the Other South Point
     Undivided Interests to the Facility Lessee.

     "OTHER BROAD RIVER FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other Broad
     River Owner Lessors and the Facility Lessee pursuant to which the Other
     Broad River Owner Lessors will sublease the Other Broad River Ground
     Interests to the Facility Lessee.

     "OTHER BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other Broad River Collateral Trust Indentures.

     "OTHER BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other Broad River Undivided
     Interests and the Other Broad River Ground Interests to the Other Broad
     River Owner Lessors, and the lease by the Other Broad River Owner Lessors
     of the Other Broad River Undivided Interests and the Other Broad River
     Ground Interests to the Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the Overall
     Transaction.

     "OTHER BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other Broad River Owner Lessors pursuant to the
     Other Broad River Operative Documents.

     "OTHER BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC and Broad River OL-4, LLC.

     "OTHER BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC and SBR OP-4, LLC.

     "OTHER BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other Broad River Lease Transactions.

     "OTHER BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other Broad River
     Owner Lessor, the Other Broad River Lessor Manager, Other Broad River
     Owner Participant, Other Broad River Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (BR-1),
     Participation Agreement (BR-2) and Participation Agreement (BR-4), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) assign and transfer to the applicable
     Other Broad River Owner Lessors certain

                                      26

<PAGE>

     undivided leasehold interests in the Facility and the Facility Site, and
     (b) lease from the applicable Other Broad River Owner Lessors such
     undivided leasehold interest in the Facility and the Facility Site
     pursuant to the Other Broad River Facility Leases and the Other Broad
     River Facility Site Leases, respectively.

     "OTHER BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interest (or, upon or following the Post-FILOT Lease Conversion Date, the
     fee interest) in the Facility not conveyed to the Owner Lessor under the
     Assignment Agreement (or, in the case of the fee interest, pursuant to the
     transactions contemplated by Article XIV of the Participation Agreement
     and the Other Broad River Participation Agreement).

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other Broad River
     Calpine Guaranties, the South Point Calpine Guaranties and the RockGen
     Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other Broad River
     Facility Leases, the South Point Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other Broad River Owner
     Lessors, the South Point Owner Lessors and the RockGen Owner Lessors.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the FILOT Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean Broad River OL-3, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: Broad River OL-3, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby, (ii) Claims against
     or any act or omission of the Owner Lessor, the Trust Company or the
     Lessor Manager or Affiliate thereof that is not related to, or that is in
     violation of, any Operative Document or the FILOT Lease (giving

                                      27

<PAGE>

     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby or that is in breach
     of any covenant or agreement of the Owner Lessor, the Trust Company or the
     Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents and the FILOT Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-3, LLC, a Delaware limited liability
     company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility Sites,
     or any part of any thereof or interest therein arising as a result of (i)
     Claims against or any act or omission of the Owner Participant that is not
     related to, or that is in violation of, any Operative Document or the
     transactions contemplated thereby or that is in breach of any covenant or
     agreement of the Owner Participant set forth therein, (ii) Taxes against
     the Owner Participant that are not indemnified against by the Facility
     Lessee pursuant to the Operative Documents or (iii) Claims against or
     affecting the Owner Participant arising out of the voluntary or
     involuntary transfer by the Owner Participant of any portion of the
     interest of the Owner Participant in the Member Interest, other than any
     transfer (x) pursuant to the exercise of any of the Facility Lessee's (or
     any Affiliate thereof) rights under the Operative Documents or (y) during
     the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to the
     multiple investment sinking fund method of analysis, and (ii) periodic
     GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and Operation
     Agreement, dated as of October 18, 2001, among the Facility Lessee, the
     Owner Lessor and the Other Broad River Owner Lessors.

                                      28

<PAGE>

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated as
     of October 18, 2001, among the Facility Lessee, the Guarantor, the Owner
     Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass Through
     Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site, all
     matters shown as exceptions on Schedule B to each of the Title Policies as
     in effect on the Closing Date.

                                      29

<PAGE>

     "PERMITTED INVESTMENTS" shall mean investments in securities that are: (i)
     direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the FILOT Lease, as well as the
     rights of sublessees and/or assignees to the extent set forth in or
     expressly permitted pursuant to the Facility Lease or any other Operative
     Document, (b) as to the Facility Lessee, Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect, or
     (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material

                                      30

<PAGE>

     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, (e) Liens
     arising out of judgments or awards, but only so long as an appeal or
     proceeding for review is being prosecuted in good faith and so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, or are fully covered by insurance, (f) mineral rights the use
     and enjoyment of which do not materially interfere with the use and
     enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens, deposits
     or pledges to secure statutory obligations or performance of bids,
     tenders, contracts (other than for the repayment of borrowed money) or
     leases, or for purposes of like general nature in the ordinary course of
     its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholders, and would not otherwise reasonably be
     expected to have a Material Adverse Effect, (k) the interests of the Other
     Broad River Owner Lessors and the Other Broad River Indenture Trustees in
     the Facility, the Facility Site and the Ownership and Operation Agreement,
     (l) the interests of the Facility Lessee, the Other Broad River Owner
     Participants, the Other Broad River Owner Lessors, the Other Broad River
     Lessor Managers, the Other Broad River Indenture Trustees, and Pass
     Through Trustees under any of the Other Broad River Operative Documents,
     (m) the Ownership and Operation Agreement, (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement and (o)
     the rights of the County with respect to the Facility and Facility Site.

     "PERSON" shall mean any individual, corporation, cooperative, partnership,
     joint venture, association, joint-stock company, limited liability
     company, other entity, trust, unincorporated organization or government or
     any agency or political subdivision thereof or any other entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the

                                      31

<PAGE>

     Facility Lessee or a Subsidiary of the Facility Lessee or an ERISA
     Affiliate, and each such plan for the five year period immediately
     following the latest date on which Facility Lessee, or a Subsidiary of
     Facility Lessee or an ERISA Affiliate maintained, contributed to or had an
     obligation to contribute to such plan.

     "POST-FILOT LEASE CONVERSION DATE" shall mean the date on which all of the
     following events shall have occurred:

          (a)   the closing of the sale of an undivided fee interest in the
     Land (to the extent of the Owner Lessor's Percentage) by the County to the
     Facility Lessee upon exercise by the Owner Lessor of the Land Purchase
     Option and the designation by the Owner Lessor to the County of the
     Facility Lessee (or its designee) as the entity to which an undivided fee
     interest in the Land (to such extent) is to be conveyed, pursuant to which
     title to the Land (to such extent) vests in the Facility Lessee, and the
     termination of the FILOT Lease pursuant to Section 10.02 thereof;

          (b)   the closing of the sale of an undivided fee interest in the
     Facility by the County to the Owner Lessor upon exercise by the Owner
     Lessor of the Facility Purchase Option, pursuant to which good and valid
     fee title an undivided fee interest to the Facility (to the extent of the
     Owner Lessor's Percentage) vests in the Owner Lessor;

          (c)   the commencement of the full force and effectiveness of the
     Springing Facility Site Lease and the Springing Facility Site Sublease;

          (d)   except for the termination of the FILOT Lease and the Facility
     Site Lease, no Operative Document shall cease to be in full force and
     effect as a result of the transactions in clauses (a), (b) or (c) above;

          (e)   receipt by the Owner Lessor, the Owner Participant and (if the
     Lien of the Collateral Trust Indenture has not been discharged) the
     Indenture Trustee of the following (1) evidence of the obtaining of all
     Governmental Approvals and third-party consents which are reasonably
     necessary or advisable in connection with the transactions referred to in
     clauses (a) through (d) above, (2) evidence satisfactory to the Indenture
     Trustee (including without limitation, evidence that all filings and
     recordings, if any, necessary under Applicable Law shall have been duly
     made and all filing, recordation, transfer and other fees payable in
     connection therewith shall have been paid) that the Lien of the Collateral
     Trust Indenture on the Indenture Estate shall continue in full force and
     effect and with the same priority following the consummation of such
     transactions, and (3) appropriate endorsements, reasonably satisfactory to
     such Persons, to required property title insurance policies to reflect the
     new fee owners of the Land and the other portions of the Project.

          (f)   the receipt by the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture has not been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees, of opinions of
     counsel with respect to the accomplishment of the foregoing matters and
     other matters substantially similar to these covered by the opinions of
     counsel to the Facility Lessee rendered on the Closing Date,

                                      32

<PAGE>

     which opinions shall be satisfactory in form and substance to the Owner
     Participant and, so long as the Lien of the Collateral Trust Indenture has
     not been terminated or discharged, the Indenture Trustee and the Pass
     Through Trustees.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROJECT" shall have the meaning set forth in the FILOT Lease.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in administrative guidance has been issued by the Internal Revenue
     Service or the Department of Treasury and which has been published in the
     Federal Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

                                      33

<PAGE>

     "PURCHASE OPTION" shall mean, collectively, the Facility Purchase Option
     and the Land Purchase Option.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of the
     Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary
     and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
     of another Restricted Subsidiary) including Indebtedness that refinances
     Refinancing Indebtedness; provided, however, that (i) if the Indebtedness
     being refinanced is contractually subordinated in right of payment to the
     Obligations, the Refinancing Indebtedness shall be contractually
     subordinated in right of payment to such Obligations to at least the same
     extent as the Indebtedness being refinanced, (ii) the Refinancing
     Indebtedness is scheduled to mature either (a) no earlier than the
     Indebtedness being refinanced or (b) after the Stated Maturity of the
     Obligations, (iii) the Refinancing Indebtedness has an Average Life at the
     time such Refinancing Indebtedness is Incurred that is equal to or greater
     than the Average Life of the Indebtedness being refinanced and (iv) such
     Refinancing Indebtedness is in an aggregate principal amount (or if issued
     with original issue discount, an aggregate issue price) that is equal to
     or less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the

                                      34

<PAGE>

     Guarantor or a Restricted Subsidiary that refinances Indebtedness of an
     Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL TERM" with respect to the Springing Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(b).

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Springing Facility Site Lease, shall
     have the meaning set forth in Section 2.2(b) of the Springing Facility
     Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases

                                      35

<PAGE>

     thereafter (except for the last Rent Payment Period which period shall
     commence on May 31, 2031 and end on, and include, October 18, 2031, each
     six-month period commencing on each Rent Payment Date through and
     including the following May 30 or November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2 of
     the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

     "ROCKGEN" shall mean RockGen Energy LLC.

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed and
     delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of the
     four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

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<PAGE>

     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests in
     the RockGen Facility Site conveyed to the RockGen Owner Lessors under the
     RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting on
     behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC, SBR
     OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground Interest to the RockGen
     Facility Lessee on substantially the same terms and conditions as under,
     and dated the same date as, the RockGen Overall Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen

                                      37

<PAGE>

     Owner Lessors certain undivided interests in the RockGen Facility, and (b)
     lease from the applicable RockGen Owner Lessors such undivided interest in
     the RockGen Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership interests
     in the RockGen Facility conveyed to the RockGen Owner Lessors under the
     RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
     owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Sringing
     Facility Site Lease, shall have the meaning set forth in Section
     2.2(a)(ii) of the Springing Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b) of
     the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other Broad River Facility Lease.

                                      38

<PAGE>

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Springing Facility Site
     Lease, shall have the meaning set forth in Section 14.1 of the Springing
     Facility Site Lease.

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner Lessor
     will lease the applicable South Point Ground Interests to South Point
     Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner Lessor
     will lease the applicable South Point Ground Interest to the South Point
     Facility Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Assignment Agreements.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving the
     assignment and transfer of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Owner Lessors, and the
     simultaneous lease of the South Point Undivided Interests and South Point
     Ground Interests to the South Point Facility Lessee

                                      39

<PAGE>

     on substantially the same terms and conditions as under, and dated the
     same date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3) and
     Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee has
     agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the South Point Facility
     and the South Point Facility Site, and (b) lease from the applicable South
     Point Owner Lessors such undivided leasehold interest in the South Point
     Facility and the South Point Facility Site pursuant to the South Point
     Facility Leases and the South Point Facility Site Leases, respectively.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests (or upon the Post-FILOT Lease Conversion Date, undivided fee
     interests) in the Broad River Facility conveyed to the South Point Owner
     Lessors under the South Point Assignment Agreement.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section 13.2
     of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

                                      40

<PAGE>

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

     "SPRINGING FACILITY SITE LEASE" shall mean the Springing Facility Site
     Lease (BR-3) dated as of October 18, 2001 by and between the Facility
     Lessee and Owner Lessor pursuant to which the Facility Lessee shall lease
     the Ground Interest to the Owner Lessor.

     "SPRINGING FACILITY SITE SUBLEASE" shall mean the Springing Facility Site
     Sublease (BR-3) dated as of October 18, 2001, by and between Owner Lessor
     and Facility Lessee pursuant to which the Owner Lessor shall sublease the
     Ground Interest back to the Facility Lessee.

     "SPRINGING OPERATIVE DOCUMENTS" shall mean, the Springing Facility Site
     Lease and the Springing Facility Site Sublease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

              "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of
the Facility Site, to be dated July 21, 2001 and revised October 18, 2001,
which inter alia, will show the location of the Facility Site.

                                      41

<PAGE>

     "TAX" or "TAXES" shall mean all fees (including license, documentation and
     registration fees), taxes (including, without limitation, income taxes,
     receipts, franchise, rental, turn over sales taxes, use taxes, stamp
     taxes, value-added taxes, excise taxes, ad valorem taxes and property
     taxes (personal and real, tangible and intangible)), licenses, exports,
     duties, recording charges, levies, assessments, withholdings, fees,
     assessments and other charges and impositions of any nature, plus all
     related interest, penalties, fines and additions to tax, now or hereafter
     imposed by any federal, state, local or foreign government or other taxing
     authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of the
     Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (BR-3),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Springing Facility Site Lease,
     shall have, collectively, the meaning set forth in Section 18.1 of the
     Springing Facility Site Lease.

     "TERM" with respect to the Facility Site Lease, shall have the meaning set
     forth in Section 2.1(a) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

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<PAGE>

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the form
     of which is attached hereto as Exhibit O: (a) Consent and Agreement from
     Carolina Power and Light Company ("CP&L") with respect to the Power and
     Purchase Agreement, dated as of December 31, 1998 (as amended), between
     CP&L and the Facility Lessee: (b) Consent and Agreement from CP&L with
     respect to the Power Purchase Agreement, dated as of July 7, 2000 (as
     amended), between CP&L and the Facility Lessee; and (c) Consent and
     Agreement from Duke Electric Transmission, a division of Duke Energy
     Corporation ("Duke") with respect to the Interconnection Agreement, dated
     as of February 5, 2000 (as amended), between Duke and the Facility Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean Lawyers Title Insurance Corporation.

     "TITLE POLICY" shall mean, the title insurance policy (#FT027141.01214)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)     the reasonable costs of reproducing and printing the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and all costs and fees,
     including but not limited to filing and recording fees and recording,
     transfer, mortgage, intangible and similar taxes in connection with the
     execution, delivery, filing and recording of the Facility Lease, the
     Facility Site Lease, and any other Operative Document and any other
     document required to be filed or recorded pursuant to the provisions
     hereof or of any other Operative Document and the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or as otherwise
     reasonably required by the Owner Lessor or the Indenture Trustee and
     surveyor fees;

     (ii)    the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of McNair Law Firm, P.A., South
     Carolina, counsel to the Facility Leasee;

                                      43

<PAGE>

     (iv)    the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)     the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)    the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the FILOT Lease;

     (viii)  the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)    the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)     the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)    the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)  the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

                                      44

<PAGE>

     (xv)    the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)  the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii) the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the FILOT Lease pursuant to the
     Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted by
     Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRI-PARTY AGREEMENT" shall mean the Tri-Party Agreement,
     Consent, Acknowledgement and Notice dated as of October 1, 2001 by and
     among the County, the Facility Lessee, the Owner Lessor and the Other
     Broad River Owner Lessors.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

                                      45

<PAGE>

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest (or, upon and following the Post-FILOT Lease Conversion Date, the
     Owner Lessor's 25% undivided fee interest) in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by
     which the value of the accumulated plan benefits under the Plan determined
     on a plan termination basis in accordance with actuarial assumptions at
     such time consistent with those prescribed by the PBGC for purposes of
     Section 4044 of ERISA, exceeds the fair market value of all plan assets
     allocable to such liabilities under Title IV of ERISA (excluding any
     accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      46

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.10
<SEQUENCE>13
<FILENAME>f80168ex4-22_10.txt
<DESCRIPTION>EXHIBIT 4.22.10
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.10


                         PARTICIPATION AGREEMENT (BR-4)

                          Dated as of October 18, 2001

                                      among

                   BROAD RIVER ENERGY LLC, as Facility Lessee,

                     BROAD RIVER OL-4, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-4, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees

                               BROAD RIVER PROJECT


================================================================================
<PAGE>
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ......................................................      3

SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ...................................................................      3

  Section 2.1.  Agreements to Participate ...................................................................................      3

  Section 2.2.  Closing Date; Procedure for Participation ...................................................................      4

  Section 2.3.  Transaction Costs ...........................................................................................      6

SECTION 3. REPRESENTATIONS AND WARRANTIES ...................................................................................      6

  Section 3.1.  Representations and Warranties of the Facility Lessee .......................................................      6

  Section 3.2.  Representations and Warranties of the Owner Lessor ..........................................................     17

  Section 3.3.  Representations and Warranties of the Lessor Manager and the Trust Company ..................................     18

  Section 3.4.  Representations and Warranties of the Owner Participant .....................................................     20

  Section 3.5.  Representations and Warranties of Indenture Trustee and the Lease Indenture Company .........................     22

  Section 3.6.  Representations, Warranties and Covenants of the Pass Through Trustees and the Pass Through Company .........     24

SECTION 4. CLOSING CONDITIONS ...............................................................................................     25

  Section 4.1.  Completion of the Facility ..................................................................................     27

  Section 4.2.  Operative Documents .........................................................................................     27

  Section 4.3.  Certificates and the Lessor Notes ...........................................................................     27

  Section 4.4.  Equity Investment ...........................................................................................     27

  Section 4.5.  Organizational Documents ....................................................................................     27

  Section 4.6.  Representations and Warranties ..............................................................................     27

  Section 4.7.  Defaults, Events of Default, Events of Loss .................................................................     27

  Section 4.8.  Regulatory Approvals ........................................................................................     27

  Section 4.9.  Consents ....................................................................................................     28

  Section 4.10. Governmental Actions ........................................................................................     29
</TABLE>


                                      i
<PAGE>
                          TABLE OF CONTENTS (continued)


<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
Section 4.11. Insurance .....................................................................................................     29

Section 4.12. Ratings .......................................................................................................     29

Section 4.13. Environmental Report ..........................................................................................     29

Section 4.14. Surveys .......................................................................................................     29

Section 4.15. Appraisal; Condition of the Facility ..........................................................................     29

Section 4.16. Letter from the Appraiser .....................................................................................     29

Section 4.17. Other Reports .................................................................................................     30

Section 4.18. Opinion with Respect to Certain Tax Aspects ...................................................................     30

Section 4.19. Opinions of Counsel ...........................................................................................     30

Section 4.20. Recordings and Filings ........................................................................................     30

Section 4.21. Conditions to Closing .........................................................................................     30

Section 4.22. Taxes .........................................................................................................     30

Section 4.23. No Changes in Applicable Law ..................................................................................     31

Section 4.24. Registered Agent for the Facility Lessee and the Owner Lessor .................................................     31

Section 4.25. Operating Lease Treatment .....................................................................................     31

Section 4.26. Rent Adjustments ..............................................................................................     31

Section 4.27. Title Insurance ...............................................................................................     31

Section 4.28. Parent Guaranty ...............................................................................................     31

Section 4.29. Letter as to Number of Offerees ...............................................................................     31

Section 4.30. Lien Search ...................................................................................................     32

Section 4.31. Litigation ....................................................................................................     32

Section 4.32. No Material Adverse Change ....................................................................................     32

Section 4.33. Private Placement Number ......................................................................................     32

Section 4.34. Proceedings and Documents .....................................................................................     32
</TABLE>


                                      ii
<PAGE>
                          TABLE OF CONTENTS (continued)


<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
  Section 4.35. No Proposed Tax Law Change ..................................................................................     32

  Section 4.36. Payment of Fees and Expenses ................................................................................     32

  Section 4.37. Corrective Ordinance ........................................................................................     32

SECTION 5. COVENANTS OF FACILITY LESSEE AND GUARANTOR .......................................................................     33

  Section 5.1.  Maintenance of Existence ....................................................................................     33

  Section 5.2.  Merger, Consolidation, Sale of Substantially All Assets .....................................................     33

  Section 5.3.  Guaranty and Contingent Obligations .........................................................................     33

  Section 5.4.  Assignment of Rights ........................................................................................     34

  Section 5.5.  Lessor Manager Fees .........................................................................................     34

  Section 5.6.  Conduct of Business, Properties, Etc ........................................................................     34

  Section 5.7.  Obligations .................................................................................................     34

  Section 5.8.  Books, Records, Access ......................................................................................     34

  Section 5.9.  Other Information ...........................................................................................     35

  Section 5.10. Warranty of Title to Facility Site ..........................................................................     35

  Section 5.11. ERISA .......................................................................................................     36

  Section 5.12. Certain Contracts and Agreements ............................................................................     36

  Section 5.13. Certain Costs ...............................................................................................     36

  Section 5.14. Limitations on Liens ........................................................................................     37

  Section 5.15. Investments .................................................................................................     37

  Section 5.16. Intentionally Deleted .......................................................................................     37

  Section 5.17. Regulations .................................................................................................     37

  Section 5.18. Partnerships ................................................................................................     37

  Section 5.19. Dissolution .................................................................................................     37

  Section 5.20. Termination of Operative Documents; Delegation of Authority .................................................     37
</TABLE>


                                      iii
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
  Section 5.21. Name and Location ...........................................................................................     39

  Section 5.22. Use of Facility Site ........................................................................................     39

  Section 5.23. Abandonment of Facility .....................................................................................     39

  Section 5.24. Taxes, Other Government Charges and Utility Charges .........................................................     39

  Section 5.25. Compliance with Laws, Instruments, Etc ......................................................................     39

  Section 5.26. PUHCA .......................................................................................................     40

  Section 5.27. Further Assurances ..........................................................................................     40

  Section 5.28. No Subsidiaries .............................................................................................     41

  Section 5.29. Permitted Business ..........................................................................................     41

  Section 5.30. Support Arrangements ........................................................................................     41

  Section 5.31. Insurance ...................................................................................................     41

  Section 5.32. Tax Status ..................................................................................................     41

  Section 5.33. Transmission Assets .........................................................................................     42

SECTION 6. COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER ..........................................     42

  Section 6.1.  Compliance with the LLC Agreement ...........................................................................     42

  Section 6.2.  Owner Lessor's Liens ........................................................................................     43

  Section 6.3.  Amendments to Operative Documents ...........................................................................     43

  Section 6.4.  Transfer of the Owner Lessor's Interest .....................................................................     43

  Section 6.5.  Owner Lessor; Lessor Estate .................................................................................     43

  Section 6.6.  Limitation on Indebtedness and Actions ......................................................................     43

  Section 6.7.  Change of Location ..........................................................................................     43

  Section 6.8.  Bankruptcy of Owner Lessor ..................................................................................     43

SECTION 7. COVENANTS OF THE OWNER PARTICIPANT ...............................................................................     44

  Section 7.1.  Restrictions on Transfer of Member Interest .................................................................     44
</TABLE>


                                      iv
<PAGE>
                          TABLE OF CONTENTS (continued)


<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
  Section 7.2.  Owner Participant's Liens ...................................................................................     46

  Section 7.3.  Amendments or Revocation of LLC Agreement ...................................................................     46

  Section 7.4.  Bankruptcy Filings ..........................................................................................     46

  Section 7.5.  Instructions ................................................................................................     47

  Section 7.6.  Right of First Refusal ......................................................................................     47

  Section 7.7.  Prohibition on Fundamental Changes ..........................................................................     47

  Section 7.8.  Appointment of Successor Lessor Manager .....................................................................     49

  Section 7.9.  Cooperation .................................................................................................     49

SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES .................................................     49

  Section 8.1.  Indenture Trustee's Liens ...................................................................................     49

  Section 8.2.  Pass Through Trustees' Covenant Not to Transfer Lessor Notes ................................................     50

SECTION 9. INDEMNIFICATION ..................................................................................................     50

  Section 9.1. General Indemnity ............................................................................................     50

  Section 9.2. General Tax Indemnity ........................................................................................     57

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ......................................................................     66

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ......................................................     66

  Section 11.1. Financing Improvements ......................................................................................     66

  Section 11.2. Optional Refinancing of Lease Debt ..........................................................................     68

  Section 11.3. Cooperation .................................................................................................     69

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS .......................................     69

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS .............................................     70

  Section 13.1. Transfer of the Facility Lessee Ownership ...................................................................     70

  Section 13.2. Special Facility Lessee Transfers ...........................................................................     72

SECTION 14. OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS .....................................................................     73
</TABLE>


                                      v
<PAGE>
                          TABLE OF CONTENTS (continued)


<TABLE>
<CAPTION>
                                                                                                                                PAGE

<S>                                                                                                                             <C>
SECTION 15. MISCELLANEOUS ...................................................................................................     75

  Section 15.1.  Consents; Cooperation ......................................................................................     75

  Section 15.2.  Successor Owner Lessor .....................................................................................     75

  Section 15.3.  Bankruptcy of Lessor Estate ................................................................................     75

  Section 15.4.  Amendments and Waivers .....................................................................................     75

  Section 15.5.  Notices ....................................................................................................     75

  Section 15.6.  Survival ...................................................................................................     80

  Section 15.7.  Successors and Assigns .....................................................................................     80

  Section 15.8.  Business Day ...............................................................................................     80

  Section 15.9.  Governing Law ..............................................................................................     80

  Section 15.10. Severability ...............................................................................................     80

  Section 15.11. Counterparts ...............................................................................................     80

  Section 15.12. Headings and Table of Contents .............................................................................     81

  Section 15.13. Limitation of Liability ....................................................................................     81

  Section 15.14. Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent ............................................     82

  Section 15.15. Further Assurances .........................................................................................     83

  Section 15.16. Effectiveness ..............................................................................................     83

  Section 15.17. Measuring Life .............................................................................................     83

  Section 15.18. No Partnership, Etc ........................................................................................     83

  Section 15.19. Entire Agreement ...........................................................................................     83

  Section 15.20. Public Utility Regulation ..................................................................................     84

  Section 15.21. Confidentiality of Information .............................................................................     84

  Section 15.22. Reliance ...................................................................................................     85

  Section 15.23. Amendments, Etc ............................................................................................     85
</TABLE>


                                      vi
<PAGE>
APPENDICES:

     Appendix A   Definitions and Rules of Interpretation

<TABLE>
<CAPTION>
<S>                         <C>
SCHEDULES:

  Schedule 1-A              Equity Investment
  Schedule 1-B              Indenture Trustee's Account
  Schedule 1-C              Owner Participant's Account
  Schedule 2                Pricing Assumptions
  Schedule 3.1(h)           Post-FILOT Lease Recordings, Filings and Notifications
  Schedule 3.1(m)           Environmental Matters - Hazardous Substances
  Schedule 4.20             Recording and Filings
  Schedule 5.31             Maintenance of Insurance

EXHIBITS:

  Exhibit A                 Description of Facility
  Exhibit B                 Form of Assignment Agreement (BR-4)
  Exhibit C                 Form of Facility Lease Agreement
  Exhibit D                 Form of Facility Site Lease
  Exhibit E                 Intentionally Omitted
  Exhibit F                 Form of Pass Through Trust Agreement
  Exhibit G                 Form of OP Parent Guaranty
  Exhibit H                 Form of Calpine Guaranty
  Exhibit I                 Form of Collateral Trust Indenture
  Exhibit J                 Form of OP Assignment and Assumption Agreement
  Exhibit K                 List of Competitors
  Exhibit L                 Form of Guarantor Assignment and Assumption Agreement
  Exhibit M                 Form of Springing Facility Site Lease
  Exhibit N                 Form of Springing Facility Site Sublease
  Exhibit O                 Forms of Consents
</TABLE>


                                      vii
<PAGE>
                            PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) BROAD RIVER ENERGY LLC (herein, together
     with its successors and permitted assigns, called the "Facility Lessee"),
     a limited liability company organized under the laws of the State of
     Delaware, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (BR-4), (the "Calpine Guaranty"), (iii) BROAD
     RIVER OL-4, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-4, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity except as expressly provided herein, but solely as independent
     manager under the LLC Agreement (herein in its capacity as independent
     manager under the LLC Agreement, together with its successors and
     permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, in March, 2000, the County and the Facility Lessee
entered into a fee-in-lieu of taxes transaction, pursuant to which the Facility
Lessee conveyed to the County, and the County leased back to the Facility
Lessee, pursuant to the FILOT Lease, a 850 MW gas-fired simple cycle merchant
power plant located near Gaffney, South Carolina, owned by the County and more
fully described in Exhibit A hereto ("Facility");
<PAGE>
          WHEREAS, Facility Lessee desires to assign and transfer to the
Owner Lessor the Undivided Interest and the Ground Interest pursuant to the
Assignment Agreement;

          WHEREAS, the Owner Participant desires to cause the Owner
Lessor to acquire and accept such assignment and transfer of the Undivided
Interest and the Ground Interest from the Facility Lessee pursuant to the
Assignment Agreement, and to lease the Undivided Interest (excluding the
Facility Purchase Option) and the Ground Interest (excluding the Land Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, the Facility Lessee desires to sublease the Undivided
Interest (excluding the Facility Purchase Option) and lease the Ground Interest
(excluding the Land Purchase Option) from the Owner Lessor pursuant to the
Facility Lease and the Facility Site Lease, respectively;

          WHEREAS, on the Closing Date, the Facility Lessee has executed
(i) a Springing Facility Site Lease (pursuant to which, upon the Post-FILOT
Lease Conversion Date, the Springing Facility Site Lease shall become effective
and the Facility Lessee shall lease the Ground Interest to the Owner Lessor
pursuant thereto) and (ii) a Springing Facility Site Sublease (pursuant to
which, upon the Post-FILOT Lease Conversion Date, the Springing Facility Site
Sublease shall become effective and the Owner Lessor shall sublease the Ground
Interest back to the Facility Lessee pursuant thereto);

          WHEREAS, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, issue the Lessor Notes and sell such Lessor Notes to the relevant
Pass Through Trust, acquire and accept such assignment and transfer of the
Undivided Interest and the Ground Interest from Facility Lessee pursuant to the
Assignment Agreement, and lease the Undivided Interest (excluding the Land
Purchase Option) and the Ground Interest (excluding the Facility Purchase
Option) to the Facility Lessee pursuant to the Facility Lease and the Facility
Site Lease, respectively;

          WHEREAS, in order to provide a portion of the Assumption Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Assignment Agreement, the Owner Participant is willing
to make an investment in the Owner Lessor in an amount equal to the Equity
Investment, all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

                                      2
<PAGE>
          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has
guaranteed all of the obligations of the Facility Lessee under the Participation
Agreement and as of the Closing Date shall guarantee all of the obligations of
the Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and

          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee shall assign and transfer the Undivided Interest and the
     Ground Interest to the Owner Lessor on the terms and conditions set forth
     in the Assignment Agreement and the Owner Lessor agrees to acquire and
     accept such assignment and transfer of the Undivided Interest and the
     Ground Interest from Facility Lessee, and each agrees to execute and
     deliver the Assignment Agreement;

the Owner Lessor agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the Ground Interest (except the Land Purchase Option)
     to the Facility Lessee on the terms and conditions set forth in the
     Facility Lease and Facility Site Lease; the Facility

                                      3
<PAGE>
     Lessee agrees to lease the Undivided Interest (except the Facility
     Purchase Option) and the corresponding Ground Interest (except the Land
     Purchase Option) from the Owner Lessor, and each agrees to execute and
     deliver the respective Facility Lease and the Facility Site Lease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents and the FILOT Lease
     pursuant to the OP Parent Guaranty;

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement;

effective upon the occurrence of the Post-FILOT Lease Conversion Date, the
     Facility Lessee agrees to lease the Ground Interest to the Owner Lessor on
     the terms and conditions set forth in the Springing Facility Site Lease and
     the Owner Lessor agrees to sublease the Ground Interest back to the
     Facility Lessee on the terms and conditions set forth in the Springing
     Facility Site Sublease;

the Owner Lessor agrees to exercise the Purchase Options pursuant to, and to the
     extent provided in, Section 14.1 hereof; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine LLP
     or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner

                                      4
<PAGE>
     Participant shall make the Owner Participant's Commitment available not
     later than 10:00 a.m., New York City time, on the Scheduled Closing Date,
     by transferring or delivering such amount, in funds immediately available
     on such Scheduled Closing Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section 2.2(c)
     above, use reasonable efforts to invest such funds from time to time at the
     written direction of Calpine, and at Calpine's sole expense and risk, in
     Permitted Investments until such funds can be returned to the Owner
     Participant. If, on the Scheduled Closing Date, the Owner Participant has
     made the Owner Participant's Commitment available to the Owner Lessor in
     accordance with Section 2.2(b), the Closing does not occur on such date and
     the Owner Lessor has not returned such funds to the Owner Participant on or
     before 1:00 p.m., New York City time, on such date, then Calpine shall
     reimburse the Owner Participant for loss of the use of such funds at the
     Applicable Rate for each day, from and including the day that such funds
     were made available to the Owner Lessor by the Owner Participant to, but
     excluding the earlier of (i) the day that such funds have been returned to
     the Owner Participant pursuant to Section 2.2(c) (funds received by the
     Owner Participant after 1:00 p.m., New York City time, of any day shall be
     deemed to be returned on the next succeeding Business Day) and (ii) the
     Closing Date. Subject to payment for the account of the Owner Participant
     of any reimbursement for loss of use of funds due to it at the Applicable
     Rate, any net gain realized on the investment of such funds (including
     interest) shall be paid to Calpine by the Owner Lessor on the earlier of
     (i) the date such funds are returned to the Owner Participant pursuant to
     Section 2.2(c) and (ii) the Closing Date. The Owner Lessor shall not be
     liable for any interest on or loss resulting from such investments and, if
     such funds are made available to the Owner Lessor and utilized to pay the
     Purchase Price or Transaction Costs on the Closing Date, Calpine shall
     reimburse the Owner Lessor for any net loss realized on the investment of
     such funds. If such funds are not so utilized, Calpine shall, in

                                      5
<PAGE>
     addition to its obligation to reimburse the Owner Participant for loss of
     use as provided above, reimburse the Owner Participant on the date such
     funds are returned to the Owner Participant for any net loss realized on
     the investment of such funds. In order to obtain funds for payment of the
     Purchase Price or Transaction Costs or to return funds made available to
     the Owner Lessor by the Owner Participant, the Owner Lessor is authorized
     to sell any investments or obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make
     its Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,500,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner Participant
     shall be paid by Calpine. If the Overall Transaction is not consummated for
     any reason (including as a result of the Facility Lessee terminating this
     Agreement pursuant to Section 12(a)), then Calpine shall bear all
     Transaction Costs; provided, however, that Calpine shall not be obligated
     to pay Transaction Costs incurred by the Owner Participant if the Overall
     Transaction is not consummated on the basis of the provisions of this
     Agreement due to a failure of the Owner Participant to satisfy any
     condition to the Closing required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company
     duly organized, validly existing, and in good standing under the laws of
     the State of Delaware. The Facility Lessee is duly licensed or qualified
     and in good standing in each jurisdiction where the character of its
     properties or the nature of its activities makes such qualification
     necessary, and the Facility Lessee has the power and authority to (x) own
     or hold under lease the

                                      6
<PAGE>
     property it purports to own or hold under lease, (y) carry
     on its business as now being conducted and as presently proposed to be
     conducted and (z) take all actions as may be necessary to consummate the
     transactions contemplated hereunder and under the other Operative Documents
     to which each is a party. The Facility Lessee is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party have
     been, or when executed and delivered will be, duly authorized, executed and
     delivered by all necessary action by the Facility Lessee, and, assuming the
     due authorization, execution and delivery by each other party thereto, this
     Agreement constitutes and, when executed and delivered, the other Operative
     Documents to which the Facility Lessee is or will be a party will
     constitute the legal, valid and binding obligations of the Facility Lessee,
     enforceable against the Facility Lessee, in accordance with their
     respective terms, except as the same may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the rights of creditors generally and by general principles of
     equity.

          1.   Non-Contravention.   (1) The execution, delivery and performance
               by the Facility Lessee of this Agreement and each of the other
               Operative Documents to which it is or will be a party, the
               consummation by the Facility Lessee of the transactions
               contemplated hereby and thereby, and compliance by the Facility
               Lessee with the terms and provisions hereof and thereof, do not
               and will not (i) contravene any Applicable Law binding on the
               Facility Lessee or its property, or its organizational
               documents, (ii) constitute a default by the Facility Lessee
               under, or result in the creation of any Lien upon the property
               of the Facility Lessee (other than pursuant to any Operative
               Document) under any indenture, mortgage or other material
               contract, agreement or instrument to which the Facility Lessee
               is a party or by which the Facility Lessee or any of its
               property is bound, (iii) contravene any Organic Document of the
               Facility Lessee or (iv) require the consent or approval of any
               Person which has not already been obtained, in each case with
               respect to clauses (i), (ii) and (iv) above, which would
               reasonably be expected to have a Material Adverse Effect.

          (2)  Neither the assignment and transfer of the Undivided
Interest and the Ground Interest by Facility Lessee to the Owner Lessor, nor the
grant by the Owner Lessor to the Indenture Trustee of the Liens and security
interests in the Undivided Interest, the Ground Interest and the applicable
Operative Documents executed in connection therewith to secure its obligations
thereunder does or will constitute a default by the Facility Lessee or the Owner
Lessors under the Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of

                                      7
<PAGE>
     any transferee or assignee) and assuming that none of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them or any
     assignee or transferee of any of the Owner Participant (or any Affiliate
     of any such transferee or assignee) is an "electric utility" or a "public
     utility" or a "public utility holding company" or any similar entity
     subject to public utility regulation under any Applicable Law immediately
     prior to the Closing, with respect to the participation by the Owner
     Participant, the Owner Lessor in the Overall Transaction, other than (i)
     any Permit where the failure to obtain or maintain such Permit would not
     be reasonably likely to result in a Material Adverse Effect, (ii) the
     FERC Orders, (iii) as may be required under Applicable Law providing for
     the supervision or regulation of the Owner Participant, the Owner Lessor
     or any Affiliate of any of them as a result of investing, lending or
     other commercial activity in which the Owner Participant, the Owner
     Lessor or any Affiliate of any of them is or may be engaged other than
     the transactions contemplated hereby or by any of the other Operative
     Documents, (iv) as may be required under existing Applicable Laws to be
     obtained, given, accomplished or renewed at any time, or from time to
     time, in each case, after the Closing Date and which the Facility Lessee
     has no reason to believe will not be timely obtained and the lack of
     which would not reasonably be expected to have a Material Adverse Effect
     or involve any danger of criminal or material civil liability being
     incurred by the Owner Participant, the Owner Lessor, the Indenture
     Trustee or the Pass Through Trustees, (v) in connection with any
     modification to or rebuilding or replacement of the Facility or any
     portion thereof that may occur in the future, (vi) as may be required in
     connection with any refinancing of the Lessor Notes or the Certificates
     or the issuance of Additional Lessor Notes or Additional Certificates,
     (vii) as may be required in consequence of any transfer of the Member
     Interest or any transfer of the Undivided Interest or the Owner Lessor's
     Interest, or any part thereof by the Owner Lessor or the exercise by any
     such party of dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents and the FILOT
     Lease or the ability of the Facility Lessee or such other Calpine Party to
     perform its obligations under the Operative Documents and the FILOT Lease
     to which the Facility Lessee or such other Calpine Party is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to have a Material Adverse Effect or otherwise materially adversely affect
     the Undivided Interest leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

                                      8
<PAGE>
Location of Chief Executive Office and Principal Place of Business, etc.   (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site and the Operative Documents is located at: c/o Calpine
     Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA 95113.

          (2)  The Facility is located on the Facility Site.

          (3)  The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Leasehold Interest; Liens.   (1) On and before the Closing Date, the Facility
     Lessee has (i) good and valid leasehold interest to the Facility, free and
     clear of all Liens other than Permitted Closing Date Liens, and (ii) good
     and valid leasehold interest to the Facility Site free and clear of all
     Liens other than Permitted Closing Date Liens.

          (2) Upon execution and delivery of the Operative Documents (other than
the Springing Operative Documents), and recording or filing (as appropriate) of
the instruments and documents referred to in Part I of Schedule 4.20 in
accordance with Section 4.20, (A) good and valid leasehold interest to the
Undivided Interest will be duly, validly and effectively conveyed and
transferred to the Owner Lessor free and clear of all Liens other than Permitted
Closing Date Liens, and (B) good and valid leasehold interest in the Ground
Interest will be duly, validly and effectively granted to the Owner Lessor upon
the terms and conditions in the corresponding Facility Site Lease, free and
clear of all Liens other than Permitted Closing Date Liens.

          (3)  Upon the closing of the conveyance of the Land and the
Facility (in each case to the extent of the Owner Lessor's Percentage interest
therein) on the Post-FILOT Lease Conversion Date and recording or filing (as
appropriate) of the instruments and documents referred to in Schedule 3.1(h)
hereto (A) good and valid fee title to the Facility (to the extent of the Owner
Lessor's Percentage interest therein) will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Liens, and (B) good and valid leasehold interest in the Land (to
the extent of the Owner Lessor's Percentage) will be duly, validly and
effectively granted to the Owner Lessor upon the terms and conditions in the
corresponding Springing Facility Site Lease, free and clear of all Liens other
than Permitted Liens. Upon any other conveyance of the Facility and/or the Land
(to the extent of the Owner Lessor's Percentage) by the County to the Owner
Lessor or its designee upon the Owner Lessor's exercise of the Facility Purchase
Option and/or the Land Purchase Option, as the case may be, good and valid fee
title ownership thereof will be duly, validly and effectively vested in the
Owner Lessor, free and clear of all Liens other than Permitted Liens.

          (4)  When duly authorized, executed and delivered by each of
the parties thereto, the Collateral Trust Indenture will create a valid and,
when the filings and recordings to be made pursuant to Section 4.20 have been
made, first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or

                                      9
<PAGE>
give record notice of, the Lien in favor of the Indenture Trustee in the
Indenture Estate to the extent such Lien may be perfected by filings or
recordings.

          (5)  None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents and the FILOT Lease) or the use of or
the exercise by the Owner Lessor of its rights under Assignment Agreement or the
Facility Site Lease or the Facility Lease, in a manner which could reasonably be
expected to have a Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or X
     of the Federal Reserve Board), and no part of the proceeds of Lessor Notes
     or the Equity Investment will be used by any Calpine Party, directly or
     indirectly, for the purpose of buying or carrying any margin stock within
     the meaning of Regulation U of the Board of Governors of the Federal
     Reserve System (12 CFR 221), or for the purpose of buying or carrying or
     trading in any securities under such circumstances as to involve such
     Person in a violation of Regulation X of said Board (12 CFR 224) or to
     involve any broker or dealer in a violation of Regulation T of said Board
     (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility
     company," a "holding company", a "subsidiary company" of a "holding
     company" or an "affiliate" of a "holding company" within the meaning of the
     Holding Company Act, and the execution, delivery and performance of the
     Operative Documents to which the Facility Lessee is or will be a party and
     the performance of the FILOT Lease will not subject the Facility Lessee to
     such regulation under the Holding Company Act and do not violate any
     provision of the Holding Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company"
     or a company controlled by an "investment company" within the meaning of
     the Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, or in any security or lease the offering of which for
     the purposes of the Securities Act would be deemed to be part of the same
     offering as the offering of the Member Interest, the Lessor Notes or the
     Certificates or any part thereof or solicited any offer to acquire any of
     the same, in any such case, in violation of the registration requirements
     of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)  The Facility Lessee has not received and does not have
Actual Knowledge of any written notice, letter, citation, order, warning,
complaint, inquiry, claim or demand from any Governmental Entity or any other
Person that: (i) there has been a Release, or there is a threat of Release, of
Hazardous Substances in, on, under or from the Facility or the Facility Site;
(ii) the Facility Lessee or any other Calpine Party is or is asserted to be
liable, in whole or in part, for the costs of cleaning up, remedying or
responding at any location (including any location at

                                      10
<PAGE>
which any Hazardous Substances have been generated, stored, treated or disposed
by or on behalf of the Facility Lessee or such other Calpine Party) to a
Release or threatened Release of any Hazardous Substance generated, used or
stored at or Released in, on, under or from the Facility or the Facility Site;
(iii) the Facility or the Facility Site is subject to a Lien in favor of any
Governmental Entity in response to a Release or threatened Release of Hazardous
Substances or (iv) the Facility or the Facility Site is or is asserted to be in
violation of or not in compliance with any Environmental Law, in any case with
respect to clauses (ii), (iii) or (iv), which could reasonably be expected to
have a Material Adverse Effect;

          (2)  The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)  To the Facility Lessee's Actual Knowledge, there is not
and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site, or (B) at, on, under or from any other location
resulting from or arising in connection with the operation by any Person of the
Facility or the Facility Site, that in each case could reasonably be expected to
have a Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or the
Facility Site, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or, maintenance of the Facility or Facility Site in
any material respect, or (iii) any criminal or material civil liability being
incurred by the Owner Participant, the Owner Lessor, the Lessor Manager, the
Indenture Trustee or the Pass Through Trustees.

          (4)  All environmental permits necessary to own, operate, lease
or maintain the Facility and the Facility Site in accordance with the Operative
Documents and the FILOT Lease and the Ownership and Operation Agreement and
Environmental Laws have been obtained on behalf of the Owner Lessor or by the
Facility Lessee and they are final, in proper form, and in full force and
effect, with all appeal periods expired, and the Facility Lessee is in
compliance with the provisions of all such permits, except where the failure to
obtain, maintain the effectiveness of, or comply with such permits would not
reasonably be expected to have a Material Adverse Effect or involve any danger
of (i) foreclosure, sale, forfeiture or loss of, or imposition of a material
lien on, the Facility or the Facility Site, (ii) the impairment of the ownership
(or leasehold or easement interest in), use, operation or maintenance of the
Facility or the Facility Site in any material respect, or (iii) any criminal or
material civil liability being incurred by the Owner Participant, the Owner
Lessor, the Indenture Trustee, the Lessor Manager, the Pass Through Trustees or
the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest and the Ground Interest and based upon the Facility
     Lessee's reasonable expectations and on Applicable Law in effect on and as
     of the Closing Date, the rights and interests made available to the Owner
     Lessor pursuant to the Operative Documents and the FILOT Lease and the
     rights contemplated by the Facility Lease to be made available under such
     Operative Documents and the FILOT Lease, permit on a commercially
     practicable basis during the Facility Lease Term and the period following
     the expiration or termination of the Facility Lease Term, as applicable,
     until the end of the

                                      11
<PAGE>
     Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii) as
     of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made to
     the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns or
     pursuant to any assessment received by it (other than Taxes and assessments
     the payment of which is being contested in good faith by such Person and
     with respect to which appropriate accounting reserves have to the extent
     required by GAAP been set aside) and neither the Facility Lessee nor any
     other Calpine Party has any Actual Knowledge of any actual or proposed
     assessment in connection therewith which, either in any case or in the
     aggregate, would reasonably be expected to have a Material Adverse Effect.

Jurisdiction. In accordance with Section 15.14 hereof, the Facility Lessee
     has validly submitted to the jurisdiction of the Supreme Court of the
     State of New York, New York County and the United States District Court
     for the Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility and the Facility Site, except where the
     noncompliance would not reasonably be expected to have a Material Adverse
     Effect or involve any danger of (i) foreclosure, sale, forfeiture or loss
     of, or imposition of a material lien on, the Facility or the Facility Site,
     (ii) the impairment of the ownership (or leasehold or easement interest
     in), use, operation or maintenance of the Facility or the Facility Site in
     any material respect, or (iii) any criminal or material civil liability
     being incurred by the Owner Participant, the Owner Lessor, the Lessor
     Manager, the Indenture Trustee or the Pass Through Trustees, including
     subjecting the Owner Participant or the Owner Lessor to regulation as a
     public utility under Applicable Law. None of the Calpine Parties is in
     default of any judgments, orders or decrees of any Governmental Entity
     relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties
     hereto and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the Lessor
     Notes under the Collateral Trust Indenture and the Certificates under the
     Pass Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

                                      12
<PAGE>
Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual Knowledge
     of the Facility Lessee, no Burdensome Buyout Event has occurred or will
     occur upon the execution and delivery of the Operative Documents and the
     Facility Lessee does not have Actual Knowledge of any event that could
     reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents and the FILOT Lease, except where the failure to have
     any such services or public utilities available would not result in a
     material adverse effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by
     a Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility or the Facility Site, which would reasonably be
     expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site
     is available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire

                                      13
<PAGE>
     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has been
     made available under the National Flood Insurance Act of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby in good faith and without any intent to
     defraud creditors of the Facility Lessee or subsequent purchasers. The
     execution and delivery of the Operative Documents to which the Facility
     Lessee is a party will not render the Facility Lessee insolvent under GAAP
     or leave the Facility Lessee with assets whose present fair valuation of
     assets is less than the present fair valuation of the Facility Lessee's
     debts. As used in this Section 3.1(dd), "debts" includes any and all
     liabilities, whether matured or unmatured, liquidated or unliquidated,
     absolute, fixed or contingent, and whether or not such liabilities are
     required under GAAP to be shown on the Facility Lessee's balance sheet. The
     execution and delivery of the Operative Documents to which the Facility
     Lessee is a party will not leave it with property remaining in its hands
     which would constitute unreasonably small assets or capital, and the
     Facility Lessee has and, after giving effect to such transactions will
     have, an adequate amount of assets and capital to engage in its business
     now and in the future, based on the actual and anticipated needs for
     capital of the businesses anticipated to be conducted by the Facility
     Lessee, and based upon the other information described herein. After giving
     effect to the transactions contemplated under the Operative Documents, the
     Facility Lessee will be able to pay all of its debts and liabilities,
     including unrecorded contingent liabilities, as they mature, the Facility
     Lessee will have positive cash flow after paying all of its scheduled and
     anticipated debt as it matures, and the Facility Lessee will realize
     sufficient monies from current assets in the ordinary and usual course of
     business to pay recurring current debt, short-term debt and long-term debt
     as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or commission to any broker, finder or
     intermediary for or on account of arranging the financing of the
     transactions contemplated by the Operative Documents.

                                      14
<PAGE>
Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance and the consummation of the
     transactions contemplated by the Operative Documents and the performance of
     the FILOT Lease shall be or become (i) subject to regulation as a "public
     utility company," "holding company," an "affiliate" of a "holding company"
     or a "subsidiary company" of a "holding company" within the meaning of
     PUHCA or (ii) a "public utility" (except that the Facility Lessee will be a
     public utility subject to the Federal Power Act with authority to sell
     wholesale electricity at market-based rates and with waivers of regulations
     customarily granted to a public utility that sells wholesale power at
     market-based rates), a "transmitting utility," or an "electric utility"
     within the meaning of the Federal Power Act, (iii) subject to state
     regulation of rates or organizational requirements for electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor the
     written information furnished to the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Indenture Trustee and the Pass Through Trustees by
     or on behalf of the Facility Lessee or any of its Affiliates in connection
     with the transactions contemplated hereby contains any untrue statement of
     a material fact or omits to state a material fact necessary in order to
     make the statements contained therein, in light of the circumstances under
     which they were made, not misleading; provided, that no representation or
     warranty is made with regard to (i) any projections or other
     forward-looking statements provided by or on behalf of the Facility Lessee,
     or (ii) the descriptions of the Operative Documents or the tax consequences
     to beneficial owners of Certificates; provided, further, each of the
     Transaction Parties acknowledge and agree that (i) Calpine has heretofore
     provided to the Appraiser, solely in order to assist the Appraiser in
     connection with the preparation of the appraisal to be delivered by the
     Appraiser to certain of the Transaction Parties at the Closing, certain (1)
     general market information, (2) information about the South Carolina energy
     markets and (3) information passed along from other Persons and (ii) that
     the Facility Lessee makes no representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by Duke Electric Transmission, a division of Duke
     Energy Corporation, and has access to transmission services and ancillary
     services sufficient to sell the net generating capacity of the Facility at
     wholesale, and the Facility Lessee has the authority to sell wholesale
     electric power from the net generating capacity of such generating Facility
     at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Order referenced in clause (v) of the
     definition of "FERC Orders" set forth in Appendix A hereto, received from
     FERC the orders referenced therein.

Fully Taxable. As of the Closing Date, each Person owning an Ownership
     Interest (i) is fully taxable at the highest federal tax rate and (ii)
     expects to be fully taxable at the highest federal tax rate throughout the
     Facility Lease Term; for the avoidance of doubt, this representation is

                                      15
<PAGE>
     not intended to be construed as nor shall it be deemed to be a guaranty as
     to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and
     currently is capable of producing at least 850 MW of capacity and complies
     in all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

FILOT Lease. The FILOT Lease is in full force and effect and neither the
     Facility Lease nor, to the Actual Knowledge of the Facility Lessee, the
     County is in default thereunder; all of the rights, title and interest of
     the Facility Lessee, in, to and under the FILOT Lease assigned pursuant to
     the Assignment Agreement have been transferred free and clear of any and
     all Liens other than Permitted Liens. Prior to the execution and delivery
     of the Assignment Agreement by the Facility Lessee, the FILOT Lease was
     enforceable against the Facility Lessee in accordance with its respective
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity; the
     execution, delivery and performance of the FILOT Lease by the Facility
     Lessee (i) did not and does not contravene any Applicable Law binding on
     the Facility Lessee or its property, (ii) does not constitute a default by
     the Facility Lessee under, or result in the creation of any Lien upon the
     property of the Facility Lessee (other than pursuant to any Operative
     Document) under any indenture, mortgage or other material contract,
     agreement or instrument to which the Facility Lessee is a party or by which
     the Facility Lessee or any of its property is bound, (iii) does not
     contravene any Organic Document of the Facility Lessee, (iv) does not
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect, or
     (v) does not create a Lien on the FILOT Lease; the Facility Lessee has all
     Permits with or from any Governmental Entity or under Applicable Law
     required for the performance of the FILOT Lease by the Owner Lessor or the
     Facility Lessee, other than (i) any Permit where the failure to obtain or
     maintain such Permit would not be reasonably likely to result in a Material
     Adverse Effect, (ii) the FERC Orders, (iii) as may be required under
     Applicable Law providing for the supervision or regulation of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them as a result
     of investing, lending or other commercial activity in which the Owner
     Participant, the Owner Lessor or any Affiliate of any of them is or may be
     engaged other than the transactions contemplated hereby or by performance
     of the FILOT Lease upon and after the assignment thereof to the Owner
     Lessor pursuant to the Assignment Agreement, (iv) as may be required under
     existing Applicable Laws to be obtained, given, accomplished or renewed at
     any time, or from time to time, in each case, after the Closing Date and
     which the Facility Lessee has no reason to believe will not be timely
     obtained and the lack of which would not reasonably be expected to have a
     Material Adverse Effect or involve any danger of criminal or material civil
     liability being incurred by the Owner Participant, the Owner Lessor, the
     Indenture Trustee or the Pass Through Trustees, (v) in connection with any
     modification to or rebuilding or replacement of the Facility or any portion
     thereof that may occur in the future, (vi) as may be required in connection
     with any refinancing of the Lessor Notes or the Certificates or the
     issuance of Additional Lessor Notes or Additional Certificates, (vii) as
     may be required in consequence of any transfer of the Member Interest or
     any transfer of the Undivided Interest or the Owner

                                      16
<PAGE>
     Lessor's Interest, or any part thereof by the Owner Lessor or the exercise
     by any such party of dispossessory remedies under the Operative Documents
     or any relinquishment of the use or operation of the Facility by the
     Facility Lessee, (viii) appropriate filing and recording to perfect the
     Lien of the Collateral Trust Indenture, if required, and the ownership and
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may be
     required under any Applicable Law enacted or adopted after the date hereof.

     B.   Representations and Warranties of the Owner Lessor. The Owner Lessor
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc.   (1) (i) This Agreement and each of
     the other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Lessor, and
     (ii) assuming the due authorization, execution and delivery of this
     Agreement by each party hereto other than the Owner Lessor, this Agreement
     constitutes and when executed and delivered each of the other Operative
     Documents (other than the Lessor Notes) to which it is or will be a party
     will be the legal, valid and binding obligations of the Owner Lessor,
     enforceable against the Owner Lessor in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Lessor is a party or
     by which the Owner Lessor or its property is bound, or in the creation of
     any Owner Lessor's Lien; provided, however, that no representation is made
     with respect to the right, power or authority of the Owner Lessor to act as
     operator of the Facility following a Lease Event of Default or the
     expiration or termination of the Facility Lease.

                                      17
<PAGE>
Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the FILOT Lease or the ability of
     the Owner Lessor to perform its obligations under the FILOT Lease or the
     Operative Documents to which it is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to materially adversely
     affect the ability of the Owner Lessor to perform its obligations under
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor
     Estate is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 15.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, the offering of which for the purposes of the Securities
     Act would be deemed to be part of the same offering as the offering of the
     Member Interest, the Lessor Notes or the Certificates or any part thereof
     or solicited any offer to acquire any of the same in violation of the
     registration requirements of Section 5 of the Securities Act.

          C.   Representations and Warranties of the Lessor Manager and the
Trust Company. The Trust Company (only with respect to representations and
warranties expressly relating to the Trust Company) and the Lessor Manager
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States has the corporate power and authority, as Lessor Manager
     and/or in its individual capacity to the extent expressly provided herein
     or in the LLC Agreement, to enter into and perform its obligations under
     the LLC Agreement, this Agreement and each of the other Operative Documents
     to which it is a party.

                                      18
<PAGE>
Due Authorization, Enforceability; etc.   (1) (i) The LLC Agreement has been
     duly authorized, executed and delivered by the Trust Company, and (ii)
     assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)  Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a party
has been or when executed and delivered will be duly authorized, executed and
delivered by the Trust Company or the Lessor Manager, and (ii) assuming the due
authorization, execution and delivery of this Agreement by each party hereto
other than the Trust Company or the Lessor Manager, this Agreement constitutes
and when executed and delivered each of the other Operative Documents to which
it is or will be a party will be the legal, valid and binding obligations of the
Lessor Manager and, to the extent expressly provided herein, the Trust Company,
as the case may be, enforceable against the Lessor Manager and, to the extent
expressly provided herein, the Trust Company, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the case
     may be, with the terms and provisions hereof and thereof, do not and will
     not contravene any Applicable Law of the State of Utah governing the Trust
     Company or any United States federal law governing the banking or trust
     powers of the Trust Company, or the LLC Agreement or its organizational
     documents or bylaws or contravene the provisions of, or constitute a
     default by the Trust Company under any indenture, mortgage or other
     material contract, agreement or instrument to which the Trust Company is a
     party or by which the Trust Company or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of the
     Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Trust Company or the Lessor Manager, as the case may be,
     of the LLC Agreement, this Agreement or the other Operative Documents to
     which the Trust Company or the Lessor Manager is or will be a party, other
     than any such authorization or approval or other action or notice or filing
     as has been duly obtained, taken or given.

                                      19
<PAGE>
Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may be,
     to perform its obligations under the LLC Agreement, this Agreement or any
     other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any interest
     therein or part thereof or the Lien of the Indenture Trustee on the
     Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any offer
     to acquire any of the same in violation of the registration of Section 5 of
     the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and perform
     its obligations under this Agreement, the LLC Agreement and the Tax
     Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement and
     any other Operative Document to which the Owner Participant is or will be a
     party constitute or when executed and delivered will constitute the legal,
     valid and binding obligations of the Owner Participant, enforceable against
     the Owner Participant in accordance with their respective terms, except as
     the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Owner Participant of
     this Agreement, the LLC Agreement, the Tax Indemnity Agreement and any
     other Operative Document to which the Owner Participant is or will be a
     party, the consummation by the Owner Participant of the transactions
     contemplated hereby and thereby, and the compliance by the Owner
     Participant

                                      20
<PAGE>
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law binding on the Owner Participant, or its
     organizational documents, or contravene the provisions of, or constitute
     a default under any indenture, mortgage or other material contract,
     agreement or instrument to which the Owner Participant is a party or by
     which the Owner Participant or its property is bound or result in the
     creation of any Owner Participant's Lien (other than any Lien created
     under any Operative Document) upon the Lessor Estate, the Facility Site
     or any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC
     Agreement, the Tax Indemnity Agreement or any other Operative Document to
     which the Owner Participant is or will be a party, other than any
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given (it being understood that no representation
     or warranty is being made as to any Applicable Laws relating to the
     Facility or the Facility Site), and other than, with respect to the
     Post-FILOT Lease Conversion Date, the conveyances and other matters
     referred to in the definition thereof.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to materially adversely affect the ability of the
     Owner Participant to perform its obligations under the LLC Agreement, this
     Agreement or any other Operative Document to which it is or will be a party
     or would materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present intention
     of distributing such Member Interest or any part thereof in any manner
     which would require registration under or would violate the Securities Act,
     but without prejudice, however, to the right of the Owner

                                      21
<PAGE>
     Participant at all times to sell or otherwise dispose of all or any part of
     such Member Interest under an exemption from registration available under
     such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, or in any security or lease the offering of which for
     the purposes of the Securities Act would be deemed to be part of the same
     offering as the offering of the Member Interest, the Lessor Notes or the
     Certificates or any part thereof or solicited any offer to acquire any of
     the same in violation of the registration requirements of Section 5 of the
     Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing
     this Agreement, the Owner Participant is not an "electric utility",
     "electric utility company", "public utility", "public-utility company",
     "holding company" or a "subsidiary company" or "affiliate" of any of the
     foregoing, under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company"
     or a company controlled by an "investment company" within the meaning of
     the Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking
      association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Indenture Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Collateral Trust Indenture, to enter
     into and perform its obligations under the Collateral Trust Indenture,
     this Agreement and each of the other Operative Documents to which it is
     or will be a party.

Due Authorization, Enforceability; etc.   (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)  (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Indenture

                                      22
<PAGE>
Trustee, each of the other Operative Documents to which the Indenture Trustee
is or will be a party constitutes or when executed and delivered will be a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally and by
general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or
     will be a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State
     of Connecticut or the United States of America governing the Lease
     Indenture Company or the banking or trust powers of the Lease Indenture
     Company, or its articles of association or by-laws, or contravene the
     provisions of, or constitute a default by the Lease Indenture Company
     under or pursuant to any indenture, mortgage or other material contract,
     agreement or instrument to which the Lease Indenture Company is a party
     or by which the Lease Indenture Company or its property is bound, or
     result in the creation of any Lien attributable to the Lease Indenture
     Company upon the Indenture Estate, the Facility Site or any interest
     therein or any part thereof (other than the Lien of the Collateral Trust
     Indenture), which would materially adversely affect the ability of the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, to perform its obligations under this
     Agreement or the other Operative Documents to which it is or will be a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     the Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act
     as operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice
     or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of the
     Lease Indenture Company or the Indenture Trustee to perform its obligations
     under the Operative Documents to which it is or will be a party or (ii) if
     determined adversely to it, could reasonably be expected to materially
     adversely affect the

                                      23
<PAGE>
     ability of the Lease Indenture Company to perform its obligations under
     this Agreement or any other Operative Document to which it is or will be
     a party or could reasonably be expected to materially adversely affect
     the Facility, the Facility Site or any interest therein or part thereof
     or the Lien of the Indenture Trustee on the Indenture Estate.

          D.   Representations, Warranties and Covenants of the Pass Through
Trustees and the Pass Through Company. The Pass Through Company and the Pass
Through Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement and
     each of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the Pass
     Through Trustees and the Pass Through Company and (B) assuming the due
     authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may be
     limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the other
     Operative Documents by each party thereto other than the Pass Through
     Company or such Pass Through Trustee, as the case may be, each of the other
     Operative Documents to which the Pass Through Company or any Pass Through
     Trustee is or will be a party constitutes or when executed and delivered
     will constitute a legal, valid and binding obligation of the Pass Through
     Company or such Pass Through Trustee, enforceable against the Pass Through
     Company or such Pass Through Trustee, as the case may be, in accordance
     with its terms, except as the same may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be,

                                      24
<PAGE>
     of the transactions contemplated hereby and thereby, and the compliance by
     the Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the United
     States of America or the State of Connecticut governing the Pass Through
     Company or the banking or trust powers of the Pass Through Company, or its
     organizational documents or by-laws, or contravene the provisions of, or
     constitute a default by the Pass Through Company under, or result in the
     creation of any Lien attributable to the Pass Through Company upon the
     Certificates or any indenture, mortgage or other material contract,
     agreement or instrument to which the Pass Through Company is a party or by
     which the Pass Through Company or its property is bound which would
     materially adversely affect the ability of the Pass Through Company, in its
     individual capacity or as Pass Through Trustee, as the case may be, to
     perform its obligations under this Agreement or the other Operative
     Documents to which it is a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     security interest of any Pass Through Trustee in the Indenture Estate;
     provided, however, that no representation is made with respect to the
     right, power or authority of the Pass Through Company or any Pass Through
     Trustee to act as operator of the Facility following a Lease Event of
     Default.

Governmental Action. Assuming the representations and warranties of the
      Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will
     be a party, other than any such authorization or approval or other action
     or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the Lessor
Manager, the Lease Indenture Company, the Indenture Trustee, the Pass Through
Company, the Pass Through Trustees, the Guarantor and the Facility Lessee to
consummate the transactions contemplated hereby on the Closing Date shall be
subject to the following conditions, except that the obligations of any Person
shall not be subject to such Person's own performance or compliance, and each
of the Transaction Parties (other than the Certificateholders) shall provide

                                      25
<PAGE>
such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                      26
<PAGE>
Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 850 MW of
capacity and shall comply in all material respects with the other specifications
set forth in the purchase and construction contracts for the Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall Transaction
to be delivered at Closing (including, without limitation, the Offering
Circular)) shall have been duly authorized, executed and delivered by the
parties thereto (if attached as an Exhibit hereto, in substantially the form
attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and effect,
and executed counterparts of each shall have been delivered to each of the
parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained in
the Certificate Purchase Agreement shall have been satisfied or waived by the
Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner Lessor
through the purchase by the Pass Through Trustees of the applicable Lessor
Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency of
all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

     E.   Representations and Warranties. The representations and warranties
of each party hereto set forth in Section 3 shall be true and correct on and as
of the Closing Date with the same effect as though made on and as of the
Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
status and the FERC Order referenced in clause (v) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                      27
<PAGE>
     F.   Consents.

          (a)  All permits, licenses, approvals and consents (including
management, credit and other internal approvals of the Transaction Parties, but
excluding the Third Party Consents referred to in (b) below) necessary to
consummate the Overall Transaction and to own and operate the Facility as
currently operated shall have been duly obtained and shall be in full force and
effect and in the form and substance satisfactory to each of the Transaction
Parties.

          (b)  Each Third Party Consent shall have been obtained and
shall be in full force and effect substantially in the form attached hereto as
Exhibit O which is applicable to the relevant third party granting such consent;
provided that if any Third Party Consent is not substantially in the form
attached hereto as Exhibit O, an authorized officer of Calpine shall provide a
certificate to the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee certifying that any differences between the form of such consent
attached hereto and the executed version are not materially adverse to any of
the Indenture Trustee, the Pass Through Trustee, the Noteholders, the
Certificateholders or the Owner Lessor.

                                      28
<PAGE>
Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the determination by FERC of EWG status and the FERC Order referenced in clause
(v) of the definition of "FERC Orders" set forth in Appendix A hereto, all
Applicable Permits required to be in effect on the Closing Date in connection
with the consummation of the transactions contemplated by the Operative
Documents shall have been issued and shall be in full force and effect; and all
such Applicable Permits shall be final, in full force and effect on the Closing
Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all premiums
thereon shall be current. The Owner Participant, the Manager, the Lessor
Manager, the Indenture Trustee and the Pass Through Trustees shall have received
a certificate or certificates (or binders, if certificates are not then
available) dated the Closing Date of Summit Global Partners Insurance Services
or an independent insurance broker or carrier reasonably satisfactory to such
Persons stating that such insurance complies with the requirements of Schedule
5.31, is in full force and effect and all premiums then due and payable in
connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and
BB+ by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have a copy of the Survey (which Survey
shall be certified to the Owner Lessor and the Title Company) in form and
substance satisfactory to the Owner Participant.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

     G.   Letter from the Appraiser. Each of the Owner Lessor and the Manager
shall have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

                                      29
<PAGE>
Other Reports. The Owner Participant, the Indenture Trustee and the Pass Through
Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the transfer by Facility Lessee of its interest in the Undivided Interest and
the Ground Interest to the Owner Lessor), (b) Thelen Reid & Priest LLP, special
counsel to the Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP,
special regulatory counsel to the Facility Lessee, (d) McNair Law Firm, P.A.,
South Carolina counsel to the Facility Lessee, (e) Karen Scowcroft, Esq.,
in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP, counsel to
the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP, counsel to
the Lease Indenture Company and the Indenture Trustee, (h) Bingham Dana LLP,
counsel to the Pass Though Trustees and the Pass Through Company, and (i) Ray
Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case in form
and substance reasonably satisfactory to each Transaction Party. Each such
Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed to
such parties.

     H.   Recordings and Filings. All filings and recordings listed on Schedule
4.20 hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
South Carolina and Delaware and any other documents as may be reasonably
requested by counsel to the Owner Participant, the Indenture Trustee or the
Pass Through Trustees to perfect (i) the Owner Lessor's Interest, or any part
thereof or interest therein and (ii) and the Lien of the Indenture Trustee on
the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents and the FILOT Lease shall
have been satisfied or waived and the Owner Participant shall be satisfied that
the Facility shall be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                      30
<PAGE>
No Changes in Applicable Law. No change shall have occurred in Applicable Law or
the interpretation thereof by any competent court or other Governmental Entity
that would make it illegal for the Owner Participant, the Owner Lessor, the
Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the Facility
Lessee, to participate in any of the transactions contemplated by the Operative
Documents or the Owner Lessor to participate in any of the transactions
contemplated by the FILOT Lease or would materially adversely affect the
Facility or the Facility Site. On the Closing Date, each Certificateholder's
purchase of Lessor Notes shall (i) be permitted by the laws and regulations of
each jurisdiction to which such Certificateholder is subject, (ii) not violate
any Applicable Law (including Regulation U, T or X of the Board of Governors of
the Federal Reserve System) and (iii) not subject any Certificateholder to any
tax, penalty or liability under or pursuant to any Applicable Law, which
Applicable Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and CT
Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the other
Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee

                                      31
<PAGE>
shall have received certification from CSFB as to the number of offerees by it
of the Lessor Estate.

     I.   Lien Search. The Owner Participant (with a copy to the Indenture
Trustee) shall have received Lien searches with respect to the Facility Lessee
in form and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have a
Material Adverse Effect (including, but not limited to, the Facility Lessee, the
Owner Participant, the Owner Lessor or the Certificateholders being subject to
or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates or
the financial and organizational regulation of electric utilities), nor shall
any order, judgment or decree have been issued or proposed by any Governmental
Entity at the time of the Closing Date, to set aside, restrain, enjoin or
prevent the consummation of the Operative Documents or the FILOT Lease or any of
the Transactions contemplated by any of the Operative Documents.

No Material Adverse Change. The annual reports, information, documents and other
reports referred to in Section 3.2(a) of the Calpine Guaranty shall have been
received by the Owner Participant, and there shall have been no material adverse
change in the financial condition, business assets or operation of Calpine and
its Consolidated Subsidiaries since the date of such annual reports,
information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

     J.   Payment of Fees and Expenses. Without limiting the provisions of
Section 2.3, all Transaction Costs invoiced at least 3 Business Days prior to
Closing to the Owner Participant with a copy to the Facility Lessee shall be
paid promptly after the Closing Date (but no later than October 29, 2001).

     K.   Corrective Ordinance. The Facility Lessee shall have received a copy
of the Corrective Ordinance.

                                      32
<PAGE>
COVENANTS OF FACILITY LESSEE AND GUARANTOR

     The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents to
     which Calpine is a party in a manner reasonably satisfactory to the Owner
     Participant and the Owner Lessor or (B) Calpine's obligations under the
     Calpine Guaranty have been succeeded to in accordance with Section 8.4(b)
     of the Calpine Guaranty, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each
     succeeding or surviving entity and the Calpine Guaranty shall remain in
     full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into account
     the nature of the transactions referred to hereunder) have been satisfied
     in connection with such transfer, and (iii) each succeeding or surviving
     entity shall be organized under the laws of the United States, any state
     thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses (including
     reasonable attorneys' fees and expenses) of the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create, incur,
assume or suffer to exist any Indebtedness (including without limitation any
guaranty or other contingent

                                      33
<PAGE>
obligations) except (i) by reason of endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the
Facility Lessee's business, (ii) indemnities in respect of unfiled mechanics'
liens and other liens permitted by clause (d) of the definition of "Permitted
Liens", (iii) contingent obligations set forth in, or incurred in connection
with, or indemnities set forth in, the Operative Documents and the FILOT Lease,
(iv) unsecured indemnities provided, and other unsecured contingent obligations
incurred by the Facility Lessee in connection with either (x) easements
relating to its applicable interest in the Facility or the Facility Site or (y)
any contract, agreement or other document or instrument relating to the Broad
River project which is entered into in the ordinary course of the Facility
Lessee's business, (v) customary indemnities in favor of the title insurers
providing the title policies covering the Facility Site or any portion thereof
or any easement or appurtenant right relating thereto in respect of claims by
the holder of mechanics' liens, (vi) the indemnities referred to in Section 9.1
and 9.2 of the Participation Agreement or pursuant to the Tax Indemnity
Agreement and (vii) unsecured Indebtedness incurred in accordance with Section
11.1 or 11.2 hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents and the FILOT Lease.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents
and the FILOT Lease, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

     L.   Books, Records, Access. The Facility Lessee shall maintain or cause
to be maintained adequate books, accounts and records with respect to itself,
the Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or

                                      34
<PAGE>
Lease Event of Default) expense to the Facility Lessee to inspect, the Facility
and Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

Other Information.

          1.   The Facility Lessee shall furnish, or shall cause to be furnished
               to, the Owner Lessor, the Owner Participant and, so long as the
               Lien of the Collateral Trust Indenture has not been terminated
               or discharged, the Indenture Trustee and the Pass Through
               Trustees, and their respective authorized representatives from
               time to time such information as such party shall reasonably
               request concerning the Facility and Facility Site including
               information concerning the condition, operation, maintenance and
               use of the Facility and Facility Site and such other financial
               or operating information as it shall reasonably request and
               which is routinely made available to creditors of the Facility
               Lessee, to the extent it possesses such information; provided
               that, the Facility Lessee reserves the right not to provide any
               information that is not otherwise publicly available to any
               transferee Owner Participant (or its Owner Lessor) if it
               reasonably believes in its good faith judgment that such
               transferee Owner Participant or any Affiliate thereof is a
               competitor or is an Affiliate of a competitor of the Facility
               Lessee or its Affiliates in the competitive power market,
               unless, before receiving any such information, such transferee
               Owner Participant shall have put in place (to the reasonable
               satisfaction of the Facility Lessee) appropriate confidentiality
               arrangements. To the extent such information consists of
               information contained in records kept by the Facility Lessee or
               any Affiliate, such information shall be furnished without cost
               to the recipient.

          (b)  The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

     M.   Warranty of Title to Facility Site.

          1.   On and after the Post-FILOT Lease Conversion Date, the Facility
               Lessee shall maintain good and valid fee, title to, or easement
               or other surface rights in, as applicable, the Facility Site,
               subject only to Permitted Liens.

          2.   The Facility Lessee shall maintain good and valid title to all
               of its other properties and assets (other than properties and
               assets disposed of in the

                                      35
<PAGE>
               ordinary course of business, including any sale, transfer or
               other disposition of any obsolete, surplus or worn out equipment,
               parts, supplies or other materials or assets to the extent
               permitted by the Operative Documents), subject only to Permitted
               Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to,
any Plan. If any Plan is established, maintained or contributed to by either
the Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any
ERISA Affiliate becomes obligated to contribute to any Plan, (a) with respect
to each such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have
at all times fulfilled in all material respects their obligations under the
minimum funding standards of ERISA and the Code, (ii) shall not allow any such
Plan to have an Unfunded Current Liability, (iii) shall, with respect to each
Plan (and each related trust, if any) which is intended to be qualified under
Sections 401(a) and 501(a) of the Code, obtain a determination letter from the
Internal Revenue Service to the effect that such Plan (and trust, if any) meets
the requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at
all times be in compliance in all material respects with applicable provisions
of ERISA and the Code, and (b) within fifteen (15) days after (i) the
occurrence of any reportable event (as defined in Section 4043(c) of ERISA)
with respect to any Plan, (ii) the complete or partial withdrawal by the
Facility Lessee or any ERISA Affiliate from any Multiemployer Plan, (iii) to
the extent the Facility Lessee or any ERISA Affiliate is notified that any
Multiemployer Plan has entered reorganization status, has become insolvent, or
has terminated (or any Multiemployer Plan notifies the Facility Lessee or any
ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA, (iv)
the institution of any action to terminate a Plan in a distress termination
under Section 4041(c) of ERISA, or (v) in the case of the breach of any other
covenant contained in this Section 5.11, the Facility Lessee shall report such
occurrence or breach to the Indenture Trustee, the Pass Through Trustees, the
Owner Lessor and the Owner Participant and furnish such information as such
Persons may reasonably request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents
or the FILOT Lease, it will not enter into or become bound by any contract or
agreement providing for the sale of energy produced from the Facility, or the
purchase of services to be performed at, for or in connection with, the Facility
or any other contract or agreement relating to the Facility that (i) has a term
that extends beyond the Basic Lease Term or the scheduled expiration of any
Renewal Lease Term then in effect or elected by the Facility Lessee, unless such
contract or agreement may be terminated by the Facility Lessee without material
costs or obligation prior to the Basic Lease Term or the scheduled expiration of
such Renewal Lease Term, as the case may be or (ii) results in any lien,
encumbrance, restriction or agreement relating to the Facility which extends
beyond the expiration of the Facility Lease Term or which binds the Facility or
the owner of the Facility beyond the expiration of the Facility Lease Term;
provided that nothing in this Section 5.12 shall prevent the Operator from
entering agreements to operate the Facility in accordance with the Operative
Documents and the FILOT Lease.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole

                                      36
<PAGE>
Amount which has become due and payable with respect to the Lessor Notes under
the Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

     N.   Investments. The Facility Lessee shall not make or permit to remain
outstanding any advances, loans or extensions of credit to, or purchase or own
any stock, bonds, notes, debentures or other securities of any Person, except
Permitted Investments.

     O.   Intentionally Deleted.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited
partner in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents; Delegation of Authority.

          1.   The Facility Lessee shall not without the prior written consent
               of the Owner Participant and, except as otherwise provided in
               Section 8 of the Collateral Trust Indenture and so long as the
               Lien of the Collateral Trust Indenture has not been terminated
               or discharged, the Indenture Trustee, (x) cause or consent to
               or (y) acquiesce in any amendment, modification, extension,
               termination, variance or waiver of timely compliance with any
               terms or conditions of any Operative Document. In addition,
               the Facility Lessee shall not enter into or acquiesce in any
               amendment, modification, extension, termination, variance or
               waiver of timely compliance with any terms or provisions of
               the FILOT Lease without the consent of the Owner Participant
               if the same would (i) subject in all cases to the provisions
               of clause (iii) below, during the Facility Lease Term, have a
               material adverse effect on the Owner Participant or the Owner
               Lessor (including, without limitation, any material decrease
               in their respective rights or any material increase in their
               respective obligations or any material increase in the
               liability exposure of the Owner Lessor or the
               Owner Participant, it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the fact
               of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and of Calpine under
               the Calpine Guaranty shall be taken into account and (y) any
               increase in rent or any other amount payable by the Owner Lessor
               or the

                                      37
<PAGE>
               Owner Participant under the FILOT Lease that is also reflected
               to the same extent under the Facility Site Lease and does not
               remain in effect after the expiration of the then existing Basic
               Lease Term or any Renewal Term with respect to which the
               Facility Lessee shall have irrevocably exercised its renewal
               option shall not constitute or cause or be deemed to constitute
               or cause such a material adverse effect), (ii) during the period
               after the expiration or termination of the Facility Lease Term,
               have any adverse effect whatsoever on the Owner Participant or
               the Owner Lessor (including, without limitation, any increase in
               their respective obligations or decrease in their respective
               rights) or (iii) whether during or after the Facility Lease
               Term, result in any change to the length of the term of the
               FILOT Lease or in any option to renew the Facility Lease Term.
               The Facility Lessee will furnish the Owner Participant with a
               copy of the executed version thereof promptly after the
               execution thereof. Notwithstanding anything to the contrary
               contained in the foregoing, the Facility Lessee shall not have
               any right to take any action otherwise permitted pursuant to
               this Section 5.20 if a Significant Lease Default or Lease Event
               of Default shall have occurred and be continuing. So long as the
               Lien of the Collateral Trust Indenture has not been discharged,
               the Facility Lessee shall not take any action pursuant to or in
               accordance with the foregoing provisions of this Section 5.20,
               if such action would (i) have a material adverse effect on the
               Indenture Trustee, the Pass Through Trustees, the Noteholders or
               the Certificateholders including, without limitation, a material
               adverse effect on such Person's rights and remedies under the
               Operative Documents (it being agreed that (x) in determining
               whether any such material adverse effect has occurred, the fact
               of the Facility Lessee's obligations under the Operative
               Documents (including paragraph (b) below) and Calpine's
               obligations under the Calpine Guaranty shall be taken into
               account and (y) any increase in rent or any other amount payable
               by the Owner Lessor or the Owner Participant under the FILOT
               Lease that is also reflected to the same extent under the
               Facility Site Lease ) shall not constitute or cause such a
               material adverse effect) or (ii) result in the release of or
               loss of the first priority, perfected Lien (subject to Permitted
               Liens) on all or any material portion of the Owner Lessor's
               interest in the Facility or the Facility Site, except as
               otherwise permitted by the Operative Documents.

     2.        During the Facility Lease Term (i) the Facility Lessee shall, at
               its own expense, on behalf of the Owner Lessor, duly fulfill and
               comply with all obligations on the part of the Owner Lessor
               under or in connection with the FILOT Lease (or any extension
               or renewal thereof) at the time performance of such
               obligations is required under the FILOT Lease and (ii) in
               connection with the foregoing obligation of the Facility
               Lessee set forth in clause (i), subject to clause (a) above,
               the Facility Lessee shall have and be entitled to exercise all
               rights and benefits (including the right to enter into any
               amendment, modification, extension, termination, variance,
               waiver, notice or consent or any action with respect thereto,

                                      38
<PAGE>
               subject to the terms and conditions of the Operative Documents)
               of the Owner Lessor under the FILOT Lease.

Name and Location. The Facility Lessee shall not change its name or the location
of its chief executive office or place of business without notice to the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through Trustees and
the Owner Participant at least thirty (30) days prior to such change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents and/or the FILOT Lease.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien on
any part of the Facility; provided, that the Facility Lessee may contest in good
faith any such taxes, assessments and other charges and, in such event, may
permit the taxes, assessments or other charges so contested to remain unpaid
during any period, including appeals, when the Facility Lessee is in good faith
contesting the same, so long as (a) adequate reserves consistent with GAAP
requirements (or other security arrangements reasonably satisfactory to the
Indenture Trustee and the Owner Participant) are established and maintained in
an amount sufficient to pay any such taxes, assessments or other charges,
accrued interest thereon and potential penalties or other costs relating
thereto, or other adequate provision for the payment thereof shall have been
made, and (b) any tax, assessment or other charge determined to be due, together
with any interest or penalties thereon, is immediately paid after resolution of
such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to itself,
the Facility or Facility Site, whether or not compliance therewith shall require
structural changes in the Facility or any part thereof or require major changes
in operational practices or interfere with the use and enjoyment of the Facility
or any part thereof, and (b) procure, maintain and comply, or cause to be
procured, maintained and complied with, all Applicable Permits, except in the
case of clause (a) and (b) above (1) as may be contested in accordance with
Section 7 or 8 of the Facility Lease and (2) the Facility Lessee may, in good
faith and by appropriate proceedings, diligently contest the validity or
application of any such Applicable Laws in any reasonable manner which does not
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material Lien on the Facility, (ii) impair the use, operation or
maintenance of the Facility in any material respect, (iii) any criminal
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee,

                                      39
<PAGE>
the Lease Indenture Company, the Pass Through Trustees, the Pass Through
Company or any Certificateholder, (iv) the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
Pass Through Trustees, the Pass Through Company or any Certificateholder being
subjected to any unindemnified civil liability or of the Owner Participant or
the Owner Lessor being subject to regulation as a public utility under
Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any
action within its control that would subject the Owner Lessor, the Lessor
Manager, the Owner Participant, the Indenture Trustee or the Pass Through
Trustees to regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site or the transactions contemplated by the Operative Documents
to which the Facility Lessee is a party and the performance of the FILOT Lease
as may be required to enable the Owner Participant, the Owner Lessor or, so
long as the Lien of the Collateral Trust Indenture shall not have been
terminated or discharged, the Indenture Trustee or the Pass Through Trustees,
as the case may be, to timely file with any Governmental Entity any reports and
obtain any licenses or permits required to be filed or obtained by the Owner
Lessor under any Operative Document or the FILOT Lease, the Owner Participant
as the owner of the Member Interest or the Indenture Trustee. The Facility
Lessee will preserve, protect, defend and enforce, or cause to be preserved,
protected, defended and enforced, the rights of itself, the Owner Lessor and
the Owner Participant under each and every Operative Document to which it is a
party (including by assignment and assumption of the rights thereunder),
including using commercially reasonable efforts to prosecute suits to enforce
any such rights and, at the request of Indenture Trustee, so long as the Lien
of the Collateral Trust Indenture has not been discharged or terminated (and
thereafter at the request of the Owner Participant), permit the Indenture
Trustee and the Owner Participant, at their respective cost and expense, to
participate in such capacity as it may choose in any such suit, any defense
thereof or in the preparation therefor; provided, however, that upon the
occurrence and during the continuance of any Lease Event of Default, if the
Indenture Trustee or the Owner Participant request that certain actions be
taken and the Facility Lessee fails to take the requested action, or to cause
the requested action to be taken within (5) Business

                                      40
<PAGE>
Days, the Indenture Trustee, so long as the Lien of the Collateral Trust
Indenture has not been discharged or terminated, and the Owner Lessor may, at
the Facility Lessee's reasonable expense, enforce, in its own name, or the
Facility Lessee's name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or relating or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing the
Facility Lessee may not change the nature of its business.

     P.   Support Arrangements. The Facility Lessee agrees that, to the extent
that the rights described in Section 3.1(n) which have already been made
available to the Owner Lessor prior to the expiration or termination of the
Facility Lease Term, and any rights assigned pursuant to the last sentence of
this Section 5.30, are insufficient to permit on a commercially practicable
basis during the period following the expiration or termination of the Facility
Lease Term, until the end of the Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including
with respect to electricity, steam, gas and water), maintenance and repair of
the Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the later of the
expiration or termination of the FILOT Lease or the Springing Facility Site
Lease, or earlier at the option of the Owner Lessor. The Facility Lessee shall
also, subject to obtaining any required third party consents, assign to the
Owner Lessor upon termination of the Facility Lease any support or similar
agreements to the extent relating to the Facility it has with third parties.

     Q.   Insurance. The Facility Lessee shall comply with the covenants set
forth in Schedule 5.31.

     R.   Tax Status. The Facility Lessee and each Person owning an Ownership
Interest therein will not voluntarily take any action to cause the Facility
Lessee to be subject to taxation as a separate entity for federal income tax
purposes.

                                      41
<PAGE>
     S.   Transmission Assets.

          1.   If and to the extent that on the Closing Date the FERC Order
               referred to in clause (v) of the definition thereof has not
               been obtained with respect to the jurisdictional facilities
               referred to therein (which facilities are identified in
               Exhibit A as Transmission Assets (the "Transmission Assets")),
               the Owner Participant shall, upon 5 days prior written notice
               to the Facility Lessee, and subject to the grant of the
               aforesaid order, cause the Owner Lessor to acquire an
               undivided interest equal to the Owner Lessor's Percentage in
               the Facility Lessee's right, title and interest in the
               Transmission Assets, for a price equal to $1.00. Upon payment
               by the Owner Lessor of such amount, the Facility Lessee shall
               execute and deliver such documentation as is reasonably
               requested by the Owner Lessor to transfer such undivided
               interest in the Facility Lessee's right, title and interest in
               the Transmission Assets to the Owner Lessor. Upon such
               transfer such Undivided Interest shall be and shall be deemed
               to be an integral part of the Undivided Interest (to the
               extent constituting a portion of the Facility) and the Ground
               Interest (to the extent constituting a portion of the
               leasehold interest in the Facility Site) for all purposes of
               the Operative Documents without the necessity of amending or
               supplementing any Operative Document, subject nevertheless to
               Section 14.15 hereof.

          2.   Without limiting Section 10 hereof or Section 4.2 of
               the Facility Lease, the Facility Lessee agrees that from and
               after the Closing Date and until the earlier to occur of (A)
               the transfer referred to in clause (a) above and (B) the
               termination of the Facility Lease, the Facility Lessee shall
               make available to the Owner Lessor, for no additional
               compensation, such rights in the Transmission Assets solely to
               the extent as shall be necessary so that the representation in
               Section 3.1(n) will be correct to the same extent as if such
               transfer had occurred on the Closing Date.

II.  COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

          1.   not amend, supplement, or otherwise modify Section 9.1, 9.3, 13.1
               or clause (i) of Section 13.2 of the LLC Agreement without the
               prior written consent of the Facility Lessee so long as no
               Significant Lease Default or Lease Event of Default has
               occurred and is continuing and the Indenture Trustee so long
               as the Lien of the Collateral Trust Indenture has not been
               terminated or discharged.

                                      42
<PAGE>
Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor Manager
each covenants severally and as to itself only that it will not directly or
indirectly create, incur, assume or suffer to exist any Owner Lessor's Lien
attributable to it and will promptly notify the Facility Lessee, the Owner
Participant and the Indenture Trustee of the imposition of any such Lien of
which it has Actual Knowledge and shall promptly, at its own expense, take such
action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and the
Owner Lessor each covenants severally and as to itself only that it will not
unless such action is expressly permitted by the Operative Documents (a) through
its own action terminate any Operative Document to which it is a party, (b)
amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents or the FILOT Lease
in any manner or (c) except as provided in Section 11 hereof or Section 2.10 or
Section 5.6 of the Collateral Trust Indenture, take any action to prepay or
refund the Lessor Notes or amend any of the payment terms of the Lessor Notes
without, in each case, the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing and, in the case of clause (a) or (b), the Indenture Trustee
so long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the Owner
Lessor covenants that it will not incur any Indebtedness nor enter into any
business or activity except as required or expressly permitted by any Operative
Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

    B.   Bankruptcy of Owner Lessor.

         Each of the Trust Company, the Lessor Manager and the Owner Lessor
hereby agrees severally and as to itself only that it shall not voluntarily
take any action that shall, or cause any action to be taken that is intended
to, submit the Owner Lessor, as debtor, to any proceeding under any Applicable
Law involving bankruptcy, insolvency, reorganization or other laws affecting the
rights of creditors generally unless a Lease Event of Default or a Significant

                                      43
<PAGE>
Lease Default shall have occurred and be continuing (in which case, if the Lien
of the Collateral Trust Indenture shall not have been discharged, the Trust
Company or the Owner Lessor shall not take any such action unless the Indenture
Trustee shall have given its prior written consent to such action in its sole
discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent of
     the Indenture Trustee; provided, however, that the Owner Participant may,
     subject to Section 7.6, assign, convey or transfer all or any part of its
     interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if applicable),
     which opinion(s) and counsel are reasonably satisfactory to each such
     recipient and consistent in scope to the opinions delivered on behalf of
     the Owner Participant at the Closing, including that all regulatory
     approvals required in connection with such transfer or necessary to assume
     the Owner Participant's obligations under the Operative Documents shall
     have been obtained and that the proposed transfer of the Member Interest
     will not require registration under the Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below
     (but in any event, such Affiliate shall not be a Competitor of Calpine);
      provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor
     Owner Participant's obligations hereunder, pursuant to an OP Parent
     Guaranty or (B) a Person which meets, or the payment and performance
     obligations of which with respect to the interest being transferred under
     the Operative Documents are guaranteed (pursuant to a OP Parent Guaranty)
     by a Person (the transferor Owner Participant or such other guarantor,
     the "Transferee Guarantor") which meets, the following criteria: (1) the
     tangible net worth of the Transferee or Transferee Guarantor, is at least
     equal to $75 million calculated in accordance with GAAP; and (2) unless
     waived in writing by the Facility Lessee prior to such transfer, such
     Transferee is not a Competitor of Calpine or in material litigation

                                      44
<PAGE>
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in this
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees, expenses
     and charges of the Indenture Trustee, the Pass Through Trustees, and the
     Facility Lessee (including reasonable attorneys' fees and expenses in
     connection with any such transfer or proposed transfer), including any of
     the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y) enjoy
     the rights and privileges and

                                      45
<PAGE>
     perform the obligations of the Owner Participant hereunder and under each
     of the OP Assignment and Assumption Agreement, the Calpine Guaranty and
     each other Operative Document to which such Owner Participant is a party,
     and each reference in this Agreement, the Calpine Guaranty and each other
     Operative Document to the "Owner Participant" shall thereafter be deemed
     to include such Transferee for all purposes and (ii) the transferor Owner
     Participant and the OP Guarantor, if any, of such transferor Owner
     Participant's obligations shall be released from all obligations
     hereunder and under each other Operative Document to which such
     transferor or OP Guarantor is a party or by which such transferor Owner
     Participant or OP Guarantor is bound to the extent such obligations are
     expressly assumed by a Transferee meeting the requirements of this
     Section 7.1; provided, however, that in no event shall any such transfer
     waive or release the transferor or its OP Guarantor from any liability
     accruing or existing in respect of any period occurring on or prior to or
     occurring simultaneously with such transfer.

The transfer restrictions set forth in this Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such Lien
of which the Owner Participant has Actual Knowledge and shall promptly, at its
own expense, take such action as may be necessary to duly discharge such Owner
Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement without
the prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and without
the prior written consent of the Indenture Trustee so long as the Lien of the
Collateral Trust Indenture has not been terminated or discharged, or (b) revoke,
or otherwise waive compliance with or terminate the LLC Agreement without the
prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in

                                      46
<PAGE>
respect of, the Owner Lessor under the Bankruptcy Code, or any other applicable
federal or state law or the law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or acquire
its interest of the Owner Lessor's Interest or the Member Interest of the Owner
Participant, and which offers it wishes to accept, together with a full and
complete statement of the price and all of the terms, conditions and provisions
contained in such offers. The Facility Lessee shall thereafter have the right
within a period of 45 days from and after the receipt by them of such notice
(the "Notice Period") to notify the Owner Participant of its intent to exercise
its right of first refusal. If the Facility Lessee elects to exercise the right
provided in the preceding sentence, it will within 60 days of such notice (the
"Agreement Period") execute a contract on the same terms and conditions as the
offer giving rise to such right. If the Facility Lessee does not give such
notice to the Owner Participant within the 45 day period or execute such a
contract within 60 days of such notice, the Owner Participant will be free to
proceed under the terms and conditions set forth in its notice to the Facility
Lessee, unless the failure to execute the contract within 60 days is
attributable to acts or omissions of the Owner Participant. In the event that
such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to the
Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and right
of first refusal provisions of this Section prior to entering into such revised
agreement; provided that, for such revised offer, the Notice Period shall be 10
Business Days from the date of such new notice, and the Agreement Period shall
not exceed 45 days from the date of the Facility Lessee's notice accepting such
new terms.

     Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other Broad River Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other Broad River Facility Lease.

     C.   Prohibition on Fundamental Changes. If the Owner Participant is an
entity which has as its sole (or substantially equivalent to sole) business
activity, the participation in the transactions contemplated by the Operative
Documents, the Owner Participant shall not change

                                      47
<PAGE>
its form of organization and shall not enter into or engage in any business
other than as contemplated by the Operative Documents and the activities related
thereto.

                                      48
<PAGE>
     D.   Appointment of Successor Lessor Manager. Notwithstanding any other
provision of this Agreement, a successor Lessor Manager shall not be appointed
by the Owner Participant without the consent of the Facility Lessee and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged and the Indenture Trustee unless such successor Lessor Manager (a)
meets the requirements of the LLC Agreement, (b) has a combined capital and
surplus of at least $150 million, and (c) the Facility Lessee and, so long as
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee, shall have received at the expense of Facility Lessee on
an After-Tax Basis: (i) an opinion or opinions of counsel, such counsel and
such opinion to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required, or (ii) such other documentation
reasonably satisfactory to the Facility Lessee or the Indenture Trustee as the
case may be.

     E.   Cooperation. The Owner Lessor agrees, and each of the Owner
Participant and the Lessor Manager agrees to cause the Owner Lessor to, at the
request of the Facility Lessee and at the sole cost and expense of the Facility
Lessee on an After-Tax Basis, take such actions as may be necessary for the
Owner Lessor to take as the holder of the leasehold interest in the Facility
for purposes of obtaining the valid and effective issue, transfer or amendment,
as the case may be, of all Governmental Approvals to the extent the same are
required for the use, ownership, operation or maintenance of the Facility, the
Facility Site, the Undivided Interest, the Ground Interest or any Component by
the Facility Lessee or any permitted assignee of the Facility Lessee in the
manner contemplated by the Operative Documents, except to the extent the same
involves any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) the risk of criminal liability being incurred by the Owner Lessor, the
Owner Participant, the Equity Investor or the OP Guarantor, or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Indenture Trustee or the Pass Through Trustee or any of their
respective Affiliates or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Equity Investor
or the OP Guarantor, or (so long as the Lessor Notes are outstanding and the
Lien of the Collateral Trust Indenture has not been discharged) the Indenture
Trustee or the Pass Through Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any applicable law. The Facility Lessee shall pay on an
After-Tax Basis all reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) of the Owner Lessor
and each other Person party to an Operative Document incurred in connection
with any such action. It is understood and agreed that, with respect to the
action requested of it, and taken by it, under this Section 7.9, the Owner
Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer to
exist any Indenture Trustee's Lien attributable to it and arising out of events
or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor

                                      49
<PAGE>
Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase and
holding of such Lessor Note (or any part thereof) constitutes assets of any Plan
or that such purchase and holding will be covered by a prohibited transaction
class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below,
     the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner
     Lessor, the Trust Company, in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, each Certificateholder, the Pass Through Company in
     its individual capacity, the Pass Through Trustees, and their respective
     Affiliates, successors, assigns, agents, directors, officers and
     employees (each an "Indemnitee") against any and all Claims (whether or
     not any of the transactions contemplated by the Operative Documents are
     consummated) imposed on, incurred or suffered by or asserted against any
     Indemnitee in any way relating to or resulting from or arising out of or
     attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase, sale
     or other disposition, insuring, sublease, or other use or non-use of the
     Undivided Interest, the Ground Interest, the Facility, the Facility Site or
     any Component or any portion of any thereof or any interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and any
     other business or affairs conducted at the Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site or any Component, or
     any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, or any other Operative Document,
     the execution or delivery thereof or the performance, enforcement,
     attempted enforcement or amendment of any terms thereof, or the
     transactions contemplated thereby or resulting therefrom;

                                      50
<PAGE>
any Environmental Condition at, related to or caused by the Facility or the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents and
     the FILOT Lease requested by the Facility Lessee, or resulting from the
     actions of the Facility Lessee or in connection with any Lease Default or
     Lease Event of Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including Environmental
     Laws), or any action of any Governmental Entity or other Person taken with
     respect to the Facility, the Facility Site, the Operative Documents, the
     FILOT Lease or the interests of the Owner Participant, the Owner Lessor,
     the Indenture Trustee or the Pass Through Trustees, or under the Operative
     Documents or the FILOT Lease or the presence, use, storage, release,
     threatened release, transportation, arrangement for transportation,
     treatment, arrangement for treatment, manufacture, disposal or arrangement
     for disposal of any Hazardous Substance in, at, under or from the Facility
     or the Facility Site, including, for the avoidance of doubt, any of the
     foregoing existing or occurring prior to the Closing Date;

the non-performance or breach by the Facility Lessee, any Calpine Party or the
     County of any obligation contained in this Agreement or any other Operative
     Document or the FILOT Lease or the falsity or inaccuracy of any
     representation, warranty or obligation of any such Person contained in this
     Agreement or any other Operative Document or the FILOT Lease;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents or the FILOT
     Lease (other than the Facility Lease, the Facility Site Lease, the FILOT
     Lease and the Springing Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative Documents
     or the FILOT Lease; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

                                      51
<PAGE>
Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility and the Facility
     Site in compliance with the provisions of the Facility Lease and the
     Facility Site Lease, respectively, and (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Springing Facility Site Lease,
     the performance by the Facility Lessee of all obligations required to be
     performed by it thereunder or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph (ii)
     shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition of
     any such rights or interests) based on what the relevant transferor
     Indemnitee would have received had no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or the FILOT Lease or (ii) any violation of
     Applicable Law by any such Person except to the extent attributable to a
     violation of Applicable Law by the Facility Lessee or any other Calpine
     Party or to any breach by the Facility Lessee or such other Calpine Party
     of any covenant, representation or warranty contained in any Operative
     Document or the FILOT Lease;

          a)   as to any Indemnitee, any Claim to the extent attributable to the
               noncompliance of such Indemnitee or a Related Party, with any
               of the terms of, or any misrepresentation or breach of
               warranty by such Indemnitee or Related Party contained in any
               Operative Document made by such Indemnitee or Related Party or
               any breach by such Indemnitee or a Related Party of any
               covenant contained in any Operative Document or any breach by
               such Indemnitee or a Related Party of any covenant contained
               in any Operative Document made by such Indemnitee or Related
               Party

                                      52
<PAGE>
               except to the extent attributable to any breach by the
               Facility Lessee or any other Calpine Party of any covenant,
               representation or warranty contained in any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from an
     Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of an Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful misconduct,"
when applied with respect to the Owner Lessor, the Owner Participant, the
Indenture Trustee, the Pass Through Trustees or any Affiliate of any thereof,
shall not include any liability imputed as a matter of law to such Indemnitee
solely by reason of any such entity's interest in the Facility or the Facility
Site or such Indemnitee's failure to act in respect of matters which are or were
the obligation of the Facility Lessee under this Agreement or any other
Operative Document. Nothing herein shall be deemed to constitute a guaranty of
any useful life or any present or future residual value of the Facility or a
guaranty that any amount of any Secured Indebtedness will be paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section
     9.1, in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other

                                      53
<PAGE>
     Indemnitee shall waive its rights to indemnification (for itself and
     each Related Party thereto) in a manner reasonably acceptable to the
     Facility Lessee, to cooperate, at the sole cost and expense of the
     Facility Lessee, with insurers in exercise of their rights to
     investigate, defend or compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as to
     which indemnification is sought; provided, that the failure so to notify
     the Facility Lessee shall not reduce or affect the Facility Lessee's
     liability which it may have to such Indemnitee under this Section 9.1, and
     no payment hereunder by the Facility Lessee to an Indemnitee shall be
     deemed to constitute a waiver or release of any right or remedy that the
     Facility Lessee may have against any such Indemnitee for actual damages
     resulting directly from the failure or delay of such Indemnitee to give the
     Facility Lessee such notice. Subject to the foregoing, any amount payable
     to any Indemnitee pursuant to this Section 9.1 shall be paid within thirty
     (30) days after receipt of such written demand therefor from such
     Indemnitee, accompanied by a certificate of such Indemnitee stating in
     reasonable detail the basis for the indemnification thereby sought and (if
     such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential information
     of any kind without the execution of an appropriate confidentiality
     agreement. Promptly after the Facility Lessee receives notification of such
     Claim accompanied by a written statement describing in reasonable detail
     the Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default shall have occurred and be continuing, the Facility Lessee
     shall have the right in its sole discretion, to defend or compromise any
     Claim for which indemnification is sought under this Section 9.1 which the
     Facility Lessee acknowledges is subject to indemnification hereunder;
     provided that no such defense or compromise shall involve any danger of (i)
     foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any
     part of the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site, the Lessor Estate or the Indenture Estate or the impairment
     of the Facility or the Facility Site, in any material respect or (ii) any
     criminal liability being incurred or any material adverse effect on such
     Indemnitee; provided, further, that no Claim shall be compromised by the
     Facility Lessee on a basis that admits any criminal violation or gross
     negligence or willful misconduct on the part of such Indemnitee without the
     express written consent of such Indemnitee; and provided, further, that to
     the extent that other Claims unrelated to the transactions contemplated by
     the Operative Documents and the FILOT Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement) are
     part of the same proceeding involving such Claim, the Facility Lessee may
     assume responsibility for the contest or compromise of such Claim only if
     the same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the event
     that in the course of the investigation or defense of a claim, the Facility
     Lessee shall in good faith reasonably

                                      54
<PAGE>
     determine that it is not liable for indemnification with respect thereto
     under this Section 9.1, it may give notice to the applicable Indemnitee
     of such fact; and, in such case, any acknowledgment, theretofore made by
     the Facility Lessee of liability with respect to such claim under this
     Section 9.1 shall be deemed revoked, and the Facility Lessee may
     thereupon cease to defend such claim; provided that (i) the Facility
     Lessee shall have given the Indemnitee reasonable prior notice of its
     intention to renounce such acknowledgment, (ii) the Facility Lessee's
     conduct regarding the defense of such claim or any decision to withdraw
     from such defense shall not prejudice or have prejudiced the Indemnitee's
     ability to contest such claim (taking into account, among other things,
     the timing of the Facility Lessee's withdrawal and the theory or theories
     upon which the Facility Lessee shall have based its defense), and (iii)
     the Facility Lessee shall have given such Indemnitee all materials,
     documents and records relating to its defense of such claim as such
     Indemnitee shall have reasonably requested in connection with the
     assumption by such Indemnitee of the defense of such claim at the cost
     and expense of the Facility Lessee. In the event that the Facility Lessee
     shall cease to defend any claim pursuant to the preceding sentence, the
     Facility Lessee shall indemnify each Indemnitee, without regard to any
     exclusion that might otherwise apply hereunder, to the extent that the
     actions of the Facility Lessee in defending such claim or the manner or
     time of the Facility Lessee's election to withdraw from the defense of
     such claim shall have caused such Indemnitee to incur any loss, cost,
     liability or expense which such Indemnitee would not have incurred had
     the Facility Lessee not ceased to defend such claim in such manner or
     such time. If the Facility Lessee elects, subject to the foregoing, to
     compromise or defend any such asserted liability, it may do so at its own
     expense and by counsel selected by it. Upon the Facility Lessee's
     election to compromise or defend such asserted liability and prompt
     notification to such Indemnitee of its intent to do so, such Indemnitee
     shall cooperate at the Facility Lessee's expense with all reasonable
     requests of the Facility Lessee in connection therewith and will provide
     the Facility Lessee with all information not within the control of the
     Facility Lessee as is reasonably available to such Indemnitee which the
     Facility Lessee may reasonably request; provided, however, that such
     Indemnitee shall not, unless otherwise required by Applicable Law, be
     obligated to disclose to the Facility Lessee or any other Person, or
     permit the Facility Lessee or any other Person to examine (i) any income
     tax returns of the Owner Participant or (ii) any confidential information
     or pricing information not generally accessible by the public possessed
     by the Owner Participant (and, in the event that any such information is
     made available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to
     the related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without
     reservation of rights against such Indemnitee), no additional legal fees
     or expenses of such Indemnitee in connection with the defense of such
     Claim shall be indemnified hereunder unless such fees or expenses were
     incurred at the request of the Facility Lessee or such insurers.
     Notwithstanding the foregoing, an Indemnitee may participate at its own
     expense in any judicial proceeding controlled by the Facility Lessee
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such

                                      55
<PAGE>
     party's participation does not constitute a waiver of the indemnification
     provided in this Section 9.1; provided, further, that if and to the
     extent that (i) such Indemnitee is advised by counsel that an actual or
     potential conflict of interest exists where it is advisable for such
     Indemnitee to be represented by separate counsel or (ii) there is a risk
     that such Indemnitee may be subject to criminal liability and such
     Indemnitee informs the Facility Lessee that such Indemnitee desires to be
     represented by separate counsel, such Indemnitee shall have the right to
     control its own defense of such Claim and the reasonable fees and
     expenses of such defense (including, without limitation, the reasonable
     fees and expenses of such separate counsel) shall be borne by the
     Facility Lessee. So long as no Lease Event of Default described in clause
     (a), (b), (g) or (h) of Section 16 of the Facility Lease has occurred and
     be continuing, no Indemnitee shall enter into any settlement or other
     compromise with respect to any Claim without the prior written consent of
     the Facility Lessee unless (i) the Indemnitee waives its rights to
     indemnification hereunder or (ii) the Facility Lessee has not
     acknowledged their indemnity obligation with respect thereto and there is
     a significant risk that a default judgment will be entered against such
     Indemnitee. Nothing contained in this Section 9.1(e) shall be deemed to
     require an Indemnitee to contest any Claim or to assume responsibility
     for or control of any judicial proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee
     (so long as no Lease Event of Default shall have occurred and be
     continuing), such insurer shall be subrogated to the rights and remedies
     of the Indemnitee on whose behalf such Claim was paid to the extent of
     such payment (other than rights of such Indemnitee under insurance
     policies maintained at its own expense) with respect to the transaction
     or event giving rise to such Claim. Should an Indemnitee receive any
     refund, in whole or in part, with respect to any Claim paid by the
     Facility Lessee hereunder, it shall promptly pay over to the Facility
     Lessee the lesser of (i) the amount refunded reduced by the amount of any
     Tax incurred by reason of the receipt or accrual of such refund and
     increased by the amount of any Tax (but not in excess of the amount of
     such reduction) saved as a result of such payment or (ii) the amount the
     Facility Lessee or any of their insurers has paid in respect of such
     Claim; provided that, so long as a Significant Lease Default or Lease
     Event of Default shall have occurred and is continuing such amount may be
     held by the Owner Lessor as security for the Facility Lessee's
     obligations under the Facility Lease, the other Operative Documents and
     the FILOT Lease.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the
     other Transaction Parties will use their respective reasonable and
     diligent efforts to minimize Claims indemnifiable by the Facility Lessee
     under this Section 9.1, including by complying with reasonable requests
     by the Facility Lessee to do or to refrain from doing any act if such
     compliance is, in the good faith opinion of the Owner Participant, the
     Owner Lessor, or such other Transaction Party, as the case may be, of a
     purely ministerial nature or otherwise has no unindemnified adverse
     impact on the Owner Participant, the Owner Lessor, or such Transaction
     Party, as the case may be, or any Affiliate of any thereof or on the
     business or operations of any of the foregoing.

                                      56
<PAGE>
General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity, the
     Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the imposition
     of any lien (or incurrence of any liability to refund or pay over any
     amount as a result of any lien) on, the Facility, the Undivided Interest,
     the Ground Interest, the Facility Site or any portion or Component thereof
     or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability of
     the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Facility Site or any portion or Component thereof, or any interest
     therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease, the Facility Site
     Lease or the Springing Facility Site Sublease or arising from the Facility,
     the Undivided Interest, the Ground Interest, the Facility Site or any
     portion or Component thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents or the
FILOT Lease;

the conveyance of title to the Undivided Interest; or

                                      57
<PAGE>
otherwise relating to the transactions contemplated by the Operative Documents
     or the performance of the FILOT Lease.

          Notwithstanding anything herein to the contrary and without regard
to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner Lessor
with respect to any failure to withhold such tax, and the withholding tax would
otherwise be an Excluded Tax under Section 9.2(b) without regard to the first
sentence of this paragraph, then the Certificateholder Indemnitee with respect
to which such withholding was not made will pay the amount of tax not withheld
to the relevant taxing authority if such taxes remain unpaid or will reimburse
the Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the period
commencing on the date the Facility Lessee shall have made the indemnity payment
to such taxing authority and ending the earlier of the date of repayment by such
Tax Indemnitee and five Business Days after the date the Facility Lessee demands
reimbursement thereof pursuant to this sentence, and (b) the Overdue Rate for
the period thereafter to the date the Facility Lessee actually receives such
payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and direct
     substitution for income taxes) or property taxes) ("Income Taxes"),
     including any such Taxes collected by way of withholding, minimum or
     alternative minimum taxes, and franchise taxes; provided that this
     exclusion (i) shall not affect any express requirement that payments be
     made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided that
     this exclusion shall not apply so long as a Lease Event of Default shall
     have occurred and be continuing;

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<PAGE>
Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and the FILOT Lease (giving effect to its assignment to the Owner Lessor
     pursuant to the Assignment Agreement) and not as a result of any action or
     inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee is
     a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the Indenture
     Trustee of any interest in the Lease Debt or the Indenture Estate, or (4)
     in the case of the Owner Lessor or the Owner Participant any direct or
     indirect interest in the Owner Lessor or the Owner Participant, including
     by reason of an election made pursuant to Section 338 of the Code, in each
     case to the extent imposed by reason of any transfer described in this
     clause (v)(A), or (B) to the extent that, under law in effect on the date
     of the transfer such Taxes exceed the amount of Taxes that would be
     indemnified hereunder had there been no such assignment, sale, transfer or
     other voluntary disposition, unless such transfer or disposition occurs
     during the continuance of a Lease Event of Default or is otherwise pursuant
     to the Facility Lessee's exercise of its rights under the Operative
     Documents; provided that this exclusion shall not apply with respect to any
     initial syndication of interests in the Owner Participant accomplished
     prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

                                      59
<PAGE>
Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall have
     determined in good faith that compliance with any such requirement shall
     not result in any identified non-immaterial adverse effect to its interests
     or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly required
     to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee is
     not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of any
     of its representations or warranties contained in Section 3.4(g) or Section
     8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the

                                      60
<PAGE>
     nature of sales, use, rental or license taxes or value added taxes (except
     to the extent value added taxes are imposed in clear and direct
     substitution for income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard
     to paragraph (b) hereof, any payment by the Facility Lessee pursuant to
     this Section 9.2 shall be increased by amounts necessary to ensure that
     all such payments are made on an After-Tax Basis. Each payment required
     to be made by the Facility Lessee to a Tax Indemnitee pursuant to this
     Section 9.2 shall be paid either (i) when due directly to the applicable
     taxing authority by the Facility Lessee if it is permitted to do so, or
     (ii) where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the
     Tax Indemnitee describing in reasonable detail the Taxes for which the
     Tax Indemnitee is demanding payment and the computation of such Taxes),
     (B) subject to paragraph (g) below, in the case of amounts which are
     being contested pursuant to such paragraph (g), at the time and in
     accordance with a final determination of such contest or (C) in the case
     of any indemnity demand for which the Facility Lessee has requested
     review and determination pursuant to paragraph (d) below, the completion
     of such review and determination; provided, however, in no event later
     than the date which is one Business Day prior to the date on which such
     Taxes are required to be paid to the applicable taxing authority. Any
     amount payable to the Facility Lessee pursuant to paragraph (e) or (f)
     below shall be paid promptly after the Tax Indemnitee realizes a Tax
     Benefit giving rise to a payment under paragraph (e) or receives a refund
     or credit giving rise to a payment under paragraph (f), as the case may
     be, and shall be accompanied by a statement of the Tax Indemnitee
     computing in reasonable detail the amount of such payment. Upon the final
     determination of any contest pursuant to paragraph (g) below in respect
     of any Taxes for which the Facility Lessee has made a Tax Advance, the
     amount of the Facility Lessee's obligation under paragraph (a) above
     shall be determined as if such Tax Advance had not been made. Any
     obligation of the Facility Lessee under this Section 9.2 and the Tax
     Indemnitee's obligation to repay the Tax Advance will be satisfied first
     by set off against each other, and any difference owing by either party
     will be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee receives
     any computation from the Tax Indemnitee, the Facility Lessee may request
     in writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary for
     the accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any other
     Operative Document or the FILOT Lease are not within the scope of the

                                      61
<PAGE>
     independent accountant's responsibility. The fees and disbursements of such
     accounting firm will be paid by the Facility Lessee; provided that such
     fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by
     the Facility Lessee under this Section 9.2, the aggregate Taxes actually
     paid by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment
     provided under this Section 9.2(e) shall be deferred until the
     Significant Lease Default or Lease Event of Default has been cured), such
     Tax Indemnitee shall pay to the Facility Lessee the lesser of (A) (y) the
     amount of such Tax Benefit, plus (z) an amount equal to any United States
     federal, state or local income tax benefit resulting to the Tax
     Indemnitee from the payment under clause (y) above and this clause (z)
     (determined using the same assumptions as set forth in the second
     sentence under the definition of After-Tax Basis) and (B) the amount of
     the indemnity paid pursuant to this Section 9.2 giving rise to such Tax
     Benefit; provided, however, that any excess of (A) over (B) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such Tax Benefit, the portion of such Tax Benefit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such refund or credit)
     plus (y) an amount equal to any United States federal, state or local
     income tax benefit realized by such Tax Indemnitee by reason of such
     payment to the Facility Lessee (determined using the same assumptions as
     set forth in the second sentence under the definition of After-Tax Basis);
     provided that (A) if at the time such payment is due to the Facility Lessee
     a Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing, such amount shall not be payable until such Significant
     Lease Default or Lease Event of Default has been cured, and (B) the amount
     payable to the Facility Lessee pursuant to this sentence shall not exceed
     the amount of the indemnity payment in respect of such refunded or credited
     Taxes that was made by the Facility Lessee. Any excess of (x) and

                                      62
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     (y) over (B) in this Section 9.2(f) shall be carried forward and reduce
     the Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such refund or credit, the
     portion of such refund or credit that is required to be repaid or
     recaptured will be treated as Taxes for which the Facility Lessee must
     indemnify the Tax Indemnitee pursuant to this Section 9.2 without regard
     to paragraph (b) hereof. If, in connection with a refund or credit of all
     or part of any Taxes paid, reimbursed or advanced by the Facility Lessee
     pursuant to this Section 9.2, a Tax Indemnitee receives an amount
     representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"), such
     Tax Indemnitee shall give the Facility Lessee written notice of such Tax
     Claim promptly after its receipt, and shall furnish the Facility Lessee
     with copies of such Tax Claim and all other writings received from the
     taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

          (1)  the Tax Indemnitee will control the contest of such Tax Claim
(acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

          (2)  the decisions regarding what actions to be taken shall be made by
the Tax Indemnitee in its sole judgment, and

          (3)  the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without the Facility Lessee's prior written consent except
as provided in paragraph (g)(iv) below.

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     In either case, the party conducting such contest shall consult in good
faith with the other party and its designated counsel with respect to such Tax
Claim and shall provide the other party with copies of any reports or claims
(or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect
     to a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

          (1)  within 30 days after written notice by the Tax Indemnitee to the
Facility Lessee of such Tax Claim (or such shorter period, to be specified by
the Tax Indemnitee in such notice, as required for taking action with respect to
such Tax Claim), the Facility Lessee shall request in writing to the Tax
Indemnitee that such Tax Claim be contested,

          (2)  no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security for
the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

          (3)  there is no risk of sale, forfeiture or loss of, or the creation
of any Lien on any Facility, the Facility Site, the Undivided Interest, the
Ground Interest, or any portion or Component thereof or any interest therein as
a result of such Tax Claim; provided that this clause (3) shall not apply if the
Facility Lessee posts security satisfactory to the Tax Indemnitee, both as to
coverage and credit, in its sole discretion,

          (4)  there is no risk of imposition of any criminal penalties or
liabilities,

          (5)  if such contest involves payment of such Tax, the Facility Lessee
will advance such amount necessary to pay the Tax to the Tax Indemnitee or its
Affiliates on an interest-free basis and with no after-tax cost to such Tax
Indemnitee (a "Tax Advance"),

          (6)  the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with the
contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

          (7)  the Tax Indemnitee, if it so requests has been provided at the
Facility Lessee's sole expense with an opinion, reasonably acceptable to such
Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

          (8)  in the case of a judicial appeal, the appeal is not to the U.S.
Supreme Court,

          (9)  if such contest is controlled by the Facility Lessee, prior to
commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity pursuant
to this Section 9.2 with respect to

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such Tax, which admission shall be binding on the Facility Lessee unless and to
the extent such contest is determined in a manner that conclusively demonstrates
that the Facility Lessee is not so liable, and

          (10) if the subject matter of such claim shall be of a continuing or
recurring nature and shall have previously been decided pursuant to this
paragraph (g), there shall have been a change in law after such previously
decided claim and such Tax Indemnitee receives, at the Facility Lessee's sole
cost, an opinion of counsel selected by such Tax Indemnitee and reasonably
acceptable to the Facility Lessee to the effect that such change is favorable to
the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained
     in this Section 9.2, the Tax Indemnitee at any time may elect to decline
     to take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

          (1)  waives its right to any indemnity payment by the Facility Lessee
pursuant to this Section 9.2 in respect of such Tax Claim (and any other claim
for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

          (2)  promptly repays to the Facility Lessee any Tax Advance and any
amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of such
Taxes, but not any costs or expenses with respect to any such contest.

     Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in such manner as
     will show the leasehold or fee interest, as applicable, of the Owner Lessor
     in the Facility for United States federal, state and local income tax
     purposes (if applicable), send a copy of such report, statement or return
     to the Tax Indemnitee and timely file such report, statement or return with
     the appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement or
     return for filing by the Tax Indemnitee; provided that the only consequence
     for failure to file after compliance by the Facility Lessee with the
     requirements hereof shall be a loss of indemnification from the Facility
     Lessee in respect of any Tax to the extent resulting from such failure.

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Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the
     Facility Lessee may require such Tax Indemnitee to agree in writing, in a
     form reasonably acceptable to the Facility Lessee, to the terms of this
     Section 9.2 prior to making any payment to such Tax Indemnitee under this
     Section. Subject to the preceding sentence, the Facility Lessee's
     obligations under this Section 9.2 shall inure to the benefit of each and
     every Tax Indemnitee without regard to whether such Tax Indemnitee is a
     party to this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the Facility Lessee's rights under the
Facility Lease, Facility Site Lease and, if applicable, the Springing Facility
Site Sublease, including the right to possession, use and quiet enjoyment of
the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's Interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an amendment
to the Facility Lease to reflect the adjustments required by clause (iv) below;
provided, however, that (x) the Owner Participant shall have been given the
opportunity, but shall have no obligation, to provide all or part of the funds
required to finance any such Improvement by making an Additional Equity
Investment in such amount, if any, as it may determine in its sole and absolute
discretion, but the Facility Lessee shall have no obligation to accept such
Additional Equity Investment; and (y) the conditions set forth below and in
Section 2.12 of the Collateral Trust Indenture shall have been satisfied. The
obligation to finance such Improvements through the issuance of Additional
Lessor Notes under Section 2.12 of the Collateral Trust Indenture (any financing
of Improvements through the issuance of such Additional Lessor Notes under the
Collateral Trust Indenture being called a "Supplemental Financing") is subject
to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

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the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that there
     shall be no changes to the amortization schedule or interest amounts and
     payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section 11
     whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default or
     Lease Event of Default and such Improvements shall be made in compliance
     with the Operative Documents and the FILOT Lease;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the Undivided
     Interest taking into account the fair market value of such Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

the Owner Participant shall suffer no adverse accounting effects under GAAP as a
     result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

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the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no later
     than the final maturity date of such Initial Lessor Notes and will be fully
     repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the Facility
     Lessee on the Closing Date under the Operative Documents to which

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     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to such
     effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall not
     result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in accordance
with the terms of the Operative Documents and the FILOT Lease. The Owner
Participant will execute such agreements and documents as may be necessary with
respect to any such refinancing and will instruct the Owner Lessor to act
accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted, either upward or downward, in accordance with the
     Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt to the extent permitted by the Collateral Trust
     Indenture; provided such re-optimization shall not result in a change to
     average life by more than six (6) months;

at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury

                                      69
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     Regulations, Revenue Rulings or Revenue Procedures ("Tax Law Change")
     enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest rate
of the Certificates) shall cause either (x) the after-tax net present value of
Basic Rent discounted at 6% to increase by more than 100 basis points or (y) the
total Basic Rent to increase by more than 2%, then in either such case, the
Facility Lessee shall not be obligated to close the Overall Transaction. Any
adjustments pursuant to Section 3.4 of the Facility Lease shall comply with
Applicable Law (including any final or proposed Treasury Regulations issued
under Section 467 of the Code) as well as the requirements of Revenue Procedure
2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of Revenue Procedure 2001-29
in a manner such that amending the Facility Lease complies with the "safe
harbors" under such Treasury Regulations or otherwise does not cause the
Facility Lease to be a "disqualified leaseback or long-term agreement" within
the meaning of Section 467 of the Code and any Treasury Regulations issued
thereunder, in each case, to the extent of such compliance on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which it
     is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest. Adjustments made pursuant to this Section 12 shall be
     subject to verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior

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     written consent of the Owner Lessor, the Owner Participant and, so long
     as the Lien of the Collateral Trust Indenture has not been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustees.
     Notwithstanding the foregoing, upon satisfaction of the conditions in
     paragraph (b) below, the Facility Lessee may assign the Facility Lease or
     any other Operative Document to which it is a party, or any interest
     therein to any Person, without the consent of the Owner Lessor, the Owner
     Participant, the Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the Ownership
     Interest of any non-assigning Facility Lessee), the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof), and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty or (y) Calpine's obligations under
     the Calpine Guaranty has been succeeded to in accordance with Section
     8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any Certificateholder to regulation under
     PUHCA or state laws and regulations regarding the rate and financial or
     organizational regulation of electric utilities in the affected party's
     reasonable opinion, nor result in a Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any state
     thereof or the District of Columbia;

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<PAGE>
          b)   the Facility Lessee shall have paid, at no after-tax cost to such
               parties, all reasonable documented out-of-pocket expenses
               (including reasonable attorneys' fees and expenses) of the
               Owner Lessor, the Lessor Manager, the Owner Participant, the
               Indenture Trustee, the Lease Indenture Company and the Pass
               Through Trustees in connection with such assignment;

          c)   the Facility Lessee has provided the Indenture Trustee with (x)
               an indemnity against the risk that such assignment will cause
               a Tax Event to occur to any direct holder of any Lessor Note
               and any Certificateholder or (y) an opinion of counsel to the
               effect that such assignment will not cause a Tax Event to
               occur to any direct holder of any Lessor Note and any
               Certificateholder; and

          d)   the transfer shall not cause the Facility to become "tax-exempt
               use property within the meaning of Section 168(h) of the Code
               (unless the Facility Lessee shall make a payment
               contemporaneously with such transfer that in the reasonable
               judgment of the Owner Participant compensates the Owner
               Participant for the adverse tax consequences therefrom).

     F.   Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP Guarantor,
the Special Lessee Transfer Amount determined as of such date, plus all amounts
due and payable to the Owner Participant on such date (including all reasonable
and documented costs and expenses of the Owner Participant or the OP Guarantor
and all sales, use, value added and other Taxes covered and not excluded by
Section 9.2 hereof associated with the Special Lessee Transfer pursuant to this
Section 13.2, to the extent such amounts have not otherwise been reimbursed by
the Facility Lessee pursuant to this Section 13.2, it being understood that any
transfer pursuant to this Section 13.2 shall not be considered a voluntary
transfer for purposes of Section 9.2). Concurrently with the payment of all sums
required to be paid pursuant to this Section 13.2 (or on such later date of
transfer of the Member Interest in accordance with clause (ii) below) (i) the
Facility Lessee shall cease to have any liability to the Owner Participant or
the OP Guarantor with respect to the Operative Documents and the FILOT Lease,
except for obligations (including Section 9.1 and 9.2 hereof and the Tax
Indemnity Agreement) surviving pursuant to the express terms of the Operative
Documents or which have otherwise accrued but not been paid as of such date and
(ii) the Owner Participant or the OP Guarantor will transfer (by an appropriate
instrument of transfer) the Member Interest to the Facility Lessee (or its
designee); provided, however, that if the Lien of the Collateral Trust Indenture
has not been terminated or discharged, such transfer shall not be made to the
Facility Lessee, but shall be

                                      72
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made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

OWNER LESSOR'S EXERCISE OF PURCHASE OPTIONS

     (a)  At any time prior to the expiration or earlier termination
of the FILOT Lease, the Facility Lessee may request (which request shall be in
writing and addressed to the Owner Lessor, the Owner Participant and the
Indenture Trustee) that the Owner Lessor exercise the Purchase Options (if and
to the extent not previously exercised) and direct the County to convey the Land
(to the extent of the Owner Lessor's Percentage interest) to the Facility Lessee
upon the closing of the conveyance of the Project pursuant thereto. Within 15
Business Days following receipt of such request, the Owner Lessor shall exercise
the Purchase Options (if and to the extent not previously exercised) and direct
the County to convey the Land (to the extent of the Owner Lessor's Percentage
interest) to the Facility Lessee upon the closing of the conveyance of the
Project pursuant thereto, if each of the following conditions shall have been
satisfied:

          (1)  the conditions specified in the definition of "Post-FILOT Lease
               Conversion Date" have been satisfied;

          (2)  no Lease Default or Lease Event of Default under any of Sections
               16(g) and 16(h) of the Facility Lease has occurred and is
               continuing; and

          (3)  no Significant Lease Default or Lease Event of Default shall
               have occurred and be continuing or would result from the
               occurrence of the Post-FILOT Lease Conversion Date.

     Notwithstanding the foregoing, the Facility Lessee shall be entitled to
make the foregoing request of the Owner Lessor and to receive a conveyance of
the Land (to the extent of the Owner Lessor's Percentage interest) only if,
concurrently with such request and receipt, the Facility Lessee also makes such
request of the Other Broad River Owner Lessors and receives their respective
interests in the Land pursuant to the Other Broad River Operative Documents.

(b) If the request of the Facility Lessee referred to in paragraph (a) above
states (and provides information constituting a reasonable basis for such
statement) (A) that the conditions specified

                                      73
<PAGE>
in paragraph (a) above have been satisfied or will be (and are capable of
being) timely satisfied, (B) that the FILOT Lease is likely to terminate or
cease to be in full force and effect before the Owner Lessor has exercised the
Purchase Options if such exercise does not occur within a period of time which
shall not be less than ten (10) Business Days from the date of the Owner
Lessor's receipt of such notice, and (C) that such notice is being given
pursuant to this Section 14(b) in anticipation of a possible exercise by the
Facility Lessee of the Purchase Options, then the Owner Lessor (or in lieu
thereof, the Owner Participant) shall respond to such notice within five (5)
Business Days after its receipt of such notice (provided that if the Facility
Lessee or the Owner Lessor shall have Actual Knowledge that a termination of
the FILOT Lease by the County is reasonably likely to occur within a time frame
shorter than the time frame of the foregoing notice provisions, the Person
having such Actual Knowledge will promptly advise the other Person of the
relevant information known to it, and thereafter the parties will proceed with
the notices to each other hereunder as promptly as commercially practicable
using all reasonable efforts). The written notice from the Owner Lessor
referred to above shall be one with which the Owner Lessor (or the Owner
Participant) either shall concur in all material facts asserted by the Facility
Lessee in its notice or shall dispute in good faith one or more of such
material facts and shall set forth the Owner Lessor's (or the Owner
Participant's or Indenture Trustee's) position (and in reasonable detail, the
basis therefor) in respect thereof. If the Owner Lessor (or the Owner
Participant) does not provide such notice in dispute of one or more material
facts so asserted by the Facility Lessee within the time period provided above,
the Facility Lessee shall be entitled, to the extent permitted by Applicable
Law, to exercise the foregoing Purchase Options (if and to the extent not
previously exercised) and direct the County to convey (to the extent of the
Owner Lessor's Percentage interest) the Land to the Facility Lessee and the
Project (other than the Land) to the Owner Lessor. Notwithstanding the
foregoing, the determination whether the conditions set forth in paragraph (a)
above have been or shall be capable of being timely satisfied shall be made by
the Owner Lessor and (if the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee (without the necessity of obtaining the
consent of any of the Noteholders or the Pass Through Trustees), provided that
either the Owner Lessor, the Owner Participant or the Indenture Trustee has
notified the Facility Lessee of the dispute referred to above.

     The Owner Lessor agrees not to exercise the Purchase Options other than
as contemplated above unless (i) there has occurred and is continuing at the
time of its election to exercise the same as contemplated by Section 10.02 of
the FILOT Lease a Lease Event of Default and the Owner Lessor or, if the Lien of
the Collateral Trust Indenture has at the time not been discharged, the
Indenture Trustee has commenced the enforcement of remedies under Section 17 of
the Facility Lease, or (ii) in the judgment of the Owner Participant the FILOT
Lease is likely to terminate or cease to be in full force and effect before the
Owner Lessor has exercised the Purchase Options.

                                      74
<PAGE>
III.   MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to be
unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or assignment
pursuant to the terms of the LLC Agreement by the Owner Lessor to a successor
Owner Lessor, will not violate the terms of any Operative Document, the
performance of the FILOT Lease or the FILOT Lease (subject to any applicable
consent required by the County).

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate becomes
the property of a debtor subject to the reorganization provisions of Title 11 of
the United States Code, as amended from time to time, (ii) pursuant to such
reorganization provisions the Owner Participant is required, by reason of the
Owner Participant being held to have recourse liability to the debtor or the
trustee of the debtor directly or indirectly, to make payment on account of any
amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such Excess
Amount (and, to the extent so refunded, such amount owing under the Lessor Notes
shall be reinstated). For purposes of this Section 15.3, "Excess Amount" means
the amount by which such payment exceeds the amount which would have been
received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in clause (ii) above. Nothing
contained in this Section 15.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds thereof)
of the Owner Participant as contemplated by this Participation Agreement (other
than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except by
an instrument or instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such transmission
is promptly confirmed by either of the methods set forth in clauses (a) or (b)
above, in each case addressed to each party hereto at its address set forth
below or, in the case of any such party hereto, at such other address as such
party may from time to time designate by written notice to the other parties
hereto:

     If to the Facility Lessee:

                                      75
<PAGE>
          Broad River Energy, LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-4, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

                                      76
<PAGE>
          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone:  (212) 382-7255
               Facsimile:  (212) 382-9033
               Attention:  Managing Director

                                      77
<PAGE>
          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attention: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010
          Telephone No.: (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the party
          giving such notice to each of the other parties hereto. In addition,

                                      78
<PAGE>
          the Facility Lessee shall (unless otherwise
          directed by the applicable Rating Agency) provide to each
          Rating Agency a copy of any information, report or notice it
          gives to the Indenture Trustee hereunder or any other
          Operative Documents.

                                      79
<PAGE>
Survival. All warranties, representations, indemnities and covenants made by any
party hereto, herein or in any certificate or other instrument delivered by any
such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall survive
the consummation of the transactions contemplated hereby and in the other
Operative Documents and the FILOT Lease regardless of any investigation made by
any such party or on behalf of any such party. In addition, the indemnifications
by the Facility Lessee under Sections 9.1 and 9.2 of this Agreement, subject to
Sections 9.1(b) and 9.2(b), respectively, the Facility Site Lease and the
Calpine Guaranty, shall expressly survive the expiration or early termination
(in either case, for whatever reason) of the Facility Lease or the transfer or
other disposition of the respective interests of the Owner Participant, the
Owner Lessor, the Lessor Manager, the Lease Indenture Company, the Indenture
Trustee, the Pass Through Trustees and the Certificateholders in, to and under
this Agreement, the Assignment Agreement and the other Operative Documents and
the FILOT Lease. Except as expressly provided above or in Section 22.3 of the
Facility Lease, the Tax Indemnity Agreement or as otherwise expressly provided
in the Operative Documents, the representations, warranties, covenants and
agreements of the Transaction Parties under the Operative Documents shall
terminate and be of no further force and effect effective upon the expiration or
earlier termination of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative Document
to the contrary, if the date on which any payment is to be made pursuant to this
Agreement or any other Operative Document is not a Business Day, the payment
otherwise payable on such date shall be payable on the next succeeding Business
Day with the same force and effect as if made on such scheduled date and
(provided such payment is made on such succeeding Business Day) no interest
shall accrue on the amount of such payment from and after such scheduled date to
the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or unenforceable
under Applicable Law, the validity, legality and enforceability of the remaining
provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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<PAGE>
Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee for
     any action or inaction on the part of the Owner Lessor in connection with
     the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or duties
     expressly set forth in this Agreement and the other Operative Documents,
     and neither the Facility Lessee nor any other Calpine Party (except Calpine
     to the extent set forth in the Calpine Guaranty) shall be liable for
     performance by any other party hereto of such other party's obligations or
     duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for, or
     for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document or the FILOT Lease, as to all of which
     the other parties hereto agree to look solely to the Indenture Estate and
     the Lessor Estate, respectively; provided, however, that the Lease
     Indenture Company and the Pass Through Trust Company shall be liable
     hereunder for their own negligence or willful misconduct or for a breach of
     their representations, warranties and covenants made in their individual
     capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                      81
<PAGE>
     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein
     or in the Collateral Trust Indenture or as otherwise required by
     Applicable Law, have any obligation to) request the approval or
     instruction of the Pass Through Trustees as the holder of the Lessor
     Notes, and the Pass Through Trustees may in its sole discretion (but
     shall not, except as otherwise provided in the Operative Documents or as
     otherwise required by Applicable Law, have any obligation to) request the
     approval of the Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York County
     (without prejudice to the right of any party to remove to the United States
     District Court for the Southern District of New York) and to the
     nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or other
     proceeding arising out of this Agreement, the other Operative Documents,
     and the FILOT Lease (except as otherwise provided therein), or the subject
     matter hereof or thereof or any of the transactions contemplated hereby or
     thereby brought by any of the parties hereto or their successors or
     assigns; (ii) hereby irrevocably agrees that all claims in respect of such
     action or proceeding may be heard and determined in such New York State
     court, or in such federal court; and (iii) to the extent permitted by
     Applicable Law, hereby irrevocably waives, and agrees not to assert, by way
     of motion, as a defense, or otherwise, in any such suit, action or
     proceeding any claim that it is not personally subject to the jurisdiction
     of the above-named courts, that the suit, action or proceeding is brought
     in an inconvenient forum, that the venue of the suit, action or proceeding
     is improper or that this Agreement, the other Operative Documents, or the
     subject matter hereof or thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                      82
<PAGE>
By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440 Ninth
     Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents or with respect to the Facility Lessee for so
     long as it has any obligations remaining under the FILOT Lease. The
     Facility Lessee shall grant an irrevocable power of attorney to CT
     Corporation System, in respect of such appointment and shall maintain such
     power of attorney in full force and effect for so long as any obligation of
     the Facility Lessee shall remain outstanding hereunder or under any of the
     Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and deliver
such further documents to make such further assurances for and take such further
action reasonably requested by any party to whom such first party is obligated,
all as may be reasonably necessary to carry out more effectively the intent and
purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such subject
matter; provided that, notwithstanding the foregoing,

                                      83
<PAGE>
the obligations of Calpine with respect to fees and expenses set forth in the
letter agreement, dated July 24, 2001 between Calpine and CSFB and the letter
agreement dated August 1, 2001 between Calpine and Newcourt Capital Securities,
Inc. shall not be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of Loss,
at the cost and expense of the Facility Lessee, so long as there shall be no
adverse consequences to the Owner Lessor or the Owner Participant as the result
of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 15.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     15.21;

as may be required by Applicable Law or, upon prompt prior written notice to the
     affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed in
     writing to be bound by the terms of this Section 15.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

                                      84
<PAGE>
          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties may
rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 15.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case of
a waiver, by the party against which enforcement of such waiver is sought, and
no such waiver shall become effective unless signed copies thereof shall have
been delivered to each such party or (b) in the case of termination, amendments,
supplements or modifications, consented to by all parties hereto; provided,
however, that the consent of the Facility Lessee is not required in the case of
amendments to any Operative Document to which the Facility Lessee is not a party
and which would not increase or accelerate the Facility Lessee's or the
Guarantor's obligations under any of the Operative Documents nor impair the
Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                      85
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized.

                                      BROAD RIVER ENERGY LLC,
                                      a Delaware limited liability company

                                             By: ______________________________
                                             Name:
                                             Title:
                                             Date:
<PAGE>
                                             BROAD RIVER OL-4 LLC, a Delaware
                                             limited liability company

                                             By: WELLS FARGO BANK NORTHWEST,
                                             NATIONAL ASSOCIATION
                                             not in its individual capacity but
                                             solely as Lessor Manager

                                             By: ______________________________
                                             Name:
                                             Title:
                                             Date:

                                             SBR OP-4 LLC, a Delaware limited
                                             liability company

                                             By: WELLS FARGO BANK NORTHWEST,
                                             NATIONAL ASSOCIATION
                                             not in its individual capacity but
                                             solely as Lessor Manager

                                             By: ______________________________
                                             Name:
                                             Title:
                                             Date:

                                             WELLS FARGO BANK NORTHWEST,
                                             NATIONAL ASSOCIATION,
                                      not in its individual capacity, except as
                                      expressly provided herein, but solely as
                                      Lessor Manager

                                      By:    _______________________
                                             Name:
                                             Title:
                                             Date:
<PAGE>
                                             STATE STREET BANK AND TRUST COMPANY
                                             OF CONNECTICUT, NATIONAL
                                             ASSOCIATION
                                      not in its individual capacity, except to
                                      the extent expressly provided herein, but
                                      solely as Indenture Trustee under the
                                      Collateral Trust Indenture

                                        By: ______________________________
                                        Name:
                                        Title:
                                        Date:

                                             STATE STREET BANK AND TRUST COMPANY
                                             OF CONNECTICUT, NATIONAL
                                             ASSOCIATION
                                      not in its individual capacity, except to
                                      the extent expressly provided herein, but
                                      solely as Pass Through Trustees under the
                                      Pass Through Trust Agreement

                                        By: ______________________________
                                        Name:
                                        Title:
                                        Date:
<PAGE>
                                             CALPINE CORPORATION
                                                         a Delaware corporation

                                        By: ______________________________
                                        Name:
                                        Title:
                                        Date:
<PAGE>
              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)  the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used
     in an Operative Document and not defined therein or in this Appendix A
     but in another Operative Document shall have the meaning herein or
     therein provided for in such other Operative Document;

     (b)  any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)  words importing the singular include the plural and vice versa;

     (d)  words importing a gender include any gender;

     (e)  a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)  a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or
     laws varying, consolidating or replacing the same from time to time, and
     a reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)  a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)  a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;
<PAGE>
     (i)  if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any
     particular date been executed and delivered and such document, instrument
     or agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)  a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)  any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)  if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)  any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof;

     (n)  words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)  a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
      Facility Lease, a banking institution, the senior long-term unsecured
      debt of which is rated at least A by

                                      2
<PAGE>
     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is
     received or properly accrued, and

                                      3
<PAGE>
     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents and the FILOT
     Lease, to sell electricity therefrom, to enter into any Operative
     Document or to consummate any transaction contemplated thereby, or (b)
     that is necessary so that none of the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholder nor any Affiliate of any of them may be
     deemed by any Governmental Entity to be subject to regulation under PUHCA
     or under any other Applicable Law relating to electric utilities,
     generators, wholesalers or retailers, in each case as a result of the
     operation of the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten
     (10) Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal.
     If either the Owner Participant or the Facility Lessee does not appoint
     its appraiser within such ten Business Day period, the determination of
     the other appraiser shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. If the appraisers appointed by the
     Owner Participant and the Facility Lessee are unable to agree upon the
     value, period, amount or other determination in question within thirty
     (30) days, such appraisers shall jointly appoint a third Independent
     Appraiser or, if

                                      4
<PAGE>
     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ASSIGNED FILOT DOCUMENTS" with respect to the Facility Site Lease and
     the Springing Facility Site Lease, shall have the meaning set forth in
     the recitals to the Facility Site Lease and the Springing Facility Site
     Lease, respectively.

     "ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement (BR-4) dated
     as of the Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B to the Participation Agreement
     duly completed, executed and delivered on the Closing Date pursuant to
     which the Owner Lessor will acquire the Undivided Interest and the Ground
     Interest from the Facility Lessee.

     "ASSUMPTION PRICE" with respect to the Undivided Interest, shall mean
     $75,000,000.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U. S.C. [sec] 101 et seq.

                                      5
<PAGE>
     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER" shall mean Broad River Energy LLC.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment Agreement
     (BR-4) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

                                      6
<PAGE>
     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
     Agreement, dated the Closing Date, among the Facility Lessee, Calpine,
     and the Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
     Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
     and each of such holder's successors and permitted assigns.

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     and the 9.825% Pass Through Certificates Series B issued on the Closing
     Date and any certificates issued in replacement therefor pursuant to
     Section 3.3, 3.4 or 3.5 of the Pass Through Trust Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

                                      7
<PAGE>
     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust,
     Mortgage, Security Agreement and Fixture Filing (BR-4), dated as of the
     Closing Date, between the Owner Lessor and the Indenture Trustee, in
     substantially the form of Exhibit I to the Participation Agreement.

    "COMMENCEMENT DATE" with respect to the Springing Facility Site Lease,
     shall have the meaning specified in Section 2.1(a) of the Springing
     Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the Guarantor and
     its Subsidiaries and (ii) all current maturities of long-term
     Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii) excess
     of cost over fair value of assets of businesses acquired, as determined
     in good faith by the Board of Directors; (iv) any revaluation or other
     write-up in value of assets subsequent to December 31, 1993 as a result
     of a change in the method of valuation in accordance with GAAP; (v)
     unamortized debt discount and expenses and other unamortized deferred
     charges, goodwill, patents, trademarks, service marks, trade names,
     copyrights, licenses, organization or developmental expenses and other
     intangible items; (vi) treasury stock; and (vii) any cash set apart and
     held in a sinking or other analogous fund established for the purpose of
     redemption or other

                                      8
<PAGE>
     retirement of Capital Stock to the extent such obligation is not reflected
     in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

          "CORRECTIVE ORDINANCE" shall mean that certain ordinance authorizing
     the Assignment Agreement and adopted by the County on October 1, 2001
     pursuant to a public hearing held September 24, 2001.

     "COUNTY" shall mean Cherokee County, South Carolina.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule
     2 of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears) minus (ii) the sum of (A) the Equity Portion of Termination
     Value and (B) if such date of determination is a Rent Payment Date, the
     Equity Portion of Periodic Rent due on that date.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

                                      9
<PAGE>
     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the Phase
     1 and Phase II reports of the Engineering Consultant, dated October 12,
     2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Roy F. Weston, Inc.

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

     "ENVIRONMENTAL REPORTS" shall mean the Phase 1 Environmental Site
     Assessment Report, dated October 10, 2001, prepared by the Environmental
     Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the

                                      10
<PAGE>
Termination Value set forth opposite the Termination Date corresponding to such
date of determination on Schedule 2 of the Facility Lease, and, if such date of
determination is a Rent Payment Date, Periodic Rent due on that date (to the
extent payable in arrears) over (ii) the balance, including scheduled (in
accordance with the payment terms of the Lessor Notes) accrued interest, on the
Lessor Notes scheduled (in accordance with the payment terms of the Lessor
Notes) to be outstanding on such date of determination corresponding to the
Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders the
     Facility permanently unfit for normal use or which does not satisfy the
     preconditions for repair of the Facility set forth in Section 10 of the
     Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii)  (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor,
     prior to the Post-FILOT Lease Conversion Date, of the Undivided Interest
     or the Ground Interest, or, from and after the Post-FILOT Lease
     Conversion Date, of title to the Undivided Interest, in each case
     following exhaustion of all permitted appeals or an election by the
     Facility Lessee in its discretion not to pursue such appeals or rights;
     provided that no such contest (or exercise) shall extend beyond the
     earlier of the date which is (x) six months after the loss of such
     leasehold interest or title, or (y) 48 months prior to the end of the
     Basic Lease Term or any Renewal Lease Term then in effect or elected by
     the Facility Lessee or (b) Requisition of use of, or leasehold interest
     represented by the Undivided Interest or the Ground Interest or, upon or
     following the Post-FILOT Lease Conversion Date, title to, the Undivided
     Interest or the Ground Interest by any Governmental Entity that shall
     have resulted in the loss of possession of the Undivided Interest or all
     or any part of the Ground Interest that is required for the use or
     operation of the Facility; provided that in any case involving
     Requisition of use of the Facility, or all or any part of the Facility
     Site that is required for the use or operation, of the Facility, but not
     of the Owner Lessor's Undivided Interest or the Ground Interest or (from
     and after the Post-FILOT Lease Conversion Date) the Facility Lessee's
     title to the Ground Interest, such event shall be an Event of Loss only if

                                      11
<PAGE>
     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below, subjection
     of the Owner Participant or the Owner Lessor to any public utility
     regulation of any Governmental Entity or law which in the reasonable
     opinion of the Owner Participant is burdensome, or the subjection of the
     Owner Participant's or the Owner Lessor's interest in the Facility Lease
     to any rate of return regulation by any Governmental Entity, in either
     case by reason of the participation of the Owner Lessor, the Owner
     Participant or the OP Guarantor in the transactions contemplated by the
     Operative Documents and the FILOT Lease and not, in any event, as a result
     of (a) investments, loans or other business activities of the Owner
     Participant or any of its Affiliates in respect of equipment or facilities
     similar in nature to the Facility or any part thereof or in any other
     electrical, cogeneration or other energy or utility related equipment or
     facilities or the general business or other activities of the Owner
     Participant or any of its Affiliates or the nature of any of the
     properties or assets from time to time owned, leased, operated, managed or
     otherwise used or made available for use by the Owner Participant or any
     of its Affiliates or (b) a failure of the Owner Participant to perform
     routine, administrative or ministerial actions the performance of which
     would not subject the Owner Participant or any of its Affiliates to any
     material adverse consequence (in the reasonable opinion of such Owner
     Participant acting in good faith); provided that the Facility Lessee and
     the Owner Lessor and Owner Participant agree to cooperate and to take
     reasonable measures to alleviate the source or consequence of any
     regulation constituting an Event of Loss under this paragraph (iv), so
     long as there shall be no adverse consequences to the Owner Lessor or
     Owner Participant as a result of such cooperation or the taking of
     reasonable measures (the events and circumstances described herein this
     paragraph (iv), a "Regulatory Event of Loss"); or

          (v)    if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Order shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act;

          (vi)   if elected by the Owner Participant, in the event that the FERC
     Order set forth in clause (v) of the definition of "FERC Orders" herein
     shall not have been obtained and become final within ninety (90) days of
     the Closing Date, such election to be conditioned upon receipt of a
     reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or the Owner Lessor; or

                                      12
<PAGE>
          (vii)  the FILOT Lease shall have been cancelled or terminated or
     shall otherwise cease to be in full force and effect otherwise than by
     reason of (a) an event constituting a Lease Event of Default or (b) the
     occurrence of the Post-FILOT Lease Conversion Date.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) above shall be the date on which the Facility
     Lessee receives the Owner Participant's election made in accordance with
     such clause (v). The date of occurrence of an Event of Loss in clause
     (vi) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (vi).
     The date of occurrence of an Event of Loss in clause (vii) shall be ten
     (10) Business Days after the date of such termination, cancellation or
     failure to be in full force and effect.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Company, or the Owner
     Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to Section
     2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and any
     payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents or the FILOT Lease, (ii)(A)
     insurance proceeds, if any, payable to the Owner Lessor or the Owner
     Participant under insurance separately maintained by the Owner Lessor or
     the Owner Participant

                                      13
<PAGE>
     with respect to the Facility as permitted by Section 3(b) of Schedule
     5.31 to the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document or the FILOT Lease for the benefit of the Owner Lessor or the
     Owner Participant, (iii) any amount payable to the Owner Participant as
     the purchase price of the Owner Participant's right and interest in the
     Member Interest, (iv) all other fees expressly payable to the Owner
     Participant under the Operative Documents, (v) any payments in respect of
     interest, or any payments made on an After-Tax Basis, to the extent
     attributable to payments referred to in clause (i) through (vi) above;
     (vii) any amounts paid to the Owner Lessor as reimbursement for amounts
     expended pursuant to Section 20 of the Facility Lease; (viii) proceeds of
     the items referred to in clause (i) through (vii) above; and (ix) any
     rights to demand, collect, sue for, or otherwise receive and enforce
     payment of the foregoing amounts, including under the Calpine Guaranty,
     but without limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 850 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Gaffney, South Carolina and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (BR-4), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to
     the Participation Agreement.

     "FACILITY PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided fee
     interest (to the extent of the Owner Lessor's Percentage) in all of or a
     portion of the Project, other than the portion thereof constituting the
     Land.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      14
<PAGE>
     "FACILITY SITE LEASE" shall mean the Facility Site Lease (BR-4), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Owner Lessor will lease the Ground Interest to the
     Facility Lessee.

     "FACILITY SITE LESSEE" shall mean, with respect to the Facility Site
     Lease, Broad River Energy LLC, and with respect to the Springing Facility
     Site Lease, shall mean Owner Lessor.

     "FACILITY SITE LESSEE EVENT OF DEFAULT" shall have the meaning set forth
     in Section 13.1 of the Facility Site Lease.

     "FACILITY SITE LESSOR" shall mean, with respect to the Facility Site
     Lease, Owner Lessor, and with respect to the Springing Facility Site
     Lease, shall mean Broad River Energy LLC.

     "FACILITY SITE RENT" shall have the meaning set forth in Article IV of
     the Facility Site Lease and Section 4.1 of the Springing Facility Site
     Lease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the FILOT Lease and the obligations relating thereto, (iii) the
     Undivided Interest or the Owner Lessor's Interest, as the case may be, is
     free and clear of all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens), (iv) taking into
     account the remaining term of the Facility Site Lease, and (v) in the
     case the Fair Market Rental Value, taking into account the terms of the
     Facility Lease and the other Operative Documents. If the Fair Market
     Sales Value of the Owner Lessor's Interest is to be determined during the
     continuance of a Lease Event of Default or in connection with the
     exercise of remedies by the Owner Lessor pursuant to Section 17 of the
     Facility Lease, such value shall be determined by an Independent
     Appraiser appointed solely by the Owner Lessor on an "as-is", "where-is"
     and "with all faults" basis and shall take into account all Liens (other
     than Owner Lessor's Liens, Owner Participant's Liens and Indenture
     Trustee Liens); provided, however, in any such case where the Owner
     Lessor shall be unable to obtain constructive possession sufficient to
     realize the economic benefit of the Owner Lessor's Interest, Fair Market
     Sales Value of the Owner Lessor's Interest shall be deemed equal to $0
     (zero). If in any case other than in the preceding sentence the parties
     are unable to agree upon a Fair Market Sales Value of the Owner Lessor's
     Interest within 30 days after a request therefor has been made, the Fair
     Market Sales Value of the Owner Lessor's

                                      15
<PAGE>
     Interest shall be determined by appraisal pursuant to the Appraisal
     Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FACILITY SITE SUBLEASE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Springing Facility Site Sublease.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as
     amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)   a determination by FERC of EWG status of the Facility Lessee
     and Owner Lessor and the Owner Participant;

          (ii)  an approval from FERC for the Facility Lessee to sell power at
     market-based rates under Section 205 of the FPA effective on or before
     the Closing Date;

          (iii) either an approval by FERC of the issuance of securities and the
     assumption of obligations necessary to effect the sale/leaseback pursuant
     to Section 204 of the Federal Power Act or blanket authorization to issue
     securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)   an approval from FERC under Section 203 of the Federal Power Act
     for the transfer of jurisidictional facilities in the sale/leaseback
     contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner Lessor is an EWG.

     "FILOT LEASE" shall mean the Lease Agreement dated March 1, 2000 by and
     between the County and Facility Lessee, together with the Inducement
     Agreement.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

                                      16
<PAGE>
     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Springing Facility Site Lease.

     "FMV RENEWAL LEASE OPTION" with respect to the Initial Term, shall have
     the meaning set forth in Section 2.2(a)(iii) of the Springing Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Springing Facility Site
     Lease, shall have the meaning set forth in Section 19.3 of the Springing
     Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean, prior to the Post-FILOT Lease Conversion
     Date, the Owner Lessor's 25% undivided leasehold interest in the Facility
     Site, and upon and after the Post-FILOT Lease Conversion Date, the Owner
     Lessor's 25% undivided leasehold interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

                                      17
<PAGE>
     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such

                                      18
<PAGE>
     Indebtedness, the amount of such obligation being deemed to be the lesser
     of the value of such property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Springing Facility Site Lease.

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f) of
     the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, not in its individual capacity, except
     as expressly provided herein, but solely as Indenture Trustee under the
     Operative Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof that
     are not related to, or that are in violation of, any Operative Document
     or the FILOT Lease or the transactions contemplated thereby, (ii) Claims
     against or any act or omission of the Lease Indenture Company or the
     Indenture Trustee, or Affiliate thereof that is not related to, or that
     is in violation of, any of such Person's representations, warranties,
     covenants or agreements in an Operative Document or the transactions
     contemplated thereby or that is in breach of any covenant or agreement of
     the Lease Indenture Company or the Indenture Trustee specified therein,
     (iii) Taxes imposed upon the Lease Indenture Company or the Indenture
     Trustee, or any Affiliate thereof that are not indemnified against by the
     Facility Lessee pursuant to any Operative Document or (iv) Claims against
     or affecting the Lease Indenture Company or the Indenture Trustee, or any
     Affiliate thereof arising out of the voluntary or involuntary transfer by
     the Lease Indenture Company or the Indenture Trustee of any portion of
     the interest of the Lease Indenture Company or the Indenture Trustee in
     the Lessor Estate, other than pursuant to the Operative Documents.

                                      19
<PAGE>
     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INDUCEMENT AGREEMENT" shall mean the Inducement Agreement and Millage
     Agreement dated June 15, 1999, between the County and the Facility Lessee.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to the Springing Facility Site
     Sublease, shall have the meaning set forth in Section 2.1(a) of the
     Springing Facility Site Sublease.

     "INITIAL TERM" with respect to the Springing Facility Site Lease, shall
     have the meaning specified in Section 2.1(a) of the Springing Facility
     Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "LAND" shall have the meaning thereof set forth in the FILOT Lease.

     "LAND PURCHASE OPTION" shall mean the right of the Owner Lessor,
     pursuant to Section 10.02 of the FILOT Lease, to acquire an undivided fee
     interest (to the extent of the Owner Lessor's Percentage) in the Land.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

                                      20
<PAGE>
     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, in its individual capacity under
     the Operative Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product where such transaction is considered borrowed
     money indebtedness of the lessee for tax purposes but is classified as an
     operating lease under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 15.3 of the Facility Site Lease and with
     respect to the Springing Facility Site Lease or Springing Facility Site
     Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 15.3 of the Facility Site Lease and
     with respect to the Springing Facility Site Lease or Springing Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Springing Facility Site Lease or Section 15.3 of the Springing Facility
     Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,

                                      21
<PAGE>
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and the FILOT Lease and any of the foregoing,
     but shall not include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.3 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely

                                      22
<PAGE>
     corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents, (b) the Indenture Estate or the Lessor Estate,
     the security interests in the Lessor Estate, or (c) with respect to the
     Owner Participant's (but not the Certificateholders') interest in the
     Undivided Interest, the residual value or remaining useful life of the
     Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (BR-4), dated as of the Closing Date, between the
     Owner Lessor, as landlord, and the Facility Lessee, as tenant, and filed
     with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
     (BR-4), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Office of the Cherokee County Clerk of
     Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE LEASE" shall mean the Memorandum
     of Springing Facility Site Lease (BR-4), dated as of the Closing Date,
     between the Facility Lessee, as landlord, and the Owner Lessor, as
     tenant, and filed with the Office of the Cherokee County Clerk of Court.

     "MEMORANDUM OF SPRINGING FACILITY SITE SUBLEASE" shall mean the
     Memorandum of Springing Facility Site Sublease (BR-4), dated as of the
     Closing Date, between the Owner Lessor, as sublandlord, and the Facility
     Lessee, as subtenant, and filed with the Office of the Cherokee County
     Clerk of Court.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan
     (as defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

                                      23
<PAGE>
     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating Officer,
     the Chief Financial Officer, the Treasurer, the Secretary, any Assistant
     Treasurer, any Assistant Secretary or the Controller or Principal
     Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing Date
     in favor of the Facility Lessee, the Owner Lessor, the Lessor Manager,
     the Trust Company, the Indenture Trustee, the Pass Through Trustees and
     the Certificateholders, or (ii) any other guaranty agreement provided by
     an OP Guarantor in form and substance substantially in the form of
     Exhibit G to the Participation Agreement.

                                      24
<PAGE>
     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the
     Assignment Agreement, the Facility Lease, the Certificates, the Facility
     Site Lease, the Springing Facility Site Lease, the Springing Facility
     Site Sublease, the Collateral Trust Indenture, the Lessor Notes, the Pass
     Through Trust Agreements, the LLC Agreement, the Tax Indemnity Agreement,
     the Tri-Party Agreement, the Calpine Guaranty, the OP Parent Guaranty (if
     any), the Certificate Purchase Agreement and the Ownership and Operation
     Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any
     replacement Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.2 of the Facility Lease.

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the
     assignment agreements executed and delivered pursuant to the Other Broad
     River Participation Agreements.

     "OTHER BROAD RIVER CALPINE GUARANTIES" shall mean the other Calpine
     guaranty and payment agreements executed and delivered by Calpine
     pursuant to the Other Broad River Participation Agreements.

                                      25
<PAGE>
     "OTHER BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     Broad River Participation Agreements.

     "OTHER BROAD RIVER FACILITY LEASES" shall mean the other Broad River
     facility lease agreements, dated as of October 18, 2001, by and between
     the Other Broad River Owner Lessors and the Facility Lessee, pursuant to
     which the Other Broad River Owner Lessors will lease the Other South
     Point Undivided Interests to the Facility Lessee.

     "OTHER BROAD RIVER FACILITY SITE LEASES" shall mean the other facility
     site leases, dated as of October 18, 2001, by and between the Other Broad
     River Owner Lessors and the Facility Lessee pursuant to which the Other
     Broad River Owner Lessors will sublease the Other Broad River Ground
     Interests to the Facility Lessee.

     "OTHER BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Facility Site not conveyed to the Owner Lessor under the
     Facility Site Lease.

     "OTHER BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other Broad River Collateral Trust Indentures.

     "OTHER BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions
     involving the assignment and transfer of the Other Broad River Undivided
     Interests and the Other Broad River Ground Interests to the Other Broad
     River Owner Lessors, and the lease by the Other Broad River Owner Lessors
     of the Other Broad River Undivided Interests and the Other Broad River
     Ground Interests to the Facility Lessee on substantially the same terms
     and conditions as under, and dated the same date as, the Overall
     Transaction.

     "OTHER BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor
     managers acting on behalf of the Other Broad River Owner Lessors pursuant
     to the Other Broad River Operative Documents.

     "OTHER BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC,
     Broad River OL-2, LLC and Broad River OL-3, LLC.

     "OTHER BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR
     OP-2, LLC and SBR OP-3, LLC.

     "OTHER BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other Broad River Lease Transactions.

     "OTHER BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other Broad River
     Owner Lessor, the Other Broad River Lessor Manager, Other Broad River
     Owner Participant, Other Broad River Indenture Trustee, Pass Through
     Trustees and Calpine and designated Participation Agreement (BR-1),
     Participation Agreement (BR-2) and Participation Agreement (BR-3), each
     dated as of the Closing Date, pursuant to which, among other things, the
     Facility Lessee has agreed to (a) assign and transfer to the applicable
     Other Broad River Owner Lessors certain

                                      26
<PAGE>
     undivided leasehold interests in the Facility and the Facility Site, and
     (b) lease from the applicable Other Broad River Owner Lessors such
     undivided leasehold interest in the Facility and the Facility Site
     pursuant to the Other Broad River Facility Leases and the Other Broad
     River Facility Site Leases, respectively.

     "OTHER BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided
     leasehold interest (or, upon or following the Post-FILOT Lease Conversion
     Date, the fee interest) in the Facility not conveyed to the Owner Lessor
     under the Assignment Agreement (or, in the case of the fee interest,
     pursuant to the transactions contemplated by Article XIV of the
     Participation Agreement and the Other Broad River Participation
     Agreement).

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other Broad
     River Calpine Guaranties, the South Point Calpine Guaranties and the
     RockGen Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other Broad River
     Facility Leases, the South Point Facility Leases and the RockGen Facility
     Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other Broad River
     Owner Lessors, the South Point Owner Lessors and the RockGen Owner
     Lessors.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents and the FILOT Lease (giving effect to its
     assignment to the Owner Lessor pursuant to the Assignment Agreement).

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time, such rate to be adjusted automatically, without
     notice, on the effective date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean Broad River OL-4, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: Broad River OL-4, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby, (ii) Claims against
     or any act or omission of the Owner Lessor, the Trust Company or the
     Lessor Manager or Affiliate thereof that is not related to, or that is in
     violation of, any Operative Document or the FILOT Lease (giving

                                      27
<PAGE>
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) or the transactions contemplated thereby or that is in breach
     of any covenant or agreement of the Owner Lessor, the Trust Company or
     the Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents and the FILOT Lease.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-4, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Sites, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document or the transactions contemplated thereby or that is in
     breach of any covenant or agreement of the Owner Participant set forth
     therein, (ii) Taxes against the Owner Participant that are not
     indemnified against by the Facility Lessee pursuant to the Operative
     Documents or (iii) Claims against or affecting the Owner Participant
     arising out of the voluntary or involuntary transfer by the Owner
     Participant of any portion of the interest of the Owner Participant in
     the Member Interest, other than any transfer (x) pursuant to the exercise
     of any of the Facility Lessee's (or any Affiliate thereof) rights under
     the Operative Documents or (y) during the continuance of a Lease Event of
     Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other Broad River Owner Lessors.

                                      28
<PAGE>
     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, National Association, in its individual capacity, together
     with its successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context
     may require, of (i) the Pass Through Trust Agreement A, dated as of
     October 18, 2001, and (ii) the Pass Through Trust Agreement B, dated as
     of October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company
     of Connecticut, National Association, not in its individual capacity, but
     solely as Pass Through Trustees under each of the Pass Through Trust
     Agreements, and each other Person that may from time to time be acting as
     a Pass Through Trustee in accordance with the provisions of a Pass
     Through Trust Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created
     pursuant to the Pass Through Trust Agreements.

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum
     of Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

                                      29
<PAGE>
     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents and the FILOT Lease, as well as
     the rights of sublessees and/or assignees to the extent set forth in or
     expressly permitted pursuant to the Facility Lease or any other Operative
     Document, (b) as to the Facility Lessee, Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or
     being contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that
     any taxes, assessments or other charges determined to be due will be
     promptly paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to
     criminal liability or material

                                      30
<PAGE>
     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, (e) Liens
     arising out of judgments or awards, but only so long as an appeal or
     proceeding for review is being prosecuted in good faith and so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, and (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, or are fully covered by insurance, (f) mineral rights the use
     and enjoyment of which do not materially interfere with the use and
     enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil
     liability on the part of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other Broad River Owner Lessors and the Other Broad
     River Indenture Trustees in the Facility, the Facility Site and the
     Ownership and Operation Agreement, (l) the interests of the Facility
     Lessee, the Other Broad River Owner Participants, the Other Broad River
     Owner Lessors, the Other Broad River Lessor Managers, the Other Broad
     River Indenture Trustees, and Pass Through Trustees under any of the
     Other Broad River Operative Documents, (m) the Ownership and Operation
     Agreement, (n) the interest of the co-owners of the Facility as tenants
     in common in the Facility and the rights of such owners under the
     Ownership and Operation Agreement and (o) the rights of the County with
     respect to the Facility and Facility Site.

    "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the

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<PAGE>
     Facility Lessee or a Subsidiary of the Facility Lessee or an ERISA
     Affiliate, and each such plan for the five year period immediately
     following the latest date on which Facility Lessee, or a Subsidiary of
     Facility Lessee or an ERISA Affiliate maintained, contributed to or had
     an obligation to contribute to such plan.

     "POST-FILOT LEASE CONVERSION DATE" shall mean the date on which all of
     the following events shall have occurred:

          (a)  the closing of the sale of an undivided fee interest in the
      Land (to the extent of the Owner Lessor's Percentage) by the County to
     the Facility Lessee upon exercise by the Owner Lessor of the Land
     Purchase Option and the designation by the Owner Lessor to the County of
     the Facility Lessee (or its designee) as the entity to which an undivided
     fee interest in the Land (to such extent) is to be conveyed, pursuant to
     which title to the Land (to such extent) vests in the Facility Lessee,
     and the termination of the FILOT Lease pursuant to Section 10.02 thereof;

          (b)  the closing of the sale of an undivided fee interest in the
     Facility by the County to the Owner Lessor upon exercise by the Owner
     Lessor of the Facility Purchase Option, pursuant to which good and valid
     fee title an undivided fee interest to the Facility (to the extent of the
     Owner Lessor's Percentage) vests in the Owner Lessor;

          (c)  the commencement of the full force and effectiveness of the
     Springing Facility Site Lease and the Springing Facility Site Sublease;

          (d)  except for the termination of the FILOT Lease and the Facility
     Site Lease, no Operative Document shall cease to be in full force and
     effect as a result of the transactions in clauses (a), (b) or (c) above;

          (e)  receipt by the Owner Lessor, the Owner Participant and (if the
     Lien of the Collateral Trust Indenture has not been discharged) the
     Indenture Trustee of the following (1) evidence of the obtaining of all
     Governmental Approvals and third-party consents which are reasonably
     necessary or advisable in connection with the transactions referred to in
     clauses (a) through (d) above, (2) evidence satisfactory to the Indenture
     Trustee (including without limitation, evidence that all filings and
     recordings, if any, necessary under Applicable Law shall have been duly
     made and all filing, recordation, transfer and other fees payable in
     connection therewith shall have been paid) that the Lien of the
     Collateral Trust Indenture on the Indenture Estate shall continue in full
     force and effect and with the same priority following the consummation of
     such transactions, and (3) appropriate endorsements, reasonably
     satisfactory to such Persons, to required property title insurance
     policies to reflect the new fee owners of the Land and the other portions
     of the Project.

          (f)  the receipt by the Owner Participant and, so long as the Lien of
      the Collateral Trust Indenture has not been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees, of opinions of
     counsel with respect to the accomplishment of the foregoing matters and
     other matters substantially similar to these covered by the opinions of
     counsel to the Facility Lessee rendered on the Closing Date,

                                      32
<PAGE>
     which opinions shall be satisfactory in form and substance to the Owner
     Participant and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, the Indenture Trustee and the Pass
     Through Trustees.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROJECT" shall have the meaning set forth in the FILOT Lease.

      "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
      3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in administrative guidance has been issued by the Internal Revenue
     Service or the Department of Treasury and which has been published in the
     Federal Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

                                      33
<PAGE>
     "PURCHASE OPTION" shall mean, collectively, the Facility Purchase Option
     and the Land Purchase Option.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have
     the meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may
     properly advise reporting such position on a tax return in accordance
     with Formal Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
     refinances Indebtedness of another Restricted Subsidiary) including
     Indebtedness that refinances Refinancing Indebtedness; provided, however,
     that (i) if the Indebtedness being refinanced is contractually
     subordinated in right of payment to the Obligations, the Refinancing
     Indebtedness shall be contractually subordinated in right of payment to
     such Obligations to at least the same extent as the Indebtedness being
     refinanced, (ii) the Refinancing Indebtedness is scheduled to mature
     either (a) no earlier than the Indebtedness being refinanced or (b) after
     the Stated Maturity of the Obligations, (iii) the Refinancing
     Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average
     Life of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the

                                      34
<PAGE>
     Guarantor or a Restricted Subsidiary that refinances Indebtedness of an
     Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv)
     of the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL TERM" with respect to the Springing Facility Site Sublease,
     shall have the meaning set forth in Section 2.1(b).

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Springing Facility Site Lease, shall
     have the meaning set forth in Section 2.2(b) of the Springing Facility
     Site Lease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002, each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases

                                      35
<PAGE>
     thereafter (except for the last Rent Payment Period which period shall
     commence on May 31, 2031 and end on, and include, October 18, 2031, each
     six-month period commencing on each Rent Payment Date through and
     including the following May 30 or November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is
     not designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the
     Granting Clause of the Collateral Trust Indenture.

     "ROCKGEN" shall mean RockGen Energy LLC.

     "ROCKGEN BILLS OF SALE" shall mean each of the bills of sale executed
     and delivered pursuant to the RockGen Participation Agreements.

     "ROCKGEN CALPINE GUARANTIES" shall mean the Calpine guaranty and payment
     agreements executed and delivered by Calpine pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the collateral
     trust indentures executed and delivered pursuant to the RockGen
     Participation Agreements.

     "ROCKGEN FACILITY LEASES" shall mean a collective reference to each of
     the four facility lease agreements, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which the RockGen Facility Lessee will lease the
     applicable RockGen Ground Interests to applicable RockGen Owner Lessor.

                                      36
<PAGE>
     "ROCKGEN FACILITY LESSEE" shall mean RockGen Energy LLC.

     "ROCKGEN FACILITY SITE" shall have the meaning set forth in the recitals
     to the RockGen Facility Site Leases.

     "ROCKGEN FACILITY SITE LEASES" shall mean a collective reference to each
     of the four facility site leases, dated as of October 18, 2001, by and
     between the applicable RockGen Owner Lessor and the RockGen Facility
     Lessee, pursuant to which RockGen Facility Lessee will lease the
     applicable RockGen Ground Interest to the applicable RockGen Owner Lessor.

     "ROCKGEN GROUND INTERESTS" shall mean the undivided leasehold interests
     in the RockGen Facility Site conveyed to the RockGen Owner Lessors under
     the RockGen Facility Site Leases.

     "ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture trustees
     relating to the RockGen Collateral Trust Indentures.

     "ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers acting
     on behalf of the RockGen Owner Lessors pursuant to the RockGen Operative
     Documents.

     "ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC RockGen OL-2, LLC,
     RockGen OL-3, LLC and RockGen OL-4, LLC.

     "ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving the
     transfer of the RockGen Undivided Interests and the lease of the RockGen
     Ground Interests to the RockGen Owner Lessors, and the simultaneous lease
     of the RockGen Undivided Interests to the RockGen Facility Lessee and the
     simultaneous sublease of the RockGen Ground Interest to the RockGen
     Facility Lessee on substantially the same terms and conditions as under,
     and dated the same date as, the RockGen Overall Transaction.

     "ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative Documents"
     for each of the RockGen Lease Transactions.

     "ROCKGEN OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the RockGen Operative Documents.

     "ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference to
     each of the other three separate participation agreements entered into by
     the RockGen Facility Lessee, the applicable RockGen Owner Lessor, the
     applicable RockGen Lessor Manager, the applicable RockGen Owner
     Participant, the applicable RockGen Indenture Trustee, the Pass Through
     Trustees and Calpine and designated Participation Agreement (RG-1),
     Participation Agreement (RG-2), Participation Agreement (RG-3) and
     Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the RockGen Facility Lessee has
     agreed to (a) sell to the applicable RockGen

                                      37
<PAGE>
     Owner Lessors certain undivided interests in the RockGen Facility, and
     (b) lease from the applicable RockGen Owner Lessors such undivided
     interest in the RockGen Facility pursuant to the RockGen Facility Leases.

     "ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the RockGen Facility conveyed to the RockGen Owner Lessors
     under the RockGen Bills of Sale.

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Sringing
     Facility Site Lease, shall have the meaning set forth in Section
     2.2(a)(ii) of the Springing Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have
     the meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other Broad River Facility Lease.

                                      38
<PAGE>
     "SIGNIFICANT SUBSIDIARY" means any Subsidiary (other than an
     Unrestricted Subsidiary) that would be a "Significant Subsidiary" of the
     Guarantor within the meaning of Rule 1-02 under Regulation S-X
     promulgated by the SEC.

     "SITE LEASE EVENT OF DEFAULT" with respect to the Springing Facility
     Site Lease, shall have the meaning set forth in Section 14.1 of the
     Springing Facility Site Lease.

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     South Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner
     Lessor will lease the applicable South Point Ground Interests to South
     Point Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the applicable South Point Owner
     Lessor will lease the applicable South Point Ground Interest to the South
     Point Facility Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Assignment Agreements.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and
     the South Point Ground Interests to the South Point Owner Lessors, and
     the simultaneous lease of the South Point Undivided Interests and South
     Point Ground Interests to the South Point Facility Lessee

                                      39
<PAGE>
     on substantially the same terms and conditions as under, and dated the
     same date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC, South
     Point OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3)
     and Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee
     has agreed to (a) assign and transfer to the applicable Broad River Owner
     Lessors certain undivided leasehold interests in the South Point Facility
     and the South Point Facility Site, and (b) lease from the applicable
     South Point Owner Lessors such undivided leasehold interest in the South
     Point Facility and the South Point Facility Site pursuant to the South
     Point Facility Leases and the South Point Facility Site Leases,
     respectively.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests (or upon the Post-FILOT Lease Conversion Date, undivided fee
     interests) in the Broad River Facility conveyed to the South Point Owner
     Lessors under the South Point Assignment Agreement.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

                                      40
<PAGE>
      (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

      (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

     "SPRINGING FACILITY SITE LEASE" shall mean the Springing Facility Site
     Lease (BR-4) dated as of October 18, 2001 by and between the Facility
     Lessee and Owner Lessor pursuant to which the Facility Lessee shall lease
     the Ground Interest to the Owner Lessor.

     "SPRINGING FACILITY SITE SUBLEASE" shall mean the Springing Facility
     Site Sublease (BR-4) dated as of October 18, 2001, by and between Owner
     Lessor and Facility Lessee pursuant to which the Owner Lessor shall
     sublease the Ground Interest back to the Facility Lessee.

     "SPRINGING OPERATIVE DOCUMENTS" shall mean, the Springing Facility Site
     Lease and the Springing Facility Site Sublease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section
     11.1 of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

         "SURVEY" shall mean the ALTA/ACSM As-Built Land Title Survey of the
Facility Site, to be dated July 21, 2001 and revised October 18, 2001, which
inter alia, will show the location of the Facility Site.

                                      41
<PAGE>
     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (BR-4),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of
     the Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Springing Facility Site
     Lease, shall have, collectively, the meaning set forth in Section 18.1 of
     the Springing Facility Site Lease.

     "TERM" with respect to the Facility Site Lease, shall have the meaning
     set forth in Section 2.1(a) of the Facility Site Lease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each
     of the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

                                      42
<PAGE>
     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall
     have the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit O: (a) Consent and Agreement
     from Carolina Power and Light Company ("CP&L") with respect to the Power
     and Purchase Agreement, dated as of December 31, 1998 (as amended),
     between CP&L and the Facility Lessee: (b) Consent and Agreement from CP&L
     with respect to the Power Purchase Agreement, dated as of July 7, 2000
     (as amended), between CP&L and the Facility Lessee; and (c) Consent and
     Agreement from Duke Electric Transmission, a division of Duke Energy
     Corporation ("Duke") with respect to the Interconnection Agreement, dated
     as of February 5, 2000 (as amended), between Duke and the Facility Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean Lawyers Title Insurance Corporation.

     "TITLE POLICY" shall mean, the title insurance policy (#FT027141.01214)
     dated as of October 18, 2001.

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)     the reasonable costs of reproducing and printing the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) and all costs and
     fees, including but not limited to filing and recording fees and
     recording, transfer, mortgage, intangible and similar taxes in connection
     with the execution, delivery, filing and recording of the Facility Lease,
     the Facility Site Lease, and any other Operative Document and any other
     document required to be filed or recorded pursuant to the provisions
     hereof or of any other Operative Document and the FILOT Lease (giving
     effect to its assignment to the Owner Lessor pursuant to the Assignment
     Agreement) and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents and the FILOT Lease (giving effect to its assignment to the
     Owner Lessor pursuant to the Assignment Agreement) or as otherwise
     reasonably required by the Owner Lessor or the Indenture Trustee and
     surveyor fees;

     (ii)    the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of McNair Law Firm, P.A., South
     Carolina, counsel to the Facility Leasee;

                                      43
<PAGE>
     (iv)    the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)     the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)    the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents and
     the FILOT Lease;

     (viii)   the reasonable fees and expenses of Bingham Dana LLP counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)     the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

     (x)     the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)    the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)  the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

                                      44
<PAGE>
     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)   the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents (including the assignment of the FILOT Lease pursuant to the
     Assignment Agreement).

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRI-PARTY AGREEMENT" shall mean the Tri-Party Agreement, Consent,
     Acknowledgement and Notice dated as of October 1, 2001 by and among the
     County, the Facility Lessee, the Owner Lessor and the Other Broad River
     Owner Lessors.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

                                      45
<PAGE>
     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     leasehold interest (or, upon and following the Post-FILOT Lease
     Conversion Date, the Owner Lessor's 25% undivided fee interest) in the
     Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial
     Code as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      46

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.11
<SEQUENCE>14
<FILENAME>f80168ex4-22_11.txt
<DESCRIPTION>EXHIBIT 4.22.11
<TEXT>
<PAGE>
                                                                 EXHIBIT 4.22.11

                                                                 EXECUTION COPY


                         PARTICIPATION AGREEMENT (RG-1)

                          Dated as of October 18, 2001

                                      among

                    ROCKGEN ENERGY LLC, as Facility Lessee,

                      ROCKGEN OL-1, LLC, as Owner Lessor,

    WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                      CALPINE CORPORATION, as Guarantor,

                     SBR OP-1, LLC, as Owner Participant,

   STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                    not in its individual capacity, except
                   as expressly provided herein, but solely
                          as Indenture Trustee, and

   STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                    not in its individual capacity, except
                   as expressly provided herein, but solely
                           as Pass Through Trustees




                                ROCKGEN PROJECT

===============================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>                                                                                                             <C>
SECTION 1.DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ......................................      3

SECTION 2.PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ...................................................      3

  Section 2.1   Agreements to Participate ..................................................................      3

  Section 2.2   Closing Date; Procedure for Participation. .................................................      4

  Section 2.3   Transaction Costs. .........................................................................      5

SECTION 3. REPRESENTATIONS AND WARRANTIES ..................................................................      6

  Section 3.1   Representations and Warranties of the Facility Lessee ......................................      6

  Section 3.2   Representations and Warranties of the Owner Lessor .........................................     15

  Section 3.3   Representations and Warranties of the Lessor Manager and the Trust Company .................     16

  Section 3.4   Representations and Warranties of the Owner Participant ....................................     18

  Section 3.5   Representations and Warranties of Indenture Trustee and the Lease Indenture Company ........     20

  Section 3.6...Warranties and Covenants of the Pass Through Trustees and the Pass Through Company .........     22

SECTION 4       CLOSING CONDITIONS .........................................................................     23

  Section 4.1   Completion of the Facility .................................................................     25

  Section 4.2   Operative Documents ........................................................................     25

  Section 4.3   Certificates and the Lessor Notes ..........................................................     25

  Section 4.4   Equity Investment ..........................................................................     25

  Section 4.5   Organizational Documents ...................................................................     25

  Section 4.6   Representations and Warranties .............................................................     25

  Section 4.7   Defaults, Events of Default, Events of Loss ................................................     25

  Section 4.8   Regulatory Approvals .......................................................................     25

  Section 4.9   Consents ...................................................................................     26

  Section 4.10  Governmental Actions .......................................................................     27
</TABLE>

                                      i

<PAGE>

                             TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>                                                                                                             <C>
  Section 4.11  Insurance ..................................................................................     27

  Section 4.12  Ratings ....................................................................................     27

  Section 4.13  Environmental Report .......................................................................     27

  Section 4.14  Surveys ....................................................................................     27

  Section 4.15  Appraisal; Condition of the Facility .......................................................     27

  Section 4.16  Letter from the Appraiser ..................................................................     27

  Section 4.17  Other Reports ..............................................................................     28

  Section 4.18  Opinion with Respect to Certain Tax Aspects ................................................     28

  Section 4.19  Opinions of Counsel ........................................................................     28

  Section 4.20  Recordings and Filings .....................................................................     28

  Section 4.21  Conditions to Closing ......................................................................     28

  Section 4.22  Taxes ......................................................................................     28

  Section 4.23  No Changes in Applicable Law ...............................................................     29

  Section 4.24  Registered Agent for the Facility Lessee and the Owner Lessor ..............................     29

  Section 4.25  Operating Lease Treatment ..................................................................     29

  Section 4.26  Rent Adjustments ...........................................................................     29

  Section 4.27  Title Insurance ............................................................................     29

  Section 4.28  Parent Guaranty ............................................................................     29

  Section 4.29  Letter as to Number of Offerees ............................................................     29

  Section 4.30  Lien Search ................................................................................     30

  Section 4.31  Litigation .................................................................................     30

  Section 4.32  No Material Adverse Change .................................................................     30

  Section 4.33  Private Placement Number ...................................................................     30

  Section 4.34  Proceedings and Documents ..................................................................     30
</TABLE>

                                       ii
<PAGE>

                             TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
  Section 4.35   No Proposed Tax Law Change ................................................................    30

  Section 4.36   Payment of Fees and Expenses ..............................................................    30

SECTION 5.COVENANTS OF FACILITY LESSEE AND GUARANTOR .......................................................    30

   Section 5.1  Maintenance of Existence ...................................................................    31

   Section 5.2  Merger, Consolidation, Sale of Substantially All Assets ....................................    31

   Section 5.3  Guaranty and Contingent Obligations ........................................................    31

   Section 5.4  Assignment of Rights .......................................................................    32

   Section 5.5  Lessor Manager Fees ........................................................................    32

   Section 5.6  Conduct of Business, Properties, Etc. ......................................................    32

   Section 5.7  Obligations ................................................................................    32

   Section 5.8  Books, Records, Access .....................................................................    32

   Section 5.9  Other Information. .........................................................................    33

   Section 5.10 Warranty of Title to Facility Site. ........................................................    33

   Section 5.11 ERISA ......................................................................................    33

   Section 5.12 Certain Contracts and Agreements ...........................................................    34

   Section 5.13 Certain Costs ..............................................................................    34

   Section 5.14 Limitations on Liens .......................................................................    34

   Section 5.15 Investments ................................................................................    34

   Section 5.16 Survey .....................................................................................    35

   Section 5.17 Regulations ................................................................................    35

   Section 5.18 Partnerships ...............................................................................    35

   Section 5.19 Dissolution ................................................................................    35

   Section 5.20 Termination of Operative Documents .........................................................    35

   Section 5.21 Name and Location ..........................................................................    35
</TABLE>
                                          iii

<PAGE>

                             TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>
   Section 5.22    Use of Facility Site ........................................... 35

   Section 5.23    Abandonment of Facility ........................................ 35

   Section 5.24    Taxes, Other Government Charges and Utility Charges ............ 35

   Section 5.25    Compliance with Laws, Instruments, Etc. ........................ 36

   Section 5.26    PUHCA .......................................................... 36

   Section 5.27    Further Assurances ............................................. 36

   Section 5.28    No Subsidiaries ................................................ 37

   Section 5.29    Permitted Business ............................................. 37

   Section 5.30    Support Arrangements ........................................... 37

   Section 5.31    Insurance ...................................................... 38

   Section 5.32    Tax Status ..................................................... 38

   Section 5.33    Transmission Assets. ........................................... 38

SECTION 6. COVENANTS OF THE OWNER LESSOR, THE TRUST
             COMPANY AND THE LESSOR MANAGER ....................................... 39

   Section 6.1     Compliance with the LLC Agreement .............................. 39

   Section 6.2     Owner Lessor's Liens ........................................... 40

   Section 6.3     Amendments to Operative Documents .............................. 40

   Section 6.4     Transfer of the Owner Lessor's Interest ........................ 40

   Section 6.5     Owner Lessor; Lessor Estate .................................... 40

   Section 6.6     Limitation on Indebtedness and Actions ......................... 40

   Section 6.7     Change of Location ............................................. 40

   Section 6.8     Bankruptcy of Owner Lessor ..................................... 40

SECTION 7.COVENANTS OF THE OWNER PARTICIPANT ...................................... 41

   Section 7.1     Restrictions on Transfer of Member Interest. ................... 41

   Section 7.2     Owner Participant's Liens ...................................... 44

</TABLE>

                                      iv

<PAGE>

                             TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <C>
   Section 7.3  Amendments or Revocation of LLC Agreement .................................   44

   Section 7.4  Bankruptcy Filings ........................................................   44

   Section 7.5  Instructions ..............................................................   44

   Section 7.6  Right of First Refusal ....................................................   44

   Section 7.7  Prohibition on Fundamental Changes ........................................   45

   Section 7.8  Appointment of Successor Lessor Manager ...................................   45

   Section 7.9  Cooperation ...............................................................   45

SECTION 8.COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ................   46

   Section 8.1  Indenture Trustee's Liens .................................................   46

   Section 8.2  Pass Through Trustees' Covenant Not to Transfer Lessor Notes ..............   46

SECTION 9. INDEMNIFICATION ................................................................   46

   Section 9.1  General Indemnity. ........................................................   46

   Section 9.2  General Tax Indemnity. ....................................................   53

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ....................................   62

SECTION 11 SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS .....................   62

   Section 11.1 Financing Improvements ....................................................   62

   Section 11.2 Optional Refinancing of Lease Debt ........................................   64

   Section 11.3 Cooperation ...............................................................   65

SECTION 12.CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS ......   65

SECTION 13 TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS ............   67

   Section 13.1 Transfer of the Facility Lessee Ownership. ................................   67

   Section 13.2 Special Facility Lessee Transfers .........................................   68

SECTION 14. MISCELLANEOUS .................................................................   69

   Section 14.1 Consents; Cooperation .....................................................   69

</TABLE>

                                       v

<PAGE>

                             TABLE OF CONTENTS(continued)
<TABLE>
<CAPTION>
                                                                                             PAGE

<S>                                                                                          <C>
Section 14.2    Successor Owner Lessor ....................................................   69

Section 14.3    Bankruptcy of Lessor Estate ...............................................   69

Section 14.4    Amendments and Waivers ....................................................   69

Section 14.5    Notices ...................................................................   70

Section 14.6    Survival ..................................................................   74

Section 14.7    Successors and Assigns ....................................................   74

Section 14.8    Business Day ..............................................................   74

Section 14.9    Governing Law .............................................................   74

Section 14.10   Severability ..............................................................   74

Section 14.11   Counterparts ..............................................................   74

Section 14.12.  Headings and Table of Contents ............................................   75

Section 14.13   Limitation of Liability. ..................................................   75

Section 14.14.  Consent to Jurisdiction; Waiver of
                  Trial by Jury; Process Agent ............................................   76

Section 14.15   Further Assurances ........................................................   77

Section 14.16   Effectiveness .............................................................   77

Section 14.17   Measuring Life                                                                77

Section 14.18   No Partnership, Etc. ......................................................   77

Section 14.19   Entire Agreement ..........................................................   77

Section 14.20   Public Utility Regulation .................................................   78

Section 14.21.  Confidentiality of Information ............................................   78

Section 14.22   Reliance ..................................................................   79

Section 14.23   Amendments, Etc. ..........................................................   79

</TABLE>



<PAGE>

APPENDICES:

          Appendix A   Definitions and Rules of Interpretation

<TABLE>
<S>                         <C>
SCHEDULES:

     Schedule 1-A           Equity Investment
     Schedule 1-B           Indenture Trustee's Account
     Schedule 1-C           Owner Participant's Account
     Schedule 2             Pricing Assumptions
     Schedule 3.1(m)        Environmental Matters - Hazardous Substances
     Schedule 4.20          Recording and Filings
     Schedule 5.31          Maintenance of Insurance

EXHIBITS:

     Exhibit A          Description of Facility
     Exhibit B-1        Form of Bill of Sale
     Exhibit B-2        Form of Warranty Deed
     Exhibit C          Form of Facility Lease Agreement
     Exhibit D          Form of Facility Site Lease
     Exhibit E          Form of Facility Site Sublease
     Exhibit F          Form of Pass Through Trust Agreement
     Exhibit G          Form of OP Parent Guaranty
     Exhibit H          Form of Calpine Guaranty
     Exhibit I          Form of Collateral Trust Indenture
     Exhibit J          Form of OP Assignment and Assumption Agreement
     Exhibit K          List of Competitors
     Exhibit L          Form of Guarantor Assignment and Assumption Agreement
     Exhibit M          Forms of Consents
</TABLE>

                                      vii

<PAGE>

                            PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) ROCKGEN ENERGY LLC (herein, together with
     its successors and permitted assigns, called the "Facility Lessee"), a
     limited liability company organized under the laws of the State of
     Wisconsin, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (RG-1), (the "Calpine Guaranty"), (iii)
     ROCKGEN OL-1, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-1, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity except as expressly provided herein, but solely as independent
     manager under the LLC Agreement (herein in its capacity as independent
     manager under the LLC Agreement, together with its successors and
     permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a)   Facility Lessee, an indirect, wholly-owned subsidiary
of Calpine, will, as of the Closing Date, own a 520 MW gas-fired combined cycle
merchant power plant located near Christiana, Wisconsin and more fully
described in Exhibit A hereto ("Facility");

          WHEREAS, Facility Lessee desires to sell to the Owner Lessor the
Undivided Interest pursuant to the Bill of Sale and lease to the Owner Lessor
the Ground Interest pursuant to the Facility Site Lease, and to lease the
Undivided Interest and sublease the Ground Interest

<PAGE>

from the Owner Lessor pursuant to the Facility Lease and the Facility Site
Sublease, respectively;

          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
purchase such Undivided Interest from the Facility Lessee pursuant to the Bill
of Sale, to lease the Ground Interest from the Facility Lessee pursuant to the
Facility Site Lease, and to lease the Undivided Interest and sublease the
Ground Interest to the Facility Lessee pursuant to the Facility Lease and
Facility Site Sublease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, purchase the Undivided Interest from the Facility Lessee pursuant to the
Bill of Sale, lease the Ground Interest from Facility Lessee pursuant to the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and Facility Site Lease and lease the Undivided Interest and
sublease the Ground Interest to the Facility Lessee pursuant to the Facility
Lease and the Facility Site Sublease, respectively;

          WHEREAS, in order to provide a portion of the Purchase Price payable
by the Owner Lessor in respect of its acquisition of the Undivided Interest
pursuant to the Bill of Sale, the Owner Participant is willing to make an
investment in the Owner Lessor in an amount equal to the Equity Investment, all
in the manner and subject to the conditions set forth herein;

          WHEREAS, on the Closing Date, the Owner Lessor intends to sell the
Lessor Notes to the relevant Pass Through Trust and to grant to the Indenture
Trustee liens and security interests in the Indenture Estate to secure its
obligations thereunder;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed all
of the obligations of the Facility Lessee under the Participation Agreement and
as of the Closing Date shall guarantee all of the obligations of the Facility
Lessee under the other Operative Documents to which the Facility Lessee is a
party; and

                                       2

<PAGE>

          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The rules of interpretation
set forth in Appendix A shall apply to terms used in this Participation
Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee agrees to sell the Undivided Interest to the Owner Lessor
     on the terms and conditions set forth in the Bill of Sale and to lease the
     Ground Interest to the Owner Lessor on the terms set forth in the Facility
     Site Lease; the Owner Lessor agrees to buy the Undivided Interest and to
     lease the Ground Interest from the Facility Lessee, and each agrees to
     execute and deliver the Bill of Sale and the Facility Site Lease;

the Owner Lessor agrees to lease the Undivided Interest to the Facility Lessee
     and to sublease the Ground Interest from the Facility Lessee on the terms
     and conditions set forth in the Facility Lease and Facility Site Sublease;
     the Facility Lessee agrees to lease the Undivided Interest and sublease
     the Ground Interest from the Owner Lessor, and each agrees to execute and
     deliver the respective Facility Lease and the Facility Site Sublease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents pursuant to the OP Parent
     Guaranty;

                                       3

<PAGE>

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section
     2.2(c)

                                       4

<PAGE>

     above, use reasonable efforts to invest such funds from time to time at
     the written direction of Calpine, and at Calpine's sole expense and risk,
     in Permitted Investments until such funds can be returned to the Owner
     Participant. If, on the Scheduled Closing Date, the Owner Participant has
     made the Owner Participant's Commitment available to the Owner Lessor in
     accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor has not returned such funds to the Owner Participant
     on or before 1:00 p.m., New York City time, on such date, then Calpine
     shall reimburse the Owner Participant for loss of the use of such funds
     at the Applicable Rate for each day, from and including the day that such
     funds were made available to the Owner Lessor by the Owner Participant
     to, but excluding the earlier of (i) the day that such funds have been
     returned to the Owner Participant pursuant to Section 2.2(c) (funds
     received by the Owner Participant after 1:00 p.m., New York City time, of
     any day shall be deemed to be returned on the next succeeding Business
     Day) and (ii) the Closing Date. Subject to payment for the account of the
     Owner Participant of any reimbursement for loss of use of funds due to it
     at the Applicable Rate, any net gain realized on the investment of such
     funds (including interest) shall be paid to Calpine by the Owner Lessor
     on the earlier of (i) the date such funds are returned to the Owner
     Participant pursuant to Section 2.2(c) and (ii) the Closing Date. The
     Owner Lessor shall not be liable for any interest on or loss resulting
     from such investments and, if such funds are made available to the Owner
     Lessor and utilized to pay the Purchase Price or Transaction Costs on the
     Closing Date, Calpine shall reimburse the Owner Lessor for any net loss
     realized on the investment of such funds. If such funds are not so
     utilized, Calpine shall, in addition to its obligation to reimburse the
     Owner Participant for loss of use as provided above, reimburse the Owner
     Participant on the date such funds are returned to the Owner Participant
     for any net loss realized on the investment of such funds. In order to
     obtain funds for payment of the Purchase Price or Transaction Costs or to
     return funds made available to the Owner Lessor by the Owner Participant,
     the Owner Lessor is authorized to sell any investments or obligations
     purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make
     its Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,125,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs;

                                       5

<PAGE>

     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for,
     and will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company
     duly organized, validly existing, and in good standing under the laws of
     the State of Wisconsin. The Facility Lessee is duly licensed or qualified
     and in good standing (as evidenced by a certificate of status issued by
     the Wisconsin Department of Financial Institutions) in each jurisdiction
     where the character of its properties or the nature of its activities
     makes such qualification necessary, and the Facility Lessee has the power
     and authority to (x) own or hold under lease the property it purports to
     own or hold under lease, (y) carry on its business as now being conducted
     and as presently proposed to be conducted and (z) take all actions as may
     be necessary to consummate the transactions contemplated hereunder and
     under the other Operative Documents to which each is a party. The
     Facility Lessee is an indirect wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee in accordance with its terms, except as the same may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting the rights of creditors generally and by general
     principles of equity.

Non-Contravention.   (1)   The execution, delivery and performance by the
     Facility Lessee of this Agreement and each of the other Operative
     Documents to which it is or will be a party, the consummation by the
     Facility Lessee of the transactions contemplated hereby and thereby, and
     compliance by the Facility Lessee with the terms and provisions hereof
     and thereof, do not and will not (i) contravene any Applicable Law
     binding on the Facility Lessee or its property, or its organizational
     documents, (ii) constitute a default by the Facility Lessee under, or
     result in the creation of any Lien upon the property of the Facility
     Lessee (other than pursuant to any Operative Document) under any
     indenture, mortgage or other material

                                       6

<PAGE>

     contract, agreement or instrument to which the Facility Lessee is a party
     or by which the Facility Lessee or any of its property is bound, (iii)
     contravene any Organic Document of the Facility Lessee or (iv) require
     the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect.

          (2)   Neither the sale of the Undivided Interest or the lease of the
Ground Interest by Facility Lessee to the Owner Lessor, nor the grant by the
Owner Lessor to the Indenture Trustee of the Liens and security interests in
the Undivided Interest and the applicable Operative Documents executed in
connection therewith to secure its obligations thereunder does or will
constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing,
     with respect to the participation by the Owner Participant, the Owner
     Lessor in the Overall Transaction, other than (i) any Permit where the
     failure to obtain or maintain such Permit would not be reasonably likely
     to result in a Material Adverse Effect, (ii) the FERC Orders, (iii) as
     may be required under Applicable Law providing for the supervision or
     regulation of the Owner Participant, the Owner Lessor or any Affiliate of
     any of them as a result of investing, lending or other commercial
     activity in which the Owner Participant, the Owner Lessor or any
     Affiliate of any of them is or may be engaged other than the transactions
     contemplated hereby or by any of the other Operative Documents, (iv) as
     may be required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and

                                      7

<PAGE>

     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents or the
     ability of the Facility Lessee or such other Calpine Party to perform its
     obligations under the Operative Documents to which the Facility Lessee or
     such other Calpine Party is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to have a Material Adverse
     Effect or otherwise materially adversely affect the Undivided Interest
     leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is
     in default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc.   (1)
     The chief executive office and principal place of business of the
     Facility Lessee and the office where the Facility Lessee keeps its
     company records concerning the Facility, the Undivided Interest, the
     Ground Interest, the Facility Site and the Operative Documents is located
     at: c/o Calpine Corporation, 50 West San Fernando Street, 5th Floor, San
     Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Title; Liens.   (1)   On and before the Closing Date, the Facility Lessee has
     (i) good and valid title to the Facility, free and clear of all Liens
     other than Permitted Closing Date Liens, and (ii) good and valid title to
     the Facility Site free and clear of all Liens other than Permitted
     Closing Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid title to the Undivided Interest will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Closing Date Liens, and (B) good and valid leasehold interest in
the Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of
the parties thereto, the Collateral Trust Indenture will create a valid and,
when the filings and recordings to be made pursuant to Section 4.20 have been
made, first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or

                                       8

<PAGE>

payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents) or the use of or the exercise by the
Owner Lessor of its rights under the Bill of Sale or the Facility Site Lease or
the Facility Lease, in a manner which could reasonably be expected to have a
Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or
     X of the Federal Reserve Board), and no part of the proceeds of Lessor
     Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility
     company," a "holding company", a "subsidiary company" of a "holding
     company" or an "affiliate" of a "holding company" within the meaning of
     the Holding Company Act, and the execution, delivery and performance of
     the Operative Documents to which the Facility Lessee is or will be a
     party will not subject the Facility Lessee to such regulation under the
     Holding Company Act and do not violate any provision of the Holding
     Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company"
     or a company controlled by an "investment company" within the meaning of
     the Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility, or the Facility Site; (ii) the

                                      9

<PAGE>

Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at which any Hazardous Substances have been
generated, stored, treated or disposed by or on behalf of the Facility Lessee
or such other Calpine Party) to a Release or threatened Release of any
Hazardous Substance generated, used or stored at or Released in, on, under or
from the Facility or the Facility Site; (iii) the Facility or the Facility Site
is subject to a Lien in favor of any Governmental Entity in response to a
Release or threatened Release of Hazardous Substances or (iv) the Facility or
the Facility Site is or is asserted to be in violation of or not in compliance
with any Environmental Law, in any case with respect to clauses (ii), (iii) or
(iv), which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not and
has not been any Environmental Condition (A) at, on, under or from the Facility
or the Facility Site, or (B) at, on, under or from any other location resulting
from or arising in connection with the operation by any Person of the Facility
or the Facility Site, that in each case could reasonably be expected to have a
Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or
the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility and the Facility Site in accordance with the Operative
Documents and the Ownership and Operation Agreement and Environmental Laws have
been obtained on behalf of the Owner Lessor or by the Facility Lessee and they
are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility
or the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or maintenance of the Facility or the
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the
Indenture Trustee, the Lessor Manager, the Pass Through Trustees or the
Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest and the Ground Interest and based upon
     the Facility Lessee's reasonable expectations and on Applicable Law in
     effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     rights contemplated by the Facility Lease to be made available under such
     Operative Documents, permit on a commercially practicable basis

                                      10

<PAGE>

     during the Facility Lease Term and the period following the expiration or
     termination of the Facility Lease Term, as applicable, until the end of
     the Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which, either
     in any case or in the aggregate, would reasonably be expected to have a
     Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee
     has validly submitted to the jurisdiction of the Supreme Court of the
     State of New York, New York County and the United States District Court
     for the Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility and the Facility Site, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility or the
     Facility Site, (ii) the impairment of the ownership (or leasehold or
     easement interest in), use, operation or maintenance of the Facility or
     the Facility Site in any material respect, or (iii) any criminal or
     material civil liability being incurred by the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
     Through Trustees, including subjecting the Owner Participant or the Owner
     Lessor to regulation as a public utility under Applicable Law. None of
     the Calpine Parties is in default of any judgments, orders or decrees of
     any Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties
     hereto and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the
     Lessor Notes under the Collateral Trust Indenture and the Certificates
     under the Pass Through Trust Agreements will be exempt from, or will not
     involve any transaction which is subject to, the prohibitions of either
     Section 406 of ERISA or Section 4975 of the Code and will not involve any
     transaction in connection with which a penalty could be imposed under
     Section 502(i) of ERISA or a tax could be imposed pursuant to Section
     4975 of the Code.

                                      11

<PAGE>

Insurance. All insurance required to be obtained pursuant to Schedule 5.31
     is in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual
     Knowledge of the Facility Lessee, no Burdensome Buyout Event has occurred
     or will occur upon the execution and delivery of the Operative Documents
     and the Facility Lessee does not have Actual Knowledge of any event that
     could reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents, except where the failure to have any such services
     or public utilities available would not result in a material adverse
     effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by
     a Governmental Entity or other Person to initiate, a Requisition of any
     of the Undivided Interest, the Facility, the Ground Interest or the
     Facility Site, which would reasonably be expected to have a Material
     Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility or the Facility Site, which would reasonably be
     expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site
     is available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to
     the Facility or the Facility Site, in either case, in any manner which
     would reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility
     or Facility Site by any Governmental Entity or by any insurance company
     which currently issues any insurance to the Facility Lessee or by any
     board of fire

                                      12

<PAGE>

     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation,
     maintenance, leasing and financing of the Facility and Facility Site and
     activities incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has
     been made available under the National Flood Insurance Act of 1968, as
     amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby (including the transfer of certain of
     its assets and properties to the Owner Lessor) in good faith and without
     any intent to defraud creditors of the Facility Lessee or subsequent
     purchasers. The execution and delivery of the Operative Documents to
     which the Facility Lessee is a party will not render the Facility Lessee
     insolvent under GAAP or leave the Facility Lessee with assets whose
     present fair valuation of assets is less than the present fair valuation
     of the Facility Lessee's debts. As used in this Section 3.1(dd), "debts"
     includes any and all liabilities, whether matured or unmatured,
     liquidated or unliquidated, absolute, fixed or contingent, and whether or
     not such liabilities are required under GAAP to be shown on the Facility
     Lessee's balance sheet. The execution and delivery of the Operative
     Documents to which the Facility Lessee is a party will not leave it with
     property remaining in its hands which would constitute unreasonably small
     assets or capital, and the Facility Lessee has and, after giving effect
     to such transactions will have, an adequate amount of assets and capital
     to engage in its business now and in the future, based on the actual and
     anticipated needs for capital of the businesses anticipated to be
     conducted by the Facility Lessee, and based upon the other information
     described herein. After giving effect to the transactions contemplated
     under the Operative Documents, the Facility Lessee will be able to pay
     all of its debts and liabilities, including unrecorded contingent
     liabilities, as they mature, the Facility Lessee will have positive cash
     flow after paying all of its scheduled and anticipated debt as it
     matures, and the Facility Lessee will realize sufficient monies from
     current assets in the ordinary and usual course of business to pay
     recurring current debt, short-term debt and long-term debt as such debts
     mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid
     or become obligated to pay any fee or

                                      13

<PAGE>

     commission to any broker, finder or intermediary for or on account of
     arranging the financing of the transactions contemplated by the Operative
     Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents shall be or become
     (i) subject to regulation as a "public utility company," "holding
     company," an "affiliate" of a "holding company" or a "subsidiary company"
     of a "holding company" within the meaning of PUHCA or (ii) a "public
     utility" (except that the Facility Lessee will be a public utility
     subject to the Federal Power Act with authority to sell wholesale
     electricity at market-based rates and with waivers of regulations
     customarily granted to a public utility that sells wholesale power at
     market-based rates), a "transmitting utility," or an "electric utility"
     within the meaning of the Federal Power Act, (iii) subject to state
     regulation of rates or organizational requirements for electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained
     therein, in light of the circumstances under which they were made, not
     misleading; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Facility Lessee, or (ii) the descriptions
     of the Operative Documents or the tax consequences to beneficial owners
     of Certificates; provided, further, each of the Transaction Parties
     acknowledge and agrees that (i) Calpine has heretofore provided to the
     Appraiser, solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Wisconsin energy markets and (3)
     information passed along from other Persons and (ii) that the Facility
     Lessee makes no representation or warranty whatsoever with respect to the
     information described in clause (i) above except to the extent expressly
     set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by American Transmission Company and has access
     to transmission services and ancillary services sufficient to sell the
     net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Orders referred to in clause (v) of the
     definition of "FERC Orders" in Appendix A hereto, received from FERC the
     orders referenced therein.

                                      14

<PAGE>

Fully Taxable. As of the Closing Date, each Person owning an Ownership
     Interest (i) is fully taxable at the highest federal tax rate and (ii)
     expects to be fully taxable at the highest federal tax rate throughout
     the Facility Lease Term; for the avoidance of doubt, this representation
     is not intended to be construed as nor shall it be deemed to be a
     guaranty as to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of
     the Facility Lessee, the Facility has commenced commercial operations and
     is currently capable of producing at least 520 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

Representations and Warranties of the Owner Lessor. The Owner Lessor represents
and warrants that as of the date of execution and delivery hereof and as of the
Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of
     which the Owner Participant is the sole member, and has the power and
     authority to enter into and perform its obligations under this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc.   (1)   (i) This Agreement and each of
     the other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and
     delivered will be duly authorized, executed and delivered by the Owner
     Lessor, and (ii) assuming the due authorization, execution and delivery
     of this Agreement by each party hereto other than the Owner Lessor, this
     Agreement constitutes and when executed and delivered each of the other
     Operative Documents (other than the Lessor Notes) to which it is or will
     be a party will be the legal, valid and binding obligations of the Owner
     Lessor, enforceable against the Owner Lessor in accordance with its
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     the rights of creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the
     State of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's

                                      15

<PAGE>

     Lien; provided, however, that no representation is made with respect to
     the right, power or authority of the Owner Lessor to act as operator of
     the Facility following a Lease Event of Default or the expiration or
     termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC
     Agreement, the Collateral Trust Indenture, the Lessor Notes, this
     Agreement or the other Operative Documents to which the Owner Lessor is
     or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or
     given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably
     be expected to materially adversely affect the ability of the Owner
     Lessor to perform its obligations under this Agreement or any other
     Operative Document to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the Lien of the Indenture Trustee on the Indenture
     Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor
     Estate is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning
     the Facility, the Facility Site, the Operative Documents and the South
     Point Ground Lease with the Lessor Manager, at the Lessor Manager's
     address set forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

Representations and Warranties of the Lessor Manager and the Trust Company. The
Trust Company (only with respect to representations and warranties expressly
relating to the Trust Company) and the Lessor Manager hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate

                                      16

<PAGE>

     power and authority, as Lessor Manager and/or in its individual capacity
     to the extent expressly provided herein or in the LLC Agreement, to enter
     into and perform its obligations under the LLC Agreement, this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc.   (1)   (i) The LLC Agreement has been
     duly authorized, executed and delivered by the Trust Company, and (ii)
     assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it
     is or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage or
     other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is bound,
     or in the creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of
     the Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the

                                      17

<PAGE>

     Trust Company or the Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement or the other Operative Documents to which the
     Trust Company or the Lessor Manager is or will be a party, other than any
     such authorization or approval or other action or notice or filing as has
     been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may
     be, to perform its obligations under the LLC Agreement, this Agreement or
     any other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest,
     the Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration of
     Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement
     and the Tax Indemnity Agreement have been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Participant
     and assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement and any other Operative Document to which the Owner Participant
     is or will be a party constitute or when executed and delivered will
     constitute the legal, valid and binding obligations of the Owner
     Participant, enforceable against the Owner Participant in accordance with
     their respective terms, except as the same may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the rights of creditors generally and by general principles of
     equity.

                                      18

<PAGE>

Non-Contravention. The execution and delivery by the Owner Participant of
     this Agreement, the LLC Agreement, the Tax Indemnity Agreement and any
     other Operative Document to which the Owner Participant is or will be a
     party, the consummation by the Owner Participant of the transactions
     contemplated hereby and thereby, and the compliance by the Owner
     Participant with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law binding on the Owner Participant,
     or its organizational documents, or contravene the provisions of, or
     constitute a default under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Participant is a
     party or by which the Owner Participant or its property is bound or result
     in the creation of any Owner Participant's Lien (other than any Lien
     created under any Operative Document) upon the Lessor Estate, the Facility
     Site or any interest therein or part thereof (it being understood that no
     representation or warranty is being made as to (i) any Applicable Laws
     relating to the particular nature of the Facility or the Facility Site or
     (ii) other than its representations set forth in Section 3.4(g), ERISA or
     Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC Agreement,
     the Tax Indemnity Agreement or any other Operative Document to which the
     Owner Participant is or will be a party, other than any authorization or
     approval or other action or notice or filing as has been duly obtained,
     taken or given (it being understood that no representation or warranty is
     being made as to any Applicable Laws relating to the Facility or the
     Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it,
     could reasonably be expected to materially adversely affect the ability of
     the Owner Participant to perform its obligations under the LLC Agreement,
     this Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make
     its investment pursuant to this Agreement, directly or indirectly,
     constitutes or is deemed to constitute assets (within the meaning of ERISA
     and any applicable rules, regulations and court decisions thereunder) of
     any "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would

                                      19

<PAGE>

     violate the Securities Act, but without prejudice, however, to the right
     of the Owner Participant at all times to sell or otherwise dispose of all
     or any part of such Member Interest under an exemption from registration
     available under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it
     has directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering of
     which for the purposes of the Securities Act would be deemed to be part of
     the same offering as the offering of the Member Interest, the Lessor Notes
     or the Certificates or any part thereof or solicited any offer to acquire
     any of the same in violation of the registration requirements of Section 5
     of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing
     this Agreement, the Owner Participant is not an "electric utility",
     "electric utility company", "public utility", "public-utility company",
     "holding company" or a "subsidiary company" or "affiliate" of any of the
     foregoing, under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment
     company" or a company controlled by an "investment company" within the
     meaning of the Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact
     or circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease
Indenture Company. The Lease Indenture Company and the Indenture Trustee hereby
severally represent and warrant that as of the date of execution and delivery
hereof and as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking
     association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Indenture Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Collateral Trust Indenture, to enter
     into and perform its obligations under the Collateral Trust Indenture,
     this Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc.   (1)   (i) This Agreement has been
     duly authorized, executed and delivered by the Indenture Trustee and the
     Lease Indenture Company, and (ii) assuming the due authorization,
     execution and delivery of this Agreement by each party hereto other than
     the Indenture Trustee and the Lease Indenture Company, this Agreement
     constitutes a legal, valid and binding obligation of the Lease Indenture
     Company and the Indenture Trustee, enforceable against the Lease Indenture
     Company or the Indenture Trustee, as the case may be, in accordance with
     its terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     rights of creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and
delivered will be duly authorized, executed and delivered by the Indenture
Trustee, and (ii) assuming the due authorization, execution and

                                      20

<PAGE>

delivery of each of the other Operative Documents by each party thereto
other than the Indenture Trustee, each of the other Operative Documents to
which the Indenture Trustee is or will be a party constitutes or when executed
and delivered will be a legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, of this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Lease Indenture Company, in
     its individual capacity or as Indenture Trustee, as the case may be, of
     the transactions contemplated hereby and thereby, and the compliance by
     the Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State of
     Connecticut or the United States of America governing the Lease Indenture
     Company or the banking or trust powers of the Lease Indenture Company, or
     its articles of association or by-laws, or contravene the provisions of,
     or constitute a default by the Lease Indenture Company under or pursuant
     to any indenture, mortgage or other material contract, agreement or
     instrument to which the Lease Indenture Company is a party or by which the
     Lease Indenture Company or its property is bound, or result in the
     creation of any Lien attributable to the Lease Indenture Company upon the
     Indenture Estate, the Facility Site or any interest therein or any part
     thereof (other than the Lien of the Collateral Trust Indenture), which
     would materially adversely affect the ability of the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the security interest of the Indenture Trustee in the
     Indenture Estate; provided, however, that no representation or warranty is
     made with respect to the right, power or authority of the Lease Indenture
     Company or the Indenture Trustee to act as operator of the Facility
     following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if

                                      21

<PAGE>

     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Lease Indenture Company to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or could reasonably be expected to materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the Lien of the Indenture Trustee on the Indenture
     Estate.

Representations, Warranties and Covenants of the Pass Through Trustees
and the Pass Through Company. The Pass Through Company and the Pass Through
Trustees hereby severally represent and warrant that as of the date of
execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking
     association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Pass Through Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Pass Through Trust Agreements, to
     enter into and perform its obligations under the Pass Through Trust
     Agreements, this Agreement and each of the other Operative Documents to
     which it is or will be a party.

Due Authorization, Enforceability; etc.

(A)   This Agreement has been duly authorized, executed and delivered by the
     Pass Through Trustees and the Pass Through Company and (B) assuming the
     due authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may
     be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)   Each of the other Operative Documents to which the Pass Through
     Company or any Pass Through Trustee is or will be a party has been or when
     executed and delivered will be duly authorized, executed and delivered by
     the Pass Through Company or such Pass Through Trustee, as the case may be,
     and (B) assuming the due authorization, execution and delivery of each of
     the other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of the
     Pass Through Company or such Pass Through Trustee, enforceable against the
     Pass Through Company or such Pass Through Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company,
     in its individual capacity or as Pass Through Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or will
     be a party, the consummation by the Pass

                                      22

<PAGE>

     Through Company, in its individual capacity or as Pass Through Trustee, as
     the case may be, of the transactions contemplated hereby and thereby, and
     the compliance by the Pass Through Company, in its individual capacity or
     as Pass Through Trustee, as the case may be, with the terms and provisions
     hereof and thereof, do not and will not contravene any Applicable Law of
     the United States of America or the State of Connecticut governing the
     Pass Through Company or the banking or trust powers of the Pass Through
     Company, or its organizational documents or by-laws, or contravene the
     provisions of, or constitute a default by the Pass Through Company under,
     or result in the creation of any Lien attributable to the Pass Through
     Company upon the Certificates or any indenture, mortgage or other material
     contract, agreement or instrument to which the Pass Through Company is a
     party or by which the Pass Through Company or its property is bound which
     would materially adversely affect the ability of the Pass Through Company,
     in its individual capacity or as Pass Through Trustee, as the case may be,
     to perform its obligations under this Agreement or the other Operative
     Documents to which it is a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or the
     security interest of any Pass Through Trustee in the Indenture Estate;
     provided, however, that no representation is made with respect to the
     right, power or authority of the Pass Through Company or any Pass Through
     Trustee to act as operator of the Facility following a Lease Event of
     Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will be
     a party, other than any such authorization or approval or other action or
     notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the
Pass Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                      23

<PAGE>

such proof of satisfaction of these conditions as any other Transaction
Party shall reasonably request.

                                      24

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 520 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent
contained in the Certificate Purchase Agreement shall have been satisfied or
waived by the Initial Purchasers and such Initial Purchasers shall have
purchased the Certificates pursuant to and in accordance with, the terms of the
Certificate Purchase Agreement and the Proceeds shall have been provided to the
Owner Lessor through the purchase by the Pass Through Trustees of the
applicable Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be
made the Equity Investment available to the Owner Lessor at the place and in
the manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have
received certified copies of the organizational documents of each of the other
parties hereto and resolutions of the board of directors of each such other
corporate party duly authorizing the transaction and such documents and such
evidence as each party may reasonably request in order to establish the
authority of each such other party to consummate the transactions contemplated
by this Agreement, the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein or therein set
forth and the incumbency of all officers signing any of the Operative
Documents. Each of the foregoing documents shall be reasonably satisfactory to
each recipient thereof.

Representations and Warranties. The representations and warranties of
each party hereto set forth in Section 3 shall be true and correct on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default,
Lease Indenture Event of Default, Event of Loss or Burdensome Buyout Event or
event that with the passage of time or giving of notice or both would
constitute a Lease Event of Default, Lease Indenture Event of Default, Event of
Loss or Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG
Orders and the FERC Orders set forth in clause (v) of the definition of "FERC
Orders" set forth in Appendix A hereto, the Owner Participant and the Pass
Through Trustees shall have received evidence of receipt of the FERC Orders.

                                      25

<PAGE>

Consents.   (a)   All permits, licenses, approvals and consents (including
     management, credit and other internal approvals of the Transaction
     Parties, but excluding the Third Party Consents referred to in (b) below)
     necessary to consummate the Overall Transaction and to own and operate the
     Facility as currently operated shall have been duly obtained and shall be
     in full force and effect and in the form and substance satisfactory to
     each of the Transaction Parties.

Each Third Party Consent shall have been obtained and shall be in full
     force and effect substantially in the form attached hereto as Exhibit O
     which is applicable to the relevant third party granting such consent;
     provided that if any Third Party Consent is not substantially in the form
     attached hereto as Exhibit O, an authorized officer of Calpine shall
     provide a certificate to the Owner Lessor, the Indenture Trustee and the
     Pass Through Trustee certifying that any differences between the form of
     such consent attached hereto and the executed version are not materially
     adverse to any of the Indenture Trustee, the Pass Through Trustee, the
     Noteholders, the Certificateholders or the Owner Lessor.

                                      26

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by
any Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the FERC Owner Lessor EWG Orders and the FERC Orders set forth in clause (v) of
the definition of "FERC Orders" set forth in Appendix A hereto, all Applicable
Permits required to be in effect on the Closing Date in connection with the
consummation of the transactions contemplated by the Operative Documents shall
have been issued and shall be in full force and effect; and all such Applicable
Permits shall be final, in full force and effect on the Closing Date.

Insurance. Insurance (including all related endorsements) complying with
the requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's
and BB+ by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture
Trustee and the Pass Through Trustees shall have received copies of the
Environmental Reports which shall be in form and substance satisfactory to such
parties. The Facility Lessee shall cause the Environmental Consultant to
deliver at the same time a reliance letter addressed to the Owner Lessor, the
Manager and the Owner Participant allowing them to rely on such reports as if
addressed to each of them.

Surveys. The Owner Participant shall have received a bringdown certificate
(which certificate shall be in form and substance satisfactory to the Owner
Participant) from the surveyor with respect to its survey of the Facility Site
dated February 22, 2000.

Appraisal; Condition of the Facility. The Owner Participant shall have
received the Closing Appraisal prepared by the Appraiser addressed and
delivered only to the Owner Participant and in form and substance satisfactory
to the Owner Participant, together with a letter of the Appraiser certifying
that its conclusions set forth in the Closing Appraisal are true and correct as
of the Closing Date. The Indenture Trustee, the Pass Through Trustees and the
Initial Purchasers shall have received a copy of the verification of value,
useful life and estimated residual value prepared by the Appraiser in
connection with the appraisal of assets subject to the Facility Lease, each of
which will be reasonably satisfactory to the recipient.

Letter from the Appraiser. Each of the Owner Lessor and the Manager shall
have received a satisfactory letter of the Appraiser setting forth the
conclusions of the Closing Appraisal as to the fair market value and remaining
economic useful life of the Facility as of the Closing Date and the methodology
of determination thereof.

                                      27

<PAGE>

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall
have received the opinion, dated the Closing Date, of Dewey Ballantine LLP
addressed and delivered only to the Owner Participant as to certain tax matters
and in form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the sale by the Facility Lessee of its interest in the Undivided Interest to
the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to the
Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C., Wisconsin counsel to the Facility Lessee, the Owner
Participant, the Owner Lessor and the Initial Purchasers, (e) Karen Scowcroft,
Esq., in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP,
counsel to the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP,
counsel to the Lease Indenture Company and the Indenture Trustee, (h) Bingham
Dana LLP, counsel to the Pass Though Trustees and the Pass Through Company, and
(i) Ray Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case
in form and substance reasonably satisfactory to each Transaction Party. Each
such Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

Recordings and Filings. All filings and recordings listed on Schedule 4.20
hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
Wisconsin and any other documents as may be reasonably requested by counsel to
the Owner Participant, the Indenture Trustee or the Pass Through Trustees to
perfect (i) the Owner Lessor's Interest, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by
on or before the Closing Date under the Operative Documents shall have been
satisfied or waived and the Owner Participant shall be satisfied that the
Facility shall be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                      28

<PAGE>

No Changes in Applicable Law. No change shall have occurred in Applicable
Law or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or would materially adversely affect the Facility or the
Facility Site. On the Closing Date, each Certificateholder's purchase of Lessor
Notes shall (i) be permitted by the laws and regulations of each jurisdiction
to which such Certificateholder is subject, (ii) not violate any Applicable Law
(including Regulation U, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject any Certificateholder to any tax, penalty
or liability under or pursuant to any Applicable Law, which Applicable Law was
not in effect on the date hereof. If requested by any Certificateholder, such
Certificateholder shall have received an Officer's Certificate of the Owner
Lessor, in form and substance satisfactory to such Certificateholder,
certifying as to such matters of fact as such Certificateholder may reasonably
specify to enable such Certificateholder to determine whether such purchase is
so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during
the Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before,
or contemplated to be made on, the Closing Date (other than adjustments to
reflect a change in Transaction Costs or the actual interest rates on the
Certificates) shall not cause either (i) the pre-tax net present value of Basic
Rent discounted at 6% to increase by more than 100 basis points or (ii) the
total Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

                                      29

<PAGE>

Lien Search. The Owner Participant (with a copy to the Indenture Trustee)
shall have received Lien searches with respect to the Facility Lessee in form
and substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties
or their properties before any court or Governmental Entity which,
individually or in the aggregate, would, if adversely determined, be reasonably
likely to have a Material Adverse Effect (including, but not limited to, the
Facility Lessee, the Owner Participant, the Owner Lessor or the
Certificateholders being subject to or not exempted from regulation as a
"public utility company" or a "holding company" under PUHCA or under state laws
and regulations respecting the rates or the financial and organizational
regulation of electric utilities), nor shall any order, judgment or decree have
been issued or proposed by any Governmental Entity at the time of the Closing
Date, to set aside, restrain, enjoin or prevent the consummation of the
Operative Documents or any of the Transactions contemplated by any of the
Operative Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Facility Lessee, the Owner Participant and the Initial
Purchasers and their respective special counsel, and such parties and their
respective special counsel shall have received all such information and
counterpart originals or certified or other copies of such documents and
certificates as each such party or its special counsel may reasonably request
in connection with the matters contemplated hereby and by the other Operative
Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for
which an adjustment has not been made pursuant to Section 12 of this Agreement.

Payment of Fees and Expenses. Without limiting the provisions of Section
2.3, all Transaction Costs invoiced at least 3 Business Days prior to Closing
to the Owner Participant with a copy to the Facility Lessee shall be paid
promptly after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

                                      30

<PAGE>

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility
Lessee covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents, (iv) unsecured indemnities provided

                                      31

<PAGE>

by, and other unsecured contingent obligation incurred by, the Facility
Lessee in connection with either (x) easements relating to its applicable
interest in the Facility or the Facility Site or (y) any contract, agreement or
other document or instrument relating to the RockGen project which is entered
into in the ordinary course of the Facility Lessee's business, (v) customary
indemnities in favor of the title insurers providing the title policies
covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its
rights or obligations except as permitted by the Operative Documents.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees,
costs and expenses of the Lessor Manager (including the reasonable compensation
and expenses of its counsel), as set forth in a letter agreement approved by
the Facility Lessee arising out of the Owner Lessor's and the Owner
Participant's discharge of their duties under or in connection with the
Operative Documents, as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly
permitted under this Agreement, the Facility Lessee shall (a) perform and
comply with all of its contractual obligations under the Operative Documents to
which it is a party and all other material agreements and contracts by which it
is bound, unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations,
howsoever arising, as and when due and payable except such as may be contested
in good faith or as to which a bona fide dispute may exist; provided, that (i)
adequate reserves consistent with GAAP requirements are maintained for such
contested or disputed obligations or (ii) the Facility Lessee otherwise
establishes and maintains adequate security arrangements for the payment of
such contested or disputed obligations which are reasonably acceptable to the
Owner Participant.

Books, Records, Access. The Facility Lessee shall maintain or cause to be
maintained adequate books, accounts and records with respect to itself, the
Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or Lease
Event of Default) expense to the Facility Lessee to inspect, the Facility and
Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

                                      32

<PAGE>

Other Information.

The Facility Lessee shall furnish, or shall cause to be furnished to, the
     Owner Lessor, the Owner Participant and, so long as the Lien of the
     Collateral Trust Indenture has not been terminated or discharged, the
     Indenture Trustee and the Pass Through Trustees, and their respective
     authorized representatives from time to time such information as such
     party shall reasonably request concerning the Facility and Facility Site
     including information concerning the condition, operation, maintenance and
     use of the Facility and Facility Site and such other financial or
     operating information as it shall reasonably request and which is
     routinely made available to creditors of the Facility Lessee, to the
     extent it possesses such information; provided that, the Facility Lessee
     reserves the right not to provide any information that is not otherwise
     publicly available to any transferee Owner Participant (or its Owner
     Lessor) if it reasonably believes in its good faith judgment that such
     transferee Owner Participant or any Affiliate thereof is a competitor or
     is an Affiliate of a competitor of the Facility Lessee or its Affiliates
     in the competitive power market, unless, before receiving any such
     information, such transferee Owner Participant shall have put in place (to
     the reasonable satisfaction of the Facility Lessee) appropriate
     confidentiality arrangements. To the extent such information consists of
     information contained in records kept by the Facility Lessee or any
     Affiliate, such information shall be furnished without cost to the
     recipient.

          (b)   The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the
Indenture Trustee promptly in writing of the occurrence of any Significant
Lease Default, Lease Event of Default or Lease Indenture Event of Default (to
the extent the Facility Lessee has Actual Knowledge of any such Lease Indenture
Event of Default) and, as soon as practicable thereafter, will provide a
description thereof and a statement as to the actions, if any, the Facility
Lessee proposes to take with respect thereto.

Warranty of Title to Facility Site.

Each Facility Lessee shall maintain good and valid fee, title to, or
     easement or other surface rights in, as applicable, its Facility Site,
     subject only to Permitted Liens.

Each Facility Lessee shall maintain good and valid title to all of its
     other properties and assets (other than properties and assets disposed of
     in the ordinary course of business including any sale, transfer or other
     disposition of any obsolete, surplus or worn out equipment, parts,
     supplies or other materials or assets to the extent permitted by the
     Operative Documents), subject only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the

                                      33

<PAGE>

Internal Revenue Service to the effect that such Plan (and trust, if any) meets
the requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at
all times be in compliance in all material respects with applicable provisions
of ERISA and the Code, and (b) within fifteen (15) days after (i) the
occurrence of any reportable event (as defined in Section 4043(c) of ERISA)
with respect to any Plan, (ii) the complete or partial withdrawal by the
Facility Lessee or any ERISA Affiliate from any Multiemployer Plan, (iii) to
the extent the Facility Lessee or any ERISA Affiliate is notified that any
Multiemployer Plan has entered reorganization status, has become insolvent, or
has terminated (or any Multiemployer Plan notifies the Facility Lessee or any
ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA, (iv)
the institution of any action to terminate a Plan in a distress termination
under Section 4041(c) of ERISA, or (v) in the case of the breach of any other
covenant contained in this Section 5.11, the Facility Lessee shall report such
occurrence or breach to the Indenture Trustee, the Pass Through Trustees, the
Owner Lessor and the Owner Participant and furnish such information as such
Persons may reasonably request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents,
it will not enter into or become bound by any contract or agreement providing
for the sale of energy produced from the Facility, or the purchase of services
to be performed at, for or in connection with, the Facility or any other
contract or agreement relating to the Facility that (i) has a term that extends
beyond the Basic Lease Term or the scheduled expiration of any Renewal Lease
Term then in effect or elected by the Facility Lessee, unless such contract or
agreement may be terminated by the Facility Lessee without material costs or
obligation prior to the Basic Lease Term or the scheduled expiration of such
Renewal Lease Term, as the case may be or (ii) results in any lien,
encumbrance, restriction or agreement relating to the Facility which extends
beyond the expiration of the Facility Lease Term or which binds the Facility or
the owner of the Facility beyond the expiration of the Facility Lease Term;
provided that nothing in this Section 5.12 shall prevent the Operator from
entering agreements to operate the Facility in accordance with the Operative
Documents.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site, or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

Investments. The Facility Lessee shall not make or permit to remain outstanding
any advances, loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, except Permitted
Investments.

                                      34

<PAGE>

Survey. The Facility Lessee shall use diligent and commercially reasonable
efforts to deliver a copy of the Survey as soon as practicable, such survey to
be an ALTA survey or other survey in form and substance reasonably satisfactory
to the Owner Participant, provided that the failure to do so shall not
constitute, in whole or in part, the basis of any default under any Operative
Document.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents. The Facility Lessee shall not without the
prior written consent of the Owner Participant and, except as otherwise
provided in Section 8 of the Collateral Trust Indenture and so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee, (a) cause or consent to or (b) permit, any amendment,
modification, extension, termination, variance or waiver of timely compliance
with any terms or conditions of any Operative Document.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are

                                      35

<PAGE>

established and maintained in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties
or other costs relating thereto, or other adequate provision for the payment
thereof shall have been made, and (b) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
immediately paid after resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or the Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) or (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Lease Indenture Company,
the Pass Through Trustees, the Pass Through Company or any Certificateholder,
(iv) the Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
Trustee, the Lease Indenture Company, the Pass Through Trustees, the Pass
Through Company or any Certificateholder being subjected to any unindemnified
civil liability or of the Owner Participant or the Owner Lessor being subject
to regulation as a public utility under Applicable Law, or (v) any Material
Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture

                                      36

<PAGE>

Trustee or the Pass Through Trustees such information with respect to the
Facility or the Facility Site or the transactions contemplated by the Operative
Documents to which the Facility Lessee is a party as may be required to enable
the Owner Participant, the Owner Lessor or, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee or the Pass Through Trustees, as the case may be, to timely
file with any Governmental Entity any reports and obtain any licenses or
permits required to be filed or obtained by the Owner Lessor under any
Operative Document, the Owner Participant as the owner of the Member Interest
or the Indenture Trustee. The Facility Lessee will preserve, protect, defend
and enforce, or cause to be preserved, protected, defended and enforced, the
rights of itself, the Owner Lessor and the Owner Participant under each and
every Operative Document to which it is a party (including by assignment and
assumption of the rights thereunder), including using commercially reasonable
efforts to prosecute suits to enforce any such rights and, at the request of
Indenture Trustee, so long as the Lien of the Collateral Trust Indenture has
not been discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the
Facility Lessee's reasonable expense, enforce, in its own name, or the Facility
Lessee's name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or related or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

Support Arrangements. The Facility Lessee agrees that, to the extent that the
rights described in Section 3.1(n) which have already been made available to
the Owner Lessor prior to the expiration or termination of the Facility Lease
Term, and any rights assigned pursuant to the last sentence of this Section
5.30, are insufficient to permit on a commercially practicable basis during the
period following the expiration or termination of the Facility Lease Term,
until the end of the Facility's useful life as set forth in the Closing
Appraisal, (i) the location, occupation, interconnection (including with
respect to electricity, steam, gas and water), maintenance and repair of the
Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same

                                      37

<PAGE>

manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the Facility Site Lease, or earlier at the option of the Owner
Lessor. The Facility Lessee shall also, subject to obtaining any required third
party consents, assign to the Owner Lessor upon termination of the Facility
Lease any support or similar agreements to the extent relating to the Facility
it has with third parties.

Insurance. The Facility Lessee shall comply with the covenants set forth in
Schedule 5.31.

Tax Status. The Facility Lessee and each Person owning an Ownership Interest
therein will not voluntarily take any action to cause the Facility Lessee to be
subject to taxation as a separate entity for federal income tax purposes.

Transmission Assets.

If and to the extent that on the Closing Date the FERC Order referred to in
     clause (v) of the definition thereof has not been obtained with respect
     to the jurisdictional facilities referred to therein (which facilities are
     identified in Exhibit A as Transmission Assets (the "Transmission
     Assets")), the Owner Participant shall, upon 5 days' prior written notice
     to the Facility Lessee, and subject to the grant of the aforesaid order,
     cause the Owner Lessor to acquire an undivided interest equal to the Owner
     Lessor's Percentage in the Facility Lessee's right, title and interest in
     the Transmission Assets, for a price equal to $1.00. Upon payment by the
     Owner Lessor of such amount, the Facility Lessee shall execute and deliver
     such documentation as is reasonably requested by the Owner Lessor to
     transfer such undivided interest in the Facility Lessee's right, title and
     interest in the Transmission Assets to the Owner Lessor. Upon such
     transfer such Undivided Interest shall be and shall be deemed to be an
     integral part of the Undivided Interest (to the extent constituting a
     portion of the Facility) and the Ground Interest (to the extent
     constituting a portion of the leasehold interest in the Facility Site) for
     all purposes of the Operative Documents without the necessity of amending
     or supplementing any Operative Document, subject nevertheless to Section
     14.15 hereof.

Without limiting Section 10 hereof or Section 4.2 of the Facility Lease,
     the Facility Lessee agrees that from and after the Closing Date and until
     the earlier to occur of (A) the transfer referred to in clause (a) above
     and (B) the termination of the Facility Lease, the Facility Lessee shall
     make available to the Owner Lessor, for no additional compensation, such
     rights in the Transmission Assets solely to the extent as shall be
     necessary so that the representation in Section 3.1(n) will be correct to
     the same extent as if such transfer had occurred on the Closing Date.

                                      38

<PAGE>

COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

not amend, supplement, or otherwise modify Section 9.1, 9.3, 13.1 or
     clause (i) of Section 13.2 of the LLC Agreement without the prior written
     consent of the Facility Lessee so long as no Significant Lease Default or
     Lease Event of Default has occurred and is continuing and the Indenture
     Trustee so long as the Lien of the Collateral Trust Indenture has not
     been terminated or discharged.

                                      39

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents in any manner or
(c) except as provided in Section 11 hereof or Section 2.10 or Section 5.6 of
the Collateral Trust Indenture, take any action to prepay or refund the Lessor
Notes or amend any of the payment terms of the Lessor Notes without, in each
case, the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default shall have occurred and be
continuing and, in the case of clause (a) or (b), the Indenture Trustee so long
as the Lien of the Collateral Trust Indenture has not been terminated or
discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

Bankruptcy of Owner Lessor. Each of the Trust Company, the Lessor Manager and
the Owner Lessor hereby agrees severally and as to itself only that it shall
not voluntarily take any action that shall, or cause any action to be taken
that is intended to, submit the Owner Lessor, as debtor, to any proceeding
under any Applicable Law involving bankruptcy, insolvency, reorganization or
other laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner

                                      40

<PAGE>

Lessor shall not take any such action unless the Indenture Trustee shall have
given its prior written consent to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent
     of the Indenture Trustee; provided, however, that the Owner Participant
     may, subject to Section 7.6, assign, convey or transfer all or any part of
     its interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees
     shall have received an opinion(s) of counsel (including an opinion with
     respect to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of
     Section 7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor Owner
     Participant's obligations hereunder, pursuant to an OP Parent Guaranty or
     (B) a Person which meets, or the payment and performance obligations of
     which with respect to the interest being transferred under the Operative
     Documents are guaranteed (pursuant to a OP Parent Guaranty) by a Person
     (the transferor Owner Participant or such other guarantor, the "Transferee
     Guarantor") which meets, the following criteria: (1) the tangible net
     worth of the Transferee or Transferee Guarantor, is at least equal to $75
     million calculated in accordance with GAAP; and (2) unless waived in
     writing by the Facility Lessee prior to such transfer, such Transferee is
     not a Competitor of Calpine or in material litigation against the Facility
     Lessee or any Affiliate of the Facility Lessee without the consent of the
     Facility Lessee; and

                                      41

<PAGE>

upon consummation of such transfer, there shall not be more than four (4)
     Owner Participants for the Overall Transaction; provided that any related
     Owner Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of
     Calpine, Calpine shall provide to the transferor Owner Participant on or
     prior to the Closing Date a list of entities which Calpine reasonably
     believes in its good faith judgment are competitors of Calpine or any of
     its Affiliates, in the business in which Calpine or any of its Affiliates
     is engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax
     consequence to the Owner Lessor or the Owner Participant resulting from
     any transfer pursuant to this Section 7.1 and the Pricing Assumptions
     shall not be changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee
     and the Facility Lessee ten (10) Business Days' prior written notice of
     such transfer, specifying the name and address of any proposed Transferee
     and such additional information as shall be necessary to determine whether
     the proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and expenses
     in connection with any such transfer or proposed transfer), including any
     of the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such
     Transferee shall (x) be deemed the "Owner Participant" for all purposes,
     and (y) enjoy the rights and privileges and perform the obligations of the
     Owner Participant hereunder and under each of the OP Assignment and
     Assumption Agreement, the Calpine Guaranty and each other Operative
     Document to which such Owner Participant is a party, and each reference in
     this Agreement,

                                      42

<PAGE>

     the Calpine Guaranty and each other Operative Document to the "Owner
     Participant" shall thereafter be deemed to include such Transferee for all
     purposes and (ii) the transferor Owner Participant and the OP Guarantor,
     if any, of such transferor Owner Participant's obligations shall be
     released from all obligations hereunder and under each other Operative
     Document to which such transferor or OP Guarantor is a party or by which
     such transferor Owner Participant or OP Guarantor is bound to the extent
     such obligations are expressly assumed by a Transferee meeting the
     requirements of this Section 7.1; provided, however, that in no event
     shall any such transfer waive or release the transferor or its OP
     Guarantor from any liability accruing or existing in respect of any period
     occurring on or prior to or occurring simultaneously with such transfer.

The transfer restrictions set forth in Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative Documents.
     In the case of such a transfer of equity ownership interests which
     satisfies such restrictions of this Section 7.1, the Owner Participant's
     obligations under the Operative Documents shall continue, but the Owner
     Participant shall, except in the case of a transfer to a transferee
     described in clause (a)(iii)(A) above, procure a new OP Parent Guaranty
     from a guarantor meeting the requirements of clause (a)(iii)(B) above.

                                      43

<PAGE>

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in respect of, the Owner Lessor
under the Bankruptcy Code, or any other applicable federal or state law or the
law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that

                                      44

<PAGE>

such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to
the Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and
right of first refusal provisions of this Section prior to entering into such
revised agreement; provided that, for such revised offer, the Notice Period
shall be 10 Business Days from the date of such new notice, and the Agreement
Period shall not exceed 45 days from the date of the Facility Lessee's notice
accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other RockGen Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other RockGen Facility Lease.

Prohibition on Fundamental Changes. If the Owner Participant is an entity which
has as its sole (or substantially equivalent to sole) business activity, the
participation in the transactions contemplated by the Operative Documents, the
Owner Participant shall not change its form of organization and shall not enter
into or engage in any business other than as contemplated by the Operative
Documents and the activities related thereto.

Appointment of Successor Lessor Manager. Notwithstanding any other provision of
this Agreement, a successor Lessor Manager shall not be appointed by the Owner
Participant without the consent of the Facility Lessee and, so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged and the
Indenture Trustee unless such successor Lessor Manager (a) meets the
requirements of the LLC Agreement, (b) has a combined capital and surplus of at
least $150 million, and (c) the Facility Lessee and, so long as Lien of the
Collateral Trust Indenture has not been terminated or discharged, the Indenture
Trustee, shall have received at the expense of Facility Lessee on an After-Tax
Basis: (i) an opinion or opinions of counsel, such counsel and such opinion to
be reasonably acceptable to such parties, to the effect that no regulatory
consents or approvals are required, or (ii) such other documentation reasonably
satisfactory to the Facility Lessee or the Indenture Trustee as the case may be.

Cooperation. The Owner Lessor agrees, and each of the Owner Participant and the
Lessor Manager agree to cause the Owner Lessor to, at the request of the
Facility Lessee and at the sole cost and expense of the Facility Lessee on an
After-Tax Basis, take such actions as may be necessary for the Owner Lessor to
take as the holder of the leasehold interest in the Facility for purposes of
obtaining the valid and effective issue, transfer or amendment, as the case may
be, of all Governmental Approvals to the extent the same are required for the
use, ownership, operation or maintenance of the Facility, the Facility Site,
the Undivided Interest, the Ground Interest or any Component by the Facility
Lessee or any permitted assignee of the Facility Lessee in the manner
contemplated by the Operative Documents, except to the extent the same involves
any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of

                                      45

<PAGE>

the use, operation or maintenance of the Facility or the Facility Site in any
material respect, (ii) the risk of criminal liability being incurred by the
Owner Lessor, the Owner Participant, the Equity Investor or the OP Guarantor,
or (so long as the Lessor Notes are outstanding and the Lien of the Lease
Indenture has not been discharged) the Indenture Trustee or the Pass Through
Trustee or any of their respective Affiliates or (iii) material risk of any
material adverse effect on the interests of the Owner Lessor, the Owner
Participant, the Equity Investor or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee or the Pass Through Trustee or any of
their respective Affiliates (including, without limitation, subjecting any such
Person to regulation as a public utility under any applicable law. The Facility
Lessee shall pay on an After-Tax Basis all reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of counsel) of
the Owner Lessor and each other Person party to an Operative Document incurred
in connection with any such action. It is understood and agreed that, with
respect to the action requested of it, and taken by it, under this Section 7.9,
the Owner Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b)
     below, the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner Lessor,
     the Trust Company, in its individual capacity, the Lessor Manager, the
     Lease Indenture Company in its individual capacity, the Indenture Trustee,
     each Certificateholder, the Pass Through Company in its individual
     capacity, the Pass

                                      46

<PAGE>

     Through Trustees, and their respective Affiliates, successors, assigns,
     agents, directors, officers and employees (each an "Indemnitee") against
     any and all Claims (whether or not any of the transactions contemplated by
     the Operative Documents are consummated) imposed on, incurred or suffered
     by or asserted against any Indemnitee in any way relating to or resulting
     from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation,
     rebuilding, warranty, ownership, possession, maintenance, repair, lease,
     condition, alteration, modification, restoration, refurbishing, return,
     purchase, sale or other disposition, insuring, sublease, or other use or
     non-use of the Undivided Interest, the Ground Interest, the Facility, the
     Facility Site, or any Component or any portion of any thereof or any
     interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine
     and any other business or affairs conducted at the Facility or the
     Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or
     condition of, or improvement to, the Facility, the Facility Site, or any
     Component, or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, the Facility Site Sublease,
     or any other Operative Document, the execution or delivery thereof or the
     performance, enforcement, attempted enforcement or amendment of any terms
     thereof, or the transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility, the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes,
     the Certificates, any Additional Lessor Notes, any Additional Certificates
     or any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction
     Parties in connection with amendments or supplements to the Operative
     Documents requested by the Facility Lessee, or resulting from the actions
     of the Facility Lessee or in connection with any Lease Default or Lease
     Event of Default;

the imposition of any Lien other than with respect to a particular
     Indemnitee (or a Related Party), an Owner Lessor's Lien, an Owner
     Participant's Lien or Indenture Trustee's Lien attributable to such
     Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any
     other Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents or the interests of the Owner Participant, the Owner
     Lessor, the Indenture Trustee or the Pass Through Trustees, or under the
     Operative Documents or the presence, use, storage, release, threatened
     release, transportation, arrangement for transportation, treatment,
     arrangement for treatment, manufacture, disposal or arrangement for
     disposal of any Hazardous Substance in,

                                      47

<PAGE>

     at, under or from the Facility or the Facility Site, including, for the
     avoidance of doubt, any of the foregoing existing or occurring prior to
     the Closing Date;

the non-performance or breach by the Facility Lessee or any Calpine Party
     of any obligation contained in this Agreement or any other Operative
     Document or the falsity or inaccuracy of any representation, warranty or
     obligation of any such Person contained in this Agreement or any other
     Operative Document;

the continuing fees (if any) and expenses of the Owner Lessor and the
     Lessor Manager (including the reasonable compensation and expenses of
     their respective counsel) arising out of the Owner Lessor's discharge of
     its duties under or in connection with the Operative Documents (other than
     the Facility Lease and the Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company,
     the Indenture Trustee, the Pass Through Company, the Pass Through
     Trustees, (including the reasonable compensation and expenses of their
     respective counsel, accountants and other professional persons) arising
     out of the discharge of their respective duties as provided in the
     Operative Documents; or

any Applicable Permits including any obligations imposed by FERC in
     connection with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility in compliance with
     the provisions of the Facility Lease or (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Facility Site Lease, the
     performance by the Facility Lessee of all obligations required to be
     performed by it thereunder, or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer,
     sale, assignment, transfer or other disposition (voluntary or involuntary)
     by or on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph
     (ii) shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition
     of any such rights or interests)

                                      48

<PAGE>

     based on what the relevant transferor Indemnitee would have received had
     no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or (ii) any violation of Applicable Law by any
     such Person except to the extent attributable to a violation of Applicable
     Law by the Facility Lessee or any other Calpine Party or to any breach by
     the Facility Lessee or such other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

as to any Indemnitee, any Claim to the extent attributable to the
     noncompliance of such Indemnitee or a Related Party, with any of the terms
     of, or any misrepresentation or breach of warranty by such Indemnitee or
     Related Party contained in any Operative Document made by such Indemnitee
     or Related Party or any breach by such Indemnitee or a Related Party of
     any covenant contained in any Operative Document or any breach by such
     Indemnitee or a Related Party of any covenant contained in any Operative
     Document made by such Indemnitee or Related Party except to the extent
     attributable to any breach by the Facility Lessee or any other Calpine
     Party of any covenant, representation or warranty contained in any
     Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising
     from an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not
     the Facility Lessee is required to indemnify therefor pursuant to Section
     9.2 hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance
     with the LLC Agreement any amounts received by it under the Operative
     Documents and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation
     or liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the
     Lessor Notes, Additional Lessor Notes, or the corresponding payments under
     the Certificates or any Additional Certificates; and

                                      49

<PAGE>

any Claim relating to the payment of any amount which constitutes
     Transaction Costs which the Owner Participant is obligated to pay pursuant
     to Section 2.3(a) hereof or any other amount to the extent such Indemnitee
     or a Related Party has expressly agreed in any Operative Document to pay
     such amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be
paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section
     9.1, in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other Indemnitee shall
     waive its rights to indemnification (for itself and each Related Party
     thereto) in a manner reasonably acceptable to the Facility Lessee, to
     cooperate, at the sole cost and expense of the Facility Lessee, with
     insurers in exercise of their rights to investigate, defend or compromise
     such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee
     shall have Actual Knowledge thereof notify the Facility Lessee of any
     Claim as to which indemnification is sought; provided, that the failure so
     to notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this Section
     9.1, and no payment hereunder by the Facility Lessee to an Indemnitee
     shall be deemed to constitute a waiver or release of any right or remedy
     that the Facility Lessee may have against any such Indemnitee for actual
     damages resulting directly from the failure or delay of such Indemnitee to
     give the Facility Lessee such notice. Subject to the foregoing, any amount
     payable to any Indemnitee pursuant to this Section 9.1 shall be paid
     within thirty (30) days after receipt of such written demand therefor from
     such Indemnitee, accompanied by a certificate of such Indemnitee stating
     in reasonable detail the basis for the indemnification thereby sought and
     (if such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential
     information of any kind without the execution of an appropriate
     confidentiality agreement. Promptly after the Facility Lessee receives
     notification of such Claim accompanied by a written statement describing
     in reasonable detail the Claims which are the subject of and basis for
     such indemnity and the computation of the amount so payable, the Facility
     Lessee shall, without affecting its obligations hereunder, notify such
     Indemnitee whether it intends to pay, object to, compromise or defend any
     matter involving the asserted liability of such Indemnitee. The Facility
     Lessee shall have the right to investigate and so long as no Significant
     Lease Default or Lease Event of Default

                                      50

<PAGE>

     shall have occurred and be continuing, the Facility Lessee shall have the
     right in its sole discretion, to defend or compromise any Claim for which
     indemnification is sought under this Section 9.1 which the Facility Lessee
     acknowledges is subject to indemnification hereunder; provided that no
     such defense or compromise shall involve any danger of (i) foreclosure,
     sale, forfeiture or loss of, or imposition of a Lien on any part of the
     Facility, the Undivided Interest, the Ground Interest, the Facility Site,
     the Lessor Estate or the Indenture Estate or the impairment of the
     Facility or the Facility Site, in any material respect or (ii) any
     criminal liability being incurred or any material adverse effect on such
     Indemnitee; provided, further, that no Claim shall be compromised by the
     Facility Lessee on a basis that admits any criminal violation or gross
     negligence or willful misconduct on the part of such Indemnitee without
     the express written consent of such Indemnitee; and provided, further,
     that to the extent that other Claims unrelated to the transactions
     contemplated by the Operative Documents are part of the same proceeding
     involving such Claim, the Facility Lessee may assume responsibility for
     the contest or compromise of such Claim only if the same may be and is
     severed from such other Claims (and each Indemnitee agrees to use
     reasonable efforts to obtain such a severance). In the event that in the
     course of the investigation or defense of a claim, the Facility Lessee
     shall in good faith reasonably determine that it is not liable for
     indemnification with respect thereto under this Section 9.1, it may give
     notice to the applicable Indemnitee of such fact; and, in such case, any
     acknowledgment, theretofore made by the Facility Lessee of liability with
     respect to such claim under this Section 9.1 shall be deemed revoked, and
     the Facility Lessee may thereupon cease to defend such claim; provided
     that (i) the Facility Lessee shall have given the Indemnitee reasonable
     prior notice of its intention to renounce such acknowledgment, (ii) the
     Facility Lessee's conduct regarding the defense of such claim or any
     decision to withdraw from such defense shall not prejudice or have
     prejudiced the Indemnitee's ability to contest such claim (taking into
     account, among other things, the timing of the Facility Lessee's
     withdrawal and the theory or theories upon which the Facility Lessee shall
     have based its defense), and (iii) the Facility Lessee shall have given
     such Indemnitee all materials, documents and records relating to its
     defense of such claim as such Indemnitee shall have reasonably requested
     in connection with the assumption by such Indemnitee of the defense of
     such claim at the cost and expense of the Facility Lessee. In the event
     that the Facility Lessee shall cease to defend any claim pursuant to the
     preceding sentence, the Facility Lessee shall indemnify each Indemnitee,
     without regard to any exclusion that might otherwise apply hereunder, to
     the extent that the actions of the Facility Lessee in defending such claim
     or the manner or time of the Facility Lessee's election to withdraw from
     the defense of such claim shall have caused such Indemnitee to incur any
     loss, cost, liability or expense which such Indemnitee would not have
     incurred had the Facility Lessee not ceased to defend such claim in such
     manner or such time. If the Facility Lessee elect, subject to the
     foregoing, to compromise or defend any such asserted liability, it may do
     so at its own expense and by counsel selected by it. Upon the Facility
     Lessee's election to compromise or defend such asserted liability and
     prompt notification to such Indemnitee of its intent to do so, such
     Indemnitee shall cooperate at the Facility Lessee's expense with all
     reasonable requests of the Facility Lessee in connection therewith and
     will provide the Facility Lessee with all information not within the
     control of the Facility Lessee as is reasonably available to such
     Indemnitee which the Facility Lessee may reasonably request; provided,
     however, that such Indemnitee shall not, unless otherwise required by
     Applicable Law, be obligated to disclose to the Facility Lessee or any
     other Person, or permit

                                      51

<PAGE>

     the Facility Lessee or any other Person to examine (i) any income tax
     returns of the Owner Participant or (ii) any confidential information or
     pricing information not generally accessible by the public possessed by
     the Owner Participant (and, in the event that any such information is made
     available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to the
     related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without reservation
     of rights against such Indemnitee), no additional legal fees or expenses
     of such Indemnitee in connection with the defense of such Claim shall be
     indemnified hereunder unless such fees or expenses were incurred at the
     request of the Facility Lessee or such insurers. Notwithstanding the
     foregoing, an Indemnitee may participate at its own expense in any
     judicial proceeding controlled by the Facility Lessee pursuant to the
     preceding provisions, but only to the extent that such party's
     participation does not in the reasonable opinion of counsel to the
     Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the Indemnitee
     waives its rights to indemnification hereunder or (ii) the Facility Lessee
     has not acknowledged their indemnity obligation with respect thereto and
     there is a significant risk that a default judgment will be entered
     against such Indemnitee. Nothing contained in this Section 9.1(e) shall be
     deemed to require an Indemnitee to contest any Claim or to assume
     responsibility for or control of any judicial proceeding with respect
     thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee
     under this Section 9.1 is in fact paid in full by the Facility Lessee or
     an insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of

                                      52

<PAGE>

     their insurers has paid in respect of such Claim; provided that, so long
     as a Significant Lease Default or Lease Event of Default shall have
     occurred and is continuing such amount may be held by the Owner Lessor as
     security for the Facility Lessee's obligations under the Facility Lease
     and the other Operative Documents.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the
     other Transaction Parties will use their respective reasonable and
     diligent efforts to minimize Claims indemnifiable by the Facility Lessee
     under this Section 9.1, including by complying with reasonable requests by
     the Facility Lessee to do or to refrain from doing any act if such
     compliance is, in the good faith opinion of the Owner Participant, the
     Owner Lessor, or such other Transaction Party, as the case may be, of a
     purely ministerial nature or otherwise has no unindemnified adverse impact
     on the Owner Participant, the Owner Lessor, or such Transaction Party, as
     the case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees
     to indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site or any portion or
     Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground
     Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility Lessee
     or Calpine, the Facility or the Facility Site;

                                      53

<PAGE>

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Facility Site or any portion or Component thereof, or any interest
     therein;

the Facility Lease, or any other Operative Document, the execution or
     delivery thereof, any other documents contemplated thereby or the
     performance, enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, or any portion or Component thereof or any
     interest therein;

any other amount paid or payable pursuant to the Operative Documents;

the conveyance of title to the Undivided Interest; or

otherwise relating to the transactions contemplated by the Operative Documents.

          Notwithstanding anything herein to the contrary and without regard
to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall
     not extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and direct
     substitution for income taxes) or property taxes) ("Income Taxes"),
     including any such Taxes collected by way of

                                      54

<PAGE>

     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee
     that are attributable to any act, event or omission by such Tax Indemnitee
     that occurs after expiration or other termination of the Facility Lease
     and surrender of the Undivided Interest to the Owner Lessor or its
     successors (or in the case of a Certificateholder Indemnitee, Taxes
     imposed for any period after the repayment of the Lease Debt) in
     accordance with the Facility Lease, (as opposed to any act, event or
     omission occurring prior to or simultaneous with such expiration,
     termination or surrender (or, in the case of a Certificateholder
     Indemnitee, such repayment)), provided that this exclusion shall not apply
     so long as a Lease Event of Default shall have occurred and be continuing;

Taxes imposed on a Tax Indemnitee that are attributable to the gross
     negligence or willful misconduct of such Tax Indemnitee, unless such
     negligence or misconduct is imputed to such Tax Indemnitee solely as a
     result of its participation in the transactions contemplated by the
     Operative Documents and not as a result of any action or inaction by such
     Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax
     Indemnitee of any of its representations, warranties or covenants under
     any Operative Document except to the extent attributable to any breach by
     the Facility Lessee or any other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect
     assignment, sale, transfer or other voluntary disposition or an
     involuntary direct or indirect transfer or disposition arising out of or
     caused by a bankruptcy or similar proceeding for relief of debtors in
     which such Tax Indemnitee is a debtor or a foreclosure by a creditor of
     (1) in the case of the Owner Lessor or the Owner Participant, the Owner
     Participant of all or part of its Member Interest or Undivided Interest,
     (2) in the case of the Owner Lessor or the Owner Participant, the Owner
     Lessor of all or part of its interest in the Facility or the Facility Site
     (other than to a successor Lessor Manager), or (3) in the case of the
     Indenture Trustee, the Indenture Trustee of any interest in the Lease Debt
     or the Indenture Estate, or (4) in the case of the Owner Lessor or the
     Owner Participant any direct or indirect interest in the Owner Lessor or
     the Owner Participant, including by reason of an election made pursuant to
     Section 338 of the Code, in each case to the extent imposed by reason of
     any transfer described in this clause (v)(A), or (B) to the extent that,
     under law in effect on the date of the transfer such Taxes exceed the
     amount of Taxes that would be indemnified hereunder had there been no such
     assignment, sale, transfer or other voluntary disposition, unless such
     transfer or disposition occurs during the continuance of a Lease Event of
     Default or is otherwise pursuant to the Facility Lessee's exercise of its
     rights under the Operative Documents; provided that this exclusion shall
     not apply with respect to any initial syndication of interests in the
     Owner Participant accomplished prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for
     the creation or existence of any Owner Lessor's Lien or Owner
     Participant's Lien attributable to such Tax Indemnitee;

                                      55

<PAGE>

Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based
     on or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee
     is obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of
     such Tax Indemnitee to comply with certification, information,
     documentation, reporting or other similar requirements concerning the
     nationality, residence, identity or connection with the jurisdiction
     imposing such Taxes; provided that the foregoing exclusion shall only
     apply if such compliance is required by statute or regulation of the
     jurisdiction imposing such Taxes as a precondition to relief or exemption
     from or reduction in such Taxes, such Tax Indemnitee is eligible to comply
     with such requirement, the Facility Lessee shall have given such Tax
     Indemnitee timely written notice of such requirement and the Tax
     Indemnitee shall have determined in good faith that compliance with any
     such requirement shall not result in any identified non-immaterial adverse
     effect to its interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines
     resulting from a failure of such Tax Indemnitee to properly and timely
     file returns as required by a taxing authority unless such failure is
     attributable to the Facility Lessee not providing information that it is
     expressly required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment,
     modification, supplement to or waiver of any provision of, any Operative
     Document which amendment, modification, supplement or waiver was not
     requested by or consented to by the Facility Lessee, and as to which the
     Facility Lessee is not a party and the Tax Indemnitee (or, in the case of
     the Owner Participant, the Owner Lessor if acting at the express direction
     of the Owner Participant or any Related Party) is a party, provided that
     this exclusion shall not apply if such amendment, modification, supplement
     or waiver (A) was required by applicable law or the Operative Documents,
     (B) may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of

                                      56

<PAGE>

     any of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for
     the activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, use, rental or license taxes, value added taxes (except to the
     extent value added taxes are imposed in clear and direct substitution for
     income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without
     regard to paragraph (b) hereof, any payment by the Facility Lessee
     pursuant to this Section 9.2 shall be increased by amounts necessary to
     ensure that all such payments are made on an After-Tax Basis. Each payment
     required to be made by the Facility Lessee to a Tax Indemnitee pursuant to
     this Section 9.2 shall be paid either (i) when due directly to the
     applicable taxing authority by the Facility Lessee if it is permitted to
     do so, or (ii) where direct payment is not permitted, and with respect to
     gross up amounts, in immediately available funds to such Tax Indemnitee by
     the later of (A) 10 days following the Facility Lessee's receipt of the
     Tax Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the Tax
     Indemnitee describing in reasonable detail the Taxes for which the Tax
     Indemnitee is demanding payment and the computation of such Taxes), (B)
     subject to paragraph (g) below, in the case of amounts which are being
     contested pursuant to such paragraph (g), at the time and in accordance
     with a final determination of such contest or (C) in the case of any
     indemnity demand for which the Facility Lessee has requested review and
     determination pursuant to paragraph (d) below, the completion of such
     review and determination; provided, however, in no event later than the
     date which is one Business Day prior to the date on which such Taxes are
     required to be paid to the applicable taxing authority. Any amount payable
     to the Facility Lessee pursuant to paragraph (e) or (f) below shall be
     paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise
     to a payment under paragraph (e) or receives a refund or credit giving
     rise to a payment under paragraph (f), as the case may be, and shall be
     accompanied by a statement of the Tax Indemnitee computing in reasonable
     detail the amount of such payment. Upon the final determination of any
     contest pursuant to paragraph (g) below in respect of any Taxes for which
     the Facility Lessee has made a Tax Advance, the amount of the Facility
     Lessee's obligation under paragraph (a) above shall be determined as if
     such Tax Advance had not been made. Any obligation of the Facility Lessee
     under this Section 9.2 and the Tax Indemnitee's obligation to repay the
     Tax Advance will be satisfied first by set off against each other, and any
     difference owing by either party will be paid within 10 days of such final
     determination.

Independent Examination. Within 10 days after the Facility Lessee receives
     any computation from the Tax Indemnitee, the Facility Lessee may request
     in writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any

                                      57

<PAGE>

     payment by a Tax Indemnitee to the Facility Lessee pursuant to paragraph
     (e) or (f) below. The Tax Indemnitee shall cooperate with such accounting
     firm and supply it with all information reasonably necessary for the
     accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any
     other Operative Document are not within the scope of the independent
     accountant's responsibility. The fees and disbursements of such accounting
     firm will be paid by the Facility Lessee; provided that such fees and
     disbursements will be paid by the Tax Indemnitee if the verification
     results in an adjustment in the Facility Lessee's favor of 5 percent or
     more of the indemnity payment or payments computed by the Tax Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment provided
     under this Section 9.2(e) shall be deferred until the Significant Lease
     Default or Lease Event of Default has been cured), such Tax Indemnitee
     shall pay to the Facility Lessee the lesser of (A) (y) the amount of such
     Tax Benefit, plus (z) an amount equal to any United States federal, state
     or local income tax benefit resulting to the Tax Indemnitee from the
     payment under clause (y) above and this clause (z) (determined using the
     same assumptions as set forth in the second sentence under the definition
     of After-Tax Basis) and (B) the amount of the indemnity paid pursuant to
     this Section 9.2 giving rise to such Tax Benefit; provided, however, that
     any excess of (A) over (B) shall be carried forward and reduce the
     Facility Lessee's obligations to make subsequent payments to such Tax
     Indemnitee pursuant to this Section 9.2. If it is subsequently determined
     that the Tax Indemnitee was not entitled to such Tax Benefit, the portion
     of such Tax Benefit that is required to be repaid or recaptured will be
     treated as Taxes for which the Facility Lessee must indemnify the Tax
     Indemnitee pursuant to this Section 9.2 without regard to paragraph (b)
     hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of
     any Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to
     this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
     Lessee (x) the amount of such refund or credit (net of any Tax payable by
     the Tax Indemnitee as a result of the receipt or accrual of such

                                      58

<PAGE>

     refund or credit) plus (y) an amount equal to any United States federal,
     state or local income tax benefit realized by such Tax Indemnitee by
     reason of such payment to the Facility Lessee (determined using the same
     assumptions as set forth in the second sentence under the definition of
     After-Tax Basis); provided that (A) if at the time such payment is due to
     the Facility Lessee a Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing, such amount shall not be payable
     until such Significant Lease Default or Lease Event of Default has been
     cured, and (B) the amount payable to the Facility Lessee pursuant to this
     sentence shall not exceed the amount of the indemnity payment in respect
     of such refunded or credited Taxes that was made by the Facility Lessee.
     Any excess of (x) and (y) over (B) in this Section 9.2(f) shall be carried
     forward and reduce the Facility Lessee's obligations to make subsequent
     payments to such Tax Indemnitee pursuant to this Section 9.2. If it is
     subsequently determined that the Tax Indemnitee was not entitled to such
     refund or credit, the portion of such refund or credit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof. If, in connection with a refund or
     credit of all or part of any Taxes paid, reimbursed or advanced by the
     Facility Lessee pursuant to this Section 9.2, a Tax Indemnitee receives an
     amount representing interest on such refund or credit, the Tax Indemnitee
     promptly shall pay to the Facility Lessee (1) the amount of such interest
     that shall be fairly attributable to such Taxes paid, reimbursed or
     advanced by the Facility Lessee prior to the receipt of such refund or
     credit (net of Taxes payable in respect of the receipt or accrual of such
     interest) and (2) any Tax savings resulting from payments made by the Tax
     Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"),
     such Tax Indemnitee shall give the Facility Lessee written notice of such
     Tax Claim promptly after its receipt, and shall furnish the Facility
     Lessee with copies of such Tax Claim and all other writings received from
     the taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility
     Lessee will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

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               (1)   the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

               (2)   the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and

               (3)   the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessee's prior written consent
except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall consult in
good faith with the other party and its designated counsel with respect to such
Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with
     respect to a Tax Claim will be required or permitted pursuant to this
     Section 9.2, and the Facility Lessee shall be required to pay the
     applicable Taxes without contest, unless:

               (1)   within 30 days after written notice by the Tax Indemnitee
to the Facility Lessee of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessee shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,

               (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

               (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

               (4)   there is no risk of imposition of any criminal penalties
or liabilities,

               (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

               (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

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               (7)   the Tax Indemnitee, if it so requests has been provided
at the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

               (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

               (9)   if such contest is controlled by the Facility Lessee,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessee shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to such Tax, which
admission shall be binding on the Facility Lessee unless and to the extent such
contest is determined in a manner that conclusively demonstrates that the
Facility Lessee is not so liable, and

               (10)   if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary
     contained in this Section 9.2, the Tax Indemnitee at any time may elect to
     decline to take any action or any further action with respect to (and the
     Facility Lessee shall not be permitted to contest) a Tax Claim and may in
     its sole discretion settle or compromise any contest with respect to such
     Tax Claim without the Facility Lessee's consent if the Tax Indemnitee:

               (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

               (2)   promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax
     Indemnitee with respect to any Tax that is subject to indemnification
     under this Section 9.2, the Facility Lessee will (1) notify the Tax
     Indemnitee in writing of such requirement not later than 30 days prior to
     the date such report, statement or return is required to be filed
     (determined without regard to extensions) and (2) either (y) unless
     directed by the Tax Indemnitee otherwise, if permitted by applicable law,
     prepare such report, statement or return for filing by the Facility Lessee
     in

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     such manner as will show the ownership of the Facility by the Owner Lessor
     for United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement or
     return for filing by the Tax Indemnitee; provided that the only
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be,
     will timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the
     Facility Lessee may require such Tax Indemnitee to agree in writing, in a
     form reasonably acceptable to the Facility Lessee, to the terms of this
     Section 9.2 prior to making any payment to such Tax Indemnitee under this
     Section. Subject to the preceding sentence, the Facility Lessee's
     obligations under this Section 9.2 shall inure to the benefit of each and
     every Tax Indemnitee without regard to whether such Tax Indemnitee is a
     party to this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the rights under the Facility Lease and
Facility Site Sublease, including the right to possession, use and quiet
enjoyment of the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no

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obligation to accept such Additional Equity Investment; and (y) the conditions
set forth below and in Section 2.12 of the Collateral Trust Indenture shall
have been satisfied. The obligation to finance such Improvements through the
issuance of Additional Lessor Notes under Section 2.12 of the Collateral Trust
Indenture (any financing of Improvements through the issuance of such
Additional Lessor Notes under the Collateral Trust Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than
     one such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than
     the final maturity of the Lessor Notes issued on the Closing Date and (B)
     will be fully repaid out of additional Basic Rent, as adjusted pursuant to
     the Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal
     to the average life to maturity of the Lessor Notes issued on the Closing
     Date;

appropriate increases to Basic Rent and Termination Value (determined
     without regard to any tax benefits associated with such Improvements,
     unless the Owner Participant is making an Additional Equity Investment)
     shall be made to protect the Owner Participant's Net Economic Return;
     provided that there shall be no changes to the amortization schedule or
     interest amounts and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing unless the Improvements to be constructed with the
     proceeds of the Additional Lessor Notes shall cure such Significant Lease
     Default or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents;

such Additional Lessor Notes represent an aggregate amount not less than
     $20 million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

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<PAGE>

the Owner Participant shall suffer no adverse accounting effects under
     GAAP as a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit
     rating of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of
     $100,000 and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a
     particular maturity, such Additional Lessor Notes shall have a final
     maturity no later than the final maturity date of such Initial Lessor
     Notes and will be fully repaid out of Basic Rent during the Facility Lease
     Term;

appropriate adjustments to Basic Rent and Termination Value shall be made
     to preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

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no Significant Lease Default or Lease Event of Default shall have occurred and
be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to which
     it is a party (except to the extent necessitated by differences between
     existing Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the
     aggregate for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents. The Owner Participant
will execute such agreements and documents as may be necessary with respect to
any such refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest shall be adjusted, either upward or downward, in accordance
     with the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's
     option, to re-optimize the Lease Debt; provided such re-optimization shall
     not result in a change to average life by more than six (6) months;

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at the request of the Facility Lessee or the Owner Participant, to reflect
     any changes in the Pricing Assumptions, including without limitation, (x)
     the initial interest rate on any of the Lessor Notes which is different
     from the applicable interest rate set forth in the Pricing Assumptions,
     (y) an increase in the Transaction Costs from the amount assumed in the
     Pricing Assumptions, unless the Facility Lessee has elected to pay such
     increase, and (z) a Closing Date other than the Scheduled Closing Date;
     and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
     ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which it
     is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to
     preserve the Owner Participant's Net Economic Return through the Basic
     Lease Term and (B) to the extent consistent with (A) above, to maintain
     operating lease treatment for the Facility Lessee; provided, however, that
     to the extent consistent with preserving the Owner Participant's Net
     Economic Return, all adjustments shall at the option of the Facility
     Lessee be calculated to (x) minimize the average annual Basic Rent over
     the Basic Lease Term and the Lessor Put Renewal Lease Term for the
     Facility Lessee's GAAP accounting purposes and/or (y) minimize the present
     value to the Facility Lessee of Basic Rent; and provided, further, that no
     such adjustment shall require the Owner Participant to record a loss as of
     the date such adjustment is made. Adjustments will be computed by the
     Owner Participant based upon the Pricing Assumptions and the Tax
     Assumptions originally used to calculate the Periodic Rent, Termination
     Value, Allocated Rent, Proportional Rent, Lessor 467 Loan Principal
     Balance, Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and
     Lessee 467 Loan Interest.

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     Adjustments made pursuant to this Section 12 shall be subject to
     verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the
     Facility Lease Term assign the Facility Lease or any other Operative
     Document, or any interest therein, without the prior written consent of
     the Owner Lessor, the Owner Participant and, so long as the Lien of the
     Collateral Trust Indenture has not been terminated or discharged, the
     Indenture Trustee and the Pass Through Trustees. Notwithstanding the
     foregoing, upon satisfaction of the conditions in paragraph (b) below, the
     Facility Lessee may assign the Facility Lease or any other Operative
     Document to which it is a party, or any interest therein to any Person,
     without the consent of the Owner Lessor, the Owner Participant, the
     Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be
     permitted if (A) after giving effect to such assignment or assignments,
     either (x) Calpine owns, directly or indirectly, at least a majority of
     the Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in writing
     its obligations under the Calpine Guaranty or (y) Calpine's obligations
     under the Calpine Guaranty has been succeeded to in accordance with
     Section 8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

the transferee shall assume all the obligations of the Facility Lessee
     under the Operative Documents, and the first priority Lien of the pledge
     of the Collateral as defined in and pursuant to the Facility Lease shall
     continue in effect, pursuant to an assignment and assumption agreement in
     form and substance satisfactory to the Owner Participant, Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any

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Certificateholder to regulation under PUHCA or state laws and regulations
     regarding the rate and financial or organizational regulation of electric
     utilities in the affected party's reasonable opinion, nor result in a
     Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

the Facility Lessee shall have paid, at no after-tax cost to such parties,
     all reasonable documented out-of-pocket expenses (including reasonable
     attorneys' fees and expenses) of the Owner Lessor, the Lessor Manager, the
     Owner Participant, the Indenture Trustee, the Lease Indenture Company and
     the Pass Through Trustees in connection with such assignment;

the Facility Lessee has provided the Indenture Trustee with (x) an
     indemnity against the risk that such assignment will cause a Tax Event to
     occur to any direct or indirect holder of any Lessor Note (including any
     Certificateholder) or (y) an opinion of counsel to the effect that such
     assignment will not cause a Tax Event to occur to any direct holder of any
     Lessor Note and any Certificateholder; and

the transfer shall not cause the Facility to become "tax-exempt use
     property within the meaning of Section 168(h) of the Code (unless the
     Facility Lessee shall make a payment contemporaneously with such transfer
     that in the reasonable judgment of the Owner Participant compensates the
     Owner Participant for the adverse tax consequences therefrom).

Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents,
except for obligations (including Section 9.1 and 9.2 hereof and the Tax
Indemnity Agreement) surviving pursuant to the express terms of the Operative
Documents or which have otherwise accrued but not been paid as of such date and
(ii) the Owner Participant or the OP Guarantor will transfer (by an appropriate
instrument of transfer) the Member Interest to the Facility Lessee (or its
designee); provided, however, that if

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the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular

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<PAGE>

instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention: Senior Counsel
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

          If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street

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<PAGE>

          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-1, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention: Managing Director

                                      71

<PAGE>

          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357

               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010-3629
          Telephone No.:  (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the party
          giving such notice to each of the other parties hereto. In addition,

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<PAGE>

          the Facility Lessee shall (unless otherwise directed by the
          applicable Rating Agency) provide to each Rating Agency a copy of
          any information, report or notice it gives to the Indenture Trustee
          hereunder or any other Operative Documents.

                                      73

<PAGE>

Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents regardless of any investigation made by any such
party or on behalf of any such party. In addition, the indemnifications by the
Facility Lessee under Sections 9.1 and 9.2 of this Agreement, subject to
Sections 9.1(b) and 9.2(b), respectively, the Facility Site Lease and the
Calpine Guaranty, shall expressly survive the expiration or early termination
(in either case, for whatever reason) of the Facility Lease or the transfer or
other disposition of the respective interests of the Owner Participant, the
Owner Lessor, the Lessor Manager, the Lease Indenture Company, the Indenture
Trustee, the Pass Through Trustees and the Certificateholders in, to and under
this Agreement, the Assignment Agreement and the other Operative Documents.
Except as expressly provided above or in Section 22.3 of the Facility Lease,
the Tax Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

                                      74

<PAGE>

Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the
     Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
     Pass Through Trustees, the Pass Through Company or the Certificateholders
     shall have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or
     duties expressly set forth in this Agreement and the other Operative
     Documents, and neither the Facility Lessee nor any other Calpine Party
     (except Calpine to the extent set forth in the Calpine Guaranty) shall be
     liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into
     the Operative Documents to which it is a party solely as trustees under
     the Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document, as to all of which the other parties
     hereto agree to look solely to the Indenture Estate and the Lessor Estate,
     respectively; provided, however, that the Lease Indenture Company and the
     Pass Through Trust Company shall be liable hereunder for their own
     negligence or willful misconduct or for a breach of their representations,
     warranties and covenants made in their individual capacity under any
     Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform
     any discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

                                      75

<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than its
     negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein or
     in the Collateral Trust Indenture or as otherwise required by Applicable
     Law, have any obligation to) request the approval or instruction of the
     Pass Through Trustees as the holder of the Lessor Notes, and the Pass
     Through Trustees may in its sole discretion (but shall not, except as
     otherwise provided in the Operative Documents or as otherwise required by
     Applicable Law, have any obligation to) request the approval of the
     Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days'
     prior notice of any proposed amendment or supplement to the LLC Agreement
     (other than an amendment solely effecting a transfer of the Owner
     Participant's interest in the Lessor Estate) and deliver true, complete
     and fully executed copies to the Facility Lessee of any amendment or
     supplement to the LLC Agreement. No amendment or supplement to the LLC
     Agreement that would reasonably be expected to materially adversely affect
     the interests of the Facility Lessee or the Indenture Trustee shall become
     effective without the written consent of the Indenture Trustee and the
     Facility Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the
     nonexclusive jurisdiction of the Supreme Court of the State of New York,
     New York County (without prejudice to the right of any party to remove to
     the United States District Court for the Southern District of New York)
     and to the nonexclusive jurisdiction of the United States District Court
     for the Southern District of New York for the purposes of any suit, action
     or other proceeding arising out of this Agreement, the other Operative
     Documents, or the subject matter hereof or thereof or any of the
     transactions contemplated hereby or thereby brought by any of the parties
     hereto or their successors or assigns; (ii) hereby irrevocably agrees that
     all claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is not
     personally subject to the jurisdiction of the above-named courts, that the
     suit, action or proceeding is brought in an inconvenient forum, that the
     venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
     HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH
     SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                      76

<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440 Ninth
     Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents. the Facility Lessee shall grant an
     irrevocable power of attorney to CT Corporation System, in respect of such
     appointment and shall maintain such power of attorney in full force and
     effect for so long as any obligation of the Facility Lessee shall remain
     outstanding hereunder or under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is
shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing, the obligations
of Calpine with respect to fees and expenses set forth in the letter agreement,

                                      77

<PAGE>

dated July 24, 2001 between Calpine and CSFB and the letter agreement dated
August 1, 2001 between Calpine and Newcourt Capital Securities, Inc. shall not
be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior
     to the Receiving Party's receipt thereof, or which becomes public after
     such receipt, but through no violation by such Receiving Party of this
     Section 14.21;

as may be required by Applicable Law or, upon prompt prior written notice
     to the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving
     Party, or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the
     Receiving Party is a party, provided that the other parties hereto shall
     have been given prompt prior written notice (to the extent permitted by
     law) of such proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the
     Receiving Party; provided, however, that, prior to any such disclosure,
     any such transferee or proposed transferee, as the case may be, shall have
     agreed in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of
     remedies by any party to any of the Operative Documents.

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

                                      78

<PAGE>

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                      79

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                         ROCKGEN ENERGY LLC,
                         a Wisconsin limited liability company

                              By: ___________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              ROCKGEN OL-1 LLC, a Delaware limited liability
                              company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: ___________________________________
                              Name:
                              Title:
                              Date:


                              SBR OP-1 LLC, a Delaware limited liability
                              company

                              By: WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION
                              not in its individual capacity but solely as
                              Lessor Manager

                              By: ___________________________________
                              Name:
                              Title:
                              Date:


                              WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION,
                         not in its individual capacity, except as expressly
                         provided herein, but solely as Lessor Manager

                         By:  ___________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                         not in its individual capacity, except to the extent
                         expressly provided herein, but solely as Indenture
                         Trustee under the Collateral Trust Indenture

                              By: ___________________________________
                              Name:
                              Title:
                              Date:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                         not in its individual capacity, except to the extent
                         expressly provided herein, but solely as Pass Through
                         Trustees under the Pass Through Trust Agreement

                              By: ___________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

                              CALPINE CORPORATION
                                               a Delaware corporation

                              By: ___________________________________
                              Name:
                              Title:
                              Date:

<PAGE>

              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but
     in another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such
     document, schedule, exhibit, instrument or agreement unless otherwise
     specified in such definition or in the context in which such reference
     is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other section,
     paragraph or other part substituted therefor from time to time;

                                      2

<PAGE>

     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof.

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof;
     and

     (o)   a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                      3

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or other
     employee whose responsibilities include the administration of the Overall
     Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued by
     the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to finance
     all or a portion of the Owner Lessor's Percentage of the cost of any
     Required or Non-Severable Improvement financed pursuant to Section 11.1 of
     the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any Person
     directly or indirectly controlling, controlled by or under common control
     with such particular Person and (b) any Person beneficially owning or
     holding, directly or indirectly, 10% or more of any class of voting or
     equity interest of such first Person or any corporation of which such
     first Person beneficially owns or holds, in the aggregate, directly or
     indirectly, 10% or more of any class of voting or equity interest. For
     purposes of this definition, "control" when used with respect to any
     particular Person shall mean the power to direct the management and
     policies of such Person, directly or indirectly, whether through the
     ownership of voting securities, by contract or otherwise, and the terms
     "controlling" and "controlled" have meanings correlative to the foregoing;
     provided, however, that under no circumstances shall the Lease Indenture
     Company be considered to be an Affiliate of either the Indenture Trustee
     or any Certificateholder, nor shall any of the Indenture Trustee or any
     Certificateholder be considered to be an Affiliate of the Lease Indenture
     Company, nor shall the Lease Indenture Company, the Indenture Trustee,
     solely because any Operative Document contemplates that any of them may
     request or act at the instruction of any such Person or such Person's
     Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount of
     a payment to be made on such basis, the payment of an amount which, after
     reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is received
     or properly accrued, and

                                      4

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations,
     orders, ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents, to sell
     electricity therefrom, to enter into any Operative Document or to
     consummate any transaction contemplated thereby, or (b) that is
     necessary so that none of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under
     any other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of
     the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten (10)
     Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal. If
     either the Owner Participant or the Facility Lessee does not appoint its
     appraiser within such ten Business Day period, the determination of the
     other appraiser shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. If the appraisers appointed by the Owner
     Participant and the Facility Lessee are unable to agree upon the value,
     period, amount or other determination in question within thirty (30) days,
     such appraisers shall jointly appoint a third Independent Appraiser or, if

                                      5

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as at
     the time of determination, the present value (discounted at the rate of
     interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee for
     rental payments during the remaining term of the lease included in such
     Sale/Leaseback Transaction (including any period for which such lease has
     been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date
     of determination to the dates of each successive scheduled principal
     payment of such Indebtedness or scheduled redemption or similar payment
     with respect to such Indebtedness or Preferred Stock multiplied by (B)
     the amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U.S.C. [sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any
     similar Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" OR "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BILL OF SALE" shall mean the Bill of Sale (RG-1) dated as of the
     Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B-1 to the

                                      6

<PAGE>

     Participation Agreement duly completed, executed and delivered on the
     Closing Date pursuant to which the Owner Lessor will purchase the
     Undivided Interest from the Facility Lessee.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner,
     as applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interests to Broad
     River Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interest to the
     Broad River Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                      7

<PAGE>

     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and
     the Broad River Ground Interests to the Broad River Owner Lessors, and
     the simultaneous lease of the Broad River Undivided Interests and Broad
     River Ground Interests to the Broad River Facility Lessee on
     substantially the same terms and conditions as under, and dated the
     same date as, the Broad River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Broad River Facility Lessee, the applicable Broad
     River Owner Lessor, the applicable Broad River Lessor Manager, the
     applicable Broad River Owner Participant, the applicable Broad River
     Indenture Trustee, the Pass Through Trustees and Calpine and designated
     Participation Agreement (BR-1), Participation Agreement (BR-2),
     Participation Agreement (BR-3) and Participation Agreement (BR-4), each
     dated as of the Closing Date, pursuant to which, among other things,
     the Broad River Facility Lessee has agreed to (a) assign and transfer
     to the applicable Broad River Owner Lessors certain undivided leasehold
     interests in the Broad River Facility, and (b) lease from the
     applicable Broad River Owner Lessors such undivided leasehold interest
     in the Broad River Facility pursuant to the Broad River Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of
     the Facility Lease upon the exercise of a termination option by the
     Facility Lessee.

                                      8

<PAGE>

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New
     York, the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "BUYER(S)" shall mean, individually or collectively, (a) Wisconsin
     Power & Light Company, (b) IES Utilities and (c) Interstate Power Company.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY" shall mean the Calpine Guaranty and Payment Agreement
     (RG-1) dated as of the Closing Date in favor of the Beneficiaries,
     substantially in the form of Exhibit H to the Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

                                      9

<PAGE>

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     issued on the Closing Date and any certificates issued in replacement
     therefor pursuant to Section 3.3, 3.4 or 3.5 of the Pass Through Trust
     Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage
     and Security Agreement (RG-1), dated as of the Closing Date, between the
     Owner Lessor and the Indenture Trustee, in substantially the form of
     Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Facility Site Lease, shall have
     the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to
     the extent constituting Improvements or spare parts while being held
     for future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as
     estimated), after eliminating (i) all inter-company items between the

                                      10

<PAGE>

     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and
     other properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii)
     excess of cost over fair value of assets of businesses acquired, as
     determined in good faith by the Board of Directors; (iv) any
     revaluation or other write-up in value of assets subsequent to December
     31, 1993 as a result of a change in the method of valuation in
     accordance with GAAP; (v) unamortized debt discount and expenses and
     other unamortized deferred charges, goodwill, patents, trademarks,
     service marks, trade names, copyrights, licenses, organization or
     developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous
     fund established for the purpose of redemption or other retirement of
     Capital Stock to the extent such obligation is not reflected in
     Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on
     Schedule 2 of the Facility Lease, and, if such date of determination is
     a Rent Payment Date, Periodic Rent due on that date (to the extent
     payable in arrears)

                                      11

<PAGE>

     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEED" means that certain Warranty Deed (RG-1), dated as of October 18,
     2001, from Facility Lessee to Owner Lessor, substantially in the form
     of Exhibit B-2 to the Participation Agreement.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     report of the Engineering Consultant, dated September 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Clayton Group Services, Inc..

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local
     laws, ordinances, rules, orders, statutes, decrees, judgments,
     injunctions, directives, permits, licenses, approvals, codes,
     regulations, common or decisional law (including principles of tort,
     negligence, trespass, nuisance, strict liability, contribution and
     indemnification) or other requirement of any Governmental Entity
     relating to the environment, the safety or health of human beings or
     other living organisms, natural resources or toxic, explosive,
     corrosive, flammable, infectious, radioactive or other Hazardous
     Substances, as each may from time to time be amended, supplemented or
     supplanted.

                                      12

<PAGE>

     "ENVIRONMENTAL REPORTS" shall mean the Phase I Environmental Site
     Assessment Report, dated September 27, 2001, prepared by the Environmental
     Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the Termination Value set forth opposite the Termination
Date corresponding to such date of determination on Schedule 2 of the Facility
Lease, and, if such date of determination is a Rent Payment Date, Periodic Rent
due on that date (to the extent payable in arrears) over (ii) the balance,
including scheduled (in accordance with the payment terms of the Lessor Notes)
accrued interest, on the Lessor Notes scheduled (in accordance with the payment
terms of the Lessor Notes) to be outstanding on such date of determination
corresponding to the Facility Lease.
     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)   the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an
     agreed constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any Governmental
     Entity that shall have resulted in loss by the Owner Lessor, of title to
     its Undivided Interest or leasehold interest of the Ground Interest,
     following exhaustion of all permitted appeals or an election by the
     Facility Lessee in its discretion not to pursue such appeals or rights;
     provided that no such contest (or exercise) shall extend beyond the earlier
     of the date which is (x) six

                                      13

<PAGE>

     months after the loss of such leasehold interest or title, or (y) 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee or (b) Requisition of use
     of, or leasehold in, the Undivided Interest or the Ground Interest by any
     Governmental Entity that shall have resulted in the loss of possession of
     the Undivided Interest or all or any part of the Ground Interest that is
     required for the use or operation of the Facility; provided that in any
     case involving Requisition of use of the Facility, or all or any part of
     the Facility Site that is required for the use or operation, of the
     Facility, such event shall be an Event of Loss only if loss of possession
     continues beyond the Basic Lease Term or any Renewal Lease Term then in
     effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such election
     to be made only in circumstances where the termination of the Facility
     Lease shall remove the basis of the regulation described below, subjection
     of the Owner Participant or the Owner Lessor to any public utility
     regulation of any Governmental Entity or law which in the reasonable
     opinion of the Owner Participant is burdensome, or the subjection of the
     Owner Participant's or the Owner Lessor's interest in the Facility Lease
     to any rate of return regulation by any Governmental Entity, in either
     case by reason of the participation of the Owner Lessor, the Owner
     Participant or the OP Guarantor in the transactions contemplated by the
     Operative Documents and not, in any event, as a result of (a) investments,
     loans or other business activities of the Owner Participant or any of its
     Affiliates in respect of equipment or facilities similar in nature to the
     Facility or any part thereof or in any other electrical, cogeneration or
     other energy or utility related equipment or facilities or the general
     business or other activities of the Owner Participant or any of its
     Affiliates or the nature of any of the properties or assets from time to
     time owned, leased, operated, managed or otherwise used or made available
     for use by the Owner Participant or any of its Affiliates or (b) a failure
     of the Owner Participant to perform routine, administrative or ministerial
     actions the performance of which would not subject the Owner Participant
     or any of its Affiliates to any material adverse consequence (in the
     reasonable opinion of such Owner Participant acting in good faith);
     provided that the Facility Lessee and the Owner Lessor and Owner
     Participant agree to cooperate and to take reasonable measures to
     alleviate the source or consequence of any regulation constituting an
     Event of Loss under this paragraph (iv), so long as there shall be no
     adverse consequences to the Owner Lessor or Owner Participant as a result
     of such cooperation or the taking of reasonable measures (the events and
     circumstances described herein this paragraph (iv), a "Regulatory Event of
     Loss"); or

          (v)   if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Order shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act; or

                                      14

<PAGE>

          (vi)   if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (v) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or subject the Owner Participant or the Owner Lessor to
     regulation as public utility company or a holding company under the
     Holding Company Act.

          (vii)   one or more of the Buyers under the RockGen PPA has exercised
     the purchase option to acquire the Facility pursuant to the RockGen PPA,
     such purchase option presently being set forth in Section 3.05 thereof.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or exercise
     its rights of eminent domain, and (C) the date which is 48 months prior to
     the end of the Basic Lease Term or any Renewal Lease Term then in effect
     or elected by the Facility Lessee (if an event described in clause
     (iii)(a) shall be continuing at such time). The date of occurrence of an
     Event of Loss described in clause (iii)(b) above shall be the date of
     requisition of title to the Facility Site or, in the case of a requisition
     of use of the Facility Site, the date which is the scheduled expiration
     date of the Basic Lease Term or any Renewal Lease Term then in effect or
     elected by the Facility Lessee, as the case may be (if an event described
     in clause (iii)(b) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iv) above shall be the
     date on which the Facility Lessee receives the Owner Participant's
     election made in accordance with such clause (iv) during any period when
     an event is continuing which upon election by Owner Participant in
     accordance with such clause (iv) would constitute a Regulatory Event of
     Loss. The date of occurrence of an Event of Loss described in clause (v)
     or (vi) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (v) or
     (vi), as applicable. The date of occurrence of an Event of Loss in clause
     (vii) above shall be the date on which the Owner Lessor's interest is
     conveyed pursuant to the terms of the Facility Lease.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Indenture Company, or the
     Owner Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to

                                      15

<PAGE>

     Section 2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and
     any payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable by
     the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents, (ii)(A) insurance proceeds, if any,
     payable to the Owner Lessor or the Owner Participant under insurance
     separately maintained by the Owner Lessor or the Owner Participant with
     respect to the Facility as permitted by Section 3(b) of Schedule 5.31 to
     the Participation Agreement or (B) proceeds of personal injury or property
     damage liability insurance maintained under any Operative Document for the
     benefit of the Owner Lessor or the Owner Participant, (iii) any amount
     payable to the Owner Participant as the purchase price of the Owner
     Participant's right and interest in the Member Interest, (iv) all other
     fees expressly payable to the Owner Participant under the Operative
     Documents, (v) any payments in respect of interest, or any payments made
     on an After-Tax Basis, to the extent attributable to payments referred to
     in clause (i) through (vi) above; (vii) any amounts paid to the Owner
     Lessor as reimbursement for amounts expended pursuant to Section 20 of the
     Facility Lease; (viii) proceeds of the items referred to in clause (i)
     through (vii) above; and (ix) any rights to demand, collect, sue for, or
     otherwise receive and enforce payment of the foregoing amounts, including
     under the Calpine Guaranty, but without limiting clause (v) of this
     definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 520 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Christiana, Wisconsin, and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (RG-1), dated
     as of October 18, 2001, between the Owner Lessor and the Facility
     Lessee, substantially in the form of Exhibit C to the Participation
     Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all Renewal
     Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to the
     Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      16

<PAGE>

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (RG-1), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Facility Lessee will lease the Ground Interest to the
     Owner Lessor.

     "FACILITY SITE LESSEE" shall mean Owner Lessor

     "FACILITY SITE LESSOR" shall mean RockGen Energy LLC .

     "FACILITY SITE RENT" shall have the meaning set forth in Section 4.1 of
     the Facility Site Lease.

     "FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease (RG-1),
     dated as of October 18, 2001, between the Facility Lessee and the Owner
     Lessor, substantially in the form of Exhibit E to the Participation
     Agreement, pursuant to which the Owner Lessor will sublease the Ground
     Interest to the Facility Lessee.

     "FACILITY SITE SUBLESSEE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Facility Site Lease and Section 13.1 of
     the Facility Site Sublease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion to
     lease or purchase and an informed and willing lessor or seller or supplier
     under no compulsion to lease or sell or supply the property or service in
     question, and shall, in the case of the Undivided Interest or the Owner
     Lessor's Interest, be determined (except pursuant to Section 17 of the
     Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with in
     all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the obligations relating thereto, (iii) the Undivided Interest
     or the Owner Lessor's Interest, as the case may be, is free and clear of
     all Liens (other than Owner Lessor's Liens, Owner Participant's Liens and
     Indenture Trustee Liens), (iv) taking into account the remaining term of
     the Facility Site Lease, and (v) in the case the Fair Market Rental Value,
     taking into account the terms of the Facility Lease and the other
     Operative Documents. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner Lessor
     pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all faults" basis and shall
     take into account all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens); provided, however, in
     any such case where the Owner Lessor shall be unable to obtain
     constructive possession sufficient to realize the economic benefit of the
     Owner Lessor's Interest, Fair Market Sales Value of the Owner Lessor's
     Interest shall be deemed equal to $0 (zero). If in any case other than in
     the preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a request
     therefor
                                      17

<PAGE>

     has been made, the Fair Market Sales Value of the Owner Lessor's Interest
     shall be determined by appraisal pursuant to the Appraisal Procedures. Any
     fair market value determination of a Severable Improvement shall take into
     consideration any liens or encumbrances to which the Severable Improvement
     being appraised is subject and which are being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)   a determination by FERC of EWG status of the Facility Lessee
     and Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell power
     at market-based rates under Section 205 of the FPA effective on or before
     the Closing Date;

          (iii)   either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the
     sale/leaseback pursuant to Section 204 of the Federal Power Act or
     blanket authorization to issue securities and assume obligations under
     such Section;

          (iv)   Intentionally Omitted; and

          (v)   an approval from FERC under Section 203 of the Federal Power
     Act for the transfer of jurisidictional facilities in the sale/leaseback
     contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner is an EWG.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Facility Site Lease.

                                      18

<PAGE>

     "FMV RENEWAL LEASE OPTION" with respect to the Facility Lease Term, shall
     have the meaning set forth in Section 2.2(a)(iii) of the Facility Site
     Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 19.3 of the Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents, approvals,
     waivers, exceptions, variances, filings, permits, orders, licenses,
     exemptions and declarations of or with any Governmental Entity and shall
     include those citing, environmental and operating permits and licenses
     (including the Applicable Permits) that are required for the use and
     operation of the Facility, the Undivided Interest (if any), the Ground
     Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international, national,
     Native American, provincial, regional, state, municipal or local
     government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act of
     1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or Optional
     Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

                                      19

<PAGE>

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests of
     such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under "swaps",
     "caps", "floors", "collars", or other interest rate hedging contracts or
     similar arrangements, (ix) all Indebtedness of any other Person of the
     type referred to in clauses (i) through (viii), guaranteed by such Person
     or for which such Person shall otherwise (including pursuant to any
     keepwell, makewell or similar arrangement) become directly or indirectly
     liable, and (x) all Indebtedness of the type referred to in clauses (i)
     through (ix) above secured by (or for which the holder of such
     Indebtedness has an existing right, contingent or otherwise, to be secured
     by) any Lien on property (including accounts and contracts rights) owned
     by such Person, even though such Person has not assumed or become liable
     for the payment of such Indebtedness, the amount of such obligation being
     deemed to be the lesser of the value of such property or the amount of the
     obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Facility Site Lease.

                                      20

<PAGE>

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
     with the passage of time or the giving of notice or both, would become an
     Lease Indenture Event of Default under Section 4.2(e) or (f) of the
     Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting Clause
     of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., not in its individual capacity, except as expressly
     provided herein, but solely as Indenture Trustee under the Operative
     Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices to
     the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the Participation
     Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate, the
     Facility, the Facility Site or any part thereof or any interest therein
     arising as a result of (i) Taxes against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof that are not
     related to, or that are in violation of, any Operative Document or the
     transactions contemplated thereby, (ii) Claims against or any act or
     omission of the Lease Indenture Company or the Indenture Trustee, or
     Affiliate thereof that is not related to, or that is in violation of, any
     of such Person's representations, warranties, covenants or agreements in
     an Operative Document or the transactions contemplated thereby or that is
     in breach of any covenant or agreement of the Lease Indenture Company or
     the Indenture Trustee specified therein, (iii) Taxes imposed upon the
     Lease Indenture Company or the Indenture Trustee, or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Lease Indenture
     Company or the Indenture Trustee, or any Affiliate thereof arising out of
     the voluntary or involuntary transfer by the Lease Indenture Company or
     the Indenture Trustee of any portion of the interest of the Lease
     Indenture Company or the Indenture Trustee in the Lessor Estate, other
     than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2 of
     the Collateral Trust Indenture.

                                      21

<PAGE>

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to a Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(a) of such Facility Site
     Sublease.

     "INITIAL TERM" with respect to the Facility Site Lease, shall have the
     meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., in its individual capacity under the Operative
     Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating

                                      22

<PAGE>

     lease, off-balance sheet loan or similar off-balance sheet financing
     product where such transaction is considered borrowed money indebtedness
     of the lessee for tax purposes but is classified as an operating lease
     under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease or the Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease or the
     Facility Site Sublease, shall have the meaning set forth in Section 16.4
     of the Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall have
     the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other payments
     of Periodic Rent, Supplemental Rent or Termination Value under the
     Facility Lease, condemnation awards, purchase price, sale proceeds,
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and any of the foregoing, but shall not
     include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.2 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title retention
     arrangement.

                                      23

<PAGE>

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of this
     definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations, assets,
     financial position, results of operation or business of the Guarantor,
     including a material adverse effect on (i) the Facility, the Undivided
     Interest, the Facility Site or the Ground Interest which adversely affects
     the ability of the Guarantor to perform its obligations under the
     Operative Documents or (ii) the validity or enforceability of the
     Operative Documents, (b) the Indenture Estate or the Lessor Estate, the
     security interests in the Lessor Estate, or (c) with respect to the Owner
     Participant's (but not the Certificateholders') interest in the Undivided
     Interest, the residual value or remaining useful life of the Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in the
     Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of Facility
     Site Lease (RG-1), dated as of the Closing Date, between the Facility
     Lessee, as landlord, and the Owner Lessor, as tenant, and filed with the
     Recorder of Dane County, Wisconsin.

                                      24

<PAGE>

     "MEMORANDUM OF FACILITY SITE SUBLEASE" shall mean the Memorandum of
     Facility Site Sublease (RG-1), dated as of the Closing Date, between the
     Owner Lessor, as sublandlord, and the Facility Lessee, as subtenant filed
     with the Recorder of Dane County, Wisconsin.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease (RG-1),
     dated as of the Closing Date, between the Owner Lessor and the Facility
     Lessee filed with the Recorder of Dane County, Wisconsin.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan (as
     defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the Note
     Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the Chairman,
     the President, any Vice President, the Chief Operating Officer, the Chief
     Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer,
     any Assistant Secretary or the Controller or Principal Accounting Officer
     of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any Person
     authorized by or pursuant to the organizational documents, the by-laws or
     any resolution of the Board of Directors or Executive Committee of such
     Person (whether general or specific) to execute, deliver and take actions
     on behalf of such Person in respect of any of the Operative Documents,
     (ii) in the case of a partnership, by the Chairman of the Board of
     Directors, the President or any Vice President, the Treasurer or an
     Assistant Treasurer of a corporate general partner and (iii) in the case
     of an Indenture Trustee, a certificate signed by a Responsible Officer of
     such Indenture Trustee.

                                      25

<PAGE>

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to the
     Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain guaranty
     of Newcourt Credit Group USA Inc., dated as of the Closing Date in favor
     of the Facility Lessee, the Owner Lessor, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees and the
     Certificateholders, or (ii) any other guaranty agreement provided by an OP
     Guarantor in form and substance substantially in the form of Exhibit G to
     the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Bill of
     Sale, the Facility Lease, the Certificates, the Facility Site Lease, the
     Facility Site Sublease, the Collateral Trust Indenture, the Lessor Notes,
     the Pass Through Trust Agreements, the LLC Agreement, the Tax Indemnity
     Agreement, the Calpine Guaranty, the OP Parent Guaranty (if any), the
     Certificate Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any replacement
     Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at Closing,
     and as to all other matters, Thelen Reid & Priest LLP and/or Davis Wright
     & Tremaine LLP, or any other outside legal counsel reasonably acceptable
     to the Owner Participant, (ii) in form and substance (with respect to
     qualifications, exception, assumption and the like) substantially
     equivalent to the legal opinions delivered at Closing, with any material
     modification or supplements thereto to be reasonably acceptable to the
     Owner Participant, or in any such other form as may be reasonably
     acceptable to the Owner Participant, and (iii) the scope of which shall
     cover due authorization, execution, delivery and enforceability of the
     applicable agreement(s), and exemption from regulation, in each case,
     substantially in the form set forth in the opinions delivered at Closing
     with any material modifications thereto to be reasonably acceptable to the
     Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.2 of the Facility Lease.

                                      26

<PAGE>

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated, or
     otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other RockGen
     Calpine Guaranties, the Broad River Calpine Guaranties and the South
     Point Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other RockGen
     Facility Leases, the Broad River Facility Leases and the South Point
     Facility Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other RockGen Owner
     Lessors, the Broad River Owner Lessors and the South Point Owner Lessors.

     "OTHER ROCKGEN BILLS OF SALE" shall mean each of the bills of sale
     executed and delivered pursuant to the Other RockGen Participation
     Agreements.

     "OTHER ROCKGEN CALPINE GUARANTIES" shall mean the other Calpine guaranty
     and payment agreements executed and delivered by Calpine pursuant to the
     Other RockGen Participation Agreements.

     "OTHER ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     RockGen Participation Agreements.

     "OTHER ROCKGEN FACILITY LEASES" shall mean the other RockGen facility
     lease agreements, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee, pursuant to which the Other
     RockGen Owner Lessors will lease the Other RockGen Undivided Interests to
     the Facility Lessee.

     "OTHER ROCKGEN FACILITY SITE LEASES" shall mean the other facility site
     leases, dated as of October 18, 2001, by and between the Other RockGen
     Owner Lessors and the Facility Lessee pursuant to which the Facility
     Lessee will lease the Other RockGen Ground Interests to the Other RockGen
     Owner Lessors.

     "OTHER ROCKGEN FACILITY SITE SUBLEASES" shall mean the other facility site
     subleases, dated as of October 18, 2001, by and between the Other RockGen
     Owner Lessors and the Facility Lessee pursuant to which the Other RockGen
     Owner Lessors will sublease the Ground Interest to the Facility Lessee.

                                      27

<PAGE>

     "OTHER ROCKGEN GROUND INTERESTS" shall mean the undivided interests in the
     Facility Site not conveyed to the Owner Lessor under the Facility Site
     Lease.

     "OTHER ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other RockGen Collateral Trust Indentures.

     "OTHER ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving
     the sale of the Other RockGen Undivided Interests and the lease of the
     Other RockGen Ground Interests to the Other RockGen Owner Lessors, and the
     lease by the Other RockGen Owner Lessors of the Other RockGen Undivided
     Interests and sublease by the Other RockGen Owner Lessors of the Other
     RockGen Ground Interest to the Facility Lessee on substantially the same
     terms and conditions as under, and dated the same date as, the Overall
     Transaction.

     "OTHER ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other RockGen Owner Lessors pursuant to the Other
     RockGen Operative Documents.

     "OTHER ROCKGEN OWNER LESSORS" shall mean RockGen OL-2, LLC, RockGen OL-3,
     LLC and RockGen OL-4, LLC.

     "OTHER ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-2, LLC, SBR OP-3, LLC
     and SBR OP-4, LLC.

     "OTHER ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other RockGen Lease Transactions.

     "OTHER ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Facility Lessee, the applicable Other RockGen Owner Lessor, the
     Other RockGen Lessor Manager, Other RockGen Owner Participant, Other
     RockGen Indenture Trustee, Pass Through Trustees and Calpine and
     designated Participation Agreement (RG-2), Participation Agreement (RG-3)
     and Participation Agreement (RG-4), each dated as of the Closing Date,
     pursuant to which, among other things, the Facility Lessee has agreed to
     (a) sell to the applicable Other RockGen Owner Lessors certain undivided
     interests in the Facility and lease certain undivided interests in the
     Facility Site, and (b) sublease from the applicable Other RockGen Owner
     Lessors such undivided interest in the Facility Site pursuant to the Other
     RockGen Facility Site Sublease.

     "OTHER ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided interest in
     the Facility not conveyed to the Owner Lessor under the Bill of Sale.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents.

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time,

                                      28

<PAGE>

     such rate to be adjusted automatically, without notice, on the effective
     date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean RockGen OL-1, LLC, a Delaware limited liability
     company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: RockGen OL-1, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate thereof
     that is not related to, or that is in violation of, any Operative Document
     or the transactions contemplated thereby or that is in breach of any
     covenant or agreement of the Owner Lessor, the Trust Company or the Lessor
     Manager specified therein, (iii) Taxes imposed upon the Owner Lessor, the
     Trust Company or the Lessor Manager or any Affiliate thereof that are not
     indemnified against by the Facility Lessee pursuant to any Operative
     Document or (iv) Claims against or affecting the Owner Lessor, the Trust
     Company or the Lessor Manager or any Affiliate thereof arising out of the
     voluntary or involuntary transfer by the Owner Lessor, the Trust Company
     or the Lessor Manager of any portion of the interest of the Owner Lessor
     in the Owner Lessor's Interest, other than pursuant to the Operative
     Documents.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-1, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the context
     may require, shall mean any Lien on the Lessor Estate, the Facility Sites,
     or any part of any thereof or interest therein arising as a result of (i)
     Claims against or any act or omission of the Owner Participant that is not
     related to, or that is in violation of, any Operative Document

                                      29

<PAGE>

     or the transactions contemplated thereby or that is in breach of any
     covenant or agreement of the Owner Participant set forth therein, (ii)
     Taxes against the Owner Participant that are not indemnified against by
     the Facility Lessee pursuant to the Operative Documents or (iii) Claims
     against or affecting the Owner Participant arising out of the voluntary or
     involuntary transfer by the Owner Participant of any portion of the
     interest of the Owner Participant in the Member Interest, other than any
     transfer (x) pursuant to the exercise of any of the Facility Lessee's (or
     any Affiliate thereof) rights under the Operative Documents or (y) during
     the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to the
     multiple investment sinking fund method of analysis, and (ii) periodic
     GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and Operation
     Agreement, dated as of October 18, 2001, among the Facility Lessee, the
     Owner Lessor and the Other RockGen Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated as
     of October 18, 2001, among the Facility Lessee, the Guarantor, the Owner
     Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust Company
     of Connecticut, as Indenture Trustee, and State Street Bank and Trust
     Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., in its individual capacity, together with its
     successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context may
     require, of (i) the Pass Through Trust Agreement A, dated as of October
     18, 2001, and (ii) the Pass Through Trust Agreement B, dated as of October
     18, 2001, in each case between the Facility Lessee and a Pass Through
     Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., not in its individual capacity, but solely as Pass
     Through Trustees under each of the Pass Through Trust Agreements, and each
     other Person that may from time to time be acting as a Pass Through
     Trustee in accordance with the provisions of a Pass Through Trust
     Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created pursuant
     to the Pass Through Trust Agreements.

                                      30

<PAGE>

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum of
     Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site, all
     matters shown as exceptions on Schedule B to each of the Title Policies as
     in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are: (i)
     direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the European
     Economic Community having a combined capital and surplus of at least $250
     million and having long-term unsecured debt securities then rated "A" or
     better by S&P or "A2" or better by Moody's (but at the time of investment
     not more than $25,000,000 may be invested in such certificates of deposit
     from any one bank); (iv) repurchase obligations with a term of not more
     than seven days for underlying securities of the types described in
     clauses (i) and (ii) above, entered into with any financial institution
     meeting the qualifications specified in clause (iii) above; (v) open
     market commercial paper of any corporation incorporated or doing business
     under the laws of the United States or of any political subdivision
     thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's
     (but at the time of investment not more than $25,000,000 may be invested
     in such commercial paper from any one company); (vi) auction rate
     securities or money market preferred stock having one of the two highest
     ratings obtainable from either S&P or Moody's (or, if at any time neither
     S&P nor Moody's is rating such obligations, then from another nationally
     recognized rating service acceptable to the Depositary); and (vii)
     investments in money market funds or money market mutual funds sponsored
     by any securities broker dealer of recognized national standing (or an
     affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents, as well as the rights of
     sublessees and/or assignees to the extent set forth in or expressly
     permitted pursuant to the Facility Lease or any other Operative Document,
     (b) as to the Facility Lessee, Owner Lessor's Liens, Owner

                                      31

<PAGE>

     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect, or
     (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to assure such Persons that any
     taxes, assessments or other charges determined to be due will be promptly
     paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to criminal
     liability or material civil liability on the part of the Owner Lessor, the
     Owner Participant, the Lessor Manager, the Trust Company, the Indenture
     Trustee, the Pass Through Trustees or any Certificateholders, and would
     not otherwise reasonably be expected to have a Material Adverse Effect,
     and (ii) adequate reserves consistent with GAAP requirements have been
     established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so long
     as an appeal or proceeding for review is being prosecuted in good faith
     and so long as (i) such proceedings shall not reasonably be expected to
     give rise to criminal liability or material civil liability on the part of
     the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise reasonably be expected to have
     a Material Adverse Effect, and (ii) adequate reserves consistent with GAAP
     requirements have been established and are maintained, so as to ensure
     that any amounts determined to be due will be promptly paid in full when
     such contest is determined, or are fully covered by insurance, (f) mineral
     rights the use and enjoyment of which do not materially interfere with the
     use and enjoyment of the Facility, (g) Permitted Encumbrances, (h) Liens,
     deposits or pledges to secure statutory obligations or performance of
     bids, tenders, contracts (other than for the repayment of borrowed money)
     or leases, or for purposes of like general nature in the ordinary course
     of its business, (i) existing Liens that have been disclosed to the
     Transaction Parties prior to the Closing Date and which are reasonably
     acceptable to the Transaction Parties, (j) Liens incident to the ordinary
     course of business that are not incurred in connection with the obtaining
     of any loan, advance or credit in respect of borrowed money permitted to
     be incurred pursuant to the Operative Documents so long as such Liens (x)
     do not in the aggregate materially impair the use of the property or
     assets of the Facility Lessee or the value of such property or assets for
     the purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholders, and would not otherwise

                                      32

<PAGE>

     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other RockGen Owner Lessors and the Other RockGen
     Indenture Trustees in the Facility, the Facility Site and the Ownership
     and Operation Agreement, (l) the interests of the Facility Lessee, the
     Other RockGen Owner Participants, the Other RockGen Owner Lessors, the
     Other RockGen Lessor Managers, the Other RockGen Indenture Trustees, and
     Pass Through Trustees under any of the Other RockGen Operative Documents,
     (m) the Ownership and Operation Agreement and (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement.

     "PERSON" shall mean any individual, corporation, cooperative, partnership,
     joint venture, association, joint-stock company, limited liability
     company, other entity, trust, unincorporated organization or government or
     any agency or political subdivision thereof or any other entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in

                                      33

<PAGE>

     administrative guidance has been issued by the Internal Revenue Service or
     the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method or
     act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any Governmental
     Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "PURCHASE PRICE" with respect to the Undivided Interest, shall mean
     $56,250,000.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have the
     meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may properly
     advise reporting such position on a tax return in accordance with Formal
     Opinion 85-352 issued by the Standing Committee on Ethics and Professional
     Responsibility of the American Bar Association (or any successor to such
     opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of the
     Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including Indebtedness
     of the Guarantor that refinances Indebtedness of any Restricted Subsidiary
     and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
     of another Restricted Subsidiary) including Indebtedness that refinances
     Refinancing Indebtedness;

                                      34

<PAGE>

     provided, however, that (i) if the Indebtedness being refinanced is
     contractually subordinated in right of payment to the Obligations, the
     Refinancing Indebtedness shall be contractually subordinated in right of
     payment to such Obligations to at least the same extent as the
     Indebtedness being refinanced, (ii) the Refinancing Indebtedness is
     scheduled to mature either (a) no earlier than the Indebtedness being
     refinanced or (b) after the Stated Maturity of the Obligations, (iii) the
     Refinancing Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average Life
     of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original issue
     discount, the aggregate accreted value) then outstanding (plus fees and
     expenses, including any premium, swap breakage and defeasance costs) under
     the Indebtedness being refinanced; and provided, further, that Refinancing
     Indebtedness shall not include (x) Indebtedness of a Subsidiary of the
     Guarantor that refinances Indebtedness of the Guarantor or (y)
     Indebtedness of the Guarantor or a Restricted Subsidiary that refinances
     Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv) of
     the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns and
     any director, officer, servant, employee or agent of that Person or any
     such Affiliate or their respective successors and assigns; provided that
     none of the Trust Company, the Lessor Manager or the Owner Lessor shall be
     treated as Related Parties to each other and none of the Trust Company,
     the Owner Lessor or the Lessor Manager shall be treated as a Related Party
     to any Owner Participant Equity Investor except that, for purposes of
     Section 9 of the Participation Agreement, the Owner Lessor will be treated
     as a Related Party to an Owner Participant to the extent that the Owner
     Lessor acts on the express direction or with the express consent of an
     Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                      35

<PAGE>

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Sublease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002 each May 30 and November 30 occurring thereafter (through
     and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the second
     Rent Payment Period, the period commencing on January 19, 2002 and ending
     on May 30, 2002 and (iii) in all cases thereafter (except for the last
     Rent Payment Period which period shall commence on May 31, 2031 and end
     on, and include, October 18, 2031) each six-month period commencing on
     each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2 of
     the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have the
     meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the Chief
     Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of Directors
     or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is not
     designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the Granting
     Clause of the Collateral Trust Indenture.

                                      36

<PAGE>

     "ROCKGEN PPA" shall mean the Power Purchase Agreement dated as of August
     10, 1998 (as amended by Amendment No. 1 dated December 22, 1998 and
     Amendment No. 2 dated December 16, 1999) by and between the Buyers and the
     Facility Lessee, as the same may hereafter be further amended (subject to
     Section 5.33 of the RockGen PPA).

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have the
     meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default under
     any Other RockGen Facility Lease.

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Facility Site Lease,
     shall have the meaning set forth in Section 14.1 of the Facility Site
     Lease.

                                      37

<PAGE>

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the South Point Owner Lessor will lease
     the applicable South Point Undivided Interests to the South Point Facility
     Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy Center, LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which South Point Owner Lessor will lease the
     applicable South Point Ground Interests to the South Point Facility Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Facility Site Leases.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Owner Lessors, and the
     simultaneous lease of the South Point Undivided Interests and the South
     Point Ground Interests to the South Point Facility Lessee on substantially
     the same terms and conditions as under, and dated the same date as, the
     South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

                                      38

<PAGE>

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2, LLC,
     SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the South Point Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3) and
     Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee has
     agreed to (a) sell to the applicable South Point Owner Lessors certain
     undivided interests in the South Point Facility, and (b) lease from the
     applicable South Point Owner Lessors such undivided interest in the South
     Point Facility pursuant to the South Point Facility Leases.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the South Point Facility conveyed to the South Point Owner
     Lessors under the South Point Bills of Sale.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the Termination
     Value under the Facility Lease on such date, or (ii) if such date shall
     not be a Termination Date, the Termination Value under the Facility Lease
     on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

                                      39

<PAGE>

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 11.1
     of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean a survey of the Facility Site, to be delivered after
     the Closing Date pursuant to Section 5.16 of the Participation Agreement,
     which inter alia, will show the location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings ,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

                                      40

<PAGE>

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (RG-1),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of the
     Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Facility Site Lease, shall
     have, collectively, the meaning set forth in Section 18.1 of the Facility
     Site Lease.

     "TERM" with respect to the Facility Site Lease or the Facility Site
     Sublease, shall have the meaning set forth in Section 2.2(b) of the
     Facility Site Lease or Section 2.1(b) of the Facility Site Sublease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each of
     the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit M: (a) Clarification Letter
     from Duke Energy Trading and Marketing, L.L.C. ("DETM") with respect to
     the Tolling Agreement, dated as of January 8, 1999 (as amended), between
     DETM and the Facility Lessee; and (b) Consent and Agreement from ANR
     Pipeline Company ("ANR") with respect to the Interconnection Agreement,
     dated as of May 28, 1999 (as amended), between ANR and the Facility Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

     "TITLE POLICY" shall mean, the title insurance policy (#0303-7538-630)
     dated as of October 18, 2001.

                                      41

<PAGE>

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)   the reasonable costs of reproducing and printing the Operative
     Documents and all costs and fees, including, but not limited to, filing
     and recording fees and recording, transfer, mortgage, intangible and
     similar taxes in connection with the execution, delivery, filing and
     recording of the Facility Lease, the Facility Site Lease, and any other
     Operative Document and any other document required to be filed or recorded
     pursuant to the provisions hereof or of any other Operative Document and
     any Uniform Commercial Code filing fees in respect of the perfection of
     any security interests created by any of the Operative Documents or as
     otherwise reasonably required by the Owner Lessor or the Indenture Trustee
     and surveyor fees;

     (ii)   the reasonable fees and expenses of Dewey Ballantine LLP, counsel to
     the Owner Participant and the Owner Lessor for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of Reinhart, Boerner Van Deuren,
     Norris & Rieselbach, S.C.,Wisconsin counsel to the Facility Lessee;

     (iv)   the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of the
     Participation Agreement and other Operative Documents;

     (v)   the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)   the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents;

     (viii)   the reasonable fees and expenses of Bingham Dana LLP, counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass Through
     Company and the Pass Through Trustees, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (ix)   the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

                                      42

<PAGE>

     (x)   the fees and expenses of the Engineering Consultant, for its services
     rendered in connection with delivering the Engineering Report required by
     Section 4.17 of the Participation Agreement;

     (xi)   the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its reasonable
     out-of-pocket costs and expenses payable to the Underwriter;

     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions in
     connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii) the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time procurement
     (other than out-of-pocket expenses of the Owner Participant), financial
     analysis and consulting, advisory services, and costs of a similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

                                      43

<PAGE>

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents.

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided interest
     in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
     as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.12
<SEQUENCE>15
<FILENAME>f80168ex4-22_12.txt
<DESCRIPTION>EXHIBIT 4.22.12
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.12

                                                               EXECUTION COPY

                         PARTICIPATION AGREEMENT (RG-2)

                          Dated as of October 18, 2001

                                      among

                     ROCKGEN ENERGY LLC, as Facility Lessee,

                       ROCKGEN OL-2, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-2, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees



                                 ROCKGEN PROJECT

===============================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                               PAGE
<S>                                                                                                                            <C>
SECTION 1 DEFINITIONS;INTERPRETATION OF THIS PARTICIPATION AGREEMENT .............................................               3

SECTION 2 PARTICIPATION;CLOSING DATE; TRANSACTION COSTS ..........................................................               3

  Section 2.1  Agreements to Participate .........................................................................               3

  Section 2.2  Closing Date; Procedure for Participation .........................................................               4

  Section 2.3  Transaction Costs .................................................................................               5

SECTION 3 REPRESENTATIONS AND WARRANTIES .........................................................................               6

  Section 3.1  Representations and Warranties of the Facility Lessee .............................................               6

  Section 3.2  Representations and Warranties of the Owner Lessor ................................................              15

  Section 3.3  Representations and Warranties of the Lessor Manager and the Trust Company ........................              16

  Section 3.4  Representations and Warranties of the Owner Participant ...........................................              18

  Section 3.5  Representations and Warranties of Indenture Trustee and the Lease Indenture Company ...............              20

  Section 3.6  Representations, Warranties and Covenants of the Pass Through Trustees and the Pass Through Company              22

SECTION 4 CLOSING CONDITIONS .....................................................................................              23

  Section 4.1  Completion of the Facility ........................................................................              25

  Section 4.2  Operative Documents ...............................................................................              25

  Section 4.3  Certificates and the Lessor Notes .................................................................              25

  Section 4.4  Equity Investment .................................................................................              25

  Section 4.5  Organizational Documents ..........................................................................              25

  Section 4.6  Representations and Warranties ....................................................................              25

  Section 4.7  Defaults, Events of Default, Events of Loss .......................................................              25

  Section 4.8  Regulatory Approvals ..............................................................................              25

  Section 4.9  Consents ..........................................................................................              26

  Section 4.10 Governmental Actions ..............................................................................              27


</TABLE>
                                      i

<PAGE>

                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
Section 4.11 Insurance ...................................................              27

Section 4.12 Ratings .....................................................              27

Section 4.13 Environmental Report ........................................              27

Section 4.14 Surveys .....................................................              27

Section 4.15 Appraisal; Condition of the Facility ........................              27

Section 4.16 Letter from the Appraiser ...................................              27

Section 4.17 Other Reports ...............................................              28

Section 4.18 Opinion with Respect to Certain Tax Aspects .................              28

Section 4.19 Opinions of Counsel .........................................              28

Section 4.20 Recordings and Filings ......................................              28

Section 4.21 Conditions to Closing .......................................              28

Section 4.22 Taxes .......................................................              28

Section 4.23 No Changes in Applicable Law ................................              29

Section 4.24 Registered Agent for the Facility Lessee and the Owner Lessor              29

Section 4.25 Operating Lease Treatment ...................................              29

Section 4.26 Rent Adjustments ............................................              29

Section 4.27 Title Insurance .............................................              29

Section 4.28 Parent Guaranty .............................................              29

Section 4.29 Letter as to Number of Offerees .............................              29

Section 4.30 Lien Search .................................................              30

Section 4.31 Litigation ..................................................              30

Section 4.32 No Material Adverse Change ..................................              30

Section 4.33 Private Placement Number ....................................              30

Section 4.34 Proceedings and Documents ...................................              30


</TABLE>
                                      ii

<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>



                                                                                  PAGE
<S>                                                                               <C>
  Section 4.35 No Proposed Tax Law Change ............................              30

  Section 4.36 Payment of Fees and Expenses ..........................              30

SECTION 5 COVENANTS OF FACILITY LESSEE AND GUARANTOR .................              30

  Section 5.1  Maintenance of Existence ..............................              31

  Section 5.2  Merger, Consolidation, Sale of Substantially All Assets              31

  Section 5.3  Guaranty and Contingent Obligations ...................              31

  Section 5.4  Assignment of Rights ..................................              32

  Section 5.5  Lessor Manager Fees ...................................              32

  Section 5.6  Conduct of Business, Properties, Etc ..................              32

  Section 5.7  Obligations ...........................................              32

  Section 5.8  Books, Records, Access ................................              32

  Section 5.9  Other Information .....................................              33

  Section 5.10 Warranty of Title to Facility Site ....................              33

  Section 5.11 ERISA .................................................              33

  Section 5.12 Certain Contracts and Agreements ......................              34

  Section 5.13 Certain Costs .........................................              34

  Section 5.14 Limitations on Liens ..................................              34

  Section 5.15 Investments ...........................................              34

  Section 5.16 Survey ................................................              35

  Section 5.17 Regulations ...........................................              35

  Section 5.18 Partnerships ..........................................              35

  Section 5.19 Dissolution ...........................................              35

  Section 5.20 Termination of Operative Documents ....................              35

  Section 5.21 Name and Location .....................................              35

</TABLE>

                                      iii

<PAGE>

                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                              PAGE
<S>                                                                                           <C>
  Section 5.22 Use of Facility Site .............................................              35

  Section 5.23 Abandonment of Facility ..........................................              35

  Section 5.24 Taxes, Other Government Charges and Utility Charges ..............              35

  Section 5.25 Compliance with Laws, Instruments, Etc ...........................              36

  Section 5.26 PUHCA ............................................................              36

  Section 5.27 Further Assurances ...............................................              36

  Section 5.28 No Subsidiaries ..................................................              37

  Section 5.29 Permitted Business ...............................................              37

  Section 5.30 Support Arrangements .............................................              37

  Section 5.31 Insurance ........................................................              38

  Section 5.32 Tax Status .......................................................              38

  Section 5.33 Transmission Assets ..............................................              38

SECTION 6 COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER              39

  Section 6.1  Compliance with the LLC Agreement ................................              39

  Section 6.2  Owner Lessor's Liens .............................................              40

  Section 6.3  Amendments to Operative Documents ................................              40

  Section 6.4  Transfer of the Owner Lessor's Interest ..........................              40

  Section 6.5  Owner Lessor; Lessor Estate ......................................              40

  Section 6.6  Limitation on Indebtedness and Actions ...........................              40

  Section 6.7  Change of Location ...............................................              40

  Section 6.8  Bankruptcy of Owner Lessor .......................................              40

SECTION 7 COVENANTS OF THE OWNER PARTICIPANT ....................................              41

  Section 7.1  Restrictions on Transfer of Member Interest ......................              41

  Section 7.2  Owner Participant's Liens ........................................              44

</TABLE>
                                       iv

<PAGE>

                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                                  PAGE
<S>                                                                                               <C>
  Section 7.3  Amendments or Revocation of LLC Agreement ...........................              44

  Section 7.4  Bankruptcy Filings ..................................................              44

  Section 7.5  Instructions ........................................................              44

  Section 7.6  Right of First Refusal ..............................................              44

  Section 7.7  Prohibition on Fundamental Changes ..................................              45

  Section 7.8  Appointment of Successor Lessor Manager .............................              45

  Section 7.9  Cooperation .........................................................              45

SECTION 8COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ..........              46

  Section 8.1  Indenture Trustee's Liens ...........................................              46

  Section 8.2  Pass Through Trustees' Covenant Not to Transfer Lessor Notes ........              46

SECTION 9 INDEMNIFICATION ..........................................................              46

  Section 9.1  General Indemnity ...................................................              46

  Section 9.2  General Tax Indemnity ...............................................              53

SECTION 10 FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ..............................              62

SECTION 11 SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ..............              62

  Section 11.1 Financing Improvements ..............................................              62

  Section 11.2 Optional Refinancing of Lease Debt ..................................              64

  Section 11.3 Cooperation .........................................................              65

SECTION 12 CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS              65

SECTION 13 TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS .....              67

  Section 13.1 Transfer of the Facility Lessee Ownership ...........................              67

  Section 13.2 Special Facility Lessee Transfers ...................................              68

SECTION 14 MISCELLANEOUS ...........................................................              69

  Section 14.1 Consents; Cooperation ...............................................              69
</TABLE>

                                      v

<PAGE>

                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>                                                                                       <C>

Section 14.2  Successor Owner Lessor .........................................              69

Section 14.3  Bankruptcy of Lessor Estate ....................................              69

Section 14.4  Amendments and Waivers .........................................              69

Section 14.5  Notices ........................................................              70

Section 14.6  Survival .......................................................              74

Section 14.7  Successors and Assigns .........................................              74

Section 14.8  Business Day ...................................................              74

Section 14.9  Governing Law ..................................................              74

Section 14.10 Severability ...................................................              74

Section 14.11 Counterparts ...................................................              74

Section 14.12 Headings and Table of Contents .................................              75

Section 14.13 Limitation of Liability ........................................              75

Section 14.14 Consent to Jurisdiction; Waiver of Trial by Jury;
               Process Agent ................................................               76

Section 14.15 Further Assurances .............................................              77

Section 14.16 Effectiveness ..................................................              77

Section 14.17 Measuring Life .................................................              77

Section 14.18 No Partnership, Etc ............................................              77

Section 14.19 Entire Agreement ...............................................              77

Section 14.20 Public Utility Regulation ......................................              78

Section 14.21 Confidentiality of Information .................................              78

Section 14.22 Reliance .......................................................              79

Section 14.23 Amendments, Etc ................................................              79

</TABLE>


                                      vi

<PAGE>

APPENDICES:

     Appendix A   Definitions and Rules of Interpretation

<TABLE>
<CAPTION>
<S>                      <C>
SCHEDULES:

  Schedule 1-A           Equity Investment
  Schedule 1-B           Indenture Trustee's Account
  Schedule 1-C           Owner Participant's Account
  Schedule 2             Pricing Assumptions
  Schedule 3.1(m)        Environmental Matters - Hazardous Substances
  Schedule 4.20          Recording and Filings
  Schedule 5.31          Maintenance of Insurance

EXHIBITS:

  Exhibit A              Description of Facility
  Exhibit B-1            Form of Bill of Sale
  Exhibit B-2            Form of Warranty Deed
  Exhibit C              Form of Facility Lease Agreement
  Exhibit D              Form of Facility Site Lease
  Exhibit E              Form of Facility Site Sublease
  Exhibit F              Form of Pass Through Trust Agreement
  Exhibit G              Form of OP Parent Guaranty
  Exhibit H              Form of Calpine Guaranty
  Exhibit I              Form of Collateral Trust Indenture
  Exhibit J              Form of OP Assignment and Assumption Agreement
  Exhibit K              List of Competitors
  Exhibit L              Form of Guarantor Assignment and Assumption Agreement
  Exhibit M              Forms of Consents
</TABLE>

                                      vii

<PAGE>

                            PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
      amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) ROCKGEN ENERGY LLC (herein, together with
     its successors and permitted assigns, called the "Facility Lessee"), a
     limited liability company organized under the laws of the State of
     Wisconsin, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (RG-2), (the "Calpine Guaranty"), (iii)
     ROCKGEN OL-2, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-2, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity except as expressly provided herein, but solely as independent
     manager under the LLC Agreement (herein in its capacity as independent
     manager under the LLC Agreement, together with its successors and
     permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a) Facility Lessee, an indirect, wholly-owned
subsidiary of Calpine, will, as of the Closing Date, own a 520 MW gas-fired
combined cycle merchant power plant located near Christiana, Wisconsin and more
fully described in Exhibit A hereto ("Facility");

          WHEREAS, Facility Lessee desires to sell to the Owner Lessor
the Undivided Interest pursuant to the Bill of Sale and lease to the Owner
Lessor the Ground Interest pursuant to the Facility Site Lease, and to lease
the Undivided Interest and sublease the Ground Interest

<PAGE>

from the Owner Lessor pursuant to the Facility Lease and the Facility Site
Sublease, respectively;

          WHEREAS, the Owner Participant desires to cause the Owner
Lessor to purchase such Undivided Interest from the Facility Lessee pursuant to
the Bill of Sale, to lease the Ground Interest from the Facility Lessee
pursuant to the Facility Site Lease, and to lease the Undivided Interest and
sublease the Ground Interest to the Facility Lessee pursuant to the Facility
Lease and Facility Site Sublease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, issue the Lessor Notes and sell such Lessor Notes to the relevant
Pass Through Trust, purchase the Undivided Interest from the Facility Lessee
pursuant to the Bill of Sale, lease the Ground Interest from Facility Lessee
pursuant to the Undivided Interest and the Ground Interest to the Facility
Lessee pursuant to the Facility Lease and Facility Site Lease and lease the
Undivided Interest and sublease the Ground Interest to the Facility Lessee
pursuant to the Facility Lease and the Facility Site Sublease, respectively;

          WHEREAS, in order to provide a portion of the Purchase Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Bill of Sale, the Owner Participant is willing to make
an investment in the Owner Lessor in an amount equal to the Equity Investment,
all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has

guaranteed all of the obligations of the Facility Lessee under the
Participation Agreement and as of the Closing Date shall guarantee all of the
obligations of the Facility Lessee under the other Operative Documents to which
the Facility Lessee is a party; and

                                        2

<PAGE>
          WHEREAS, the parties hereto desire to consummate the
transactions contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to
     (i) fund the Equity Investment and (ii) pay the Transaction Costs which
     the Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee agrees to sell the Undivided Interest to the Owner
     Lessor on the terms and conditions set forth in the Bill of Sale and to
     lease the Ground Interest to the Owner Lessor on the terms set forth in
     the Facility Site Lease; the Owner Lessor agrees to buy the Undivided
     Interest and to lease the Ground Interest from the Facility Lessee, and
     each agrees to execute and deliver the Bill of Sale and the Facility Site
     Lease;

the Owner Lessor agrees to lease the Undivided Interest to the Facility
     Lessee and to sublease the Ground Interest from the Facility Lessee on
     the terms and conditions set forth in the Facility Lease and Facility
     Site Sublease; the Facility Lessee agrees to lease the Undivided Interest
     and sublease the Ground Interest from the Owner Lessor, and each agrees
     to execute and deliver the respective Facility Lease and the Facility
     Site Sublease;

the Indenture Trustee agrees to act as the trustee under and enter into
     the Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security
     interests in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations
     of the Owner Participant under the Operative Documents pursuant to the OP
     Parent Guaranty;

                                        3

<PAGE>

the Owner Lessor agrees to use the funds received from the Owner
     Participant and the Pass Through Trusts pursuant to clause (a)(i) and
     (e), respectively, of this Section 2.1 on the Closing Date to pay the
     Purchase Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the
     other Operative Documents, and to cause each Affiliate thereof that is
     not a party hereto but is a party to an Operative Document to enter into
     such Operative Document, as the case may be (in each case, if attached as
     an Exhibit hereto, in substantially the form attached hereto).

Closing Date;  Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine LLP
     or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York City
     time, on the Scheduled Closing Date, by transferring or delivering such
     amount, in funds immediately available on such Scheduled Closing Date, to
     the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall have
     otherwise directed. All funds made available pursuant to Section 2.2(b)
     will be held by the Owner Lessor in trust for the Owner Participant and
     shall not be part of the Indenture Estate or the Lessor Estate, shall be
     invested by the Owner Lessor in accordance with clause (d) below and such
     funds shall remain the sole property of the Owner Participant unless and
     until released by the Owner Participant and made available to the Owner
     Lessor and applied to pay the Purchase Price or Transaction Costs or
     returned to the Owner Participant, as provided in this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner Lessor
     in accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor is unable to return such funds to the Owner
     Participant on such date, the Owner Lessor shall, subject to Section 2.2(c)

                                        4

<PAGE>

     above, use reasonable efforts to invest such funds from time to time at the
     written direction of Calpine, and at Calpine's sole expense and risk, in
     Permitted Investments until such funds can be returned to the Owner
     Participant. If, on the Scheduled Closing Date, the Owner Participant has
     made the Owner Participant's Commitment available to the Owner Lessor in
     accordance with Section 2.2(b), the Closing does not occur on such date and
     the Owner Lessor has not returned such funds to the Owner Participant on or
     before 1:00 p.m., New York City time, on such date, then Calpine shall
     reimburse the Owner Participant for loss of the use of such funds at the
     Applicable Rate for each day, from and including the day that such funds
     were made available to the Owner Lessor by the Owner Participant to, but
     excluding the earlier of (i) the day that such funds have been returned to
     the Owner Participant pursuant to Section 2.2(c) (funds received by the
     Owner Participant after 1:00 p.m., New York City time, of any day shall be
     deemed to be returned on the next succeeding Business Day) and (ii) the
     Closing Date. Subject to payment for the account of the Owner Participant
     of any reimbursement for loss of use of funds due to it at the Applicable
     Rate, any net gain realized on the investment of such funds (including
     interest) shall be paid to Calpine by the Owner Lessor on the earlier of
     (i) the date such funds are returned to the Owner Participant pursuant to
     Section 2.2(c) and (ii) the Closing Date. The Owner Lessor shall not be
     liable for any interest on or loss resulting from such investments and, if
     such funds are made available to the Owner Lessor and utilized to pay the
     Purchase Price or Transaction Costs on the Closing Date, Calpine shall
     reimburse the Owner Lessor for any net loss realized on the investment of
     such funds. If such funds are not so utilized, Calpine shall, in addition
     to its obligation to reimburse the Owner Participant for loss of use as
     provided above, reimburse the Owner Participant on the date such funds are
     returned to the Owner Participant for any net loss realized on the
     investment of such funds. In order to obtain funds for payment of the
     Purchase Price or Transaction Costs or to return funds made available to
     the Owner Lessor by the Owner Participant, the Owner Lessor is authorized
     to sell any investments or obligations purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,125,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner Participant
     shall be paid by Calpine. If the Overall Transaction is not consummated for
     any reason (including as a result of the Facility Lessee terminating this
     Agreement pursuant to Section 12(a)), then Calpine shall bear all
     Transaction Costs;

                                        5

<PAGE>

    provided, however, that Calpine shall not be obligated to pay
    Transaction Costs incurred by the Owner Participant if the Overall
    Transaction is not consummated on the basis of the provisions of this
    Agreement due to a failure of the Owner Participant to satisfy any
    condition to the Closing required to be satisfied by the Owner
    Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Wisconsin. The Facility Lessee is duly licensed or qualified and
     in good standing (as evidenced by a certificate of status issued by the
     Wisconsin Department of Financial Institutions) in each jurisdiction where
     the character of its properties or the nature of its activities makes such
     qualification necessary, and the Facility Lessee has the power and
     authority to (x) own or hold under lease the property it purports to own or
     hold under lease, (y) carry on its business as now being conducted and as
     presently proposed to be conducted and (z) take all actions as may be
     necessary to consummate the transactions contemplated hereunder and under
     the other Operative Documents to which each is a party. The Facility Lessee
     is an indirect wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party have
     been, or when executed and delivered will be, duly authorized, executed and
     delivered by all necessary action by the Facility Lessee, and, assuming the
     due authorization, execution and delivery by each other party thereto, this
     Agreement constitutes and, when executed and delivered, the other Operative
     Documents to which the Facility Lessee is or will be a party will
     constitute the legal, valid and binding obligations of the Facility Lessee,
     enforceable against the Facility Lessee in accordance with its terms,
     except as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

Non-Contravention. (1) The execution, delivery and performance by the Facility
     Lessee of this Agreement and each of the other Operative Documents to which
     it is or will be a party, the consummation by the Facility Lessee of the
     transactions contemplated hereby and thereby, and compliance by the
     Facility Lessee with the terms and provisions hereof and thereof, do not
     and will not (i) contravene any Applicable Law binding on the Facility
     Lessee or its property, or its organizational documents, (ii) constitute a
     default by the Facility Lessee under, or result in the creation of any Lien
     upon the property of the Facility Lessee (other than pursuant to any
     Operative Document) under any indenture, mortgage or other material

                                        6

<PAGE>

     contract, agreement or instrument to which the Facility Lessee is a party
     or by which the Facility Lessee or any of its property is bound, (iii)
     contravene any Organic Document of the Facility Lessee or (iv) require the
     consent or approval of any Person which has not already been obtained, in
     each case with respect to clauses (i), (ii) and (iv) above, which would
     reasonably be expected to have a Material Adverse Effect.

          (2)   Neither the sale of the Undivided Interest or the lease of
the Ground Interest by Facility Lessee to the Owner Lessor, nor the grant by the
Owner Lessor to the Indenture Trustee of the Liens and security interests in the
Undivided Interest and the applicable Operative Documents executed in connection
therewith to secure its obligations thereunder does or will constitute a default
by the Facility Lessee or the Owner Lessors under the Ownership and Operation
Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner Lessor
     or any Affiliate of any of them or any assignee or transferee of any of the
     Owner Participant (or any Affiliate of any such transferee or assignee) is
     an "electric utility" or a "public utility" or a "public utility holding
     company" or any similar entity subject to public utility regulation under
     any Applicable Law immediately prior to the Closing, with respect to the
     participation by the Owner Participant, the Owner Lessor in the Overall
     Transaction, other than (i) any Permit where the failure to obtain or
     maintain such Permit would not be reasonably likely to result in a Material
     Adverse Effect, (ii) the FERC Orders, (iii) as may be required under
     Applicable Law providing for the supervision or regulation of the Owner
     Participant, the Owner Lessor or any Affiliate of any of them as a result
     of investing, lending or other commercial activity in which the Owner
     Participant, the Owner Lessor or any Affiliate of any of them is or may be
     engaged other than the transactions contemplated hereby or by any of the
     other Operative Documents, (iv) as may be required under existing
     Applicable Laws to be obtained, given, accomplished or renewed at any time,
     or from time to time, in each case, after the Closing Date and which the
     Facility Lessee has no reason to believe will not be timely obtained and
     the lack of which would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of criminal or material civil
     liability being incurred by the Owner Participant, the Owner Lessor, the
     Indenture Trustee or the Pass Through Trustees, (v) in connection with any
     modification to or rebuilding or replacement of the Facility or any portion
     thereof that may occur in the future, (vi) as may be required in connection
     with any refinancing of the Lessor Notes or the Certificates or the
     issuance of Additional Lessor Notes or Additional Certificates, (vii) as
     may be required in consequence of any transfer of the Member Interest or
     any transfer of the Undivided Interest or the Owner Lessor's Interest, or
     any part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any relinquishment
     of the use or operation of the Facility by the Facility Lessee, (viii)
     appropriate filing and recording to perfect the Lien of the Collateral
     Trust Indenture, if required, and the ownership and

                                        7

<PAGE>

     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against the
     Facility Lessee or any other Calpine Party before any Governmental Entity
     which (i) questions the validity of the Operative Documents or the ability
     of the Facility Lessee or such other Calpine Party to perform its
     obligations under the Operative Documents to which the Facility Lessee or
     such other Calpine Party is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to have a Material Adverse
     Effect or otherwise materially adversely affect the Undivided Interest
     leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or both
     would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc. (1) The
     chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site and the Operative Documents is located at: c/o Calpine
     Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Title; Liens. (1) On and before the Closing Date, the Facility Lessee has (i)
     good and valid title to the Facility, free and clear of all Liens other
     than Permitted Closing Date Liens, and (ii) good and valid title to the
     Facility Site free and clear of all Liens other than Permitted Closing Date
     Liens.

              (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid title to the Undivided Interest will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Closing Date Liens, and (B) good and valid leasehold interest in
the Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

              (3)   When duly authorized, executed and delivered by each of
the parties thereto, the Collateral Trust Indenture will create a valid and,
when the filings and recordings to be made pursuant to Section 4.20 have been
made, first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or

                                        8

<PAGE>

payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien in
favor of the Indenture Trustee in the Indenture Estate to the extent such Lien
may be perfected by filings or recordings.

              (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents) or the use of or the exercise by the
Owner Lessor of its rights under the Bill of Sale or the Facility Site Lease or
the Facility Lease, in a manner which could reasonably be expected to have a
Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (as defined in Regulations T, U or X
     of the Federal Reserve Board), and no part of the proceeds of Lessor Notes
     or the Equity Investment will be used by any Calpine Party, directly or
     indirectly, for the purpose of buying or carrying any margin stock within
     the meaning of Regulation U of the Board of Governors of the Federal
     Reserve System (12 CFR 221), or for the purpose of buying or carrying or
     trading in any securities under such circumstances as to involve such
     Person in a violation of Regulation X of said Board (12 CFR 224) or to
     involve any broker or dealer in a violation of Regulation T of said Board
     (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility company," a
     "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party will not
     subject the Facility Lessee to such regulation under the Holding Company
     Act and do not violate any provision of the Holding Company Act or any rule
     or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, or in any security or lease the offering of which for
     the purposes of the Securities Act would be deemed to be part of the same
     offering as the offering of the Member Interest, the Lessor Notes or the
     Certificates or any part thereof or solicited any offer to acquire any of
     the same, in any such case, in violation of the registration requirements
     of Section 5 of the Securities Act.

Environmental Matters.  Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility, or the Facility Site; (ii) the

                                        9

<PAGE>

Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at which any Hazardous Substances have been
generated, stored, treated or disposed by or on behalf of the Facility Lessee or
such other Calpine Party) to a Release or threatened Release of any Hazardous
Substance generated, used or stored at or Released in, on, under or from the
Facility or the Facility Site; (iii) the Facility or the Facility Site is
subject to a Lien in favor of any Governmental Entity in response to a Release
or threatened Release of Hazardous Substances or (iv) the Facility or the
Facility Site is or is asserted to be in violation of or not in compliance with
any Environmental Law, in any case with respect to clauses (ii), (iii) or (iv),
which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not
and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site, or (B) at, on, under or from any other location
resulting from or arising in connection with the operation by any Person of the
Facility or the Facility Site, that in each case could reasonably be expected to
have a Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or the
Facility Site, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or, maintenance of the Facility or Facility Site in
any material respect, or (iii) any criminal or material civil liability being
incurred by the Owner Participant, the Owner Lessor, the Lessor Manager, the
Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease
or maintain the Facility and the Facility Site in accordance with the Operative
Documents and the Ownership and Operation Agreement and Environmental Laws have
been obtained on behalf of the Owner Lessor or by the Facility Lessee and they
are final, in proper form, and in full force and effect, with all appeal periods
expired, and the Facility Lessee is in compliance with the provisions of all
such permits, except where the failure to obtain, maintain the effectiveness of,
or comply with such permits would not reasonably be expected to have a Material
Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture or
loss of, or imposition of a material lien on, the Facility or the Facility Site,
(ii) the impairment of the ownership (or leasehold or easement interest in),
use, operation or maintenance of the Facility or the Facility Site in any
material respect, or (iii) any criminal or material civil liability being
incurred by the Owner Participant, the Owner Lessor, the Indenture Trustee, the
Lessor Manager, the Pass Through Trustees or the Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and interests
     to be possessed on the Closing Date by the Facility Lessee with respect to
     the Undivided Interest and the Ground Interest and based upon the Facility
     Lessee's reasonable expectations and on Applicable Law in effect on and as
     of the Closing Date, the rights and interests made available to the Owner
     Lessor pursuant to the Operative Documents and the rights contemplated by
     the Facility Lease to be made available under such Operative Documents,
     permit on a commercially practicable basis

                                       10

<PAGE>

     during the Facility Lease Term and the period following the expiration or
     termination of the Facility Lease Term, as applicable, until the end of
     the Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be filed
     by it and has paid all Taxes shown to be due and payable on such returns or
     pursuant to any assessment received by it (other than Taxes and assessments
     the payment of which is being contested in good faith by such Person and
     with respect to which appropriate accounting reserves have to the extent
     required by GAAP been set aside) and neither the Facility Lessee nor any
     other Calpine Party has any Actual Knowledge of any actual or proposed
     assessment in connection therewith which, either in any case or in the
     aggregate, would reasonably be expected to have a Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State of
     New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws, regulations
     and ordinances relating to the operations, maintenance, use, lease or
     ownership of the Facility and the Facility Site, except where the
     noncompliance would not reasonably be expected to have a Material Adverse
     Effect or involve any danger of (i) foreclosure, sale, forfeiture or loss
     of, or imposition of a material lien on, the Facility or the Facility Site,
     (ii) the impairment of the ownership (or leasehold or easement interest
     in), use, operation or maintenance of the Facility or the Facility Site in
     any material respect, or (iii) any criminal or material civil liability
     being incurred by the Owner Participant, the Owner Lessor, the Lessor
     Manager, the Indenture Trustee or the Pass Through Trustees, including
     subjecting the Owner Participant or the Owner Lessor to regulation as a
     public utility under Applicable Law. None of the Calpine Parties is in
     default of any judgments, orders or decrees of any Governmental Entity
     relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and delivery
     of the Operative Documents and the issuance and sale of the Lessor Notes
     under the Collateral Trust Indenture and the Certificates under the Pass
     Through Trust Agreements will be exempt from, or will not involve any
     transaction which is subject to, the prohibitions of either Section 406 of
     ERISA or Section 4975 of the Code and will not involve any transaction in
     connection with which a penalty could be imposed under Section 502(i) of
     ERISA or a tax could be imposed pursuant to Section 4975 of the Code.

                                       11

<PAGE>

Insurance.  All insurance required to be obtained pursuant to Schedule
     5.31 is in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of the
     Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual Knowledge
     of the Facility Lessee, no Burdensome Buyout Event has occurred or will
     occur upon the execution and delivery of the Operative Documents and the
     Facility Lessee does not have Actual Knowledge of any event that could
     reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all services
     of public utilities necessary for use and operation of the Facility as
     currently being used and as contemplated by the applicable Operative
     Documents, except where the failure to have any such services or public
     utilities available would not result in a material adverse effect with
     respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement agreements,
     declarations, development agreements or recorded restrictions or covenants
     relating to the Facility or the Facility Site, which would reasonably be
     expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to the
     Facility or the Facility Site, in either case, in any manner which would
     reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no outstanding
     written notices from any Governmental Entity of any violation of, or that
     the Facility or Facility Site is not in compliance with, any and all
     Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility or
     Facility Site by any Governmental Entity or by any insurance company which
     currently issues any insurance to the Facility Lessee or by any board of
     fire

                                       12

<PAGE>

     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation, maintenance,
     leasing and financing of the Facility and Facility Site and activities
     incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site includes
     improved real property that is located in an area that has been identified
     by the Director of the Federal Emergency Management Agency as an area
     having special flood hazards and in which flood insurance has been made
     available under the National Flood Insurance Act of 1968, as amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby (including the transfer of certain of its
     assets and properties to the Owner Lessor) in good faith and without any
     intent to defraud creditors of the Facility Lessee or subsequent
     purchasers. The execution and delivery of the Operative Documents to which
     the Facility Lessee is a party will not render the Facility Lessee
     insolvent under GAAP or leave the Facility Lessee with assets whose present
     fair valuation of assets is less than the present fair valuation of the
     Facility Lessee's debts. As used in this Section 3.1(dd), "debts" includes
     any and all liabilities, whether matured or unmatured, liquidated or
     unliquidated, absolute, fixed or contingent, and whether or not such
     liabilities are required under GAAP to be shown on the Facility Lessee's
     balance sheet. The execution and delivery of the Operative Documents to
     which the Facility Lessee is a party will not leave it with property
     remaining in its hands which would constitute unreasonably small assets or
     capital, and the Facility Lessee has and, after giving effect to such
     transactions will have, an adequate amount of assets and capital to engage
     in its business now and in the future, based on the actual and anticipated
     needs for capital of the businesses anticipated to be conducted by the
     Facility Lessee, and based upon the other information described herein.
     After giving effect to the transactions contemplated under the Operative
     Documents, the Facility Lessee will be able to pay all of its debts and
     liabilities, including unrecorded contingent liabilities, as they mature,
     the Facility Lessee will have positive cash flow after paying all of its
     scheduled and anticipated debt as it matures, and the Facility Lessee will
     realize sufficient monies from current assets in the ordinary and usual
     course of business to pay recurring current debt, short-term debt and
     long-term debt as such debts mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid or
     become obligated to pay any fee or

                                       13

<PAGE>

     commission to any broker, finder or intermediary for or on account of
     arranging the financing of the transactions contemplated by the Operative
     Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents shall be or become (i)
     subject to regulation as a "public utility company," "holding company," an
     "affiliate" of a "holding company" or a "subsidiary company" of a "holding
     company" within the meaning of PUHCA or (ii) a "public utility" (except
     that the Facility Lessee will be a public utility subject to the Federal
     Power Act with authority to sell wholesale electricity at market-based
     rates and with waivers of regulations customarily granted to a public
     utility that sells wholesale power at market-based rates), a "transmitting
     utility," or an "electric utility" within the meaning of the Federal Power
     Act, (iii) subject to state regulation of rates or organizational
     requirements for electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor the
     written information furnished to the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Indenture Trustee and the Pass Through Trustees by
     or on behalf of the Facility Lessee or any of its Affiliates in connection
     with the transactions contemplated hereby contains any untrue statement of
     a material fact or omits to state a material fact necessary in order to
     make the statements contained therein, in light of the circumstances under
     which they were made, not misleading; provided, that no representation or
     warranty is made with regard to (i) any projections or other
     forward-looking statements provided by or on behalf of the Facility Lessee,
     or (ii) the descriptions of the Operative Documents or the tax consequences
     to beneficial owners of Certificates; provided, further, each of the
     Transaction Parties acknowledge and agrees that (i) Calpine has heretofore
     provided to the Appraiser, solely in order to assist the Appraiser in
     connection with the preparation of the appraisal to be delivered by the
     Appraiser to certain of the Transaction Parties at the Closing, certain (1)
     general market information, (2) information about the Wisconsin energy
     markets and (3) information passed along from other Persons and (ii) that
     the Facility Lessee makes no representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by American Transmission Company and has access to
     transmission services and ancillary services sufficient to sell the net
     generating capacity of the Facility at wholesale, and the Facility Lessee
     has the authority to sell wholesale electric power from the net generating
     capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings referenced
     in Section 4.8 and, except with respect to the FERC Owner Lessor EWG Orders
     and the FERC Orders referred to in clause (v) of the definition of "FERC
     Orders" in Appendix A hereto, received from FERC the orders referenced
     therein.

                                       14

<PAGE>

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to be
     fully taxable at the highest federal tax rate throughout the Facility Lease
     Term; for the avoidance of doubt, this representation is not intended to be
     construed as nor shall it be deemed to be a guaranty as to any such
     Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and is
     currently capable of producing at least 520 MW of capacity and complies in
     all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

Representations and Warranties of the Owner Lessor. The Owner Lessor represents
and warrants that as of the date of execution and delivery hereof and as of the
Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of which
     the Owner Participant is the sole member, and has the power and authority
     to enter into and perform its obligations under this Agreement and each of
     the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the Owner
     Lessor is or will be a party has been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Lessor, and (ii)
     assuming the due authorization, execution and delivery of this Agreement by
     each party hereto other than the Owner Lessor, this Agreement constitutes
     and when executed and delivered each of the other Operative Documents
     (other than the Lessor Notes) to which it is or will be a party will be the
     legal, valid and binding obligations of the Owner Lessor, enforceable
     against the Owner Lessor in accordance with its terms, except as the same
     may be limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the rights of creditors
     generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the State
     of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Lessor is a party or
     by which the Owner Lessor or its property is bound, or in the creation of
     any Owner Lessor's

                                       15

<PAGE>

     Lien; provided, however, that no representation is made with respect to
     the right, power or authority of the Owner Lessor to act as operator of
     the Facility following a Lease Event of Default or the expiration or
     termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC Agreement,
     the Collateral Trust Indenture, the Lessor Notes, this Agreement or the
     other Operative Documents to which the Owner Lessor is or will be a party,
     other than any such authorization or approval or other action or notice or
     filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner Lessor,
     threatened, action, suit, investigation or proceeding against the Owner
     Lessor before any Governmental Entity which (i) questions the validity of
     the Operative Documents or the ability of the Owner Lessor to perform its
     obligations under the Operative Documents to which it is or will be a party
     or (ii) if determined adversely to it, could reasonably be expected to
     materially adversely affect the ability of the Owner Lessor to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or would materially adversely affect the Facility,
     the Facility Site or any interest therein or part thereof or the Lien of
     the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning the
     Facility, the Facility Site, the Operative Documents and the South Point
     Ground Lease with the Lessor Manager, at the Lessor Manager's address set
     forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, the offering of which for the purposes of the Securities
     Act would be deemed to be part of the same offering as the offering of the
     Member Interest, the Lessor Notes or the Certificates or any part thereof
     or solicited any offer to acquire any of the same in violation of the
     registration requirements of Section 5 of the Securities Act.

Representations and Warranties of the Lessor Manager and the Trust Company. The
Trust Company (only with respect to representations and warranties expressly
relating to the Trust Company) and the Lessor Manager hereby severally represent
and warrant that as of the date of execution and delivery hereof and as of the
Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate

                                       16

<PAGE>

     power and authority, as Lessor Manager and/or in its individual capacity
     to the extent expressly provided herein or in the LLC Agreement, to enter
     into and perform its obligations under the LLC Agreement, this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii) assuming
     the due authorization, execution and delivery of the LLC Agreement by the
     Owner Participant, the LLC Agreement constitutes the legal, valid and
     binding obligation of the Trust Company, enforceable against it in its
     individual capacity or as Lessor Manager, as the case may be, in accordance
     with its terms, except as may be limited by bankruptcy, insolvency,
     fraudulent conveyance, reorganization, arrangement, moratorium or other
     laws relating to or affecting the rights of creditors generally and by
     general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a party
has been or when executed and delivered will be duly authorized, executed and
delivered by the Trust Company or the Lessor Manager, and (ii) assuming the due
authorization, execution and delivery of this Agreement by each party hereto
other than the Trust Company or the Lessor Manager, this Agreement constitutes
and when executed and delivered each of the other Operative Documents to which
it is or will be a party will be the legal, valid and binding obligations of the
Lessor Manager and, to the extent expressly provided herein, the Trust Company,
as the case may be, enforceable against the Lessor Manager and, to the extent
expressly provided herein, the Trust Company, in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it is
     or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the case
     may be, with the terms and provisions hereof and thereof, do not and will
     not contravene any Applicable Law of the State of Utah governing the Trust
     Company or any United States federal law governing the banking or trust
     powers of the Trust Company, or the LLC Agreement or its organizational
     documents or bylaws or contravene the provisions of, or constitute a
     default by the Trust Company under any indenture, mortgage or other
     material contract, agreement or instrument to which the Trust Company is a
     party or by which the Trust Company or its property is bound, or in the
     creation of any Owner Lessor's Lien; provided, however, that no
     representation is made with respect to the right, power or authority of the
     Trust Company or the Lessor Manager to act as operator of the Facility
     following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff)
     and (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the

                                       17

<PAGE>

     Trust Company or the Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement or the other Operative Documents to which the
     Trust Company or the Lessor Manager is or will be a party, other than any
     such authorization or approval or other action or notice or filing as has
     been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably be
     expected to materially adversely affect the ability of the Trust Company
     either in its individual capacity or as Lessor Manager, as the case may be,
     to perform its obligations under the LLC Agreement, this Agreement or any
     other Operative Document to which it is or will be a party or would
     materially adversely affect the Facility, the Facility Site or any interest
     therein or part thereof or the Lien of the Indenture Trustee on the
     Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered or
     sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease, the
     offering of which, for the purposes of the Securities Act, would be deemed
     to be part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any offer
     to acquire any of the same in violation of the registration of Section 5 of
     the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and perform
     its obligations under this Agreement, the LLC Agreement and the Tax
     Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered will
     be duly authorized, executed and delivered by the Owner Participant and
     assuming the due authorization, execution and delivery by each other party
     thereto, this Agreement, the LLC Agreement, the Tax Indemnity Agreement and
     any other Operative Document to which the Owner Participant is or will be a
     party constitute or when executed and delivered will constitute the legal,
     valid and binding obligations of the Owner Participant, enforceable against
     the Owner Participant in accordance with their respective terms, except as
     the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

                                       18

<PAGE>

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions contemplated
     hereby and thereby, and the compliance by the Owner Participant with the
     terms and provisions hereof and thereof, do not and will not contravene any
     Applicable Law binding on the Owner Participant, or its organizational
     documents, or contravene the provisions of, or constitute a default under
     any indenture, mortgage or other material contract, agreement or instrument
     to which the Owner Participant is a party or by which the Owner Participant
     or its property is bound or result in the creation of any Owner
     Participant's Lien (other than any Lien created under any Operative
     Document) upon the Lessor Estate, the Facility Site or any interest therein
     or part thereof (it being understood that no representation or warranty is
     being made as to (i) any Applicable Laws relating to the particular nature
     of the Facility or the Facility Site or (ii) other than its representations
     set forth in Section 3.4(g), ERISA or Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity is
     required for the due execution, delivery or performance by the Owner
     Participant of this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement or any other Operative Document to which the Owner Participant is
     or will be a party, other than any authorization or approval or other
     action or notice or filing as has been duly obtained, taken or given (it
     being understood that no representation or warranty is being made as to any
     Applicable Laws relating to the Facility or the Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding against
     the Owner Participant before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Participant to perform its obligations under the Operative Documents to
     which it is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to materially adversely affect the ability of the
     Owner Participant to perform its obligations under the LLC Agreement, this
     Agreement or any other Operative Document to which it is or will be a party
     or would materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly, constitutes
     or is deemed to constitute assets (within the meaning of ERISA and any
     applicable rules, regulations and court decisions thereunder) of any
     "employee benefit plan" (as defined in Section 3(3) of ERISA) that is
     subject to ERISA, of any Transaction Party and ERISA Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present intention
     of distributing such Member Interest or any part thereof in any manner
     which would require registration under or would

                                       19

<PAGE>

     violate the Securities Act, but without prejudice, however, to the right
     of the Owner Participant at all times to sell or otherwise dispose of all
     or any part of such Member Interest under an exemption from registration
     available under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member Interest,
     the Lessor Notes or the Certificates or any part thereof, or in any similar
     security or lease, or in any security or lease the offering of which for
     the purposes of the Securities Act would be deemed to be part of the same
     offering as the offering of the Member Interest, the Lessor Notes or the
     Certificates or any part thereof or solicited any offer to acquire any of
     the same in violation of the registration requirements of Section 5 of the
     Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the foregoing,
     under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact
     or circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Indenture Trustee
     and/or in its individual capacity to the extent expressly provided herein
     or in the Collateral Trust Indenture, to enter into and perform its
     obligations under the Collateral Trust Indenture, this Agreement and each
     of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the Lease
     Indenture Company, and (ii) assuming the due authorization, execution and
     delivery of this Agreement by each party hereto other than the Indenture
     Trustee and the Lease Indenture Company, this Agreement constitutes a
     legal, valid and binding obligation of the Lease Indenture Company and the
     Indenture Trustee, enforceable against the Lease Indenture Company or the
     Indenture Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the rights of
     creditors generally and by general principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and

                                       20

<PAGE>

delivery of each of the other Operative Documents by each party thereto
other than the Indenture Trustee, each of the other Operative Documents
to which the Indenture Trustee is or will be a party constitutes or when
executed and delivered will be a legal, valid and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by general
principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company, in
     its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Lease Indenture Company, in its individual
     capacity or as Indenture Trustee, as the case may be, of the transactions
     contemplated hereby and thereby, and the compliance by the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, with the terms and provisions hereof and thereof, do not and will
     not contravene any Applicable Law of the State of Connecticut or the United
     States of America governing the Lease Indenture Company or the banking or
     trust powers of the Lease Indenture Company, or its articles of association
     or by-laws, or contravene the provisions of, or constitute a default by the
     Lease Indenture Company under or pursuant to any indenture, mortgage or
     other material contract, agreement or instrument to which the Lease
     Indenture Company is a party or by which the Lease Indenture Company or its
     property is bound, or result in the creation of any Lien attributable to
     the Lease Indenture Company upon the Indenture Estate, the Facility Site or
     any interest therein or any part thereof (other than the Lien of the
     Collateral Trust Indenture), which would materially adversely affect the
     ability of the Lease Indenture Company, in its individual capacity or as
     Indenture Trustee, as the case may be, to perform its obligations under
     this Agreement or the other Operative Documents to which it is or will be a
     party or would materially adversely affect the Facility, the Facility Site
     or any interest therein or part thereof or the security interest of the
     Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity of
     the State of Delaware or of the United State of America governing its
     banking or trust powers is required for the due execution, delivery or
     performance by the Lease Indenture Company or the Indenture Trustee, as the
     case may be, of this Agreement or the other Operative Documents to which
     the Indenture Trustee is or will be a party, other than any such
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of the
     Lease Indenture Company or the Indenture Trustee to perform its obligations
     under the Operative Documents to which it is or will be a party or (ii) if

                                       21

<PAGE>

     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Lease Indenture Company to perform its
     obligations under this Agreement or any other Operative Document to which
     it is or will be a party or could reasonably be expected to materially
     adversely affect the Facility, the Facility Site or any interest therein or
     part thereof or the Lien of the Indenture Trustee on the Indenture Estate.

Representations, Warranties and Covenants of the Pass Through Trustees and the
Pass Through Company. The Pass Through Company and the Pass Through Trustees
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of the
     United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly provided
     herein or in the Pass Through Trust Agreements, to enter into and perform
     its obligations under the Pass Through Trust Agreements, this Agreement and
     each of the other Operative Documents to which it is or will be a party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the Pass
     Through Trustees and the Pass Through Company and (B) assuming the due
     authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through Trustee,
     as the case may be, in accordance with its terms, except as the same may be
     limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the other
     Operative Documents by each party thereto other than the Pass Through
     Company or such Pass Through Trustee, as the case may be, each of the other
     Operative Documents to which the Pass Through Company or any Pass Through
     Trustee is or will be a party constitutes or when executed and delivered
     will constitute a legal, valid and binding obligation of the Pass Through
     Company or such Pass Through Trustee, enforceable against the Pass Through
     Company or such Pass Through Trustee, as the case may be, in accordance
     with its terms, except as the same may be limited by bankruptcy,
     insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
     or other laws relating to or affecting the rights of creditors generally
     and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will be
     a party, the consummation by the Pass

                                       22

<PAGE>

     Through Company, in its individual capacity or as Pass Through Trustee,
     as the case may be, of the transactions contemplated hereby and thereby,
     and the compliance by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, with the terms
     and provisions hereof and thereof, do not and will not contravene any
     Applicable Law of the United States of America or the State of
     Connecticut governing the Pass Through Company or the banking or trust
     powers of the Pass Through Company, or its organizational documents or
     by-laws, or contravene the provisions of, or constitute a default by the
     Pass Through Company under, or result in the creation of any Lien
     attributable to the Pass Through Company upon the Certificates or any
     indenture, mortgage or other material contract, agreement or instrument
     to which the Pass Through Company is a party or by which the Pass Through
     Company or its property is bound which would materially adversely affect
     the ability of the Pass Through Company, in its individual capacity or as
     Pass Through Trustee, as the case may be, to perform its obligations
     under this Agreement or the other Operative Documents to which it is a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     any Pass Through Trustee in the Indenture Estate; provided, however, that
     no representation is made with respect to the right, power or authority
     of the Pass Through Company or any Pass Through Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and (hh)
     of Section 3.1 are true, no authorization or approval or other action by,
     and no notice to or filing or registration with, any Governmental Entity
     governing its banking or trust powers is required for the due execution,
     delivery or performance by the Pass Through Company or any Pass Through
     Trustee, as the case may be, of this Agreement or the other Operative
     Documents to which such Pass Through Trustee is or will be a party, other
     than any such authorization or approval or other action or notice or filing
     as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the case
     may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                       23

<PAGE>

such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                       24

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 520 MW of
capacity and shall comply in all material respects with the other specifications
set forth in the purchase and construction contracts for the Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall Transaction
to be delivered at Closing (including, without limitation, the Offering
Circular)) shall have been duly authorized, executed and delivered by the
parties thereto (if attached as an Exhibit hereto, in substantially the form
attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and effect,
and executed counterparts of each shall have been delivered to each of the
parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained in
the Certificate Purchase Agreement shall have been satisfied or waived by the
Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner Lessor
through the purchase by the Pass Through Trustees of the applicable Lessor
Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency of
all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

Representations and Warranties. The representations and warranties of each party
hereto set forth in Section 3 shall be true and correct on and as of the Closing
Date with the same effect as though made on and as of the Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
and the FERC Orders set forth in clause (v) of the definition of "FERC Orders"
set forth in Appendix A hereto, the Owner Participant and the Pass Through
Trustees shall have received evidence of receipt of the FERC Orders.

                                       25

<PAGE>

Consents. (a) All permits, licenses, approvals and consents (including
     management, credit and other internal approvals of the Transaction Parties,
     but excluding the Third Party Consents referred to in (b) below) necessary
     to consummate the Overall Transaction and to own and operate the Facility
     as currently operated shall have been duly obtained and shall be in full
     force and effect and in the form and substance satisfactory to each of the
     Transaction Parties.

Each Third Party Consent shall have been obtained and shall be in full force and
     effect substantially in the form attached hereto as Exhibit O which is
     applicable to the relevant third party granting such consent; provided that
     if any Third Party Consent is not substantially in the form attached hereto
     as Exhibit O, an authorized officer of Calpine shall provide a certificate
     to the Owner Lessor, the Indenture Trustee and the Pass Through Trustee
     certifying that any differences between the form of such consent attached
     hereto and the executed version are not materially adverse to any of the
     Indenture Trustee, the Pass Through Trustee, the Noteholders, the
     Certificateholders or the Owner Lessor.

                                       26

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the FERC Owner Lessor EWG Orders and the FERC Orders set forth in clause (v) of
the definition of "FERC Orders" set forth in Appendix A hereto, all Applicable
Permits required to be in effect on the Closing Date in connection with the
consummation of the transactions contemplated by the Operative Documents shall
have been issued and shall be in full force and effect; and all such Applicable
Permits shall be final, in full force and effect on the Closing Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all premiums
thereon shall be current. The Owner Participant, the Manager, the Lessor
Manager, the Indenture Trustee and the Pass Through Trustees shall have received
a certificate or certificates (or binders, if certificates are not then
available) dated the Closing Date of Summit Global Partners Insurance Services
or an independent insurance broker or carrier reasonably satisfactory to such
Persons stating that such insurance complies with the requirements of Schedule
5.31, is in full force and effect and all premiums then due and payable in
connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a bringdown certificate
(which certificate shall be in form and substance satisfactory to the Owner
Participant) from the surveyor with respect to its survey of the Facility Site
dated February 22, 2000.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

Letter from the Appraiser. Each of the Owner Lessor and the Manager shall have
received a satisfactory letter of the Appraiser setting forth the conclusions of
the Closing Appraisal as to the fair market value and remaining economic useful
life of the Facility as of the Closing Date and the methodology of determination
thereof.

                                       27

<PAGE>

Other Reports. The Owner Participant, the Indenture Trustee and the Pass Through
Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the sale by the Facility Lessee of its interest in the Undivided Interest to the
Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to the Facility
Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special regulatory
counsel to the Facility Lessee, (d) Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, S.C., Wisconsin counsel to the Facility Lessee, the Owner
Participant, the Owner Lessor and the Initial Purchasers, (e) Karen Scowcroft,
Esq., in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP, counsel
to the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP, counsel
to the Lease Indenture Company and the Indenture Trustee, (h) Bingham Dana LLP,
counsel to the Pass Though Trustees and the Pass Through Company, and (i) Ray
Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case in form
and substance reasonably satisfactory to each Transaction Party. Each such
Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed to
such parties.

Recordings and Filings. All filings and recordings listed on Schedule 4.20
hereto shall have been duly made and all filing, recordation, transfer and other
fees payable in connection therewith shall have been paid; and the filing of all
precautionary financing statements under the Uniform Commercial Code of
Wisconsin and any other documents as may be reasonably requested by counsel to
the Owner Participant, the Indenture Trustee or the Pass Through Trustees to
perfect (i) the Owner Lessor's Interest, or any part thereof or interest therein
and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents shall have been satisfied
or waived and the Owner Participant shall be satisfied that the Facility shall
be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                       28

<PAGE>

No Changes in Applicable Law. No change shall have occurred in Applicable Law or
the interpretation thereof by any competent court or other Governmental Entity
that would make it illegal for the Owner Participant, the Owner Lessor, the
Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the Facility
Lessee, to participate in any of the transactions contemplated by the Operative
Documents or would materially adversely affect the Facility or the Facility
Site. On the Closing Date, each Certificateholder's purchase of Lessor Notes
shall (i) be permitted by the laws and regulations of each jurisdiction to which
such Certificateholder is subject, (ii) not violate any Applicable Law
(including Regulation U, T or X of the Board of Governors of the Federal Reserve
System) and (iii) not subject any Certificateholder to any tax, penalty or
liability under or pursuant to any Applicable Law, which Applicable Law was not
in effect on the date hereof. If requested by any Certificateholder, such
Certificateholder shall have received an Officer's Certificate of the Owner
Lessor, in form and substance satisfactory to such Certificateholder, certifying
as to such matters of fact as such Certificateholder may reasonably specify to
enable such Certificateholder to determine whether such purchase is so
permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and CT
Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the other
Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

                                       29

<PAGE>

Lien Search. The Owner Participant (with a copy to the Indenture Trustee) shall
have received Lien searches with respect to the Facility Lessee in form and
substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have a
Material Adverse Effect (including, but not limited to, the Facility Lessee, the
Owner Participant, the Owner Lessor or the Certificateholders being subject to
or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates or
the financial and organizational regulation of electric utilities), nor shall
any order, judgment or decree have been issued or proposed by any Governmental
Entity at the time of the Closing Date, to set aside, restrain, enjoin or
prevent the consummation of the Operative Documents or any of the Transactions
contemplated by any of the Operative Documents.

No Material Adverse Change. The annual reports, information, documents and other
reports referred to in Section 3.2(a) of the Calpine Guaranty shall have been
received by the Owner Participant, and there shall have been no material adverse
change in the financial condition, business assets or operation of Calpine and
its Consolidated Subsidiaries since the date of such annual reports,
information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

Payment of Fees and Expenses. Without limiting the provisions of Section 2.3,
all Transaction Costs invoiced at least 3 Business Days prior to Closing to the
Owner Participant with a copy to the Facility Lessee shall be paid promptly
after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

                                       30

<PAGE>

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets.  The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents to
     which Calpine is a party in a manner reasonably satisfactory to the Owner
     Participant and the Owner Lessor or (B) Calpine's obligations under the
     Calpine Guaranty have been succeeded to in accordance with Section 8.4(b)
     of the Calpine Guaranty, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each
     succeeding or surviving entity and the Calpine Guaranty shall remain in
     full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through (vi)
     of this Agreement (with appropriate conforming changes to take into account
     the nature of the transactions referred to hereunder) have been satisfied
     in connection with such transfer, and (iii) each succeeding or surviving
     entity shall be organized under the laws of the United States, any state
     thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility Lessee
     under this Participation Agreement and each other Operative Document to
     which the Facility Lessee was a party immediately prior to such
     transaction, with the same effect as if such entity had been named herein
     and therein. The Facility Lessee will pay the costs and expenses (including
     reasonable attorneys' fees and expenses) of the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
     Trustees and the Certificateholders in connection with any transaction
     contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create, incur,
assume or suffer to exist any Indebtedness (including without limitation any
guaranty or other contingent obligations) except (i) by reason of endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of the Facility Lessee's business, (ii) indemnities in respect
of unfiled mechanics' liens and other liens permitted by clause (d) of the
definition of "Permitted Liens", (iii) contingent obligations set forth in, or
incurred in connection with, or indemnities set forth in, the Operative
Documents, (iv) unsecured indemnities provided

                                       31

<PAGE>

by, and other unsecured contingent obligation incurred by, the Facility Lessee
in connection with either (x) easements relating to its applicable interest in
the Facility or the Facility Site or (y) any contract, agreement or other
document or instrument relating to the RockGen project which is entered into in
the ordinary course of the Facility Lessee's business, (v) customary
indemnities in favor of the title insurers providing the title policies
covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights.  The Facility Lessee shall not assign any of its rights
or obligations except as permitted by the Operative Documents.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents,
as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

Books, Records, Access. The Facility Lessee shall maintain or cause to be
maintained adequate books, accounts and records with respect to itself, the
Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all reasonable
times during normal business hours and upon reasonable prior notice and at no
risk or (except during the existence of a Lease Default or Lease Event of
Default) expense to the Facility Lessee to inspect, the Facility and Facility
Site, to examine or audit all of or any of the Facility Lessee's books, accounts
and records and make copies and memoranda thereof and, together with such
consultants, to observe the operation, maintenance and repair of the Facility;
provided, however, any such inspection shall be conducted in accordance with
Section 12 of the Facility Lease.

                                       32

<PAGE>

Other Information.

The Facility Lessee shall furnish, or shall cause to be furnished to, the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees, and their respective authorized
     representatives from time to time such information as such party shall
     reasonably request concerning the Facility and Facility Site including
     information concerning the condition, operation, maintenance and use of the
     Facility and Facility Site and such other financial or operating
     information as it shall reasonably request and which is routinely made
     available to creditors of the Facility Lessee, to the extent it possesses
     such information; provided that, the Facility Lessee reserves the right not
     to provide any information that is not otherwise publicly available to any
     transferee Owner Participant (or its Owner Lessor) if it reasonably
     believes in its good faith judgment that such transferee Owner Participant
     or any Affiliate thereof is a competitor or is an Affiliate of a competitor
     of the Facility Lessee or its Affiliates in the competitive power market,
     unless, before receiving any such information, such transferee Owner
     Participant shall have put in place (to the reasonable satisfaction of the
     Facility Lessee) appropriate confidentiality arrangements. To the extent
     such information consists of information contained in records kept by the
     Facility Lessee or any Affiliate, such information shall be furnished
     without cost to the recipient.

          (b)   The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

Warranty of Title to Facility Site.

Each Facility Lessee shall maintain good and valid fee, title to, or easement or
     other surface rights in, as applicable, its Facility Site, subject only to
     Permitted Liens.

Each Facility Lessee shall maintain good and valid title to all of its other
     properties and assets (other than properties and assets disposed of in the
     ordinary course of business including any sale, transfer or other
     disposition of any obsolete, surplus or worn out equipment, parts, supplies
     or other materials or assets to the extent permitted by the Operative
     Documents), subject only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the

                                       33

<PAGE>

Internal Revenue Service to the effect that such Plan (and trust, if any) meets
the requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at
all times be in compliance in all material respects with applicable provisions
of ERISA and the Code, and (b) within fifteen (15) days after (i) the
occurrence of any reportable event (as defined in Section 4043(c) of ERISA)
with respect to any Plan, (ii) the complete or partial withdrawal by the
Facility Lessee or any ERISA Affiliate from any Multiemployer Plan, (iii) to
the extent the Facility Lessee or any ERISA Affiliate is notified that any
Multiemployer Plan has entered reorganization status, has become insolvent, or
has terminated (or any Multiemployer Plan notifies the Facility Lessee or any
ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA, (iv)
the institution of any action to terminate a Plan in a distress termination
under Section 4041(c) of ERISA, or (v) in the case of the breach of any other
covenant contained in this Section 5.11, the Facility Lessee shall report such
occurrence or breach to the Indenture Trustee, the Pass Through Trustees, the
Owner Lessor and the Owner Participant and furnish such information as such
Persons may reasonably request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents,
it will not enter into or become bound by any contract or agreement providing
for the sale of energy produced from the Facility, or the purchase of services
to be performed at, for or in connection with, the Facility or any other
contract or agreement relating to the Facility that (i) has a term that extends
beyond the Basic Lease Term or the scheduled expiration of any Renewal Lease
Term then in effect or elected by the Facility Lessee, unless such contract or
agreement may be terminated by the Facility Lessee without material costs or
obligation prior to the Basic Lease Term or the scheduled expiration of such
Renewal Lease Term, as the case may be or (ii) results in any lien, encumbrance,
restriction or agreement relating to the Facility which extends beyond the
expiration of the Facility Lease Term or which binds the Facility or the owner
of the Facility beyond the expiration of the Facility Lease Term; provided that
nothing in this Section 5.12 shall prevent the Operator from entering agreements
to operate the Facility in accordance with the Operative Documents.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the Collateral
Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site, or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

Investments. The Facility Lessee shall not make or permit to remain outstanding
any advances, loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, except Permitted
Investments.

                                       34

<PAGE>

Survey. The Facility Lessee shall use diligent and commercially reasonable
efforts to deliver a copy of the Survey as soon as practicable, such survey to
be an ALTA survey or other survey in form and substance reasonably satisfactory
to the Owner Participant, provided that the failure to do so shall not
constitute, in whole or in part, the basis of any default under any Operative
Document.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships.  The Facility Lessee shall not become a general or limited
partner in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents. The Facility Lessee shall not without the
prior written consent of the Owner Participant and, except as otherwise provided
in Section 8 of the Collateral Trust Indenture and so long as the Lien of the
Collateral Trust Indenture has not been terminated or discharged, the Indenture
Trustee, (a) cause or consent to or (b) permit, any amendment, modification,
extension, termination, variance or waiver of timely compliance with any terms
or conditions of any Operative Document.

Name and Location. The Facility Lessee shall not change its name or the location
of its chief executive office or place of business without notice to the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through Trustees and
the Owner Participant at least thirty (30) days prior to such change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien on
any part of the Facility; provided, that the Facility Lessee may contest in good
faith any such taxes, assessments and other charges and, in such event, may
permit the taxes, assessments or other charges so contested to remain unpaid
during any period, including appeals, when the Facility Lessee is in good faith
contesting the same, so long as (a) adequate reserves consistent with GAAP
requirements (or other security arrangements reasonably satisfactory to the
Indenture Trustee and the Owner Participant) are

                                       35

<PAGE>

established and maintained in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties
or other costs relating thereto, or other adequate provision for the payment
thereof shall have been made, and (b) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
immediately paid after resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to itself,
the Facility or the Facility Site, whether or not compliance therewith shall
require structural changes in the Facility or any part thereof or require major
changes in operational practices or interfere with the use and enjoyment of the
Facility or any part thereof, and (b) procure, maintain and comply, or cause to
be procured, maintained and complied with, all Applicable Permits, except in the
case of clause (a) or (b) above (1) as may be contested in accordance with
Section 7 or 8 of the Facility Lease and (2) the Facility Lessee may, in good
faith and by appropriate proceedings, diligently contest the validity or
application of any such Applicable Laws in any reasonable manner which does not
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material Lien on the Facility, (ii) impair the use, operation or
maintenance of the Facility in any material respect, (iii) any criminal
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustees, the Pass Through Company or any Certificateholder, (iv) the Owner
Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee, the
Lease Indenture Company, the Pass Through Trustees, the Pass Through Company or
any Certificateholder being subjected to any unindemnified civil liability or of
the Owner Participant or the Owner Lessor being subject to regulation as a
public utility under Applicable Law, or (v) any Material Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and liability,
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as may be necessary in order to
carry out the intent and purposes of this Participation Agreement and the other
Operative Documents, and the transactions contemplated hereby and thereby. The
Facility Lessee, at its own cost, expense and liability, will cause such
financing statements and fixture filings (and continuation statements with
respect thereto) as may be necessary and such other documents as the Owner
Participant, the Owner Lessor and, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
and the Pass Through Trustees shall reasonably request to be recorded or filed
at such places and times in such manner, and will take all such other actions or
cause such actions to be taken, as may be necessary in order to establish,
preserve, protect and perfect the right, title and interest of the Owner Lessor
in and to the Undivided Interest, the Ground Interest, any Component or any
portion of any thereof or any interest therein and the first priority Lien
intended to be created by the Collateral Trust Indenture therein. The Facility
Lessee shall promptly from time to time furnish to the Owner Participant, the
Owner Lessor or, so long as the Lien of the Collateral Trust Indenture shall not
have been terminated or discharged, the Indenture

                                       36

<PAGE>

Trustee or the Pass Through Trustees such information with respect to the
Facility or the Facility Site or the transactions contemplated by the Operative
Documents to which the Facility Lessee is a party as may be required to enable
the Owner Participant, the Owner Lessor or, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee or the Pass Through Trustees, as the case may be, to timely
file with any Governmental Entity any reports and obtain any licenses or
permits required to be filed or obtained by the Owner Lessor under any
Operative Document, the Owner Participant as the owner of the Member Interest
or the Indenture Trustee. The Facility Lessee will preserve, protect, defend
and enforce, or cause to be preserved, protected, defended and enforced, the
rights of itself, the Owner Lessor and the Owner Participant under each and
every Operative Document to which it is a party (including by assignment and
assumption of the rights thereunder), including using commercially reasonable
efforts to prosecute suits to enforce any such rights and, at the request of
Indenture Trustee, so long as the Lien of the Collateral Trust Indenture has
not been discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the
Facility Lessee's reasonable expense, enforce, in its own name, or the Facility
Lessee's name, such rights of the Facility Lessee.

No Subsidiaries.  The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or related or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing the
Facility Lessee may not change the nature of its business.

Support Arrangements. The Facility Lessee agrees that, to the extent that the
rights described in Section 3.1(n) which have already been made available to the
Owner Lessor prior to the expiration or termination of the Facility Lease Term,
and any rights assigned pursuant to the last sentence of this Section 5.30, are
insufficient to permit on a commercially practicable basis during the period
following the expiration or termination of the Facility Lease Term, until the
end of the Facility's useful life as set forth in the Closing Appraisal, (i) the
location, occupation, interconnection (including with respect to electricity,
steam, gas and water), maintenance and repair of the Facility, (ii) the use,
operation and possession of the Facility, (iii) the use, operation, possession,
maintenance, replacement, renewal and repair of all Improvements then required
to be made to the Facility, (iv) adequate ingress to and egress from the
Facility in connection with the ownership, use, maintenance or operation of the
Facility, (v) adequate transmission of electricity from the Facility to enable
such Person to deliver the net electrical and steam output of the Facility on a
commercially reasonable basis and (vi) the interest of the Owner Lessor (or any
successor) in the Undivided Interest or the Ground Interest, the Facility Lessee
will cause Calpine to provide, and Calpine will provide, the Owner Lessor with
any additional services relating to the Owner Lessor's Interest and operation of
the Facility substantially in the same

                                       37

<PAGE>

manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the Facility Site Lease, or earlier at the option of the Owner
Lessor. The Facility Lessee shall also, subject to obtaining any required third
party consents, assign to the Owner Lessor upon termination of the Facility
Lease any support or similar agreements to the extent relating to the Facility
it has with third parties.

Insurance.  The Facility Lessee shall comply with the covenants set forth in
Schedule 5.31.

Tax Status. The Facility Lessee and each Person owning an Ownership Interest
therein will not voluntarily take any action to cause the Facility Lessee to be
subject to taxation as a separate entity for federal income tax purposes.

Transmission Assets.

If and to the extent that on the Closing Date the FERC Order referred to in
     clause (v) of the definition thereof has not been obtained with respect to
     the jurisdictional facilities referred to therein (which facilities are
     identified in Exhibit A as Transmission Assets (the "Transmission
     Assets")), the Owner Participant shall, upon 5 days' prior written notice
     to the Facility Lessee, and subject to the grant of the aforesaid order,
     cause the Owner Lessor to acquire an undivided interest equal to the Owner
     Lessor's Percentage in the Facility Lessee's right, title and interest in
     the Transmission Assets, for a price equal to $1.00. Upon payment by the
     Owner Lessor of such amount, the Facility Lessee shall execute and deliver
     such documentation as is reasonably requested by the Owner Lessor to
     transfer such undivided interest in the Facility Lessee's right, title and
     interest in the Transmission Assets to the Owner Lessor. Upon such transfer
     such Undivided Interest shall be and shall be deemed to be an integral part
     of the Undivided Interest (to the extent constituting a portion of the
     Facility) and the Ground Interest (to the extent constituting a portion of
     the leasehold interest in the Facility Site) for all purposes of the
     Operative Documents without the necessity of amending or supplementing any
     Operative Document, subject nevertheless to Section 14.15 hereof.

Without limiting Section 10 hereof or Section 4.2 of the Facility Lease, the
     Facility Lessee agrees that from and after the Closing Date and until the
     earlier to occur of (A) the transfer referred to in clause (a) above and
     (B) the termination of the Facility Lease, the Facility Lessee shall make
     available to the Owner Lessor, for no additional compensation, such rights
     in the Transmission Assets solely to the extent as shall be necessary so
     that the representation in Section 3.1(n) will be correct to the same
     extent as if such transfer had occurred on the Closing Date.

                                       38

<PAGE>

COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

not amend, supplement, or otherwise modify Section 9.1, 9.3, 13.1 or clause (i)
     of Section 13.2 of the LLC Agreement without the prior written consent of
     the Facility Lessee so long as no Significant Lease Default or Lease Event
     of Default has occurred and is continuing and the Indenture Trustee so long
     as the Lien of the Collateral Trust Indenture has not been terminated or
     discharged.

                                       39

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor Manager
each covenants severally and as to itself only that it will not directly or
indirectly create, incur, assume or suffer to exist any Owner Lessor's Lien
attributable to it and will promptly notify the Facility Lessee, the Owner
Participant and the Indenture Trustee of the imposition of any such Lien of
which it has Actual Knowledge and shall promptly, at its own expense, take such
action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and the
Owner Lessor each covenants severally and as to itself only that it will not
unless such action is expressly permitted by the Operative Documents (a) through
its own action terminate any Operative Document to which it is a party, (b)
amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents in any manner or
(c) except as provided in Section 11 hereof or Section 2.10 or Section 5.6 of
the Collateral Trust Indenture, take any action to prepay or refund the Lessor
Notes or amend any of the payment terms of the Lessor Notes without, in each
case, the prior written consent of the Facility Lessee so long as no Significant
Lease Default or Lease Event of Default shall have occurred and be continuing
and, in the case of clause (a) or (b), the Indenture Trustee so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the Owner
Lessor covenants that it will not incur any Indebtedness nor enter into any
business or activity except as required or expressly permitted by any Operative
Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

Bankruptcy of Owner Lessor. Each of the Trust Company, the Lessor Manager and
the Owner Lessor hereby agrees severally and as to itself only that it shall not
voluntarily take any action that shall, or cause any action to be taken that is
intended to, submit the Owner Lessor, as debtor, to any proceeding under any
Applicable Law involving bankruptcy, insolvency, reorganization or other laws
affecting the rights of creditors generally unless a Lease Event of Default or a
Significant Lease Default shall have occurred and be continuing (in which case,
if the Lien of the Collateral Trust Indenture shall not have been discharged,
the Trust Company or the Owner

                                       40

<PAGE>

Lessor shall not take any such action unless the Indenture Trustee shall have
given its prior written consent to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust Indenture
     has not been terminated or discharged, without the prior written consent of
     the Indenture Trustee; provided, however, that the Owner Participant may,
     subject to Section 7.6, assign, convey or transfer all or any part of its
     interest in the Member Interest without such consent to a Person (the
     "Transferee") which shall assume the duties and obligations of the Owner
     Participant under the Operative Documents with respect to the interest
     being transferred pursuant to an OP Assignment and Assumption Agreement
     substantially in the form of Exhibit J hereto, if each of the following
     conditions shall have been satisfied on or prior to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if applicable),
     which opinion(s) and counsel are reasonably satisfactory to each such
     recipient and consistent in scope to the opinions delivered on behalf of
     the Owner Participant at the Closing, including that all regulatory
     approvals required in connection with such transfer or necessary to assume
     the Owner Participant's obligations under the Operative Documents shall
     have been obtained and that the proposed transfer of the Member Interest
     will not require registration under the Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but in
     any event, such Affiliate shall not be a Competitor of Calpine); provided
     that all of the payment and performance obligations of the Transferee with
     respect to the interest being transferred under the Operative Documents
     shall be guaranteed by the transferor Owner Participant, or a Person then
     providing a guaranty of the transferor Owner Participant's obligations
     hereunder, pursuant to an OP Parent Guaranty or (B) a Person which meets,
     or the payment and performance obligations of which with respect to the
     interest being transferred under the Operative Documents are guaranteed
     (pursuant to a OP Parent Guaranty) by a Person (the transferor Owner
     Participant or such other guarantor, the "Transferee Guarantor") which
     meets, the following criteria: (1) the tangible net worth of the Transferee
     or Transferee Guarantor, is at least equal to $75 million calculated in
     accordance with GAAP; and (2) unless waived in writing by the Facility
     Lessee prior to such transfer, such Transferee is not a Competitor of
     Calpine or in material litigation against the Facility Lessee or any
     Affiliate of the Facility Lessee without the consent of the Facility
     Lessee; and

                                       41

<PAGE>

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related Owner
     Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of this
     clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in Section
7.1 shall not inure to the benefit of the Facility Lessee if such transfer
occurs during the continuance of a Significant Lease Default or Lease Event of
Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to be
     a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each notice
     from the Owner Participant of its intent to transfer its interest and, in
     addition, no more than once in any calendar year plus each time the
     Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether the
     proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees, expenses
     and charges of the Indenture Trustee, the Pass Through Trustees, and the
     Facility Lessee (including reasonable attorneys' fees and expenses in
     connection with any such transfer or proposed transfer), including any of
     the foregoing relating to any amendments to the Operative Documents
     required in connection therewith, shall be paid on an After-Tax Basis by
     the Owner Lessor, without any right of indemnification from the Facility
     Lessee or any other Person; provided, however, that the Owner Participant
     shall have no obligation to pay fees, expenses or charges of the Facility
     Lessee as a result of any transfer while a Significant Lease Default or a
     Lease Event of Default is continuing, in which case the Facility Lessee
     shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y) enjoy
     the rights and privileges and perform the obligations of the Owner
     Participant hereunder and under each of the OP Assignment and Assumption
     Agreement, the Calpine Guaranty and each other Operative Document to which
     such Owner Participant is a party, and each reference in this Agreement,

                                       42

<PAGE>

     the Calpine Guaranty and each other Operative Document to the "Owner
     Participant" shall thereafter be deemed to include such Transferee for all
     purposes and (ii) the transferor Owner Participant and the OP Guarantor,
     if any, of such transferor Owner Participant's obligations shall be
     released from all obligations hereunder and under each other Operative
     Document to which such transferor or OP Guarantor is a party or by which
     such transferor Owner Participant or OP Guarantor is bound to the extent
     such obligations are expressly assumed by a Transferee meeting the
     requirements of this Section 7.1; provided, however, that in no event
     shall any such transfer waive or release the transferor or its OP
     Guarantor from any liability accruing or existing in respect of any period
     occurring on or prior to or occurring simultaneously with such transfer.

The transfer restrictions set forth in Section 7.1 (other than the requirement
     that the Owner Participant and the Transferee enter into an OP Assignment
     and Assumption Agreement) shall also apply to any transfer of the equity
     ownership interests of an Owner Participant which has as its sole (or
     substantially equivalent to sole) business activity its participation in
     the transactions contemplated by the Operative Documents. In the case of
     such a transfer of equity ownership interests which satisfies such
     restrictions of this Section 7.1, the Owner Participant's obligations under
     the Operative Documents shall continue, but the Owner Participant shall,
     except in the case of a transfer to a transferee described in clause
     (a)(iii)(A) above, procure a new OP Parent Guaranty from a guarantor
     meeting the requirements of clause (a)(iii)(B) above.

                                       43

<PAGE>

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such Lien
of which the Owner Participant has Actual Knowledge and shall promptly, at its
own expense, take such action as may be necessary to duly discharge such Owner
Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement without
the prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and without
the prior written consent of the Indenture Trustee so long as the Lien of the
Collateral Trust Indenture has not been terminated or discharged, or (b) revoke,
or otherwise waive compliance with or terminate the LLC Agreement without the
prior written consent of the Facility Lessee so long as no Significant Lease
Default or Lease Event of Default has occurred and is continuing, and the
Indenture Trustee so long as the Lien of the Collateral Trust Indenture has not
been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in respect of, the Owner Lessor
under the Bankruptcy Code, or any other applicable federal or state law or the
law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or acquire
its interest of the Owner Lessor's Interest or the Member Interest of the Owner
Participant, and which offers it wishes to accept, together with a full and
complete statement of the price and all of the terms, conditions and provisions
contained in such offers. The Facility Lessee shall thereafter have the right
within a period of 45 days from and after the receipt by them of such notice
(the "Notice Period") to notify the Owner Participant of its intent to exercise
its right of first refusal. If the Facility Lessee elects to exercise the right
provided in the preceding sentence, it will within 60 days of such notice (the
"Agreement Period") execute a contract on the same terms and conditions as the
offer giving rise to such right. If the Facility Lessee does not give such
notice to the Owner Participant within the 45 day period or execute such a
contract within 60 days of such notice, the Owner Participant will be free to
proceed under the terms and conditions set forth in its notice to the Facility
Lessee, unless the failure to execute the contract within 60 days is
attributable to acts or omissions of the Owner Participant. In the event that

                                       44

<PAGE>

such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to the
Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and right
of first refusal provisions of this Section prior to entering into such revised
agreement; provided that, for such revised offer, the Notice Period shall be 10
Business Days from the date of such new notice, and the Agreement Period shall
not exceed 45 days from the date of the Facility Lessee's notice accepting such
new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6, it
or one of its Affiliates offers to sell any interest in an owner lessor who has
entered into any Other RockGen Facility Lease, then the Facility Lessee shall
exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such Other
RockGen Facility Lease.

Prohibition on Fundamental Changes. If the Owner Participant is an entity which
has as its sole (or substantially equivalent to sole) business activity, the
participation in the transactions contemplated by the Operative Documents, the
Owner Participant shall not change its form of organization and shall not enter
into or engage in any business other than as contemplated by the Operative
Documents and the activities related thereto.


Appointment of Successor Lessor Manager. Notwithstanding any other provision of
this Agreement, a successor Lessor Manager shall not be appointed by the Owner
Participant without the consent of the Facility Lessee and, so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged and the
Indenture Trustee unless such successor Lessor Manager (a) meets the
requirements of the LLC Agreement, (b) has a combined capital and surplus of at
least $150 million, and (c) the Facility Lessee and, so long as Lien of the
Collateral Trust Indenture has not been terminated or discharged, the Indenture
Trustee, shall have received at the expense of Facility Lessee on an After-Tax
Basis: (i) an opinion or opinions of counsel, such counsel and such opinion to
be reasonably acceptable to such parties, to the effect that no regulatory
consents or approvals are required, or (ii) such other documentation reasonably
satisfactory to the Facility Lessee or the Indenture Trustee as the case may be.

Cooperation. The Owner Lessor agrees, and each of the Owner Participant and the
Lessor Manager agree to cause the Owner Lessor to, at the request of the
Facility Lessee and at the sole cost and expense of the Facility Lessee on an
After-Tax Basis, take such actions as may be necessary for the Owner Lessor to
take as the holder of the leasehold interest in the Facility for purposes of
obtaining the valid and effective issue, transfer or amendment, as the case may
be, of all Governmental Approvals to the extent the same are required for the
use, ownership, operation or maintenance of the Facility, the Facility Site, the
Undivided Interest, the Ground Interest or any Component by the Facility Lessee
or any permitted assignee of the Facility Lessee in the manner contemplated by
the Operative Documents, except to the extent the same involves any (i) material
risk of foreclosure, sale, forfeiture or loss of, or imposition of a Lien (other
than a Permitted Lien) on, the Facility, the Undivided Interest or the Facility
Site or the impairment of

                                       45

<PAGE>

the use, operation or maintenance of the Facility or the Facility Site in any
material respect, (ii) the risk of criminal liability being incurred by the
Owner Lessor, the Owner Participant, the Equity Investor or the OP Guarantor,
or (so long as the Lessor Notes are outstanding and the Lien of the Lease
Indenture has not been discharged) the Indenture Trustee or the Pass Through
Trustee or any of their respective Affiliates or (iii) material risk of any
material adverse effect on the interests of the Owner Lessor, the Owner
Participant, the Equity Investor or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee or the Pass Through Trustee or any of
their respective Affiliates (including, without limitation, subjecting any such
Person to regulation as a public utility under any applicable law. The Facility
Lessee shall pay on an After-Tax Basis all reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of counsel) of
the Owner Lessor and each other Person party to an Operative Document incurred
in connection with any such action. It is understood and agreed that, with
respect to the action requested of it, and taken by it, under this Section 7.9,
the Owner Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer to
exist any Indenture Trustee's Lien attributable to it and arising out of events
or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase and
holding of such Lessor Note (or any part thereof) constitutes assets of any Plan
or that such purchase and holding will be covered by a prohibited transaction
class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below, the
     Facility Lessee agrees to indemnify, protect, defend and hold harmless, and
     do hereby indemnify the Owner Participant, the Owner Lessor, the Trust
     Company, in its individual capacity, the Lessor Manager, the Lease
     Indenture Company in its individual capacity, the Indenture Trustee, each
     Certificateholder, the Pass Through Company in its individual capacity, the
     Pass

                                       46

<PAGE>

     Through Trustees,
     and their respective Affiliates, successors, assigns, agents, directors,
     officers and employees (each an "Indemnitee") against any and all Claims
     (whether or not any of the transactions contemplated by the Operative
     Documents are consummated) imposed on, incurred or suffered by or
     asserted against any Indemnitee in any way relating to or resulting from
     or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase, sale
     or other disposition, insuring, sublease, or other use or non-use of the
     Undivided Interest, the Ground Interest, the Facility, the Facility Site,
     or any Component or any portion of any thereof or any interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine
     and any other business or affairs conducted at the Facility or the
     Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, or any Component,
     or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, the Facility Site Sublease, or any
     other Operative Document, the execution or delivery thereof or the
     performance, enforcement, attempted enforcement or amendment of any terms
     thereof, or the transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility, the
     Facility Site or any Component, or any portion thereof, including, for the
     avoidance of doubt, any such Environmental Condition existing prior to the
     Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates or
     any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents
     requested by the Facility Lessee, or resulting from the actions of the
     Facility Lessee or in connection with any Lease Default or Lease Event of
     Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's Lien
     or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including Environmental
     Laws), or any action of any Governmental Entity or other Person taken with
     respect to the Facility, the Facility Site, the Operative Documents or the
     interests of the Owner Participant, the Owner Lessor, the Indenture Trustee
     or the Pass Through Trustees, or under the Operative Documents or the
     presence, use, storage, release, threatened release, transportation,
     arrangement for transportation, treatment, arrangement for treatment,
     manufacture, disposal or arrangement for disposal of any Hazardous
     Substance in,

                                       47

<PAGE>

     at, under or from the Facility or the Facility Site, including, for the
     avoidance of doubt, any of the foregoing existing or occurring prior to
     the Closing Date;

the non-performance or breach by the Facility Lessee or any Calpine Party of
     any obligation contained in this Agreement or any other Operative Document
     or the falsity or inaccuracy of any representation, warranty or obligation
     of any such Person contained in this Agreement or any other Operative
     Document;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents (other than the
     Facility Lease and the Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility in compliance with
     the provisions of the Facility Lease or (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Facility Site Lease, the
     performance by the Facility Lessee of all obligations required to be
     performed by it thereunder, or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by or
     on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such transfer
     is required by the terms of the Operative Documents or occurs during the
     continuance of a Lease Event of Default; (provided that this paragraph (ii)
     shall not serve to cap the indemnity to be received by a transferee
     Indemnitee for a Claim (other than a Claim relating solely to or arising
     solely out of any offer, transfer, sale, assignment or other disposition of
     any such rights or interests)

                                       48

<PAGE>

     based on what the relevant transferor Indemnitee would have received had
     no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or (ii) any violation of Applicable Law by any
     such Person except to the extent attributable to a violation of Applicable
     Law by the Facility Lessee or any other Calpine Party or to any breach by
     the Facility Lessee or such other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

as to any Indemnitee, any Claim to the extent attributable to the
     noncompliance of such Indemnitee or a Related Party, with any of the terms
     of, or any misrepresentation or breach of warranty by such Indemnitee or
     Related Party contained in any Operative Document made by such Indemnitee
     or Related Party or any breach by such Indemnitee or a Related Party of any
     covenant contained in any Operative Document or any breach by such
     Indemnitee or a Related Party of any covenant contained in any Operative
     Document made by such Indemnitee or Related Party except to the extent
     attributable to any breach by the Facility Lessee or any other Calpine
     Party of any covenant, representation or warranty contained in any
     Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any Claim
     constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising
     from an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section 9.2
     hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative Documents
     and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of Default
     that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

                                       49

<PAGE>

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to Section
     2.3(a) hereof or any other amount to the extent such Indemnitee or a
     Related Party has expressly agreed in any Operative Document to pay such
     amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful misconduct,"
when applied with respect to the Owner Lessor, the Owner Participant, the
Indenture Trustee, the Pass Through Trustees or any Affiliate of any thereof,
shall not include any liability imputed as a matter of law to such Indemnitee
solely by reason of any such entity's interest in the Facility or the Facility
Site or such Indemnitee's failure to act in respect of matters which are or were
the obligation of the Facility Lessee under this Agreement or any other
Operative Document. Nothing herein shall be deemed to constitute a guaranty of
any useful life or any present or future residual value of the Facility or a
guaranty that any amount of any Secured Indebtedness will be paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder which
     is covered by a policy of insurance maintained by the Facility Lessee, each
     Indemnitee agrees, unless it and each other Indemnitee shall waive its
     rights to indemnification (for itself and each Related Party thereto) in a
     manner reasonably acceptable to the Facility Lessee, to cooperate, at the
     sole cost and expense of the Facility Lessee, with insurers in exercise of
     their rights to investigate, defend or compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as to
     which indemnification is sought; provided, that the failure so to notify
     the Facility Lessee shall not reduce or affect the Facility Lessee's
     liability which it may have to such Indemnitee under this Section 9.1, and
     no payment hereunder by the Facility Lessee to an Indemnitee shall be
     deemed to constitute a waiver or release of any right or remedy that the
     Facility Lessee may have against any such Indemnitee for actual damages
     resulting directly from the failure or delay of such Indemnitee to give the
     Facility Lessee such notice. Subject to the foregoing, any amount payable
     to any Indemnitee pursuant to this Section 9.1 shall be paid within thirty
     (30) days after receipt of such written demand therefor from such
     Indemnitee, accompanied by a certificate of such Indemnitee stating in
     reasonable detail the basis for the indemnification thereby sought and (if
     such Indemnitee is not a party hereto) an agreement to be bound by the
     terms hereof as if such Indemnitee were such a party. The foregoing shall
     not, however, constitute an obligation to disclose confidential information
     of any kind without the execution of an appropriate confidentiality
     agreement. Promptly after the Facility Lessee receives notification of such
     Claim accompanied by a written statement describing in reasonable detail
     the Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default

                                       50

<PAGE>

     shall have occurred and be continuing, the Facility Lessee
     shall have the right in its sole discretion, to defend or compromise any
     Claim for which indemnification is sought under this Section 9.1 which the
     Facility Lessee acknowledges is subject to indemnification hereunder;
     provided that no such defense or compromise shall involve any danger of (i)
     foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any
     part of the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site, the Lessor Estate or the Indenture Estate or the impairment
     of the Facility or the Facility Site, in any material respect or (ii) any
     criminal liability being incurred or any material adverse effect on such
     Indemnitee; provided, further, that no Claim shall be compromised by the
     Facility Lessee on a basis that admits any criminal violation or gross
     negligence or willful misconduct on the part of such Indemnitee without the
     express written consent of such Indemnitee; and provided, further, that to
     the extent that other Claims unrelated to the transactions contemplated by
     the Operative Documents are part of the same proceeding involving such
     Claim, the Facility Lessee may assume responsibility for the contest or
     compromise of such Claim only if the same may be and is severed from such
     other Claims (and each Indemnitee agrees to use reasonable efforts to
     obtain such a severance). In the event that in the course of the
     investigation or defense of a claim, the Facility Lessee shall in good
     faith reasonably determine that it is not liable for indemnification with
     respect thereto under this Section 9.1, it may give notice to the
     applicable Indemnitee of such fact; and, in such case, any acknowledgment,
     theretofore made by the Facility Lessee of liability with respect to such
     claim under this Section 9.1 shall be deemed revoked, and the Facility
     Lessee may thereupon cease to defend such claim; provided that (i) the
     Facility Lessee shall have given the Indemnitee reasonable prior notice of
     its intention to renounce such acknowledgment, (ii) the Facility Lessee's
     conduct regarding the defense of such claim or any decision to withdraw
     from such defense shall not prejudice or have prejudiced the Indemnitee's
     ability to contest such claim (taking into account, among other things, the
     timing of the Facility Lessee's withdrawal and the theory or theories upon
     which the Facility Lessee shall have based its defense), and (iii) the
     Facility Lessee shall have given such Indemnitee all materials, documents
     and records relating to its defense of such claim as such Indemnitee shall
     have reasonably requested in connection with the assumption by such
     Indemnitee of the defense of such claim at the cost and expense of the
     Facility Lessee. In the event that the Facility Lessee shall cease to
     defend any claim pursuant to the preceding sentence, the Facility Lessee
     shall indemnify each Indemnitee, without regard to any exclusion that might
     otherwise apply hereunder, to the extent that the actions of the Facility
     Lessee in defending such claim or the manner or time of the Facility
     Lessee's election to withdraw from the defense of such claim shall have
     caused such Indemnitee to incur any loss, cost, liability or expense which
     such Indemnitee would not have incurred had the Facility Lessee not ceased
     to defend such claim in such manner or such time. If the Facility Lessee
     elect, subject to the foregoing, to compromise or defend any such asserted
     liability, it may do so at its own expense and by counsel selected by it.
     Upon the Facility Lessee's election to compromise or defend such asserted
     liability and prompt notification to such Indemnitee of its intent to do
     so, such Indemnitee shall cooperate at the Facility Lessee's expense with
     all reasonable requests of the Facility Lessee in connection therewith and
     will provide the Facility Lessee with all information not within the
     control of the Facility Lessee as is reasonably available to such
     Indemnitee which the Facility Lessee may reasonably request; provided,
     however, that such Indemnitee shall not, unless otherwise required by
     Applicable Law, be obligated to disclose to the Facility Lessee or any
     other Person, or permit

                                       51

<PAGE>

     the Facility Lessee or any other Person to examine (i) any income tax
     returns of the Owner Participant or (ii) any confidential information or
     pricing information not generally accessible by the public possessed by
     the Owner Participant (and, in the event that any such information is
     made available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to
     the related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without
     reservation of rights against such Indemnitee), no additional legal fees
     or expenses of such Indemnitee in connection with the defense of such
     Claim shall be indemnified hereunder unless such fees or expenses were
     incurred at the request of the Facility Lessee or such insurers.
     Notwithstanding the foregoing, an Indemnitee may participate at its own
     expense in any judicial proceeding controlled by the Facility Lessee
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the
     Indemnitee waives its rights to indemnification hereunder or (ii) the
     Facility Lessee has not acknowledged their indemnity obligation with
     respect thereto and there is a significant risk that a default judgment
     will be entered against such Indemnitee. Nothing contained in this
     Section 9.1(e) shall be deemed to require an Indemnitee to contest any
     Claim or to assume responsibility for or control of any judicial
     proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee under
     this Section 9.1 is in fact paid in full by the Facility Lessee or an
     insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser of
     (i) the amount refunded reduced by the amount of any Tax incurred by reason
     of the receipt or accrual of such refund and increased by the amount of any
     Tax (but not in excess of the amount of such reduction) saved as a result
     of such payment or (ii) the amount the Facility Lessee or any of

                                       52

<PAGE>

     their insurers has paid in respect of such Claim; provided that, so long
     as a Significant Lease Default or Lease Event of Default shall have
     occurred and is continuing such amount may be held by the Owner Lessor as
     security for the Facility Lessee's obligations under the Facility Lease
     and the other Operative Documents.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under this
     Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on the
     Owner Participant, the Owner Lessor, or such Transaction Party, as the case
     may be, or any Affiliate of any thereof or on the business or operations of
     any of the foregoing.

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity, the
     Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof, a
     "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or with
     respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the imposition
     of any lien (or incurrence of any liability to refund or pay over any
     amount as a result of any lien) on, the Facility, the Undivided Interest,
     the Ground Interest, the Facility Site or any portion or Component thereof
     or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability of
     the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

                                       53

<PAGE>

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the Facility,
     the Facility Site or any portion or Component thereof, or any interest
     therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility Site
     Lease or arising from the Facility, the Undivided Interest, the Ground
     Interest, the Facility Site, or any portion or Component thereof or any
     interest therein;

any other amount paid or payable pursuant to the Operative Documents;

the conveyance of title to the Undivided Interest; or

otherwise relating to the transactions contemplated by the Operative Documents.

          Notwithstanding anything herein to the contrary and without
regard to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner Lessor
with respect to any failure to withhold such tax, and the withholding tax would
otherwise be an Excluded Tax under Section 9.2(b) without regard to the first
sentence of this paragraph, then the Certificateholder Indemnitee with respect
to which such withholding was not made will pay the amount of tax not withheld
to the relevant taxing authority if such taxes remain unpaid or will reimburse
the Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the period
commencing on the date the Facility Lessee shall have made the indemnity payment
to such taxing authority and ending the earlier of the date of repayment by such
Tax Indemnitee and five Business Days after the date the Facility Lessee demands
reimbursement thereof pursuant to this sentence, and (b) the Overdue Rate for
the period thereafter to the date the Facility Lessee actually receives such
payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall
     not extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed on,
     based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and direct
     substitution for income taxes) or property taxes) ("Income Taxes"),
     including any such Taxes collected by way of

                                       54

<PAGE>

     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee that
     are attributable to any act, event or omission by such Tax Indemnitee that
     occurs after expiration or other termination of the Facility Lease and
     surrender of the Undivided Interest to the Owner Lessor or its successors
     (or in the case of a Certificateholder Indemnitee, Taxes imposed for any
     period after the repayment of the Lease Debt) in accordance with the
     Facility Lease, (as opposed to any act, event or omission occurring prior
     to or simultaneous with such expiration, termination or surrender (or, in
     the case of a Certificateholder Indemnitee, such repayment)), provided that
     this exclusion shall not apply so long as a Lease Event of Default shall
     have occurred and be continuing;

Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and not as a result of any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any Operative
     Document except to the extent attributable to any breach by the Facility
     Lessee or any other Calpine Party of any covenant, representation or
     warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct or
     indirect transfer or disposition arising out of or caused by a bankruptcy
     or similar proceeding for relief of debtors in which such Tax Indemnitee is
     a debtor or a foreclosure by a creditor of (1) in the case of the Owner
     Lessor or the Owner Participant, the Owner Participant of all or part of
     its Member Interest or Undivided Interest, (2) in the case of the Owner
     Lessor or the Owner Participant, the Owner Lessor of all or part of its
     interest in the Facility or the Facility Site (other than to a successor
     Lessor Manager), or (3) in the case of the Indenture Trustee, the Indenture
     Trustee of any interest in the Lease Debt or the Indenture Estate, or (4)
     in the case of the Owner Lessor or the Owner Participant any direct or
     indirect interest in the Owner Lessor or the Owner Participant, including
     by reason of an election made pursuant to Section 338 of the Code, in each
     case to the extent imposed by reason of any transfer described in this
     clause (v)(A), or (B) to the extent that, under law in effect on the date
     of the transfer such Taxes exceed the amount of Taxes that would be
     indemnified hereunder had there been no such assignment, sale, transfer or
     other voluntary disposition, unless such transfer or disposition occurs
     during the continuance of a Lease Event of Default or is otherwise pursuant
     to the Facility Lessee's exercise of its rights under the Operative
     Documents; provided that this exclusion shall not apply with respect to any
     initial syndication of interests in the Owner Participant accomplished
     prior to December 29, 2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

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Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax Indemnitee
     timely written notice of such requirement and the Tax Indemnitee shall have
     determined in good faith that compliance with any such requirement shall
     not result in any identified non-immaterial adverse effect to its interests
     or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file returns
     as required by a taxing authority unless such failure is attributable to
     the Facility Lessee not providing information that it is expressly required
     to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document which
     amendment, modification, supplement or waiver was not requested by or
     consented to by the Facility Lessee, and as to which the Facility Lessee is
     not a party and the Tax Indemnitee (or, in the case of the Owner
     Participant, the Owner Lessor if acting at the express direction of the
     Owner Participant or any Related Party) is a party, provided that this
     exclusion shall not apply if such amendment, modification, supplement or
     waiver (A) was required by applicable law or the Operative Documents, (B)
     may be necessary or appropriate to, and is in conformity with, any
     amendment to any Operative Document requested by the Facility Lessee in
     writing, or (C) was expressly consented to by a Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of

                                       56

<PAGE>

     any of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, use, rental or license taxes, value added taxes (except to the
     extent value added taxes are imposed in clear and direct substitution for
     income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to this
     Section 9.2 shall be increased by amounts necessary to ensure that all such
     payments are made on an After-Tax Basis. Each payment required to be made
     by the Facility Lessee to a Tax Indemnitee pursuant to this Section 9.2
     shall be paid either (i) when due directly to the applicable taxing
     authority by the Facility Lessee if it is permitted to do so, or (ii) where
     direct payment is not permitted, and with respect to gross up amounts, in
     immediately available funds to such Tax Indemnitee by the later of (A) 10
     days following the Facility Lessee's receipt of the Tax Indemnitee's
     written demand for the payment pursuant to clause (g)(i) below (which
     demand shall be accompanied by a written statement of the Tax Indemnitee
     describing in reasonable detail the Taxes for which the Tax Indemnitee is
     demanding payment and the computation of such Taxes), (B) subject to
     paragraph (g) below, in the case of amounts which are being contested
     pursuant to such paragraph (g), at the time and in accordance with a final
     determination of such contest or (C) in the case of any indemnity demand
     for which the Facility Lessee has requested review and determination
     pursuant to paragraph (d) below, the completion of such review and
     determination; provided, however, in no event later than the date which is
     one Business Day prior to the date on which such Taxes are required to be
     paid to the applicable taxing authority. Any amount payable to the Facility
     Lessee pursuant to paragraph (e) or (f) below shall be paid promptly after
     the Tax Indemnitee realizes a Tax Benefit giving rise to a payment under
     paragraph (e) or receives a refund or credit giving rise to a payment under
     paragraph (f), as the case may be, and shall be accompanied by a statement
     of the Tax Indemnitee computing in reasonable detail the amount of such
     payment. Upon the final determination of any contest pursuant to paragraph
     (g) below in respect of any Taxes for which the Facility Lessee has made a
     Tax Advance, the amount of the Facility Lessee's obligation under paragraph
     (a) above shall be determined as if such Tax Advance had not been made. Any
     obligation of the Facility Lessee under this Section 9.2 and the Tax
     Indemnitee's obligation to repay the Tax Advance will be satisfied first by
     set off against each other, and any difference owing by either party will
     be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any

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<PAGE>

     payment by a Tax Indemnitee to the Facility Lessee pursuant to
     paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with such
     accounting firm and supply it with all information reasonably necessary for
     the accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto agree
     that the independent public accounting firm's sole responsibility shall be
     to verify the computation of any payment pursuant to this Section 9.2 and
     that matters of interpretation of this Participation Agreement or any other
     Operative Document are not within the scope of the independent accountant's
     responsibility. The fees and disbursements of such accounting firm will be
     paid by the Facility Lessee; provided that such fees and disbursements will
     be paid by the Tax Indemnitee if the verification results in an adjustment
     in the Facility Lessee's favor of 5 percent or more of the indemnity
     payment or payments computed by the Tax Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually paid
     by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason of
     a deduction, credit, allocation or apportionment of income or otherwise)
     than the amount of such Taxes that otherwise would have been payable by
     such Tax Indemnitee (a "Tax Benefit"), then to the extent such Tax Benefit
     was not taken into account in determining the amount of indemnification
     payable by the Facility Lessee under paragraph (a) or (c) above and
     provided no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing (in which event the payment provided under this
     Section 9.2(e) shall be deferred until the Significant Lease Default or
     Lease Event of Default has been cured), such Tax Indemnitee shall pay to
     the Facility Lessee the lesser of (A) (y) the amount of such Tax Benefit,
     plus (z) an amount equal to any United States federal, state or local
     income tax benefit resulting to the Tax Indemnitee from the payment under
     clause (y) above and this clause (z) (determined using the same assumptions
     as set forth in the second sentence under the definition of After-Tax
     Basis) and (B) the amount of the indemnity paid pursuant to this Section
     9.2 giving rise to such Tax Benefit; provided, however, that any excess of
     (A) over (B) shall be carried forward and reduce the Facility Lessee's
     obligations to make subsequent payments to such Tax Indemnitee pursuant to
     this Section 9.2. If it is subsequently determined that the Tax Indemnitee
     was not entitled to such Tax Benefit, the portion of such Tax Benefit that
     is required to be repaid or recaptured will be treated as Taxes for which
     the Facility Lessee must indemnify the Tax Indemnitee pursuant to this
     Section 9.2 without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to this
     Section 9.2, the Tax Indemnitee promptly shall pay to the Facility Lessee
     (x) the amount of such refund or credit (net of any Tax payable by the Tax
     Indemnitee as a result of the receipt or accrual of such

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<PAGE>

     refund or credit) plus (y) an amount equal to any United States federal,
     state or local income tax benefit realized by such Tax Indemnitee by
     reason of such payment to the Facility Lessee (determined using the same
     assumptions as set forth in the second sentence under the definition of
     After-Tax Basis); provided that (A) if at the time such payment is due to
     the Facility Lessee a Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing, such amount shall not be payable
     until such Significant Lease Default or Lease Event of Default has been
     cured, and (B) the amount payable to the Facility Lessee pursuant to this
     sentence shall not exceed the amount of the indemnity payment in respect
     of such refunded or credited Taxes that was made by the Facility Lessee.
     Any excess of (x) and (y) over (B) in this Section 9.2(f) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such refund or credit, the portion of such refund or credit that is
     required to be repaid or recaptured will be treated as Taxes for which
     the Facility Lessee must indemnify the Tax Indemnitee pursuant to this
     Section 9.2 without regard to paragraph (b) hereof. If, in connection
     with a refund or credit of all or part of any Taxes paid, reimbursed or
     advanced by the Facility Lessee pursuant to this Section 9.2, a Tax
     Indemnitee receives an amount representing interest on such refund or
     credit, the Tax Indemnitee promptly shall pay to the Facility Lessee (1)
     the amount of such interest that shall be fairly attributable to such
     Taxes paid, reimbursed or advanced by the Facility Lessee prior to the
     receipt of such refund or credit (net of Taxes payable in respect of the
     receipt or accrual of such interest) and (2) any Tax savings resulting
     from payments made by the Tax Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which the
     Facility Lessee may be liable for indemnity hereunder (a "Tax Claim"), such
     Tax Indemnitee shall give the Facility Lessee written notice of such Tax
     Claim promptly after its receipt, and shall furnish the Facility Lessee
     with copies of such Tax Claim and all other writings received from the
     taxing authority to the extent relating to such claim; provided that
     failure to so notify the Facility Lessee shall not relieve the Facility
     Lessee of any obligation to indemnify the Tax Indemnitee hereunder except
     to the extent that such failure effectively precludes the ability to
     conduct a contest hereunder (and without limiting any damage claim or
     remedy the Facility Lessee may otherwise have for such failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be pursued
     in the name of the Facility Lessee and may be segregated procedurally from
     tax claims for which the Facility Lessee is not obligated to indemnify the
     Tax Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessee
     control such contest. In the case of all other Tax Claims, the Tax
     Indemnitee will contest the Tax Claim if the Facility Lessee shall request
     that the Tax be contested (subject to subsection (g)(iii) below), and the
     following rules shall apply with respect to such contest:

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<PAGE>

              (1)   the Tax Indemnitee will control the contest of such
Tax Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

              (2)   the decisions regarding what actions to be taken
shall be made by the Tax Indemnitee in its sole judgment, and

              (3)   the Tax Indemnitee shall not otherwise settle,
compromise or abandon such contest without the Facility Lessee's prior written
consent except as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall
consult in good faith with the other party and its designated counsel with
respect to such Tax Claim and shall provide the other party with copies of any
reports or claims (or extracts therefrom) issued by the relevant auditing agents
or taxing authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect to
     a Tax Claim will be required or permitted pursuant to this Section 9.2, and
     the Facility Lessee shall be required to pay the applicable Taxes without
     contest, unless:

              (1)  within 30 days after written notice by the Tax
Indemnitee to the Facility Lessee of such Tax Claim (or such shorter period, to
be specified by the Tax Indemnitee in such notice, as required for taking
action with respect to such Tax Claim), the Facility Lessee shall request in
writing to the Tax Indemnitee that such Tax Claim be contested,

              (2)   no Significant Lease Default or Lease Event of
Default has occurred and is continuing, unless the Facility Lessee has provided
security for the indemnity payment and the expenses of contest in a manner
reasonably acceptable to the Tax Indemnitee and the Indenture Trustee, both as
to coverage and credit,

              (3)   there is no risk of sale, forfeiture or loss of, or
the creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

              (4)   there is no risk of imposition of any criminal penalties or
liabilities,

              (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

              (6)   the Facility Lessee agrees to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

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              (7)   the Tax Indemnitee, if it so requests has been provided at
the Facility Lessee's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee
and reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

              (8)   in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,

              (9)   if such contest is controlled by the Facility Lessee, prior
to commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity
pursuant to this Section 9.2 with respect to such Tax, which admission shall be
binding on the Facility Lessee unless and to the extent such contest is
determined in a manner that conclusively demonstrates that the Facility Lessee
is not so liable, and

              (10)   if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessee's sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that such change is
favorable to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained in
     this Section 9.2, the Tax Indemnitee at any time may elect to decline to
     take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax Claim
     without the Facility Lessee's consent if the Tax Indemnitee:

              (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

              (2)   promptly repays to the Facility Lessee any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such report,
     statement or return for filing by the Facility Lessee in

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     such manner as will show the ownership of the Facility by the Owner
     Lessor for United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement
     or return for filing by the Tax Indemnitee; provided that the only
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this Section
     9.2 prior to making any payment to such Tax Indemnitee under this Section.
     Subject to the preceding sentence, the Facility Lessee's obligations under
     this Section 9.2 shall inure to the benefit of each and every Tax
     Indemnitee without regard to whether such Tax Indemnitee is a party to this
     Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Facility Lease and the Facility
Site Lease and expressly, severally and as to its own actions only, agrees that,
so long as no Lease Event of Default has occurred and is continuing, it shall
not take or cause to be taken any action or direct that any action be taken,
which is contrary to or inconsistent with the rights under the Facility Lease
and Facility Site Sublease, including the right to possession, use and quiet
enjoyment of the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an amendment
to the Facility Lease to reflect the adjustments required by clause (iv) below;
provided, however, that (x) the Owner Participant shall have been given the
opportunity, but shall have no obligation, to provide all or part of the
funds required to finance any such Improvement by making an Additional Equity
Investment in such amount, if any, as it may determine in its sole and absolute
discretion, but the Facility Lessee shall have no

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obligation to accept such Additional Equity Investment; and (y) the conditions
set forth below and in Section 2.12 of the Collateral Trust Indenture shall
have been satisfied. The obligation to finance such Improvements through the
issuance of Additional Lessor Notes under Section 2.12 of the Collateral Trust
Indenture (any financing of Improvements through the issuance of such
Additional Lessor Notes under the Collateral Trust Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be made
     to protect the Owner Participant's Net Economic Return; provided that there
     shall be no changes to the amortization schedule or interest amounts and
     payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section 11
     whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default or
     Lease Event of Default and such Improvements shall be made in compliance
     with the Operative Documents;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the Undivided
     Interest taking into account the fair market value of such Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

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the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no later
     than the final maturity date of such Initial Lessor Notes and will be fully
     repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

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no Significant Lease Default or Lease Event of Default shall have occurred
     and be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the Facility
     Lessee on the Closing Date under the Operative Documents to which it is a
     party (except to the extent necessitated by differences between existing
     Operative Documents and the terms and conditions of the proposed
     refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to such
     effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall not
     result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in accordance
with the terms of the Operative Documents. The Owner Participant will execute
such agreements and documents as may be necessary with respect to any such
refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted, either upward or downward, in accordance with the
     Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not result
     in a change to average life by more than six (6) months;

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at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x) the
     initial interest rate on any of the Lessor Notes which is different from
     the applicable interest rate set forth in the Pricing Assumptions, (y) an
     increase in the Transaction Costs from the amount assumed in the Pricing
     Assumptions, unless the Facility Lessee has elected to pay such increase,
     and (z) a Closing Date other than the Scheduled Closing Date; and
at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change in
     the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures ("Tax
     Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest rate
of the Certificates) shall cause either (x) the after-tax net present value of
Basic Rent discounted at 6% to increase by more than 100 basis points or (y) the
total Basic Rent to increase by more than 2%, then in either such case, the
Facility Lessee shall not be obligated to close the Overall Transaction. Any
adjustments pursuant to Section 3.4 of the Facility Lease shall comply with
Applicable Law (including any final or proposed Treasury Regulations issued
under Section 467 of the Code) as well as the requirements of Revenue Procedure
2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of Revenue Procedure 2001-29
in a manner such that amending the Facility Lease complies with the "safe
harbors" under such Treasury Regulations or otherwise does not cause the
Facility Lease to be a "disqualified leaseback or long-term agreement" within
the meaning of Section 467 of the Code and any Treasury Regulations issued
thereunder, in each case, to the extent of such compliance on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which it
     is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility Lessee's
     GAAP accounting purposes and/or (y) minimize the present value to the
     Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467
     Loan Interest.

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     Adjustments made pursuant to this Section 12 shall be subject to
     verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing, upon
     satisfaction of the conditions in paragraph (b) below, the Facility Lessee
     may assign the Facility Lease or any other Operative Document to which it
     is a party, or any interest therein to any Person, without the consent of
     the Owner Lessor, the Owner Participant, the Indenture Trustee or any other
     Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the Ownership
     Interest of any non-assigning Facility Lessee), the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with Section
     8.4(b) thereof), and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty or (y) Calpine's obligations under
     the Calpine Guaranty has been succeeded to in accordance with Section
     8.4(b) thereof, the transferee of Calpine shall own, directly or
     indirectly, at least a majority of the Ownership Interest of each assignee
     (as well as at least a majority of the Ownership Interest of any
     non-assigning Facility Lessee) and the Calpine Guaranty shall remain in
     full force and effect and (B) satisfaction of the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of the
     Collateral as defined in and pursuant to the Facility Lease shall continue
     in effect, pursuant to an assignment and assumption agreement in form and
     substance satisfactory to the Owner Participant, Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received an
     Opinion of Counsel as to such assignment and assumption agreement and the
     satisfaction of the requirements and conditions set forth in this Section
     13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any

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<PAGE>

     Certificateholder to regulation under PUHCA or state laws and regulations
     regarding the rate and financial or organizational regulation of electric
     utilities in the affected party's reasonable opinion, nor result in a
     Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

the Facility Lessee shall have paid, at no after-tax cost to such parties, all
     reasonable documented out-of-pocket expenses (including reasonable
     attorneys' fees and expenses) of the Owner Lessor, the Lessor Manager, the
     Owner Participant, the Indenture Trustee, the Lease Indenture Company and
     the Pass Through Trustees in connection with such assignment;

the Facility Lessee has provided the Indenture Trustee with (x) an indemnity
     against the risk that such assignment will cause a Tax Event to occur to
     any direct or indirect holder of any Lessor Note (including any
     Certificateholder) or (y) an opinion of counsel to the effect that such
     assignment will not cause a Tax Event to occur to any direct holder of any
     Lessor Note and any Certificateholder; and

the transfer shall not cause the Facility to become "tax-exempt use property
     within the meaning of Section 168(h) of the Code (unless the Facility
     Lessee shall make a payment contemporaneously with such transfer that in
     the reasonable judgment of the Owner Participant compensates the Owner
     Participant for the adverse tax consequences therefrom).

Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP Guarantor,
the Special Lessee Transfer Amount determined as of such date, plus all amounts
due and payable to the Owner Participant on such date (including all reasonable
and documented costs and expenses of the Owner Participant or the OP Guarantor
and all sales, use, value added and other Taxes covered and not excluded by
Section 9.2 hereof associated with the Special Lessee Transfer pursuant to this
Section 13.2, to the extent such amounts have not otherwise been reimbursed by
the Facility Lessee pursuant to this Section 13.2, it being understood that any
transfer pursuant to this Section 13.2 shall not be considered a voluntary
transfer for purposes of Section 9.2). Concurrently with the payment of all sums
required to be paid pursuant to this Section 13.2 (or on such later date of
transfer of the Member Interest in accordance with clause (ii) below) (i) the
Facility Lessee shall cease to have any liability to the Owner Participant or
the OP Guarantor with respect to the Operative Documents, except for obligations
(including Section 9.1 and 9.2 hereof and the Tax Indemnity Agreement) surviving
pursuant to the express terms of the Operative Documents or which have otherwise
accrued but not been paid as of such date and (ii) the Owner Participant or the
OP Guarantor will transfer (by an appropriate instrument of transfer) the Member
Interest to the Facility Lessee (or its designee); provided, however, that if

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<PAGE>

the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall be
made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence of
Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction contemplated
by this Section 13.2 shall not effect a merger of the Facility Lessee's interest
in the Facility and the Facility Site with the Owner Lessor's Interest. The
Facility Lessee will pay, on an After-Tax Basis, all reasonable and documented
transaction costs and expenses of the parties (including reasonable attorneys'
fees and disbursements) in connection with any transfer pursuant to this Section
13.2. Subsequent to such transfer, the Facility Lessee and the Owner Lessor may,
without the consent of the Indenture Trustee or the Pass Through Trustees, waive
the Regulatory Event of Loss or the Burdensome Termination Event that gave rise
to the Special Lessee Transfer Event and the Facility Lease shall continue in
full force and effect in accordance with its terms.

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to be
unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or assignment
pursuant to the terms of the LLC Agreement by the Owner Lessor to a successor
Owner Lessor, will not violate the terms of any Operative Document.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate becomes
the property of a debtor subject to the reorganization provisions of Title 11 of
the United States Code, as amended from time to time, (ii) pursuant to such
reorganization provisions the Owner Participant is required, by reason of the
Owner Participant being held to have recourse liability to the debtor or the
trustee of the debtor directly or indirectly, to make payment on account of any
amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such Excess
Amount (and, to the extent so refunded, such amount owing under the Lessor Notes
shall be reinstated). For purposes of this Section 14.3, "Excess Amount" means
the amount by which such payment exceeds the amount which would have been
received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in clause (ii) above. Nothing
contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds thereof)
of the Owner Participant as contemplated by this Participation Agreement (other
than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular

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<PAGE>

instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such transmission
is promptly confirmed by either of the methods set forth in clauses (a) or (b)
above, in each case addressed to each party hereto at its address set forth
below or, in the case of any such party hereto, at such other address as such
party may from time to time designate by written notice to the other parties
hereto:

          If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

    If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

           c/o Wells Fargo Bank Northwest, National Association
           MAC U1254-031
           79 South Main Street

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          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-2, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone:  (212) 382-7255
               Facsimile:  (212) 382-9033
               Attention:  Managing Director

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<PAGE>

          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010-3629
          Telephone No.:  (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the party
          giving such notice to each of the other parties hereto. In addition,

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         the Facility Lessee shall (unless otherwise directed by the applicable
         Rating Agency) provide to each Rating Agency a copy of any information,
         report or notice it gives to the Indenture Trustee hereunder or any
         other Operative Documents.

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Survival. All warranties, representations, indemnities and covenants made by any
party hereto, herein or in any certificate or other instrument delivered by any
such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall survive
the consummation of the transactions contemplated hereby and in the other
Operative Documents regardless of any investigation made by any such party or on
behalf of any such party. In addition, the indemnifications by the Facility
Lessee under Sections 9.1 and 9.2 of this Agreement, subject to Sections 9.1(b)
and 9.2(b), respectively, the Facility Site Lease and the Calpine Guaranty,
shall expressly survive the expiration or early termination (in either case, for
whatever reason) of the Facility Lease or the transfer or other disposition of
the respective interests of the Owner Participant, the Owner Lessor, the Lessor
Manager, the Lease Indenture Company, the Indenture Trustee, the Pass Through
Trustees and the Certificateholders in, to and under this Agreement, the
Assignment Agreement and the other Operative Documents. Except as expressly
provided above or in Section 22.3 of the Facility Lease, the Tax Indemnity
Agreement or as otherwise expressly provided in the Operative Documents, the
representations, warranties, covenants and agreements of the Transaction Parties
under the Operative Documents shall terminate and be of no further force and
effect effective upon the expiration or earlier termination of the Facility
Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative Document
to the contrary, if the date on which any payment is to be made pursuant to this
Agreement or any other Operative Document is not a Business Day, the payment
otherwise payable on such date shall be payable on the next succeeding Business
Day with the same force and effect as if made on such scheduled date and
(provided such payment is made on such succeeding Business Day) no interest
shall accrue on the amount of such payment from and after such scheduled date to
the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or unenforceable
under Applicable Law, the validity, legality and enforceability of the remaining
provisions hereof shall not be affected or impaired thereby.

Counterparts.  This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders shall
     have any obligation or duty to the Facility Lessee or to others with
     respect to the transactions contemplated hereby, except those obligations
     or duties expressly set forth in this Agreement and the other Operative
     Documents to which such Person is a party, and none of the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Lease Indenture
     Company, the Pass Through Trustees, the Pass Through Company or the
     Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee for
     any action or inaction on the part of the Owner Lessor in connection with
     the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through Trustees,
     the Pass Through Company, the Certificateholders or to others with respect
     to the transactions contemplated hereby, except those obligations or duties
     expressly set forth in this Agreement and the other Operative Documents,
     and neither the Facility Lessee nor any other Calpine Party (except Calpine
     to the extent set forth in the Calpine Guaranty) shall be liable for
     performance by any other party hereto of such other party's obligations or
     duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for, or
     for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document, as to all of which the other parties
     hereto agree to look solely to the Indenture Estate and the Lessor Estate,
     respectively; provided, however, that the Lease Indenture Company and the
     Pass Through Trust Company shall be liable hereunder for their own
     negligence or willful misconduct or for a breach of their representations,
     warranties and covenants made in their individual capacity under any
     Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or consent
     to any change or amendment to, any of the Operative Documents)

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<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein
     or in the Collateral Trust Indenture or as otherwise required by
     Applicable Law, have any obligation to) request the approval or
     instruction of the Pass Through Trustees as the holder of the Lessor
     Notes, and the Pass Through Trustees may in its sole discretion (but
     shall not, except as otherwise provided in the Operative Documents or as
     otherwise required by Applicable Law, have any obligation to) request the
     approval of the Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement (other
     than an amendment solely effecting a transfer of the Owner Participant's
     interest in the Lessor Estate) and deliver true, complete and fully
     executed copies to the Facility Lessee of any amendment or supplement to
     the LLC Agreement. No amendment or supplement to the LLC Agreement that
     would reasonably be expected to materially adversely affect the interests
     of the Facility Lessee or the Indenture Trustee shall become effective
     without the written consent of the Indenture Trustee and the Facility
     Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York County
     (without prejudice to the right of any party to remove to the United States
     District Court for the Southern District of New York) and to the
     nonexclusive jurisdiction of the United States District Court for the
     Southern District of New York for the purposes of any suit, action or other
     proceeding arising out of this Agreement, the other Operative Documents, or
     the subject matter hereof or thereof or any of the transactions
     contemplated hereby or thereby brought by any of the parties hereto or
     their successors or assigns; (ii) hereby irrevocably agrees that all claims
     in respect of such action or proceeding may be heard and determined in such
     New York State court, or in such federal court; and (iii) to the extent
     permitted by Applicable Law, hereby irrevocably waives, and agrees not to
     assert, by way of motion, as a defense, or otherwise, in any such suit,
     action or proceeding any claim that it is not personally subject to the
     jurisdiction of the above-named courts, that the suit, action or proceeding
     is brought in an inconvenient forum, that the venue of the suit, action or
     proceeding is improper or that this Agreement, the other Operative
     Documents, or the subject matter hereof or thereof may not be enforced in
     or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
     ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES
     HERETO OR THEIR SUCCESSORS OR ASSIGNS.

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By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440 Ninth
     Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office at
     111 Eighth Avenue, New York, New York 10011, as its authorized agent to
     receive for and on its behalf service of any summons, complaint or other
     legal process in any such action, suit or proceeding in the State of New
     York for so long as any obligation of the Facility Lessee or the Owner
     Lessor, as applicable, shall remain outstanding hereunder or under any of
     the other Operative Documents. the Facility Lessee shall grant an
     irrevocable power of attorney to CT Corporation System, in respect of such
     appointment and shall maintain such power of attorney in full force and
     effect for so long as any obligation of the Facility Lessee shall remain
     outstanding hereunder or under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and deliver
such further documents to make such further assurances for and take such further
action reasonably requested by any party to whom such first party is obligated,
all as may be reasonably necessary to carry out more effectively the intent and
purpose of this Agreement and the other Operative Documents.

Effectiveness.  This Agreement has been dated as of the date first above
written for convenience only. This Agreement shall be effective on the
date of execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing, the obligations
of Calpine with respect to fees and expenses set forth in the letter agreement,

                                       77

<PAGE>

dated July 24, 2001 between Calpine and CSFB and the letter agreement dated
August 1, 2001 between Calpine and Newcourt Capital Securities, Inc. shall not
be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after such
     receipt, but through no violation by such Receiving Party of this Section
     14.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of such
     proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed in
     writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

                                       78

<PAGE>

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                       79

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.



                         ROCKGEN ENERGY LLC,
                         a Wisconsin limited liability company


                                   By: _________________________________
                                   Name:
                                   Title:
                                   Date:

<PAGE>

                         ROCKGEN OL-2 LLC, a Delaware limited liability company

                         By: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
                         not in its individual capacity but solely as
                         Lessor Manager


                         By: _________________________________
                         Name:
                         Title:
                         Date:


                         SBR OP-2 LLC, a Delaware limited liability company

                         By: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
                         not in its individual capacity but solely as
                         Lessor Manager


                         By: _________________________________
                         Name:
                         Title:
                         Date:


                         WELLS FARGO BANK NORTHWEST,
                         NATIONAL ASSOCIATION,
                         not in its individual capacity, except as expressly
                         provided herein, but solely as Lessor Manager

                         By: _____________________________________
                         Name:
                         Title:
                         Date:

<PAGE>

                        STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                        NATIONAL ASSOCIATION,
               not in its individual capacity, except to the extent expressly
               provided herein, but solely as Indenture Trustee under the
               Collateral Trust Indenture


                         By: _________________________________
                         Name:
                         Title:
                         Date:


                         STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                         NATIONAL ASSOCIATION,
               not in its individual capacity, except to the extent expressly
               provided herein, but solely as Pass Through Trustees under the
               Pass Through Trust Agreement


                         By: _________________________________
                         Name:
                         Title:
                         Date:

<PAGE>

                         CALPINE CORPORATION
                                            a Delaware corporation

                         By: _________________________________
                         Name:
                         Title:
                         Date:


<PAGE>

  APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used
     in an Operative Document and not defined therein or in this Appendix A
     but in another Operative Document shall have the meaning herein or
     therein provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or
     laws varying, consolidating or replacing the same from time to time, and
     a reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;

<PAGE>

     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any
     particular date been executed and delivered and such document, instrument
     or agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes
     such Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless
     "Business Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof.

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)   a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                        2

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual
     or constructive) of such payment, which net increase shall be
     calculated by taking into account any reduction in such Taxes resulting
     from any Tax benefits realized or to be realized by the recipient as a
     result of such payment, shall be equal to the amount required to be
     paid. In calculating the amount payable by reason of this provision,
     all income taxes payable and tax benefits realized or to be realized
     shall be determined on the assumptions that (i) the recipient shall be
     subject to the applicable income taxes at the highest marginal tax
     rates then applicable to corporate taxpayers taxed on the same basis as
     the recipient that are in effect in the applicable jurisdictions at the
     time such amount is received or properly accrued, and

                                        3

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents, to sell
     electricity therefrom, to enter into any Operative Document or to
     consummate any transaction contemplated thereby, or (b) that is necessary
     so that none of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of
     the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or
     Fair Market Rental Value during any period when a Lease Event of
     Default shall have occurred and be continuing), an appraisal conducted
     by an appraiser or appraisers in accordance with the following
     procedures. Within ten (10) Business Days of written notice from the
     initiating party of the commencement of an Appraisal Procedure, the
     Owner Participant and the Facility Lessee will each appoint one
     Independent Appraiser, which Independent Appraisers shall attempt to
     agree upon the Fair Market Sales Value or Fair Market Rental Value that
     is the subject of the appraisal. If either the Owner Participant or the
     Facility Lessee does not appoint its appraiser within such ten Business
     Day period, the determination of the other appraiser shall be
     conclusive and binding on the Owner Participant and the Facility
     Lessee. If the appraisers appointed by the Owner Participant and the
     Facility Lessee are unable to agree upon the value, period, amount or
     other determination in question within thirty (30) days, such
     appraisers shall jointly appoint a third Independent Appraiser or, if

                                        4

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U.S.C. [sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BILL OF SALE" shall mean the Bill of Sale (RG-2) dated as of the
     Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B-1 to the

                                        5

<PAGE>

     Participation Agreement duly completed, executed and delivered on the
     Closing Date pursuant to which the Owner Lessor will purchase the
     Undivided Interest from the Facility Lessee.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interests to Broad
     River Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interest to the Broad
     River Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                        6

<PAGE>

     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC. "Broad River Lease Transactions"
     shall mean the transactions involving the assignment and transfer of the
     Broad River Undivided Interests and the Broad River Ground Interests to
     the Broad River Owner Lessors, and the simultaneous lease of the Broad
     River Undivided Interests and Broad River Ground Interests to the Broad
     River Facility Lessee on substantially the same terms and conditions as
     under, and dated the same date as, the Broad River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee,
     the Pass Through Trustees and Calpine and designated Participation
     Agreement (BR-1), Participation Agreement (BR-2), Participation Agreement
     (BR-3) and Participation Agreement (BR-4), each dated as of the Closing
     Date, pursuant to which, among other things, the Broad River Facility
     Lessee has agreed to (a) assign and transfer to the applicable Broad
     River Owner Lessors certain undivided leasehold interests in the Broad
     River Facility, and (b) lease from the applicable Broad River Owner
     Lessors such undivided leasehold interest in the Broad River Facility
     pursuant to the Broad River Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                        7

<PAGE>

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "BUYER(S)" shall mean, individually or collectively, (a) Wisconsin Power
     & Light Company, (b) IES Utilities and (c) Interstate Power Company.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment
     Agreement (RG-2) dated as of the Closing Date in favor of the
     Beneficiaries, substantially in the form of Exhibit H to the
     Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

                                        8

<PAGE>

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     issued on the Closing Date and any certificates issued in replacement
     therefor pursuant to Section 3.3, 3.4 or 3.5 of the Pass Through Trust
     Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage
     and Security Agreement (RG-2), dated as of the Closing Date, between the
     Owner Lessor and the Indenture Trustee, in substantially the form of
     Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Facility Site Lease, shall have
     the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as
     estimated), after eliminating (i) all inter-company items between the

                                        9

<PAGE>

     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii) excess
     of cost over fair value of assets of businesses acquired, as determined
     in good faith by the Board of Directors; (iv) any revaluation or other
     write-up in value of assets subsequent to December 31, 1993 as a result
     of a change in the method of valuation in accordance with GAAP; (v)
     unamortized debt discount and expenses and other unamortized deferred
     charges, goodwill, patents, trademarks, service marks, trade names,
     copyrights, licenses, organization or developmental expenses and other
     intangible items; (vi) treasury stock; and (vii) any cash set apart and
     held in a sinking or other analogous fund established for the purpose of
     redemption or other retirement of Capital Stock to the extent such
     obligation is not reflected in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on
     Schedule 2 of the Facility Lease, and, if such date of determination is
     a Rent Payment Date, Periodic Rent due on that date (to the extent
     payable in arrears)
                                       10

<PAGE>

     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEED" means that certain Warranty Deed (RG-2), dated as of October 18,
     2001, from Facility Lessee to Owner Lessor, substantially in the form of
     Exhibit B-2 to the Participation Agreement.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     report of the Engineering Consultant, dated September 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Clayton Group Services, Inc..

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                       11

<PAGE>

     "ENVIRONMENTAL REPORTS" shall mean the Phase I Environmental Site
     Assessment Report, dated September 27, 2001, prepared by the
     Environmental Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any
determination of Termination Value or amount determined by reference to
Termination Value payable pursuant to the Operative Documents, shall mean an
amount equal to the excess, if any, of (i) the Termination Value set forth
opposite the Termination Date corresponding to such date of determination on
Schedule 2 of the Facility Lease, and, if such date of determination is a Rent
Payment Date, Periodic Rent due on that date (to the extent payable in arrears)
over (ii) the balance, including scheduled (in accordance with the payment
terms of the Lessor Notes) accrued interest, on the Lessor Notes scheduled (in
accordance with the payment terms of the Lessor Notes) to be outstanding on
such date of determination corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)    the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an
     agreed constructive or a compromised total loss of the Facility; or

          (iii)  (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor,
     of title to its Undivided Interest or leasehold interest of the Ground
     Interest, following exhaustion of all permitted appeals or an election by
     the Facility Lessee in its discretion not to pursue such appeals or
     rights; provided that no such contest (or exercise) shall extend beyond
     the earlier of the date which is (x) six

                                       12

<PAGE>

     months after the loss of such leasehold interest or title, or (y) 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee or (b) Requisition of
     use of, or leasehold in, the Undivided Interest or the Ground Interest by
     any Governmental Entity that shall have resulted in the loss of
     possession of the Undivided Interest or all or any part of the Ground
     Interest that is required for the use or operation of the Facility;
     provided that in any case involving Requisition of use of the Facility,
     or all or any part of the Facility Site that is required for the use or
     operation, of the Facility, such event shall be an Event of Loss only if
     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and not, in any event, as a
     result of (a) investments, loans or other business activities of the
     Owner Participant or any of its Affiliates in respect of equipment or
     facilities similar in nature to the Facility or any part thereof or in
     any other electrical, cogeneration or other energy or utility related
     equipment or facilities or the general business or other activities of
     the Owner Participant or any of its Affiliates or the nature of any of
     the properties or assets from time to time owned, leased, operated,
     managed or otherwise used or made available for use by the Owner
     Participant or any of its Affiliates or (b) a failure of the Owner
     Participant to perform routine, administrative or ministerial actions the
     performance of which would not subject the Owner Participant or any of
     its Affiliates to any material adverse consequence (in the reasonable
     opinion of such Owner Participant acting in good faith); provided that
     the Facility Lessee and the Owner Lessor and Owner Participant agree to
     cooperate and to take reasonable measures to alleviate the source or
     consequence of any regulation constituting an Event of Loss under this
     paragraph (iv), so long as there shall be no adverse consequences to the
     Owner Lessor or Owner Participant as a result of such cooperation or the
     taking of reasonable measures (the events and circumstances described
     herein this paragraph (iv), a "Regulatory Event of Loss"); or

          (v)    if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Order shall not have been obtained and become
     final within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act; or

                                       13

<PAGE>

          (vi)   if elected by the Owner Participant, in the event that
     the FERC Order set forth in clause (v) of the definition of "FERC
     Orders" herein shall not have been obtained and become final within
     ninety (90) days of the Closing Date, such election to be conditioned
     upon receipt of a reasoned legal opinion of nationally recognized
     independent counsel (Owner Participant's outside counsel at Closing to be
     deemed to meet such qualifications) that any pending proceeding, if
     adversely determined, would reasonably be expected to have a material
     adverse effect on the Owner Participant or subject the Owner Participant
     or the Owner Lessor to regulation as public utility company or a holding
     company under the Holding Company Act.

          (vii)  one or more of the Buyers under the RockGen PPA has
     exercised the purchase option to acquire the Facility pursuant to the
     RockGen PPA, such purchase option presently being set forth in Section
     3.05 thereof.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) or (vi) above shall be the date on which the
     Facility Lessee receives the Owner Participant's election made in
     accordance with such clause (v) or (vi), as applicable. The date of
     occurrence of an Event of Loss in clause (vii) above shall be the date on
     which the Owner Lessor's interest is conveyed pursuant to the terms of
     the Facility Lease.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental
     Rent and whether or not a Lease Event of Default exists) payable to
     either the Owner Lessor, the Lessor Manager, the Trust Indenture
     Company, or the Owner Participant or to their respective Indemnitees
     and successors and permitted assigns (other than the Indenture Trustee)
     pursuant to

                                       14

<PAGE>

     Section 2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and
     any payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents, (ii)(A) insurance proceeds, if any,
     payable to the Owner Lessor or the Owner Participant under insurance
     separately maintained by the Owner Lessor or the Owner Participant with
     respect to the Facility as permitted by Section 3(b) of Schedule 5.31 to
     the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document for the benefit of the Owner Lessor or the Owner Participant,
     (iii) any amount payable to the Owner Participant as the purchase price
     of the Owner Participant's right and interest in the Member Interest,
     (iv) all other fees expressly payable to the Owner Participant under the
     Operative Documents, (v) any payments in respect of interest, or any
     payments made on an After-Tax Basis, to the extent attributable to
     payments referred to in clause (i) through (vi) above; (vii) any amounts
     paid to the Owner Lessor as reimbursement for amounts expended pursuant
     to Section 20 of the Facility Lease; (viii) proceeds of the items
     referred to in clause (i) through (vii) above; and (ix) any rights to
     demand, collect, sue for, or otherwise receive and enforce payment of the
     foregoing amounts, including under the Calpine Guaranty, but without
     limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 520 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Christiana, Wisconsin, and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (RG-2), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to
     the Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                       15

<PAGE>

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (RG-2), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Facility Lessee will lease the Ground Interest to the
     Owner Lessor.

     "FACILITY SITE LESSEE" shall mean Owner Lessor

     "FACILITY SITE LESSOR" shall mean RockGen Energy LLC .

     "FACILITY SITE RENT" shall have the meaning set forth in Section 4.1 of
     the Facility Site Lease.

     "FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease (RG-2),
     dated as of October 18, 2001, between the Facility Lessee and the Owner
     Lessor, substantially in the form of Exhibit E to the Participation
     Agreement, pursuant to which the Owner Lessor will sublease the Ground
     Interest to the Facility Lessee.

     "FACILITY SITE SUBLESSEE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Facility Site Lease and Section 13.1 of the
     Facility Site Sublease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the obligations relating thereto, (iii) the Undivided Interest
     or the Owner Lessor's Interest, as the case may be, is free and clear of
     all Liens (other than Owner Lessor's Liens, Owner Participant's Liens and
     Indenture Trustee Liens), (iv) taking into account the remaining term of
     the Facility Site Lease, and (v) in the case the Fair Market Rental
     Value, taking into account the terms of the Facility Lease and the other
     Operative Documents. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner
     Lessor pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all faults" basis and shall
     take into account all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens); provided, however, in
     any such case where the Owner Lessor shall be unable to obtain
     constructive possession sufficient to realize the economic benefit of the
     Owner Lessor's Interest, Fair Market Sales Value of the Owner Lessor's
     Interest shall be deemed equal to $0 (zero). If in any case other than in
     the preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a request
     therefor

                                       16

<PAGE>

     has been made, the Fair Market Sales Value of the Owner Lessor's Interest
     shall be determined by appraisal pursuant to the Appraisal Procedures.
     Any fair market value determination of a Severable Improvement shall take
     into consideration any liens or encumbrances to which the Severable
     Improvement being appraised is subject and which are being assumed by the
     transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as
     amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of the Facility
     Lessee and Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on or
     before the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal
     Power Act for the transfer of jurisidictional facilities in the
     sale/leaseback contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner is an EWG.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Facility Site Lease.

                                       17

<PAGE>

     "FMV RENEWAL LEASE OPTION" with respect to the Facility Lease Term,
     shall have the meaning set forth in Section 2.2(a)(iii) of the Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 19.3 of the Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

                                       18

<PAGE>

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such Indebtedness, the amount
     of such obligation being deemed to be the lesser of the value of such
     property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Facility Site Lease.

                                       19

<PAGE>

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f) of
     the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., not in its individual capacity, except as expressly
     provided herein, but solely as Indenture Trustee under the Operative
     Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof that
     are not related to, or that are in violation of, any Operative Document
     or the transactions contemplated thereby, (ii) Claims against or any act
     or omission of the Lease Indenture Company or the Indenture Trustee, or
     Affiliate thereof that is not related to, or that is in violation of, any
     of such Person's representations, warranties, covenants or agreements in
     an Operative Document or the transactions contemplated thereby or that is
     in breach of any covenant or agreement of the Lease Indenture Company or
     the Indenture Trustee specified therein, (iii) Taxes imposed upon the
     Lease Indenture Company or the Indenture Trustee, or any Affiliate
     thereof that are not indemnified against by the Facility Lessee pursuant
     to any Operative Document or (iv) Claims against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the interest
     of the Lease Indenture Company or the Indenture Trustee in the Lessor
     Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

                                       20

<PAGE>

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to a Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(a) of such Facility Site
     Sublease.

     "INITIAL TERM" with respect to the Facility Site Lease, shall have the
     meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., in its individual capacity under the Operative
     Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination
     value or similar amount payable by the lessee under such lease and
     (iii) the principal amount of financial obligations under any synthetic
     lease, tax retention operating

                                       21

<PAGE>

     lease, off-balance sheet loan or similar off-balance sheet financing
     product where such transaction is considered borrowed money indebtedness
     of the lessee for tax purposes but is classified as an operating lease
     under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease or the Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease or the
     Facility Site Sublease, shall have the meaning set forth in Section 16.4
     of the Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and any of the foregoing, but shall not
     include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.2 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

                                       22

<PAGE>

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents, (b) the Indenture Estate or the Lessor Estate,
     the security interests in the Lessor Estate, or (c) with respect to the
     Owner Participant's (but not the Certificateholders') interest in the
     Undivided Interest, the residual value or remaining useful life of the
     Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (RG-2), dated as of the Closing Date, between the
     Facility Lessee, as landlord, and the Owner Lessor, as tenant, and filed
     with the Recorder of Dane County, Wisconsin.

                                       23

<PAGE>

     "MEMORANDUM OF FACILITY SITE SUBLEASE" shall mean the Memorandum of
     Facility Site Sublease (RG-2), dated as of the Closing Date, between the
     Owner Lessor, as sublandlord, and the Facility Lessee, as subtenant filed
     with the Recorder of Dane County, Wisconsin.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
     (RG-2), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Recorder of Dane County, Wisconsin.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan
     (as defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating Officer,
     the Chief Financial Officer, the Treasurer, the Secretary, any Assistant
     Treasurer, any Assistant Secretary or the Controller or Principal
     Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

                                       24

<PAGE>

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing Date
     in favor of the Facility Lessee, the Owner Lessor, the Lessor Manager,
     the Trust Company, the Indenture Trustee, the Pass Through Trustees and
     the Certificateholders, or (ii) any other guaranty agreement provided by
     an OP Guarantor in form and substance substantially in the form of
     Exhibit G to the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Bill
     of Sale, the Facility Lease, the Certificates, the Facility Site Lease,
     the Facility Site Sublease, the Collateral Trust Indenture, the Lessor
     Notes, the Pass Through Trust Agreements, the LLC Agreement, the Tax
     Indemnity Agreement, the Calpine Guaranty, the OP Parent Guaranty (if
     any), the Certificate Purchase Agreement, and the Ownership and Operation
     Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any
     replacement Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.2 of the Facility Lease.

                                       25

<PAGE>

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other RockGen
     Calpine Guaranties, the Broad River Calpine Guaranties and the South
     Point Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other RockGen
     Facility Leases, the Broad River Facility Leases and the South Point
     Facility Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other RockGen Owner
     Lessors, the Broad River Owner Lessors and the South Point Owner Lessors.

     "OTHER ROCKGEN BILLS OF SALE" shall mean each of the bills of sale
     executed and delivered pursuant to the Other RockGen Participation
     Agreements.

     "OTHER ROCKGEN CALPINE GUARANTIES" shall mean the other Calpine guaranty
     and payment agreements executed and delivered by Calpine pursuant to the
     Other RockGen Participation Agreements.

     "OTHER ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     RockGen Participation Agreements.

     "OTHER ROCKGEN FACILITY LEASES" shall mean the other RockGen facility
     lease agreements, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee, pursuant to which the
     Other RockGen Owner Lessors will lease the Other RockGen Undivided
     Interests to the Facility Lessee.

     "OTHER ROCKGEN FACILITY SITE LEASES" shall mean the other facility site
     leases, dated as of October 18, 2001, by and between the Other RockGen
     Owner Lessors and the Facility Lessee pursuant to which the Facility
     Lessee will lease the Other RockGen Ground Interests to the Other RockGen
     Owner Lessors.

     "OTHER ROCKGEN FACILITY SITE SUBLEASES" shall mean the other facility
     site subleases, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee pursuant to which the Other
     RockGen Owner Lessors will sublease the Ground Interest to the Facility
     Lessee.
                                       26

<PAGE>

     "OTHER ROCKGEN GROUND INTERESTS" shall mean the undivided interests in
     the Facility Site not conveyed to the Owner Lessor under the Facility
     Site Lease.

     "OTHER ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other RockGen Collateral Trust Indentures.

     "OTHER ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving
     the sale of the Other RockGen Undivided Interests and the lease of the
     Other RockGen Ground Interests to the Other RockGen Owner Lessors, and
     the lease by the Other RockGen Owner Lessors of the Other RockGen
     Undivided Interests and sublease by the Other RockGen Owner Lessors of
     the Other RockGen Ground Interest to the Facility Lessee on substantially
     the same terms and conditions as under, and dated the same date as, the
     Overall Transaction.

     "OTHER ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other RockGen Owner Lessors pursuant to the Other
     RockGen Operative Documents.

     "OTHER ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC, RockGen
     OL-3, LLC and RockGen OL-4, LLC.

     "OTHER ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-3,
     LLC and SBR OP-4, LLC.

     "OTHER ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other RockGen Lease Transactions.

     "OTHER ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other RockGen Owner
     Lessor, the Other RockGen Lessor Manager, Other RockGen Owner
     Participant, Other RockGen Indenture Trustee, Pass Through Trustees and
     Calpine and designated Participation Agreement (RG-1), Participation
     Agreement (RG-3) and Participation Agreement (RG-4), each dated as of the
     Closing Date, pursuant to which, among other things, the Facility Lessee
     has agreed to (a) sell to the applicable Other RockGen Owner Lessors
     certain undivided interests in the Facility and lease certain undivided
     interests in the Facility Site, and (b) sublease from the applicable
     Other RockGen Owner Lessors such undivided interest in the Facility Site
     pursuant to the Other RockGen Facility Site Sublease.

     "OTHER ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided interest in
     the Facility not conveyed to the Owner Lessor under the Bill of Sale.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents.

     "OVERDUE RATE" shall mean a rate per annum equal to the prime
     commercial lending rate of the Chase Manhattan Bank (as publicly
     announced to be effect from time to time,

                                       27

<PAGE>

     such rate to be adjusted automatically, without notice, on the effective
     date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean RockGen OL-2, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City,Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: RockGen OL-2, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate
     thereof that is not related to, or that is in violation of, any Operative
     Document or the transactions contemplated thereby or that is in breach of
     any covenant or agreement of the Owner Lessor, the Trust Company or the
     Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-2, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Sites, or any part of any thereof or interest therein arising
     as a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document
                                       28

<PAGE>

     or the transactions contemplated thereby or that is in breach of any
     covenant or agreement of the Owner Participant set forth therein, (ii)
     Taxes against the Owner Participant that are not indemnified against by
     the Facility Lessee pursuant to the Operative Documents or (iii) Claims
     against or affecting the Owner Participant arising out of the voluntary
     or involuntary transfer by the Owner Participant of any portion of the
     interest of the Owner Participant in the Member Interest, other than any
     transfer (x) pursuant to the exercise of any of the Facility Lessee's (or
     any Affiliate thereof) rights under the Operative Documents or (y) during
     the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other RockGen Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., in its individual capacity, together with its
     successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context
     may require, of (i) the Pass Through Trust Agreement A, dated as of
     October 18, 2001, and (ii) the Pass Through Trust Agreement B, dated as
     of October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., not in its individual capacity, but solely as Pass
     Through Trustees under each of the Pass Through Trust Agreements, and
     each other Person that may from time to time be acting as a Pass Through
     Trustee in accordance with the provisions of a Pass Through Trust
     Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created
     pursuant to the Pass Through Trust Agreements.

                                       29

<PAGE>

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum
     of Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents, as well as the rights of
     sublessees and/or assignees to the extent set forth in or expressly
     permitted pursuant to the Facility Lease or any other Operative Document,
     (b) as to the Facility Lessee, Owner Lessor's Liens, Owner

                                       30

<PAGE>

     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any
     tax, assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or
     being contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that
     any taxes, assessments or other charges determined to be due will be
     promptly paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, and (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so
     long as an appeal or proceeding for review is being prosecuted in good
     faith and so long as (i) such proceedings shall not reasonably be
     expected to give rise to criminal liability or material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholders, and would not otherwise reasonably be
     expected to have a Material Adverse Effect, and (ii) adequate reserves
     consistent with GAAP requirements have been established and are
     maintained, so as to ensure that any amounts determined to be due will be
     promptly paid in full when such contest is determined, or are fully
     covered by insurance, (f) mineral rights the use and enjoyment of which
     do not materially interfere with the use and enjoyment of the Facility,
     (g) Permitted Encumbrances, (h) Liens, deposits or pledges to secure
     statutory obligations or performance of bids, tenders, contracts (other
     than for the repayment of borrowed money) or leases, or for purposes of
     like general nature in the ordinary course of its business, (i) existing
     Liens that have been disclosed to the Transaction Parties prior to the
     Closing Date and which are reasonably acceptable to the Transaction
     Parties, (j) Liens incident to the ordinary course of business that are
     not incurred in connection with the obtaining of any loan, advance or
     credit in respect of borrowed money permitted to be incurred pursuant to
     the Operative Documents so long as such Liens (x) do not in the aggregate
     materially impair the use of the property or assets of the Facility
     Lessee or the value of such property or assets for the purposes of such
     business and (y) shall not reasonably be expected to give rise to
     criminal liability or unindemnified, material civil liability on the part
     of the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise

                                       31

<PAGE>

     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other RockGen Owner Lessors and the Other RockGen
     Indenture Trustees in the Facility, the Facility Site and the Ownership
     and Operation Agreement, (l) the interests of the Facility Lessee, the
     Other RockGen Owner Participants, the Other RockGen Owner Lessors, the
     Other RockGen Lessor Managers, the Other RockGen Indenture Trustees, and
     Pass Through Trustees under any of the Other RockGen Operative Documents,
     (m) the Ownership and Operation Agreement and (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such
     plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in

                                       32

<PAGE>

     administrative guidance has been issued by the Internal Revenue Service
     or the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "PURCHASE PRICE" with respect to the Undivided Interest, shall mean
     $56,250,000.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have
     the meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may
     properly advise reporting such position on a tax return in accordance
     with Formal Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
     refinances Indebtedness of another Restricted Subsidiary) including
     Indebtedness that refinances Refinancing Indebtedness;

                                       33

<PAGE>

     provided, however, that (i) if the Indebtedness being refinanced is
     contractually subordinated in right of payment to the Obligations, the
     Refinancing Indebtedness shall be contractually subordinated in right of
     payment to such Obligations to at least the same extent as the
     Indebtedness being refinanced, (ii) the Refinancing Indebtedness is
     scheduled to mature either (a) no earlier than the Indebtedness being
     refinanced or (b) after the Stated Maturity of the Obligations, (iii) the
     Refinancing Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average
     Life of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv)
     of the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                       34

<PAGE>

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Sublease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002 each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases thereafter (except for the
     last Rent Payment Period which period shall commence on May 31, 2031 and
     end on, and include, October 18, 2031) each six-month period commencing
     on each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is
     not designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the
     Granting Clause of the Collateral Trust Indenture.

                                       35

<PAGE>

     "ROCKGEN PPA" shall mean the Power Purchase Agreement dated as of August
     10, 1998 (as amended by Amendment No. 1 dated December 22, 1998 and
     Amendment No. 2 dated December 16, 1999) by and between the Buyers and
     the Facility Lessee, as the same may hereafter be further amended
     (subject to Section 5.33 of the RockGen PPA).

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have
     the meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other RockGen Facility Lease.

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Facility Site Lease,
     shall have the meaning set forth in Section 14.1 of the Facility Site
     Lease.

                                       36

<PAGE>

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     South Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the South Point Owner Lessor will
     lease the applicable South Point Undivided Interests to the South Point
     Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy Center, LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which South Point Owner Lessor will lease
     the applicable South Point Ground Interests to the South Point Facility
     Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Facility Site Leases.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and
     the South Point Ground Interests to the South Point Owner Lessors, and
     the simultaneous lease of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

                                       37

<PAGE>

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the South Point Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3)
     and Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee
     has agreed to (a) sell to the applicable South Point Owner Lessors
     certain undivided interests in the South Point Facility, and (b) lease
     from the applicable South Point Owner Lessors such undivided interest in
     the South Point Facility pursuant to the South Point Facility Leases.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the South Point Facility conveyed to the South Point Owner
     Lessors under the South Point Bills of Sale.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

                                       38

<PAGE>

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section
     11.1 of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean a survey of the Facility Site, to be delivered after
     the Closing Date pursuant to Section 5.16 of the Participation Agreement,
     which inter alia, will show the location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings ,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

                                       39

<PAGE>

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (RG-2),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of
     the Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Facility Site Lease, shall
     have, collectively, the meaning set forth in Section 18.1 of the Facility
     Site Lease.

     "TERM" with respect to the Facility Site Lease or the Facility Site
     Sublease, shall have the meaning set forth in Section 2.2(b) of the
     Facility Site Lease or Section 2.1(b) of the Facility Site Sublease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each
     of the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall
     have the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit M: (a) Clarification Letter
     from Duke Energy Trading and Marketing, L.L.C. ("DETM") with respect to
     the Tolling Agreement, dated as of January 8, 1999 (as amended), between
     DETM and the Facility Lessee; and (b) Consent and Agreement from ANR
     Pipeline Company ("ANR") with respect to the Interconnection Agreement,
     dated as of May 28, 1999 (as amended), between ANR and the Facility
     Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

     "TITLE POLICY" shall mean, the title insurance policy (#0303-7538-630)
     dated as of October 18, 2001.

                                       40

<PAGE>

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)     the reasonable costs of reproducing and printing the Operative
     Documents and all costs and fees, including, but not limited to, filing
     and recording fees and recording, transfer, mortgage, intangible and
     similar taxes in connection with the execution, delivery, filing and
     recording of the Facility Lease, the Facility Site Lease, and any other
     Operative Document and any other document required to be filed or
     recorded pursuant to the provisions hereof or of any other Operative
     Document and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)    the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of Reinhart, Boerner Van Deuren,
     Norris & Rieselbach, S.C.,Wisconsin counsel to the Facility Lessee;

     (iv)    the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)     the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)    the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents;

     (viii)  the reasonable fees and expenses of Bingham Dana LLP, counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)    the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

                                     41

<PAGE>

     (x)     the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)    the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)  the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

     (xv)    the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)  the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;
     (xviii) the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

                                     42

<PAGE>

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents.

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial
     Code as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                       43

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.13
<SEQUENCE>16
<FILENAME>f80168ex4-22_13.txt
<DESCRIPTION>EXHIBIT 4.22.13
<TEXT>
<PAGE>
                                                                 EXHIBIT 4.22.13

                                                           EXECUTION COPY

                         PARTICIPATION AGREEMENT (RG-3)

                          Dated as of October 18, 2001

                                      among

                    ROCKGEN ENERGY LLC, as Facility Lessee,

                      ROCKGEN OL-3, LLC, as Owner Lessor,

    WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-3, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees

                                ROCKGEN PROJECT

================================================================================
<PAGE>
                            TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>

SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ......    3

SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ...................    3

     Section 2.1.   Agreements to Participate ...............................    3

     Section 2.2.   Closing Date; Procedure for Participation. ..............    4

     Section 2.3.   Transaction Costs. ......................................    5

SECTION 3. REPRESENTATIONS AND WARRANTIES ...................................    6

     Section 3.1.   Representations and Warranties
                    of the Facility Lessee ..................................    6

     Section 3.2.   Representations and Warranties
                    of the Owner Lessor .....................................   15

     Section 3.3.   Representations and Warranties of the Lessor
                    Manager and the Trust Company ...........................   16

     Section 3.4.   Representations and Warranties
                    of the Owner Participant ................................   18

     Section 3.5.   Representations and Warranties of Indenture
                    Trustee and the Lease Indenture Company .................   20

     Section 3.6.   Representations, Warranties and Covenants
                    of the Pass Through Trustees and
                    the Pass Through Company ................................   22

SECTION 4. CLOSING CONDITIONS ...............................................   23

     Section 4.1.   Completion of the Facility ..............................   25

     Section 4.2.   Operative Documents .....................................   25

     Section 4.3.   Certificates and the Lessor Notes .......................   25

     Section 4.4.   Equity Investment .......................................   25

     Section 4.5.   Organizational Documents ................................   25

     Section 4.6.   Representations and Warranties ..........................   25

     Section 4.7.   Defaults, Events of Default, Events of Loss .............   25

     Section 4.8.   Regulatory Approvals ....................................   25

     Section 4.9.   Consents ................................................   26

     Section 4.10.  Governmental Actions ....................................   27
</TABLE>

                                        i
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>
     Section 4.11.  Insurance ...............................................   27

     Section 4.12.  Ratings .................................................   27

     Section 4.13.  Environmental Report ....................................   27

     Section 4.14.  Surveys .................................................   27

     Section 4.15.  Appraisal; Condition of the Facility ....................   27

     Section 4.16.  Letter from the Appraiser ...............................   27

     Section 4.17.  Other Reports ...........................................   28

     Section 4.18.  Opinion with Respect to Certain Tax Aspects .............   28

     Section 4.19.  Opinions of Counsel .....................................   28

     Section 4.20.  Recordings and Filings ..................................   28

     Section 4.21.  Conditions to Closing ...................................   28

     Section 4.22.  Taxes ...................................................   28

     Section 4.23.  No Changes in Applicable Law ............................   29

     Section 4.24.  Registered Agent for the Facility
                    Lessee and the Owner Lessor .............................   29

     Section 4.25.  Operating Lease Treatment ...............................   29

     Section 4.26.  Rent Adjustments ........................................   29

     Section 4.27.  Title Insurance .........................................   29

     Section 4.28.  Parent Guaranty .........................................   29

     Section 4.29.  Letter as to Number of Offerees .........................   29

     Section 4.30.  Lien Search .............................................   30

     Section 4.31.  Litigation ..............................................   30

     Section 4.32.  No Material Adverse Change ..............................   30

     Section 4.33.  Private Placement Number ................................   30

     Section 4.34.  Proceedings and Documents ...............................   30
</TABLE>

                                       ii
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>
     Section 4.35.  No Proposed Tax Law Change ..............................   30

     Section 4.36.  Payment of Fees and Expenses ............................   30

SECTION 5. COVENANTS OF FACILITY LESSEE AND GUARANTOR .......................   30

     Section 5.1.   Maintenance of Existence ................................   31

     Section 5.2.   Merger, Consolidation, Sale of
                    Substantially All Assets ................................   31

     Section 5.3.   Guaranty and Contingent Obligations .....................   31

     Section 5.4.   Assignment of Rights ....................................   32

     Section 5.5.   Lessor Manager Fees .....................................   32

     Section 5.6.   Conduct of Business, Properties, Etc. ...................   32

     Section 5.7.   Obligations .............................................   32

     Section 5.8.   Books, Records, Access ..................................   32

     Section 5.9.   Other Information. ......................................   33

     Section 5.10.  Warranty of Title to Facility Site. .....................   33

     Section 5.11.  ERISA ...................................................   33

     Section 5.12.  Certain Contracts and Agreements ........................   34

     Section 5.13.  Certain Costs ...........................................   34

     Section 5.14.  Limitations on Liens ....................................   34

     Section 5.15.  Investments .............................................   34

     Section 5.16.  Survey ..................................................   35

     Section 5.17.  Regulations .............................................   35

     Section 5.18.  Partnerships ............................................   35

     Section 5.19.  Dissolution .............................................   35

     Section 5.20.  Termination of Operative Documents ......................   35

     Section 5.21.  Name and Location .......................................   35
</TABLE>

                                      iii
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>

     Section 5.22.  Use of Facility Site ....................................   35

     Section 5.23.  Abandonment of Facility .................................   35

     Section 5.24.  Taxes, Other Government Charges and Utility Charges .....   35

     Section 5.25.  Compliance with Laws, Instruments, Etc. .................   36

     Section 5.26.  PUHCA ...................................................   36

     Section 5.27.  Further Assurances ......................................   36

     Section 5.28.  No Subsidiaries .........................................   37

     Section 5.29.  Permitted Business ......................................   37

     Section 5.30.  Support Arrangements ....................................   37

     Section 5.31.  Insurance ...............................................   38

     Section 5.32.  Tax Status ..............................................   38

     Section 5.33.  Transmission Assets. ....................................   38

SECTION 6. COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY
           AND THE LESSOR MANAGER ...........................................   39

     Section 6.1.   Compliance with the LLC Agreement .......................   39

     Section 6.2.   Owner Lessor's Liens ....................................   40

     Section 6.3.   Amendments to Operative Documents .......................   40

     Section 6.4.   Transfer of the Owner Lessor's Interest .................   40

     Section 6.5.   Owner Lessor; Lessor Estate .............................   40

     Section 6.6.   Limitation on Indebtedness and Actions ..................   40

     Section 6.7.   Change of Location ......................................   40

     Section 6.8.   Bankruptcy of Owner Lessor ..............................   40

SECTION 7. COVENANTS OF THE OWNER PARTICIPANT ...............................   41

     Section 7.1.   Restrictions on Transfer of Member Interest. ............   41

     Section 7.2.   Owner Participant's Liens ...............................   44
</TABLE>

                                       iv
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>
     Section 7.3.   Amendments or Revocation of LLC Agreement ...............   44

     Section 7.4.   Bankruptcy Filings ......................................   44

     Section 7.5.   Instructions ............................................   44

     Section 7.6.   Right of First Refusal ..................................   44

     Section 7.7.   Prohibition on Fundamental Changes ......................   45

     Section 7.8.   Appointment of Successor Lessor Manager .................   45

     Section 7.9.   Cooperation .............................................   45

SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE
           AND THE PASS THROUGH TRUSTEES ....................................   46

     Section 8.1.   Indenture Trustee's Liens ...............................   46

     Section 8.2.   Pass Through Trustees' Covenant Not
                    to Transfer Lessor Notes ................................   46

SECTION 9. INDEMNIFICATION ..................................................   46

     Section 9.1.   General Indemnity. ......................................   46

     Section 9.2.   General Tax Indemnity. ..................................   53

SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ......................   62

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ......   62

     Section 11.1.  Financing Improvements ..................................   62

     Section 11.2.  Optional Refinancing of Lease Debt ......................   64

     Section 11.3.  Cooperation .............................................   65

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT,
            TERMINATION VALUE AND OTHER AMOUNTS .............................   66

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP;
            SPECIAL LESSEE TRANSFERS ........................................   67

     Section 13.1.  Transfer of the Facility Lessee Ownership. ..............   67

     Section 13.2.  Special Facility Lessee Transfers .......................   68

SECTION 14. MISCELLANEOUS ...................................................   69

     Section 14.1.  Consents; Cooperation ...................................   69
</TABLE>
                                        v
<PAGE>
                          TABLE OF CONTENTS (continued)

<TABLE>
<CAPTION>
                                                                                PAGE
<S>                                                                             <C>

     Section 14.2.  Successor Owner Lessor ..................................   69

     Section 14.3.  Bankruptcy of Lessor Estate .............................   69

     Section 14.4.  Amendments and Waivers ..................................   69

     Section 14.5.  Notices .................................................   70

     Section 14.6.  Survival ................................................   74

     Section 14.7.  Successors and Assigns ..................................   74

     Section 14.8.  Business Day ............................................   74

     Section 14.9.  Governing Law ...........................................   74

     Section 14.10. Severability ............................................   74

     Section 14.11. Counterparts ............................................   74

     Section 14.12. Headings and Table of Contents ..........................   75

     Section 14.13. Limitation of Liability. ................................   75

     Section 14.14. Consent to Jurisdiction;
                    Waiver of Trial by Jury; Process Agent. .................   76

     Section 14.15. Further Assurances ......................................   77

     Section 14.16. Effectiveness ...........................................   77

     Section 14.17. Measuring Life ..........................................   77

     Section 14.18. No Partnership, Etc. ....................................   77

     Section 14.19. Entire Agreement ........................................   77

     Section 14.20. Public Utility Regulation ...............................   78

     Section 14.21. Confidentiality of Information ..........................   78

     Section 14.22. Reliance ................................................   79

     Section 14.23. Amendments, Etc. ........................................   79
</TABLE>

                                       vi
<PAGE>
APPENDICES:

       Appendix A       Definitions and Rules of Interpretation

<TABLE>
<CAPTION>
SCHEDULES:
<S>                          <C>
     Schedule 1-A            Equity Investment
     Schedule 1-B            Indenture Trustee's Account
     Schedule 1-C            Owner Participant's Account
     Schedule 2              Pricing Assumptions
     Schedule 3.1(m)         Environmental Matters - Hazardous Substances
     Schedule 4.20           Recording and Filings
     Schedule 5.31           Maintenance of Insurance
</TABLE>

<TABLE>
EXHIBITS:
<S>                       <C>
     Exhibit A            Description of Facility
     Exhibit B-1          Form of Bill of Sale
     Exhibit B-2          Form of Warranty Deed
     Exhibit C            Form of Facility Lease Agreement
     Exhibit D            Form of Facility Site Lease
     Exhibit E            Form of Facility Site Sublease
     Exhibit F            Form of Pass Through Trust Agreement
     Exhibit G            Form of OP Parent Guaranty
     Exhibit H            Form of Calpine Guaranty
     Exhibit I            Form of Collateral Trust Indenture
     Exhibit J            Form of OP Assignment and Assumption Agreement
     Exhibit K            List of Competitors
     Exhibit L            Form of Guarantor Assignment and Assumption Agreement
     Exhibit M            Forms of Consents
</TABLE>

                                      vii
<PAGE>
                            PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement"
     or this "Agreement"), among (i) ROCKGEN ENERGY LLC (herein, together
     with its successors and permitted assigns, called the "Facility
     Lessee"), a limited liability company organized under the laws of the
     State of Wisconsin, (ii) CALPINE CORPORATION, a Delaware corporation,
     as Guarantor (together with its successors and permitted assigns, the
     "Guarantor") under the Calpine Guaranty (RG-3), (the "Calpine
     Guaranty"), (iii) ROCKGEN OL-3, LLC, a Delaware limited liability
     company (the "Owner Lessor"), (iv) SBR OP-3, LLC, a Delaware limited
     liability company (herein, together with its successors and permitted
     assigns, called the "Owner Participant"), (v) STATE STREET BANK AND
     TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
     association organized and existing under the laws of the United States,
     not in its individual capacity, except as expressly provided herein,
     but solely as trustee under the Collateral Trust Indenture (herein in
     its capacity as trustee under the Collateral Trust Indenture, together
     with its successors and permitted assigns, called the "Indenture
     Trustee", and herein in its individual capacity, together with its
     successors and permitted assigns, called the "Lease Indenture
     Company"), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity, except as expressly provided herein, but solely as trustee
     under each of the Pass Through Trust Agreements (herein in its capacity
     as trustee under the Pass Through Trust Agreements, the "Pass Through
     Trustees", and herein in its individual capacity, together with its
     successors and permitted assigns, the "Pass Through Company"), and
     (vii) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
     banking association organized and existing under the laws of the United
     States, not in its individual capacity except as expressly provided
     herein, but solely as independent manager under the LLC Agreement
     (herein in its capacity as independent manager under the LLC Agreement,
     together with its successors and permitted assigns, called the "Lessor
     Manager", and herein in its individual capacity, together with its
     successors and permitted assigns, called the "Trust Company").

                                   WITNESSETH:

          WHEREAS, (a) Facility Lessee, an indirect, wholly-owned
subsidiary of Calpine, will, as of the Closing Date, own a 520 MW gas-fired
combined cycle merchant power plant located near Christiana, Wisconsin and more
fully described in Exhibit A hereto ("Facility");

          WHEREAS, Facility Lessee desires to sell to the Owner Lessor the
Undivided Interest pursuant to the Bill of Sale and lease to the Owner Lessor
the Ground Interest pursuant to the Facility Site Lease, and to lease the
Undivided Interest and sublease the Ground Interest
<PAGE>
from the Owner Lessor pursuant to the Facility Lease and the Facility Site
Sublease, respectively;

          WHEREAS, the Owner Participant desires to cause the Owner Lessor to
purchase such Undivided Interest from the Facility Lessee pursuant to the Bill
of Sale, to lease the Ground Interest from the Facility Lessee pursuant to the
Facility Site Lease, and to lease the Undivided Interest and sublease the
Ground Interest to the Facility Lessee pursuant to the Facility Lease and
Facility Site Sublease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the relevant Pass Through
Trust, purchase the Undivided Interest from the Facility Lessee pursuant to the
Bill of Sale, lease the Ground Interest from Facility Lessee pursuant to the
Undivided Interest and the Ground Interest to the Facility Lessee pursuant to
the Facility Lease and Facility Site Lease and lease the Undivided Interest and
sublease the Ground Interest to the Facility Lessee pursuant to the Facility
Lease and the Facility Site Sublease, respectively;

          WHEREAS, in order to provide a portion of the Purchase Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Bill of Sale, the Owner Participant is willing to make
an investment in the Owner Lessor in an amount equal to the Equity Investment,
all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the
Lessor Notes to the relevant Pass Through Trust and to grant to the Indenture
Trustee liens and security interests in the Indenture Estate to secure its
obligations thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has guaranteed
all of the obligations of the Facility Lessee under the Participation Agreement
and as of the Closing Date shall guarantee all of the obligations of the
Facility Lessee under the other Operative Documents to which the Facility
Lessee is a party; and

                                        2
<PAGE>
          WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee agrees to sell the Undivided Interest to the Owner Lessor
     on the terms and conditions set forth in the Bill of Sale and to lease the
     Ground Interest to the Owner Lessor on the terms set forth in the Facility
     Site Lease; the Owner Lessor agrees to buy the Undivided Interest and to
     lease the Ground Interest from the Facility Lessee, and each agrees to
     execute and deliver the Bill of Sale and the Facility Site Lease;

the Owner Lessor agrees to lease the Undivided Interest to the Facility
     Lessee and to sublease the Ground Interest from the Facility Lessee on
     the terms and conditions set forth in the Facility Lease and Facility
     Site Sublease; the Facility Lessee agrees to lease the Undivided Interest
     and sublease the Ground Interest from the Owner Lessor, and each agrees
     to execute and deliver the respective Facility Lease and the Facility
     Site Sublease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes from
     the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security interests
     in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents pursuant to the OP Parent
     Guaranty;

                                        3
<PAGE>
the Owner Lessor agrees to use the funds received from the Owner
     Participant and the Pass Through Trusts pursuant to clause (a)(i) and
     (e), respectively, of this Section 2.1 on the Closing Date to pay the
     Purchase Price;

the Owner Participant and the Facility Lessee agree to enter into
     the Tax Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the
     other Operative Documents, and to cause each Affiliate thereof that is
     not a party hereto but is a party to an Operative Document to enter into
     such Operative Document, as the case may be (in each case, if attached as
     an Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed
     from time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall
     have otherwise directed. All funds made available pursuant to Section
     2.2(b) will be held by the Owner Lessor in trust for the Owner
     Participant and shall not be part of the Indenture Estate or the Lessor
     Estate, shall be invested by the Owner Lessor in accordance with clause
     (d) below and such funds shall remain the sole property of the Owner
     Participant unless and until released by the Owner Participant and made
     available to the Owner Lessor and applied to pay the Purchase Price or
     Transaction Costs or returned to the Owner Participant, as provided in
     this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner
     Participant has made the Owner Participant's Commitment available to the
     Owner Lessor in accordance with Section 2.2(b), the Closing does not
     occur on such date and the Owner Lessor is unable to return such funds to
     the Owner Participant on such date, the Owner Lessor shall, subject to
     Section 2.2(c)

                                      4
<PAGE>
     above, use reasonable efforts to invest such funds from time to time at
     the written direction of Calpine, and at Calpine's sole expense and risk,
     in Permitted Investments until such funds can be returned to the Owner
     Participant. If, on the Scheduled Closing Date, the Owner Participant has
     made the Owner Participant's Commitment available to the Owner Lessor in
     accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor has not returned such funds to the Owner Participant
     on or before 1:00 p.m., New York City time, on such date, then Calpine
     shall reimburse the Owner Participant for loss of the use of such funds
     at the Applicable Rate for each day, from and including the day that such
     funds were made available to the Owner Lessor by the Owner Participant
     to, but excluding the earlier of (i) the day that such funds have been
     returned to the Owner Participant pursuant to Section 2.2(c) (funds
     received by the Owner Participant after 1:00 p.m., New York City time, of
     any day shall be deemed to be returned on the next succeeding Business
     Day) and (ii) the Closing Date. Subject to payment for the account of the
     Owner Participant of any reimbursement for loss of use of funds due to it
     at the Applicable Rate, any net gain realized on the investment of such
     funds (including interest) shall be paid to Calpine by the Owner Lessor
     on the earlier of (i) the date such funds are returned to the Owner
     Participant pursuant to Section 2.2(c) and (ii) the Closing Date. The
     Owner Lessor shall not be liable for any interest on or loss resulting
     from such investments and, if such funds are made available to the Owner
     Lessor and utilized to pay the Purchase Price or Transaction Costs on the
     Closing Date, Calpine shall reimburse the Owner Lessor for any net loss
     realized on the investment of such funds. If such funds are not so
     utilized, Calpine shall, in addition to its obligation to reimburse the
     Owner Participant for loss of use as provided above, reimburse the Owner
     Participant on the date such funds are returned to the Owner Participant
     for any net loss realized on the investment of such funds. In order to
     obtain funds for payment of the Purchase Price or Transaction Costs or to
     return funds made available to the Owner Lessor by the Owner Participant,
     the Owner Lessor is authorized to sell any investments or obligations
     purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to
     make its Equity Investment shall expire at 5:00 p.m., New York City time,
     on December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,125,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs;

                                      5
<PAGE>
     provided, however, that Calpine shall not be obligated to pay Transaction
     Costs incurred by the Owner Participant if the Overall Transaction is not
     consummated on the basis of the provisions of this Agreement due to a
     failure of the Owner Participant to satisfy any condition to the Closing
     required to be satisfied by the Owner Participant.

Following the Closing Date, the Facility Lessee will be responsible for,
     and will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability
     company duly organized, validly existing, and in good standing under the
     laws of the State of Wisconsin. The Facility Lessee is duly licensed or
     qualified and in good standing (as evidenced by a certificate of status
     issued by the Wisconsin Department of Financial Institutions) in each
     jurisdiction where the character of its properties or the nature of its
     activities makes such qualification necessary, and the Facility Lessee
     has the power and authority to (x) own or hold under lease the property
     it purports to own or hold under lease, (y) carry on its business as now
     being conducted and as presently proposed to be conducted and (z) take
     all actions as may be necessary to consummate the transactions
     contemplated hereunder and under the other Operative Documents to which
     each is a party. The Facility Lessee is an indirect wholly-owned
     subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee in accordance with its terms, except as the same may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting the rights of creditors generally and by general
     principles of equity.

Non-Contravention. (1) The execution, delivery and performance by the
     Facility Lessee of this Agreement and each of the other Operative
     Documents to which it is or will be a party, the consummation by the
     Facility Lessee of the transactions contemplated hereby and thereby, and
     compliance by the Facility Lessee with the terms and provisions hereof
     and thereof, do not and will not (i) contravene any Applicable Law
     binding on the Facility Lessee or its property, or its organizational
     documents, (ii) constitute a default by the Facility Lessee under, or
     result in the creation of any Lien upon the property of the Facility
     Lessee (other than pursuant to any Operative Document) under any
     indenture, mortgage or other material

                                      6
<PAGE>
     contract, agreement or instrument to which the Facility Lessee is a
     party or by which the Facility Lessee or any of its property is bound,
     (iii) contravene any Organic Document of the Facility Lessee or (iv)
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect.

          (2) Neither the sale of the Undivided Interest or the lease of the
Ground Interest by Facility Lessee to the Owner Lessor, nor the grant by the
Owner Lessor to the Indenture Trustee of the Liens and security interests in
the Undivided Interest and the applicable Operative Documents executed in
connection therewith to secure its obligations thereunder does or will
constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing,
     with respect to the participation by the Owner Participant, the Owner
     Lessor in the Overall Transaction, other than (i) any Permit where the
     failure to obtain or maintain such Permit would not be reasonably likely
     to result in a Material Adverse Effect, (ii) the FERC Orders, (iii) as
     may be required under Applicable Law providing for the supervision or
     regulation of the Owner Participant, the Owner Lessor or any Affiliate of
     any of them as a result of investing, lending or other commercial
     activity in which the Owner Participant, the Owner Lessor or any
     Affiliate of any of them is or may be engaged other than the transactions
     contemplated hereby or by any of the other Operative Documents, (iv) as
     may be required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and

                                      7
<PAGE>
     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the
     Facility Lessee, threatened, action, suit, investigation or proceeding
     against the Facility Lessee or any other Calpine Party before any
     Governmental Entity which (i) questions the validity of the Operative
     Documents or the ability of the Facility Lessee or such other Calpine
     Party to perform its obligations under the Operative Documents to which
     the Facility Lessee or such other Calpine Party is or will be a party or
     (ii) if determined adversely to it, could reasonably be expected to have
     a Material Adverse Effect or otherwise materially adversely affect the
     Undivided Interest leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is
     in default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc.
     (1) The chief executive office and principal place of business of the
     Facility Lessee and the office where the Facility Lessee keeps its
     company records concerning the Facility, the Undivided Interest, the
     Ground Interest, the Facility Site and the Operative Documents is located
     at: c/o Calpine Corporation, 50 West San Fernando Street, 5th Floor, San
     Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical to
the condition it was in when inspected by the Appraiser in connection with the
Closing Appraisal.

Title; Liens. (1) On and before the Closing Date, the Facility Lessee has
     (i) good and valid title to the Facility, free and clear of all Liens
     other than Permitted Closing Date Liens, and (ii) good and valid title to
     the Facility Site free and clear of all Liens other than Permitted
     Closing Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid title to the Undivided Interest will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Closing Date Liens, and (B) good and valid leasehold interest in
the Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of the
parties thereto, the Collateral Trust Indenture will create a valid and, when
the filings and recordings to be made pursuant to Section 4.20 have been made,
first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or

                                      8
<PAGE>
payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents) or the use of or the exercise by the
Owner Lessor of its rights under the Bill of Sale or the Facility Site Lease or
the Facility Lease, in a manner which could reasonably be expected to have a
Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of
     its principal activities, in the business of extending credit for the
     purpose of purchasing or carrying margin stock (as defined in Regulations
     T, U or X of the Federal Reserve Board), and no part of the proceeds of
     Lessor Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility
     company," a "holding company", a "subsidiary company" of a "holding
     company" or an "affiliate" of a "holding company" within the meaning of
     the Holding Company Act, and the execution, delivery and performance of
     the Operative Documents to which the Facility Lessee is or will be a
     party will not subject the Facility Lessee to such regulation under the
     Holding Company Act and do not violate any provision of the Holding
     Company Act or any rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment
     company" or a company controlled by an "investment company" within the
     meaning of the Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it
     has directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters.  Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received or has Actual Knowledge
of any written notice, letter, citation, order, warning, complaint, inquiry,
claim or demand from any Governmental Entity or any other Person that: (i)
there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility, or the Facility Site; (ii) the

                                      9
<PAGE>
Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at which any Hazardous Substances have been
generated, stored, treated or disposed by or on behalf of the Facility Lessee
or such other Calpine Party) to a Release or threatened Release of any
Hazardous Substance generated, used or stored at or Released in, on, under or
from the Facility or the Facility Site; (iii) the Facility or the Facility Site
is subject to a Lien in favor of any Governmental Entity in response to a
Release or threatened Release of Hazardous Substances or (iv) the Facility or
the Facility Site is or is asserted to be in violation of or not in compliance
with any Environmental Law, in any case with respect to clauses (ii), (iii) or
(iv), which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility or
the Facility Site, or (B) at, on, under or from any other location resulting
from or arising in connection with the operation by any Person of the Facility
or the Facility Site, that in each case could reasonably be expected to have a
Material Adverse Effect or involve any danger of (i) foreclosure, sale,
forfeiture or loss of, or imposition of a material lien on, such Facility or
the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease or
maintain the Facility and the Facility Site in accordance with the Operative
Documents and the Ownership and Operation Agreement and Environmental Laws have
been obtained on behalf of the Owner Lessor or by the Facility Lessee and they
are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility
or the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or maintenance of the Facility or the
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the
Indenture Trustee, the Lessor Manager, the Pass Through Trustees or the
Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest and the Ground Interest and based upon
     the Facility Lessee's reasonable expectations and on Applicable Law in
     effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     rights contemplated by the Facility Lease to be made available under such
     Operative Documents, permit on a commercially practicable basis

                                      10
<PAGE>
     during the Facility Lease Term and the period following the expiration or
     termination of the Facility Lease Term, as applicable, until the end of
     the Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed
     all federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which, either
     in any case or in the aggregate, would reasonably be expected to have a
     Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility
     Lessee has validly submitted to the jurisdiction of the Supreme Court of
     the State of New York, New York County and the United States District
     Court for the Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable
     Law, including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility and the Facility Site, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility or the
     Facility Site, (ii) the impairment of the ownership (or leasehold or
     easement interest in), use, operation or maintenance of the Facility or
     the Facility Site in any material respect, or (iii) any criminal or
     material civil liability being incurred by the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
     Through Trustees, including subjecting the Owner Participant or the Owner
     Lessor to regulation as a public utility under Applicable Law. None of
     the Calpine Parties is in default of any judgments, orders or decrees of
     any Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties
     hereto and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the
     Lessor Notes under the Collateral Trust Indenture and the Certificates
     under the Pass Through Trust Agreements will be exempt from, or will not
     involve any transaction which is subject to, the prohibitions of either
     Section 406 of ERISA or Section 4975 of the Code and will not involve any
     transaction in connection with which a penalty could be imposed under
     Section 502(i) of ERISA or a tax could be imposed pursuant to Section
     4975 of the Code.

                                      11
<PAGE>
Insurance. All insurance required to be obtained pursuant to Schedule
     5.31 is in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or
     Lease Event of Default, exists or will exist upon execution and delivery
     of the Operative Documents. No Event of Loss exists or will exist upon
     the execution and delivery of the Operative Documents. To the Actual
     Knowledge of the Facility Lessee, no Burdensome Buyout Event has occurred
     or will occur upon the execution and delivery of the Operative Documents
     and the Facility Lessee does not have Actual Knowledge of any event that
     could reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility
     Lessee's Actual Knowledge, threatened by a Governmental Entity or other
     Person to specially assess the Facility or the Facility Site for any
     public improvements constructed or to be constructed which would
     reasonably be expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all
     services of public utilities necessary for use and operation of the
     Facility as currently being used and as contemplated by the applicable
     Operative Documents, except where the failure to have any such services
     or public utilities available would not result in a material adverse
     effect with respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened
     by a Governmental Entity or other Person to initiate, a Requisition of
     any of the Undivided Interest, the Facility, the Ground Interest or the
     Facility Site, which would reasonably be expected to have a Material
     Adverse Effect.

Permitted Liens. There are no violations or proceedings or actions
     pending or threatened, with respect to any easements, reciprocal easement
     agreements, declarations, development agreements or recorded restrictions
     or covenants relating to the Facility or the Facility Site, which would
     reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility
     Site is available and provided by public streets and/or private roads
     fully accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to
     the Facility or the Facility Site, in either case, in any manner which
     would reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no
     outstanding written notices from any Governmental Entity of any violation
     of, or that the Facility or Facility Site is not in compliance with, any
     and all Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility
     or Facility Site by any Governmental Entity or by any insurance company
     which currently issues any insurance to the Facility Lessee or by any
     board of fire

                                      12
<PAGE>
     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than
     the acquisition, construction, development, ownership, operation,
     maintenance, leasing and financing of the Facility and Facility Site and
     activities incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site
     includes improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has
     been made available under the National Flood Insurance Act of 1968, as
     amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby (including the transfer of certain of
     its assets and properties to the Owner Lessor) in good faith and without
     any intent to defraud creditors of the Facility Lessee or subsequent
     purchasers. The execution and delivery of the Operative Documents to
     which the Facility Lessee is a party will not render the Facility Lessee
     insolvent under GAAP or leave the Facility Lessee with assets whose
     present fair valuation of assets is less than the present fair valuation
     of the Facility Lessee's debts. As used in this Section 3.1(dd), "debts"
     includes any and all liabilities, whether matured or unmatured,
     liquidated or unliquidated, absolute, fixed or contingent, and whether or
     not such liabilities are required under GAAP to be shown on the Facility
     Lessee's balance sheet. The execution and delivery of the Operative
     Documents to which the Facility Lessee is a party will not leave it with
     property remaining in its hands which would constitute unreasonably small
     assets or capital, and the Facility Lessee has and, after giving effect
     to such transactions will have, an adequate amount of assets and capital
     to engage in its business now and in the future, based on the actual and
     anticipated needs for capital of the businesses anticipated to be
     conducted by the Facility Lessee, and based upon the other information
     described herein. After giving effect to the transactions contemplated
     under the Operative Documents, the Facility Lessee will be able to pay
     all of its debts and liabilities, including unrecorded contingent
     liabilities, as they mature, the Facility Lessee will have positive cash
     flow after paying all of its scheduled and anticipated debt as it
     matures, and the Facility Lessee will realize sufficient monies from
     current assets in the ordinary and usual course of business to pay
     recurring current debt, short-term debt and long-term debt as such debts
     mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and
     (xv) of the definition of Transaction Costs, the Facility Lessee has not
     paid or become obligated to pay any fee or

                                      13
<PAGE>
     commission to any broker, finder or intermediary for or on account of
     arranging the financing of the transactions contemplated by the Operative
     Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees nor any Certificateholder solely as a result of
     execution, delivery and performance of, and the consummation of the
     transactions contemplated by the Operative Documents shall be or become
     (i) subject to regulation as a "public utility company," "holding
     company," an "affiliate" of a "holding company" or a "subsidiary company"
     of a "holding company" within the meaning of PUHCA or (ii) a "public
     utility" (except that the Facility Lessee will be a public utility
     subject to the Federal Power Act with authority to sell wholesale
     electricity at market-based rates and with waivers of regulations
     customarily granted to a public utility that sells wholesale power at
     market-based rates), a "transmitting utility," or an "electric utility"
     within the meaning of the Federal Power Act, (iii) subject to state
     regulation of rates or organizational requirements for electric utilities.

Material Omission. Neither the Offering Circular (including any
     preliminary offering circular approved by the Facility Lessee for
     distribution) nor the written information furnished to the Owner Lessor,
     the Owner Participant, the Lessor Manager, the Indenture Trustee and the
     Pass Through Trustees by or on behalf of the Facility Lessee or any of
     its Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained
     therein, in light of the circumstances under which they were made, not
     misleading; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Facility Lessee, or (ii) the descriptions
     of the Operative Documents or the tax consequences to beneficial owners
     of Certificates; provided, further, each of the Transaction Parties
     acknowledge and agrees that (i) Calpine has heretofore provided to the
     Appraiser, solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Wisconsin energy markets and (3)
     information passed along from other Persons and (ii) that the Facility
     Lessee makes no representation or warranty whatsoever with respect to the
     information described in clause (i) above except to the extent expressly
     set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by American Transmission Company and has access
     to transmission services and ancillary services sufficient to sell the
     net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings
     referenced in Section 4.8 and, except with respect to the FERC Owner
     Lessor EWG Orders and the FERC Orders referred to in clause (v) of the
     definition of "FERC Orders" in Appendix A hereto, received from FERC the
     orders referenced therein.

                                      14
<PAGE>
Fully Taxable. As of the Closing Date, each Person owning an Ownership
     Interest (i) is fully taxable at the highest federal tax rate and (ii)
     expects to be fully taxable at the highest federal tax rate throughout
     the Facility Lease Term; for the avoidance of doubt, this representation
     is not intended to be construed as nor shall it be deemed to be a
     guaranty as to any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of
     the Facility Lessee, the Facility has commenced commercial operations and
     is currently capable of producing at least 520 MW of capacity and
     complies in all material respects with the other specifications set forth
     in the purchase and construction contracts for the Facility.

Representations and Warranties of the Owner Lessor. The Owner Lessor represents
and warrants that as of the date of execution and delivery hereof and as of the
Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly
     existing limited liability company under the laws of the State of
     Delaware of which the Owner Participant is the sole member, and has the
     power and authority to enter into and perform its obligations under this
     Agreement and each of the other Operative Documents to which it is a
     party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each
     of the other Operative Documents (other than the Lessor Notes) to which
     the Owner Lessor is or will be a party has been or when executed and
     delivered will be duly authorized, executed and delivered by the Owner
     Lessor, and (ii) assuming the due authorization, execution and delivery
     of this Agreement by each party hereto other than the Owner Lessor, this
     Agreement constitutes and when executed and delivered each of the other
     Operative Documents (other than the Lessor Notes) to which it is or will
     be a party will be the legal, valid and binding obligations of the Owner
     Lessor, enforceable against the Owner Lessor in accordance with its
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     the rights of creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the
     State of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's

                                      15
<PAGE>
     Lien; provided, however, that no representation is made with respect to
     the right, power or authority of the Owner Lessor to act as operator of
     the Facility following a Lease Event of Default or the expiration or
     termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC
     Agreement, the Collateral Trust Indenture, the Lessor Notes, this
     Agreement or the other Operative Documents to which the Owner Lessor is
     or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or
     given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Lessor, threatened, action, suit, investigation or proceeding against the
     Owner Lessor before any Governmental Entity which (i) questions the
     validity of the Operative Documents or the ability of the Owner Lessor to
     perform its obligations under the Operative Documents to which it is or
     will be a party or (ii) if determined adversely to it, could reasonably
     be expected to materially adversely affect the ability of the Owner
     Lessor to perform its obligations under this Agreement or any other
     Operative Document to which it is or will be a party or would materially
     adversely affect the Facility, the Facility Site or any interest therein
     or part thereof or the Lien of the Indenture Trustee on the Indenture
     Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor
     Estate is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The
     registered office of the Owner Lessor is 1209 Orange Street, Wilmington,
     Delaware 19801, and the Owner Lessor will keep its corporate records
     concerning the Facility, the Facility Site, the Operative Documents and
     the South Point Ground Lease with the Lessor Manager, at the Lessor
     Manager's address set forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

Representations and Warranties of the Lessor Manager and the Trust Company. The
Trust Company (only with respect to representations and warranties expressly
relating to the Trust Company) and the Lessor Manager hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of the
     United States, has the corporate

                                      16
<PAGE>
     power and authority, as Lessor Manager and/or in its individual capacity
     to the extent expressly provided herein or in the LLC Agreement, to enter
     into and perform its obligations under the LLC Agreement, this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has
     been duly authorized, executed and delivered by the Trust Company, and
     (ii) assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in
     its individual capacity or as Lessor Manager, as the case may be, of the
     LLC Agreement, this Agreement and the other Operative Documents to which
     it is or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage
     or other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is
     bound, or in the creation of any Owner Lessor's Lien; provided, however,
     that no representation is made with respect to the right, power or
     authority of the Trust Company or the Lessor Manager to act as operator
     of the Facility following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the

                                      17
<PAGE>
     Trust Company or the Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement or the other Operative Documents to which the
     Trust Company or the Lessor Manager is or will be a party, other than any
     such authorization or approval or other action or notice or filing as has
     been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against
     the Trust Company either in its individual capacity or as Lessor Manager,
     as the case may be, before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Lessor to perform its obligations under the Operative Documents to which
     it is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to materially adversely affect the ability of the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, to perform its obligations under the LLC Agreement, this
     Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable
     to the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered
     or sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease,
     the offering of which, for the purposes of the Securities Act, would be
     deemed to be part of the same offering as the offering of the Member
     Interest, the Lessor Notes or the Certificates or any part thereof or
     solicited any offer to acquire any of the same in violation of the
     registration of Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company
     duly organized, validly existing and in good standing under the laws of
     the State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement
     and the Tax Indemnity Agreement have been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Participant
     and assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement and any other Operative Document to which the Owner Participant
     is or will be a party constitute or when executed and delivered will
     constitute the legal, valid and binding obligations of the Owner
     Participant, enforceable against the Owner Participant in accordance with
     their respective terms, except as the same may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the rights of creditors generally and by general principles of
     equity.

                                      18
<PAGE>
Non-Contravention. The execution and delivery by the Owner Participant of
     this Agreement, the LLC Agreement, the Tax Indemnity Agreement and any
     other Operative Document to which the Owner Participant is or will be a
     party, the consummation by the Owner Participant of the transactions
     contemplated hereby and thereby, and the compliance by the Owner
     Participant with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law binding on the Owner Participant,
     or its organizational documents, or contravene the provisions of, or
     constitute a default under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Participant is a
     party or by which the Owner Participant or its property is bound or
     result in the creation of any Owner Participant's Lien (other than any
     Lien created under any Operative Document) upon the Lessor Estate, the
     Facility Site or any interest therein or part thereof (it being
     understood that no representation or warranty is being made as to (i) any
     Applicable Laws relating to the particular nature of the Facility or the
     Facility Site or (ii) other than its representations set forth in Section
     3.4(g), ERISA or Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC
     Agreement, the Tax Indemnity Agreement or any other Operative Document to
     which the Owner Participant is or will be a party, other than any
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given (it being understood that no representation
     or warranty is being made as to any Applicable Laws relating to the
     Facility or the Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding
     against the Owner Participant before any Governmental Entity which (i)
     questions the validity of the Operative Documents or the ability of the
     Owner Participant to perform its obligations under the Operative
     Documents to which it is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to materially adversely
     affect the ability of the Owner Participant to perform its obligations
     under the LLC Agreement, this Agreement or any other Operative Document
     to which it is or will be a party or would materially adversely affect
     the Facility, the Facility Site or any interest therein or part thereof
     or the Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make
     its investment pursuant to this Agreement, directly or indirectly,
     constitutes or is deemed to constitute assets (within the meaning of
     ERISA and any applicable rules, regulations and court decisions
     thereunder) of any "employee benefit plan" (as defined in Section 3(3) of
     ERISA) that is subject to ERISA, of any Transaction Party and ERISA
     Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the
     Member Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would

                                      19
<PAGE>
     violate the Securities Act, but without prejudice, however, to the right
     of the Owner Participant at all times to sell or otherwise dispose of all
     or any part of such Member Interest under an exemption from registration
     available under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it
     has directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration
     requirements of Section 5 of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing
     this Agreement, the Owner Participant is not an "electric utility",
     "electric utility company", "public utility", "public-utility company",
     "holding company" or a "subsidiary company" or "affiliate" of any of the
     foregoing, under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment
     company" or a company controlled by an "investment company" within the
     meaning of the Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact
     or circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking
     association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Indenture Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Collateral Trust Indenture, to enter
     into and perform its obligations under the Collateral Trust Indenture,
     this Agreement and each of the other Operative Documents to which it is
     or will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been
     duly authorized, executed and delivered by the Indenture Trustee and the
     Lease Indenture Company, and (ii) assuming the due authorization,
     execution and delivery of this Agreement by each party hereto other than
     the Indenture Trustee and the Lease Indenture Company, this Agreement
     constitutes a legal, valid and binding obligation of the Lease Indenture
     Company and the Indenture Trustee, enforceable against the Lease
     Indenture Company or the Indenture Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting the rights of creditors generally and by general
     principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and

                                      20
<PAGE>
delivery of each of the other Operative Documents by each party thereto other
than the Indenture Trustee, each of the other Operative Documents to which the
Indenture Trustee is or will be a party constitutes or when executed and
delivered will be a legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture
     Company, in its individual capacity or as Indenture Trustee, as the case
     may be, of this Agreement and the other Operative Documents to which it
     is or will be a party, the consummation by the Lease Indenture Company,
     in its individual capacity or as Indenture Trustee, as the case may be,
     of the transactions contemplated hereby and thereby, and the compliance
     by the Lease Indenture Company, in its individual capacity or as
     Indenture Trustee, as the case may be, with the terms and provisions
     hereof and thereof, do not and will not contravene any Applicable Law of
     the State of Connecticut or the United States of America governing the
     Lease Indenture Company or the banking or trust powers of the Lease
     Indenture Company, or its articles of association or by-laws, or
     contravene the provisions of, or constitute a default by the Lease
     Indenture Company under or pursuant to any indenture, mortgage or other
     material contract, agreement or instrument to which the Lease Indenture
     Company is a party or by which the Lease Indenture Company or its
     property is bound, or result in the creation of any Lien attributable to
     the Lease Indenture Company upon the Indenture Estate, the Facility Site
     or any interest therein or any part thereof (other than the Lien of the
     Collateral Trust Indenture), which would materially adversely affect the
     ability of the Lease Indenture Company, in its individual capacity or as
     Indenture Trustee, as the case may be, to perform its obligations under
     this Agreement or the other Operative Documents to which it is or will be
     a party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     the Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act
     as operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice
     or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if

                                      21
<PAGE>
     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Lease Indenture Company to perform
     its obligations under this Agreement or any other Operative Document to
     which it is or will be a party or could reasonably be expected to
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Representations, Warranties and Covenants of the Pass Through Trustees and the
Pass Through Company. The Pass Through Company and the Pass Through rustees
hereby severally represent and warrant that as of the date of execution and
delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking
     association duly organized, validly existing and in good standing under
     the laws of the United States, has the corporate power and authority, as
     Pass Through Trustee and/or in its individual capacity to the extent
     expressly provided herein or in the Pass Through Trust Agreements, to
     enter into and perform its obligations under the Pass Through Trust
     Agreements, this Agreement and each of the other Operative Documents to
     which it is or will be a party.

Due Authorization, Enforceability; etc.

(A) This Agreement has been duly authorized, executed and delivered by
     the Pass Through Trustees and the Pass Through Company and (B) assuming
     the due authorization, execution and delivery of this Agreement by each
     party hereto other than each Pass Through Trustee and the Pass Through
     Company, as the case may be, this Agreement constitutes a legal, valid
     and binding obligation of the Pass Through Company and each Pass Through
     Trustee, enforceable against the Pass Through Company or each Pass
     Through Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by bankruptcy, insolvency, fraudulent
     conveyance, reorganization, arrangement, moratorium or other laws
     relating to or affecting the rights of creditors generally and by general
     principles of equity.

(A) Each of the other Operative Documents to which the Pass Through
     Company or any Pass Through Trustee is or will be a party has been or
     when executed and delivered will be duly authorized, executed and
     delivered by the Pass Through Company or such Pass Through Trustee, as
     the case may be, and (B) assuming the due authorization, execution and
     delivery of each of the other Operative Documents by each party thereto
     other than the Pass Through Company or such Pass Through Trustee, as the
     case may be, each of the other Operative Documents to which the Pass
     Through Company or any Pass Through Trustee is or will be a party
     constitutes or when executed and delivered will constitute a legal, valid
     and binding obligation of the Pass Through Company or such Pass Through
     Trustee, enforceable against the Pass Through Company or such Pass
     Through Trustee, as the case may be, in accordance with its terms, except
     as the same may be limited by bankruptcy, insolvency, fraudulent
     conveyance, reorganization, arrangement, moratorium or other laws
     relating to or affecting the rights of creditors generally and by general
     principles of equity.

Non-Contravention. The execution and delivery by the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, of this Agreement and the other Operative Documents to which
     it is or will be a party, the consummation by the Pass

                                      22
<PAGE>
     Through Company, in its individual capacity or as Pass Through Trustee,
     as the case may be, of the transactions contemplated hereby and thereby,
     and the compliance by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, with the terms
     and provisions hereof and thereof, do not and will not contravene any
     Applicable Law of the United States of America or the State of
     Connecticut governing the Pass Through Company or the banking or trust
     powers of the Pass Through Company, or its organizational documents or
     by-laws, or contravene the provisions of, or constitute a default by the
     Pass Through Company under, or result in the creation of any Lien
     attributable to the Pass Through Company upon the Certificates or any
     indenture, mortgage or other material contract, agreement or instrument
     to which the Pass Through Company is a party or by which the Pass Through
     Company or its property is bound which would materially adversely affect
     the ability of the Pass Through Company, in its individual capacity or as
     Pass Through Trustee, as the case may be, to perform its obligations
     under this Agreement or the other Operative Documents to which it is a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     any Pass Through Trustee in the Indenture Estate; provided, however, that
     no representation is made with respect to the right, power or authority
     of the Pass Through Company or any Pass Through Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will
     be a party, other than any such authorization or approval or other action
     or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against the
     Pass Through Company either in its individual capacity or as Pass Through
     Trustee, before any Governmental Entity which, if determined adversely to
     it, would materially adversely affect the ability of the Pass Through
     Company, in its individual capacity or as Pass Through Trustee, as the
     case may be, to perform its obligations under this Agreement or the other
     Operative Documents to which it is a party or would materially adversely
     affect the Facility, the Facility Site or any interest therein or part
     thereof or the security interest of any Pass Through Trustee in the
     Indenture Estate or which questions the validity or enforceability of any
     Operative Document to which the Pass Through Company or any Pass Through
     Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                      23
<PAGE>
such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                      24
<PAGE>
Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 520 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

Representations and Warranties. The representations and warranties of each
party hereto set forth in Section 3 shall be true and correct on and as of the
Closing Date with the same effect as though made on and as of the Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
and the FERC Orders set forth in clause (v) of the definition of "FERC Orders"
set forth in Appendix A hereto, the Owner Participant and the Pass Through
Trustees shall have received evidence of receipt of the FERC Orders.

                                      25
<PAGE>
Consents. (a) All permits, licenses, approvals and consents (including
     management, credit and other internal approvals of the Transaction
     Parties, but excluding the Third Party Consents referred to in (b) below)
     necessary to consummate the Overall Transaction and to own and operate
     the Facility as currently operated shall have been duly obtained and
     shall be in full force and effect and in the form and substance
     satisfactory to each of the Transaction Parties.

Each Third Party Consent shall have been obtained and shall be in full
     force and effect substantially in the form attached hereto as Exhibit O
     which is applicable to the relevant third party granting such consent;
     provided that if any Third Party Consent is not substantially in the form
     attached hereto as Exhibit O, an authorized officer of Calpine shall
     provide a certificate to the Owner Lessor, the Indenture Trustee and the
     Pass Through Trustee certifying that any differences between the form of
     such consent attached hereto and the executed version are not materially
     adverse to any of the Indenture Trustee, the Pass Through Trustee, the
     Noteholders, the Certificateholders or the Owner Lessor.

                                      26
<PAGE>
Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the FERC Owner Lessor EWG Orders and the FERC Orders set forth in clause (v) of
the definition of "FERC Orders" set forth in Appendix A hereto, all Applicable
Permits required to be in effect on the Closing Date in connection with the
consummation of the transactions contemplated by the Operative Documents shall
have been issued and shall be in full force and effect; and all such Applicable
Permits shall be final, in full force and effect on the Closing Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a bringdown certificate
(which certificate shall be in form and substance satisfactory to the Owner
Participant) from the surveyor with respect to its survey of the Facility Site
dated February 22, 2000.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

Letter from the Appraiser. Each of the Owner Lessor and the Manager shall have
received a satisfactory letter of the Appraiser setting forth the conclusions
of the Closing Appraisal as to the fair market value and remaining economic
useful life of the Facility as of the Closing Date and the methodology of
determination thereof.

                                      27
<PAGE>
Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the sale by the Facility Lessee of its interest in the Undivided Interest to
the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to the
Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C., Wisconsin counsel to the Facility Lessee, the Owner
Participant, the Owner Lessor and the Initial Purchasers, (e) Karen Scowcroft,
Esq., in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP,
counsel to the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP,
counsel to the Lease Indenture Company and the Indenture Trustee, (h) Bingham
Dana LLP, counsel to the Pass Though Trustees and the Pass Through Company, and
(i) Ray Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case
in form and substance reasonably satisfactory to each Transaction Party. Each
such Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

Recordings and Filings. All filings and recordings listed on Schedule 4.20
hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
Wisconsin and any other documents as may be reasonably requested by counsel to
the Owner Participant, the Indenture Trustee or the Pass Through Trustees to
perfect (i) the Owner Lessor's Interest, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents shall have been satisfied
or waived and the Owner Participant shall be satisfied that the Facility shall
be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                      28
<PAGE>
No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or would materially adversely affect the Facility or the
Facility Site. On the Closing Date, each Certificateholder's purchase of Lessor
Notes shall (i) be permitted by the laws and regulations of each jurisdiction
to which such Certificateholder is subject, (ii) not violate any Applicable Law
(including Regulation U, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject any Certificateholder to any tax, penalty
or liability under or pursuant to any Applicable Law, which Applicable Law was
not in effect on the date hereof. If requested by any Certificateholder, such
Certificateholder shall have received an Officer's Certificate of the Owner
Lessor, in form and substance satisfactory to such Certificateholder,
certifying as to such matters of fact as such Certificateholder may reasonably
specify to enable such Certificateholder to determine whether such purchase is
so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G
hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

                                      29
<PAGE>
Lien Search. The Owner Participant (with a copy to the Indenture Trustee) shall
have received Lien searches with respect to the Facility Lessee in form and
substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or any of the
Transactions contemplated by any of the Operative Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

Payment of Fees and Expenses. Without limiting the provisions of Section 2.3,
all Transaction Costs invoiced at least 3 Business Days prior to Closing to the
Owner Participant with a copy to the Facility Lessee shall be paid promptly
after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided below,
covenant as follows;

                                      30
<PAGE>
Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
     all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with
     Section 8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through
     (vi) of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a),
     the resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility
     Lessee under this Participation Agreement and each other Operative
     Document to which the Facility Lessee was a party immediately prior to
     such transaction, with the same effect as if such entity had been named
     herein and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents, (iv) unsecured indemnities provided

                                      31
<PAGE>
by, and other unsecured contingent obligation incurred by, the Facility Lessee
in connection with either (x) easements relating to its applicable interest in
the Facility or the Facility Site or (y) any contract, agreement or other
document or instrument relating to the RockGen project which is entered into in
the ordinary course of the Facility Lessee's business, (v) customary
indemnities in favor of the title insurers providing the title policies
covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents,
as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

Books, Records, Access. The Facility Lessee shall maintain or cause to be
maintained adequate books, accounts and records with respect to itself, the
Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or Lease
Event of Default) expense to the Facility Lessee to inspect, the Facility and
Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

                                      32
<PAGE>
Other Information.

The Facility Lessee shall furnish, or shall cause to be furnished to, the
     Owner Lessor, the Owner Participant and, so long as the Lien of the
     Collateral Trust Indenture has not been terminated or discharged, the
     Indenture Trustee and the Pass Through Trustees, and their respective
     authorized representatives from time to time such information as such
     party shall reasonably request concerning the Facility and Facility Site
     including information concerning the condition, operation, maintenance
     and use of the Facility and Facility Site and such other financial or
     operating information as it shall reasonably request and which is
     routinely made available to creditors of the Facility Lessee, to the
     extent it possesses such information; provided that, the Facility Lessee
     reserves the right not to provide any information that is not otherwise
     publicly available to any transferee Owner Participant (or its Owner
     Lessor) if it reasonably believes in its good faith judgment that such
     transferee Owner Participant or any Affiliate thereof is a competitor or
     is an Affiliate of a competitor of the Facility Lessee or its Affiliates
     in the competitive power market, unless, before receiving any such
     information, such transferee Owner Participant shall have put in place
     (to the reasonable satisfaction of the Facility Lessee) appropriate
     confidentiality arrangements. To the extent such information consists of
     information contained in records kept by the Facility Lessee or any
     Affiliate, such information shall be furnished without cost to the
     recipient.

          (b)   The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

Warranty of Title to Facility Site.

Each Facility Lessee shall maintain good and valid fee, title to, or
     easement or other surface rights in, as applicable, its Facility Site,
     subject only to Permitted Liens.

Each Facility Lessee shall maintain good and valid title to all of its
     other properties and assets (other than properties and assets disposed of
     in the ordinary course of business including any sale, transfer or other
     disposition of any obsolete, surplus or worn out equipment, parts,
     supplies or other materials or assets to the extent permitted by the
     Operative Documents), subject only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the

                                      33
<PAGE>
Internal Revenue Service to the effect that such Plan (and trust, if any) meets
the requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at
all times be in compliance in all material respects with applicable provisions
of ERISA and the Code, and (b) within fifteen (15) days after (i) the
occurrence of any reportable event (as defined in Section 4043(c) of ERISA)
with respect to any Plan, (ii) the complete or partial withdrawal by the
Facility Lessee or any ERISA Affiliate from any Multiemployer Plan, (iii) to
the extent the Facility Lessee or any ERISA Affiliate is notified that any
Multiemployer Plan has entered reorganization status, has become insolvent, or
has terminated (or any Multiemployer Plan notifies the Facility Lessee or any
ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA, (iv)
the institution of any action to terminate a Plan in a distress termination
under Section 4041(c) of ERISA, or (v) in the case of the breach of any other
covenant contained in this Section 5.11, the Facility Lessee shall report such
occurrence or breach to the Indenture Trustee, the Pass Through Trustees, the
Owner Lessor and the Owner Participant and furnish such information as such
Persons may reasonably request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents,
it will not enter into or become bound by any contract or agreement providing
for the sale of energy produced from the Facility, or the purchase of services
to be performed at, for or in connection with, the Facility or any other
contract or agreement relating to the Facility that (i) has a term that extends
beyond the Basic Lease Term or the scheduled expiration of any Renewal Lease
Term then in effect or elected by the Facility Lessee, unless such contract or
agreement may be terminated by the Facility Lessee without material costs or
obligation prior to the Basic Lease Term or the scheduled expiration of such
Renewal Lease Term, as the case may be or (ii) results in any lien,
encumbrance, restriction or agreement relating to the Facility which extends
beyond the expiration of the Facility Lease Term or which binds the Facility or
the owner of the Facility beyond the expiration of the Facility Lease Term;
provided that nothing in this Section 5.12 shall prevent the Operator from
entering agreements to operate the Facility in accordance with the Operative
Documents.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site, or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

Investments. The Facility Lessee shall not make or permit to remain outstanding
any advances, loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, except Permitted
Investments.

                                      34
<PAGE>
Survey. The Facility Lessee shall use diligent and commercially reasonable
efforts to deliver a copy of the Survey as soon as practicable, such survey to
be an ALTA survey or other survey in form and substance reasonably satisfactory
to the Owner Participant, provided that the failure to do so shall not
constitute, in whole or in part, the basis of any default under any Operative
Document.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents. The Facility Lessee shall not without the
prior written consent of the Owner Participant and, except as otherwise
provided in Section 8 of the Collateral Trust Indenture and so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee, (a) cause or consent to or (b) permit, any amendment,
modification, extension, termination, variance or waiver of timely compliance
with any terms or conditions of any Operative Document.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are

                                      35
<PAGE>
established and maintained in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties
or other costs relating thereto, or other adequate provision for the payment
thereof shall have been made, and (b) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
immediately paid after resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or the Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) or (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Lease Indenture Company,
the Pass Through Trustees, the Pass Through Company or any Certificateholder,
(iv) the Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
Trustee, the Lease Indenture Company, the Pass Through Trustees, the Pass
Through Company or any Certificateholder being subjected to any unindemnified
civil liability or of the Owner Participant or the Owner Lessor being subject
to regulation as a public utility under Applicable Law, or (v) any Material
Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture

                                      36
<PAGE>
Trustee or the Pass Through Trustees such information with respect to the
Facility or the Facility Site or the transactions contemplated by the Operative
Documents to which the Facility Lessee is a party as may be required to enable
the Owner Participant, the Owner Lessor or, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee or the Pass Through Trustees, as the case may be, to timely
file with any Governmental Entity any reports and obtain any licenses or
permits required to be filed or obtained by the Owner Lessor under any
Operative Document, the Owner Participant as the owner of the Member Interest
or the Indenture Trustee.  The Facility Lessee will preserve, protect, defend
and enforce, or cause to be preserved, protected, defended and enforced, the
rights of itself, the Owner Lessor and the Owner Participant under each and
every Operative Document to which it is a party (including by assignment and
assumption of the rights thereunder), including using commercially reasonable
efforts to prosecute suits to enforce any such rights and, at the request of
Indenture Trustee, so long as the Lien of the Collateral Trust Indenture has
not been discharged or terminated (and thereafter at the request of the Owner
Participant), permit the Indenture Trustee and the Owner Participant, at their
respective cost and expense, to participate in such capacity as it may choose
in any such suit, any defense thereof or in the preparation therefor; provided,
however, that upon the occurrence and during the continuance of any Lease Event
of Default, if the Indenture Trustee or the Owner Participant request that
certain actions be taken and the Facility Lessee fails to take the requested
action, or to cause the requested action to be taken within (5) Business Days,
the Indenture Trustee, so long as the Lien of the Collateral Trust Indenture
has not been discharged or terminated, and the Owner Lessor may, at the
Facility Lessee's reasonable expense, enforce, in its own name, or the Facility
Lessee's name, such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or related or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

Support Arrangements. The Facility Lessee agrees that, to the extent that the
rights described in Section 3.1(n) which have already been made available to
the Owner Lessor prior to the expiration or termination of the Facility Lease
Term, and any rights assigned pursuant to the last sentence of this Section
5.30, are insufficient to permit on a commercially practicable basis during the
period following the expiration or termination of the Facility Lease Term,
until the end of the Facility's useful life as set forth in the Closing
Appraisal, (i) the location, occupation, interconnection (including with
respect to electricity, steam, gas and water), maintenance and repair of the
Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same

                                      37
<PAGE>
manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the Facility Site Lease, or earlier at the option of the Owner
Lessor. The Facility Lessee shall also, subject to obtaining any required third
party consents, assign to the Owner Lessor upon termination of the Facility
Lease any support or similar agreements to the extent relating to the Facility
it has with third parties.

Insurance. The Facility Lessee shall comply with the covenants set forth in
Schedule 5.31.

Tax Status. The Facility Lessee and each Person owning an Ownership Interest
therein will not voluntarily take any action to cause the Facility Lessee to be
subject to taxation as a separate entity for federal income tax purposes.

Transmission Assets.

If and to the extent that on the Closing Date the FERC Order referred to
     in clause (v) of the definition thereof has not been obtained with
     respect to the jurisdictional facilities referred to therein (which
     facilities are identified in Exhibit A as Transmission Assets (the
     "Transmission Assets")), the Owner Participant shall, upon 5 days' prior
     written notice to the Facility Lessee, and subject to the grant of the
     aforesaid order, cause the Owner Lessor to acquire an undivided interest
     equal to the Owner Lessor's Percentage in the Facility Lessee's right,
     title and interest in the Transmission Assets, for a price equal to
     $1.00. Upon payment by the Owner Lessor of such amount, the Facility
     Lessee shall execute and deliver such documentation as is reasonably
     requested by the Owner Lessor to transfer such undivided interest in the
     Facility Lessee's right, title and interest in the Transmission Assets to
     the Owner Lessor. Upon such transfer such Undivided Interest shall be and
     shall be deemed to be an integral part of the Undivided Interest (to the
     extent constituting a portion of the Facility) and the Ground Interest
     (to the extent constituting a portion of the leasehold interest in the
     Facility Site) for all purposes of the Operative Documents without the
     necessity of amending or supplementing any Operative Document, subject
     nevertheless to Section 14.15 hereof.

Without limiting Section 10 hereof or Section 4.2 of the Facility Lease,
     the Facility Lessee agrees that from and after the Closing Date and until
     the earlier to occur of (A) the transfer referred to in clause (a) above
     and (B) the termination of the Facility Lease, the Facility Lessee shall
     make available to the Owner Lessor, for no additional compensation, such
     rights in the Transmission Assets solely to the extent as shall be
     necessary so that the representation in Section 3.1(n) will be correct to
     the same extent as if such transfer had occurred on the Closing Date.

                                      38
<PAGE>
COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

not amend, supplement, or otherwise modify Section 9.1, 9.3, 13.1 or
     clause (i) of Section 13.2 of the LLC Agreement without the prior written
     consent of the Facility Lessee so long as no Significant Lease Default or
     Lease Event of Default has occurred and is continuing and the Indenture
     Trustee so long as the Lien of the Collateral Trust Indenture has not
     been terminated or discharged.

                                      39
<PAGE>
Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents in any manner or
(c) except as provided in Section 11 hereof or Section 2.10 or Section 5.6 of
the Collateral Trust Indenture, take any action to prepay or refund the Lessor
Notes or amend any of the payment terms of the Lessor Notes without, in each
case, the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default shall have occurred and be
continuing and, in the case of clause (a) or (b), the Indenture Trustee so long
as the Lien of the Collateral Trust Indenture has not been terminated or
discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

Bankruptcy of Owner Lessor. Each of the Trust Company, the Lessor Manager and
the Owner Lessor hereby agrees severally and as to itself only that it shall
not voluntarily take any action that shall, or cause any action to be taken
that is intended to, submit the Owner Lessor, as debtor, to any proceeding
under any Applicable Law involving bankruptcy, insolvency, reorganization or
other laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner

                                      40
<PAGE>
Lessor shall not take any such action unless the Indenture Trustee shall have
given its prior written consent to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title or
     interest in the Member Interest without the prior written consent of the
     Facility Lessee and, so long as the Lien of the Collateral Trust
     Indenture has not been terminated or discharged, without the prior
     written consent of the Indenture Trustee; provided, however, that the
     Owner Participant may, subject to Section 7.6, assign, convey or transfer
     all or any part of its interest in the Member Interest without such
     consent to a Person (the "Transferee") which shall assume the duties and
     obligations of the Owner Participant under the Operative Documents with
     respect to the interest being transferred pursuant to an OP Assignment
     and Assumption Agreement substantially in the form of Exhibit J hereto,
     if each of the following conditions shall have been satisfied on or prior
     to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees
     shall have received an opinion(s) of counsel (including an opinion with
     respect to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of
     Section 7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor
     Owner Participant's obligations hereunder, pursuant to an OP Parent
     Guaranty or (B) a Person which meets, or the payment and performance
     obligations of which with respect to the interest being transferred under
     the Operative Documents are guaranteed (pursuant to a OP Parent Guaranty)
     by a Person (the transferor Owner Participant or such other guarantor,
     the "Transferee Guarantor") which meets, the following criteria: (1) the
     tangible net worth of the Transferee or Transferee Guarantor, is at least
     equal to $75 million calculated in accordance with GAAP; and (2) unless
     waived in writing by the Facility Lessee prior to such transfer, such
     Transferee is not a Competitor of Calpine or in material litigation
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

                                      41
<PAGE>
upon consummation of such transfer, there shall not be more than four (4)
     Owner Participants for the Overall Transaction; provided that any related
     Owner Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of
     this clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in Section
7.1 shall not inure to the benefit of the Facility Lessee if such transfer
occurs during the continuance of a Significant Lease Default or Lease Event of
Default.

For purposes of determining whether a Transferee is a "Competitor" of
     Calpine, Calpine shall provide to the transferor Owner Participant on or
     prior to the Closing Date a list of entities which Calpine reasonably
     believes in its good faith judgment are competitors of Calpine or any of
     its Affiliates, in the business in which Calpine or any of its Affiliates
     is engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to
     be a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each
     notice from the Owner Participant of its intent to transfer its interest
     and, in addition, no more than once in any calendar year plus each time
     the Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee
     and the Facility Lessee ten (10) Business Days' prior written notice of
     such transfer, specifying the name and address of any proposed Transferee
     and such additional information as shall be necessary to determine
     whether the proposed transfer satisfies the requirements of this Section
     7.1. If requested by the Owner Participant or the Indenture Trustee, the
     Facility Lessee will acknowledge qualifying transfers. All reasonable
     fees, expenses and charges of the Indenture Trustee, the Pass Through
     Trustees, and the Facility Lessee (including reasonable attorneys' fees
     and expenses in connection with any such transfer or proposed transfer),
     including any of the foregoing relating to any amendments to the
     Operative Documents required in connection therewith, shall be paid on an
     After-Tax Basis by the Owner Lessor, without any right of indemnification
     from the Facility Lessee or any other Person; provided, however, that the
     Owner Participant shall have no obligation to pay fees, expenses or
     charges of the Facility Lessee as a result of any transfer while a
     Significant Lease Default or a Lease Event of Default is continuing, in
     which case the Facility Lessee shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such
     Transferee shall (x) be deemed the "Owner Participant" for all purposes,
     and (y) enjoy the rights and privileges and perform the obligations of
     the Owner Participant hereunder and under each of the OP Assignment and
     Assumption Agreement, the Calpine Guaranty and each other Operative
     Document to which such Owner Participant is a party, and each reference in
     this Agreement,

                                      42
<PAGE>
     the Calpine Guaranty and each other Operative Document to the "Owner
     Participant" shall thereafter be deemed to include such Transferee for
     all purposes and (ii) the transferor Owner Participant and the OP
     Guarantor, if any, of such transferor Owner Participant's obligations
     shall be released from all obligations hereunder and under each other
     Operative Document to which such transferor or OP Guarantor is a party or
     by which such transferor Owner Participant or OP Guarantor is bound to
     the extent such obligations are expressly assumed by a Transferee meeting
     the requirements of this Section 7.1; provided, however, that in no event
     shall any such transfer waive or release the transferor or its OP
     Guarantor from any liability accruing or existing in respect of any
     period occurring on or prior to or occurring simultaneously with such
     transfer.

The transfer restrictions set forth in Section 7.1 (other than the
     requirement that the Owner Participant and the Transferee enter into an
     OP Assignment and Assumption Agreement) shall also apply to any transfer
     of the equity ownership interests of an Owner Participant which has as
     its sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative
     Documents. In the case of such a transfer of equity ownership interests
     which satisfies such restrictions of this Section 7.1, the Owner
     Participant's obligations under the Operative Documents shall continue,
     but the Owner Participant shall, except in the case of a transfer to a
     transferee described in clause (a)(iii)(A) above, procure a new OP Parent
     Guaranty from a guarantor meeting the requirements of clause (a)(iii)(B)
     above.

                                      43
<PAGE>
Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in respect of, the Owner Lessor
under the Bankruptcy Code, or any other applicable federal or state law or the
law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that

                                      44
<PAGE>
such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to
the Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and
right of first refusal provisions of this Section prior to entering into such
revised agreement; provided that, for such revised offer, the Notice Period
shall be 10 Business Days from the date of such new notice, and the Agreement
Period shall not exceed 45 days from the date of the Facility Lessee's notice
accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other RockGen Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other RockGen Facility Lease.

Prohibition on Fundamental Changes. If the Owner Participant is an entity which
has as its sole (or substantially equivalent to sole) business activity, the
participation in the transactions contemplated by the Operative Documents, the
Owner Participant shall not change its form of organization and shall not enter
into or engage in any business other than as contemplated by the Operative
Documents and the activities related thereto.

Appointment of Successor Lessor Manager. Notwithstanding any other provision of
this Agreement, a successor Lessor Manager shall not be appointed by the Owner
Participant without the consent of the Facility Lessee and, so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged and the
Indenture Trustee unless such successor Lessor Manager (a) meets the
requirements of the LLC Agreement, (b) has a combined capital and surplus of at
least $150 million, and (c) the Facility Lessee and, so long as Lien of the
Collateral Trust Indenture has not been terminated or discharged, the Indenture
Trustee, shall have received at the expense of Facility Lessee on an After-Tax
Basis: (i) an opinion or opinions of counsel, such counsel and such opinion to
be reasonably acceptable to such parties, to the effect that no regulatory
consents or approvals are required, or (ii) such other documentation reasonably
satisfactory to the Facility Lessee or the Indenture Trustee as the case may be.

Cooperation. The Owner Lessor agrees, and each of the Owner Participant and the
Lessor Manager agree to cause the Owner Lessor to, at the request of the
Facility Lessee and at the sole cost and expense of the Facility Lessee on an
After-Tax Basis, take such actions as may be necessary for the Owner Lessor to
take as the holder of the leasehold interest in the Facility for purposes of
obtaining the valid and effective issue, transfer or amendment, as the case may
be, of all Governmental Approvals to the extent the same are required for the
use, ownership, operation or maintenance of the Facility, the Facility Site,
the Undivided Interest, the Ground Interest or any Component by the Facility
Lessee or any permitted assignee of the Facility Lessee in the manner
contemplated by the Operative Documents, except to the extent the same involves
any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of

                                      45
<PAGE>
the use, operation or maintenance of the Facility or the Facility Site in any
material respect, (ii) the risk of criminal liability being incurred by the
Owner Lessor, the Owner Participant, the Equity Investor or the OP Guarantor,
or (so long as the Lessor Notes are outstanding and the Lien of the Lease
Indenture has not been discharged) the Indenture Trustee or the Pass Through
Trustee or any of their respective Affiliates or (iii) material risk of any
material adverse effect on the interests of the Owner Lessor, the Owner
Participant, the Equity Investor or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee or the Pass Through Trustee or any of
their respective Affiliates (including, without limitation, subjecting any such
Person to regulation as a public utility under any applicable law. The Facility
Lessee shall pay on an After-Tax Basis all reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of counsel) of
the Owner Lessor and each other Person party to an Operative Document incurred
in connection with any such action. It is understood and agreed that, with
respect to the action requested of it, and taken by it, under this Section 7.9,
the Owner Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b)
     below, the Facility Lessee agrees to indemnify, protect, defend and hold
     harmless, and do hereby indemnify the Owner Participant, the Owner
     Lessor, the Trust Company, in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, each Certificateholder, the Pass Through Company in
     its individual capacity, the Pass

                                      46
<PAGE>
     Through Trustees, and their respective Affiliates, successors, assigns,
     agents, directors, officers and employees (each an "Indemnitee") against
     any and all Claims (whether or not any of the transactions contemplated
     by the Operative Documents are consummated) imposed on, incurred or
     suffered by or asserted against any Indemnitee in any way relating to or
     resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation,
     rebuilding, warranty, ownership, possession, maintenance, repair, lease,
     condition, alteration, modification, restoration, refurbishing, return,
     purchase, sale or other disposition, insuring, sublease, or other use or
     non-use of the Undivided Interest, the Ground Interest, the Facility, the
     Facility Site, or any Component or any portion of any thereof or any
     interest therein;

the conduct of the business or affairs of the Facility Lessee or Calpine
     and any other business or affairs conducted at the Facility or the
     Facility Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, or any Component,
     or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, the Facility Site Sublease,
     or any other Operative Document, the execution or delivery thereof or the
     performance, enforcement, attempted enforcement or amendment of any terms
     thereof, or the transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility, the
     Facility Site or any Component, or any portion thereof, including, for
     the avoidance of doubt, any such Environmental Condition existing prior
     to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates
     or any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents
     requested by the Facility Lessee, or resulting from the actions of the
     Facility Lessee or in connection with any Lease Default or Lease Event of
     Default;

the imposition of any Lien other than with respect to a particular
     Indemnitee (or a Related Party), an Owner Lessor's Lien, an Owner
     Participant's Lien or Indenture Trustee's Lien attributable to such
     Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any
     other Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents or the interests of the Owner Participant, the Owner
     Lessor, the Indenture Trustee or the Pass Through Trustees, or under the
     Operative Documents or the presence, use, storage, release, threatened
     release, transportation, arrangement for transportation, treatment,
     arrangement for treatment, manufacture, disposal or arrangement for
     disposal of any Hazardous Substance in,

                                      47
<PAGE>
     at, under or from the Facility or the Facility Site, including, for the
     avoidance of doubt, any of the foregoing existing or occurring prior to
     the Closing Date;

the non-performance or breach by the Facility Lessee or any Calpine Party of
     any obligation contained in this Agreement or any other Operative Document
     or the falsity or inaccuracy of any representation, warranty or obligation
     of any such Person contained in this Agreement or any other Operative
     Document;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents (other than the
     Facility Lease and the Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility in compliance with
     the provisions of the Facility Lease or (y) if the Owner Lessor exercises
     its option set forth in Article VI of the Facility Site Lease, the
     performance by the Facility Lessee of all obligations required to be
     performed by it thereunder, or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer,
     sale, assignment, transfer or other disposition (voluntary or
     involuntary) by or on behalf of (A) in the case of the Owner Participant,
     the Owner Participant of its Member Interest or with respect to any
     Related Party, its direct or indirect interest in the Owner Participant,
     (B) in the case of the Owner Lessor, and if such action is taken at the
     written direction of the Owner Participant, the Owner Participant, and
     Related Parties, the Owner Lessor of all or any of the Owner Lessor's
     Interest, (C) the Indenture Trustee of all or any of its interest in the
     Lessor Notes, unless, in any such case referred to in this paragraph
     (ii), such transfer is required by the terms of the Operative Documents
     or occurs during the continuance of a Lease Event of Default; (provided
     that this paragraph (ii) shall not serve to cap the indemnity to be
     received by a transferee Indemnitee for a Claim (other than a Claim
     relating solely to or arising solely out of any offer, transfer, sale,
     assignment or other disposition of any such rights or interests)

                                      48
<PAGE>
     based on what the relevant transferor Indemnitee would have received had
     no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or (ii) any violation of Applicable Law by any
     such Person except to the extent attributable to a violation of
     Applicable Law by the Facility Lessee or any other Calpine Party or to
     any breach by the Facility Lessee or such other Calpine Party of any
     covenant, representation or warranty contained in any Operative Document;

as to any Indemnitee, any Claim to the extent attributable to the
     noncompliance of such Indemnitee or a Related Party, with any of the
     terms of, or any misrepresentation or breach of warranty by such
     Indemnitee or Related Party contained in any Operative Document made by
     such Indemnitee or Related Party or any breach by such Indemnitee or a
     Related Party of any covenant contained in any Operative Document or any
     breach by such Indemnitee or a Related Party of any covenant contained in
     any Operative Document made by such Indemnitee or Related Party except to
     the extent attributable to any breach by the Facility Lessee or any other
     Calpine Party of any covenant, representation or warranty contained in
     any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company,
     any Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising
     from an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not
     the Facility Lessee is required to indemnify therefor pursuant to Section
     9.2 hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance
     with the LLC Agreement any amounts received by it under the Operative
     Documents and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation
     or liability expressly assumed in any Operative Document by the
     Indemnitee seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the
     Lessor Notes, Additional Lessor Notes, or the corresponding payments
     under the Certificates or any Additional Certificates; and

                                      49
<PAGE>
any Claim relating to the payment of any amount which constitutes
     Transaction Costs which the Owner Participant is obligated to pay
     pursuant to Section 2.3(a) hereof or any other amount to the extent such
     Indemnitee or a Related Party has expressly agreed in any Operative
     Document to pay such amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

Insured Claims. Subject to the provisions of paragraph (e) of this
     Section 9.1, in the case of any Claim indemnified by the Facility Lessee
     hereunder which is covered by a policy of insurance maintained by the
     Facility Lessee, each Indemnitee agrees, unless it and each other
     Indemnitee shall waive its rights to indemnification (for itself and each
     Related Party thereto) in a manner reasonably acceptable to the Facility
     Lessee, to cooperate, at the sole cost and expense of the Facility
     Lessee, with insurers in exercise of their rights to investigate, defend
     or compromise such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee
     shall have Actual Knowledge thereof notify the Facility Lessee of any
     Claim as to which indemnification is sought; provided, that the failure
     so to notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this
     Section 9.1, and no payment hereunder by the Facility Lessee to an
     Indemnitee shall be deemed to constitute a waiver or release of any right
     or remedy that the Facility Lessee may have against any such Indemnitee
     for actual damages resulting directly from the failure or delay of such
     Indemnitee to give the Facility Lessee such notice. Subject to the
     foregoing, any amount payable to any Indemnitee pursuant to this Section
     9.1 shall be paid within thirty (30) days after receipt of such written
     demand therefor from such Indemnitee, accompanied by a certificate of
     such Indemnitee stating in reasonable detail the basis for the
     indemnification thereby sought and (if such Indemnitee is not a party
     hereto) an agreement to be bound by the terms hereof as if such
     Indemnitee were such a party. The foregoing shall not, however,
     constitute an obligation to disclose confidential information of any kind
     without the execution of an appropriate confidentiality agreement.
     Promptly after the Facility Lessee receives notification of such Claim
     accompanied by a written statement describing in reasonable detail the
     Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default

                                      50
<PAGE>
     shall have occurred and be continuing, the Facility Lessee shall have the
     right in its sole discretion, to defend or compromise any Claim for which
     indemnification is sought under this Section 9.1 which the Facility
     Lessee acknowledges is subject to indemnification hereunder; provided
     that no such defense or compromise shall involve any danger of (i)
     foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any
     part of the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site, the Lessor Estate or the Indenture Estate or the
     impairment of the Facility or the Facility Site, in any material respect
     or (ii) any criminal liability being incurred or any material adverse
     effect on such Indemnitee; provided, further, that no Claim shall be
     compromised by the Facility Lessee on a basis that admits any criminal
     violation or gross negligence or willful misconduct on the part of such
     Indemnitee without the express written consent of such Indemnitee; and
     provided, further, that to the extent that other Claims unrelated to the
     transactions contemplated by the Operative Documents are part of the same
     proceeding involving such Claim, the Facility Lessee may assume
     responsibility for the contest or compromise of such Claim only if the
     same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the
     event that in the course of the investigation or defense of a claim, the
     Facility Lessee shall in good faith reasonably determine that it is not
     liable for indemnification with respect thereto under this Section 9.1,
     it may give notice to the applicable Indemnitee of such fact; and, in
     such case, any acknowledgment, theretofore made by the Facility Lessee of
     liability with respect to such claim under this Section 9.1 shall be
     deemed revoked, and the Facility Lessee may thereupon cease to defend
     such claim; provided that (i) the Facility Lessee shall have given the
     Indemnitee reasonable prior notice of its intention to renounce such
     acknowledgment, (ii) the Facility Lessee's conduct regarding the defense
     of such claim or any decision to withdraw from such defense shall not
     prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the
     Facility Lessee's withdrawal and the theory or theories upon which the
     Facility Lessee shall have based its defense), and (iii) the Facility
     Lessee shall have given such Indemnitee all materials, documents and
     records relating to its defense of such claim as such Indemnitee shall
     have reasonably requested in connection with the assumption by such
     Indemnitee of the defense of such claim at the cost and expense of the
     Facility Lessee. In the event that the Facility Lessee shall cease to
     defend any claim pursuant to the preceding sentence, the Facility Lessee
     shall indemnify each Indemnitee, without regard to any exclusion that
     might otherwise apply hereunder, to the extent that the actions of the
     Facility Lessee in defending such claim or the manner or time of the
     Facility Lessee's election to withdraw from the defense of such claim
     shall have caused such Indemnitee to incur any loss, cost, liability or
     expense which such Indemnitee would not have incurred had the Facility
     Lessee not ceased to defend such claim in such manner or such time. If
     the Facility Lessee elect, subject to the foregoing, to compromise or
     defend any such asserted liability, it may do so at its own expense and
     by counsel selected by it. Upon the Facility Lessee's election to
     compromise or defend such asserted liability and prompt notification to
     such Indemnitee of its intent to do so, such Indemnitee shall cooperate
     at the Facility Lessee's expense with all reasonable requests of the
     Facility Lessee in connection therewith and will provide the Facility
     Lessee with all information not within the control of the Facility Lessee
     as is reasonably available to such Indemnitee which the Facility Lessee
     may reasonably request; provided, however, that such Indemnitee shall
     not, unless otherwise required by Applicable Law, be obligated to
     disclose to the Facility Lessee or any other Person, or permit

                                      51
<PAGE>
     the Facility Lessee or any other Person to examine (i) any income tax
     returns of the Owner Participant or (ii) any confidential information or
     pricing information not generally accessible by the public possessed by
     the Owner Participant (and, in the event that any such information is
     made available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to
     the related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without
     reservation of rights against such Indemnitee), no additional legal fees
     or expenses of such Indemnitee in connection with the defense of such
     Claim shall be indemnified hereunder unless such fees or expenses were
     incurred at the request of the Facility Lessee or such insurers.
     Notwithstanding the foregoing, an Indemnitee may participate at its own
     expense in any judicial proceeding controlled by the Facility Lessee
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the
     Indemnitee waives its rights to indemnification hereunder or (ii) the
     Facility Lessee has not acknowledged their indemnity obligation with
     respect thereto and there is a significant risk that a default judgment
     will be entered against such Indemnitee. Nothing contained in this
     Section 9.1(e) shall be deemed to require an Indemnitee to contest any
     Claim or to assume responsibility for or control of any judicial
     proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility
     Lessee under this Section 9.1 is in fact paid in full by the Facility
     Lessee or an insurer under an insurance policy maintained by the Facility
     Lessee (so long as no Lease Event of Default shall have occurred and be
     continuing), such insurer shall be subrogated to the rights and remedies
     of the Indemnitee on whose behalf such Claim was paid to the extent of
     such payment (other than rights of such Indemnitee under insurance
     policies maintained at its own expense) with respect to the transaction
     or event giving rise to such Claim. Should an Indemnitee receive any
     refund, in whole or in part, with respect to any Claim paid by the
     Facility Lessee hereunder, it shall promptly pay over to the Facility
     Lessee the lesser of (i) the amount refunded reduced by the amount of any
     Tax incurred by reason of the receipt or accrual of such refund and
     increased by the amount of any Tax (but not in excess of the amount of
     such reduction) saved as a result of such payment or (ii) the amount the
     Facility Lessee or any of

                                      52
<PAGE>
     their insurers has paid in respect of such Claim; provided that, so long
     as a Significant Lease Default or Lease Event of Default shall have
     occurred and is continuing such amount may be held by the Owner Lessor as
     security for the Facility Lessee's obligations under the Facility Lease
     and the other Operative Documents.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the
     other Transaction Parties will use their respective reasonable and
     diligent efforts to minimize Claims indemnifiable by the Facility Lessee
     under this Section 9.1, including by complying with reasonable requests
     by the Facility Lessee to do or to refrain from doing any act if such
     compliance is, in the good faith opinion of the Owner Participant, the
     Owner Lessor, or such other Transaction Party, as the case may be, of a
     purely ministerial nature or otherwise has no unindemnified adverse
     impact on the Owner Participant, the Owner Lessor, or such Transaction
     Party, as the case may be, or any Affiliate of any thereof or on the
     business or operations of any of the foregoing.

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee
     agrees to indemnify each of the Owner Participant, the Owner Lessor, any
     OP Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof,
     a "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or
     with respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or
     other disposition, insuring, sublease, or other use or non-use of,
     the imposition of any lien (or incurrence of any liability to
     refund or pay over any amount as a result of any lien) on, the Facility,
     the Undivided Interest, the Ground Interest, the Facility Site or any
     portion or Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground
     Interest, any portion thereof or Component or interest therein, the
     applicability of the Facility Lease to the Facility or the Undivided
     Interest, or the conduct of the business or affairs of the Facility
     Lessee or Calpine, the Facility or the Facility Site;

                                      53
<PAGE>
the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the
     Facility, the Facility Site or any portion or Component thereof, or any
     interest therein;

the Facility Lease, or any other Operative Document, the execution or
     delivery thereof, any other documents contemplated thereby or the
     performance, enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any
     other payment, receipt or earning under the Facility Lease or the
     Facility Site Lease or arising from the Facility, the Undivided Interest,
     the Ground Interest, the Facility Site, or any portion or Component
     thereof or any interest therein;

any other amount paid or payable pursuant to the Operative Documents;

the conveyance of title to the Undivided Interest; or

otherwise relating to the transactions contemplated by the Operative Documents.

          Notwithstanding anything herein to the contrary and without regard to
paragraph (b) hereof, the Facility Lessee will indemnify the Owner Participant
and the Owner Lessor on an After-Tax Basis for any Taxes collected by way of
withholding (and any interest, penalties or additions to tax associated
therewith) (or for the failure to withhold taxes) imposed on the Lessor Notes
or the Additional Lessor Notes or any other payments to each Certificateholder
or the Indenture Trustee (each a "Certificateholder Indemnitee"), including any
penalties, interest, or additions to tax applicable in connection therewith;
provided, however, that if the Facility Lessee is required, for any reason, to
indemnify the Owner Participant or the Owner Lessor with respect to any failure
to withhold such tax, and the withholding tax would otherwise be an Excluded
Tax under Section 9.2(b) without regard to the first sentence of this
paragraph, then the Certificateholder Indemnitee with respect to which such
withholding was not made will pay the amount of tax not withheld to the
relevant taxing authority if such taxes remain unpaid or will reimburse the
Facility Lessee for the amount of tax not withheld, but paid to such taxing
authority, on demand, plus interest at (a) the Lease Debt Rate during the
period commencing on the date the Facility Lessee shall have made the indemnity
payment to such taxing authority and ending the earlier of the date of
repayment by such Tax Indemnitee and five Business Days after the date the
Facility Lessee demands reimbursement thereof pursuant to this sentence, and
(b) the Overdue Rate for the period thereafter to the date the Facility Lessee
actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall
     not extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or
     local government, any political subdivision of any of the foregoing,
     imposed on, based on or measured by gross or net income, receipts,
     capital gain, capital or net worth, or conduct of business (other than,
     in each case, Taxes that are or are in the nature of sales, use, rental,
     license, value added (to the extent value added taxes are not imposed in
     clear and direct substitution for income taxes) or property taxes)
     ("Income Taxes"), including any such Taxes collected by way of

                                      54
<PAGE>
     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder
     Indemnitee that are attributable to any act, event or omission by such
     Tax Indemnitee that occurs after expiration or other termination of the
     Facility Lease and surrender of the Undivided Interest to the Owner
     Lessor or its successors (or in the case of a Certificateholder
     Indemnitee, Taxes imposed for any period after the repayment of the Lease
     Debt) in accordance with the Facility Lease, (as opposed to any act,
     event or omission occurring prior to or simultaneous with such
     expiration, termination or surrender (or, in the case of a
     Certificateholder Indemnitee, such repayment)), provided that this
     exclusion shall not apply so long as a Lease Event of Default shall have
     occurred and be continuing;

Taxes imposed on a Tax Indemnitee that are attributable to the gross
     negligence or willful misconduct of such Tax Indemnitee, unless such
     negligence or misconduct is imputed to such Tax Indemnitee solely as a
     result of its participation in the transactions contemplated by the
     Operative Documents and not as a result of any action or inaction by such
     Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax
     Indemnitee of any of its representations, warranties or covenants under
     any Operative Document except to the extent attributable to any breach by
     the Facility Lessee or any other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

Taxes (A) that are attributable to any voluntary direct or indirect
     assignment, sale, transfer or other voluntary disposition or an
     involuntary direct or indirect transfer or disposition arising out of or
     caused by a bankruptcy or similar proceeding for relief of debtors in
     which such Tax Indemnitee is a debtor or a foreclosure by a creditor of
     (1) in the case of the Owner Lessor or the Owner Participant, the Owner
     Participant of all or part of its Member Interest or Undivided Interest,
     (2) in the case of the Owner Lessor or the Owner Participant, the Owner
     Lessor of all or part of its interest in the Facility or the Facility
     Site (other than to a successor Lessor Manager), or (3) in the case of
     the Indenture Trustee, the Indenture Trustee of any interest in the Lease
     Debt or the Indenture Estate, or (4) in the case of the Owner Lessor or
     the Owner Participant any direct or indirect interest in the Owner Lessor
     or the Owner Participant, including by reason of an election made
     pursuant to Section 338 of the Code, in each case to the extent imposed
     by reason of any transfer described in this clause (v)(A), or (B) to the
     extent that, under law in effect on the date of the transfer such Taxes
     exceed the amount of Taxes that would be indemnified hereunder had there
     been no such assignment, sale, transfer or other voluntary disposition,
     unless such transfer or disposition occurs during the continuance of a
     Lease Event of Default or is otherwise pursuant to the Facility Lessee's
     exercise of its rights under the Operative Documents; provided that this
     exclusion shall not apply with respect to any initial syndication of
     interests in the Owner Participant accomplished prior to December 29,
     2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for
     the creation or existence of any Owner Lessor's Lien or Owner
     Participant's Lien attributable to such Tax Indemnitee;

                                      55
<PAGE>
Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility
     Lessee is obligated to indemnify the Owner Participant under the Tax
     Indemnity Agreement (or which are expressly excluded from indemnification
     thereunder);

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a grantor
     trust or other conduit entity for federal, state or local income tax
     purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of
     such Tax Indemnitee to comply with certification, information,
     documentation, reporting or other similar requirements concerning the
     nationality, residence, identity or connection with the jurisdiction
     imposing such Taxes; provided that the foregoing exclusion shall only
     apply if such compliance is required by statute or regulation of the
     jurisdiction imposing such Taxes as a precondition to relief or exemption
     from or reduction in such Taxes, such Tax Indemnitee is eligible to
     comply with such requirement, the Facility Lessee shall have given such
     Tax Indemnitee timely written notice of such requirement and the Tax
     Indemnitee shall have determined in good faith that compliance with any
     such requirement shall not result in any identified non-immaterial
     adverse effect to its interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines
     resulting from a failure of such Tax Indemnitee to properly and timely
     file returns as required by a taxing authority unless such failure is
     attributable to the Facility Lessee not providing information that it is
     expressly required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment,
     modification, supplement to or waiver of any provision of, any Operative
     Document which amendment, modification, supplement or waiver was not
     requested by or consented to by the Facility Lessee, and as to which the
     Facility Lessee is not a party and the Tax Indemnitee (or, in the case of
     the Owner Participant, the Owner Lessor if acting at the express
     direction of the Owner Participant or any Related Party) is a party,
     provided that this exclusion shall not apply if such amendment,
     modification, supplement or waiver (A) was required by applicable law or
     the Operative Documents, (B) may be necessary or appropriate to, and is
     in conformity with, any amendment to any Operative Document requested by
     the Facility Lessee in writing, or (C) was expressly consented to by a
     Calpine Party in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section 406
     of ERISA or any comparable laws of any Governmental Entity, engaged in by
     any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of

                                      56
<PAGE>
     any of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax
     Indemnitee if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, use, rental or license taxes, value added taxes (except to the
     extent value added taxes are imposed in clear and direct substitution for
     income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without
     regard to paragraph (b) hereof, any payment by the Facility Lessee
     pursuant to this Section 9.2 shall be increased by amounts necessary to
     ensure that all such payments are made on an After-Tax Basis. Each
     payment required to be made by the Facility Lessee to a Tax Indemnitee
     pursuant to this Section 9.2 shall be paid either (i) when due directly
     to the applicable taxing authority by the Facility Lessee if it is
     permitted to do so, or (ii) where direct payment is not permitted, and
     with respect to gross up amounts, in immediately available funds to such
     Tax Indemnitee by the later of (A) 10 days following the Facility
     Lessee's receipt of the Tax Indemnitee's written demand for the payment
     pursuant to clause (g)(i) below (which demand shall be accompanied by a
     written statement of the Tax Indemnitee describing in reasonable detail
     the Taxes for which the Tax Indemnitee is demanding payment and the
     computation of such Taxes), (B) subject to paragraph (g) below, in the
     case of amounts which are being contested pursuant to such paragraph (g),
     at the time and in accordance with a final determination of such contest
     or (C) in the case of any indemnity demand for which the Facility Lessee
     has requested review and determination pursuant to paragraph (d) below,
     the completion of such review and determination; provided, however, in no
     event later than the date which is one Business Day prior to the date on
     which such Taxes are required to be paid to the applicable taxing
     authority. Any amount payable to the Facility Lessee pursuant to
     paragraph (e) or (f) below shall be paid promptly after the Tax
     Indemnitee realizes a Tax Benefit giving rise to a payment under
     paragraph (e) or receives a refund or credit giving rise to a payment
     under paragraph (f), as the case may be, and shall be accompanied by a
     statement of the Tax Indemnitee computing in reasonable detail the amount
     of such payment. Upon the final determination of any contest pursuant to
     paragraph (g) below in respect of any Taxes for which the Facility Lessee
     has made a Tax Advance, the amount of the Facility Lessee's obligation
     under paragraph (a) above shall be determined as if such Tax Advance had
     not been made. Any obligation of the Facility Lessee under this Section
     9.2 and the Tax Indemnitee's obligation to repay the Tax Advance will be
     satisfied first by set off against each other, and any difference owing
     by either party will be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee
     receives any computation from the Tax Indemnitee, the Facility Lessee may
     request in writing that an independent public accounting firm selected by
     the Tax Indemnitee and reasonably acceptable to the Facility Lessee
     review and determine on a confidential basis the amount of any indemnity
     payment by the Facility Lessee to the Tax Indemnitee pursuant to this
     Section 9.2 or any

                                      57
<PAGE>
     payment by a Tax Indemnitee to the Facility Lessee pursuant to paragraph
     (e) or (f) below. The Tax Indemnitee shall cooperate with such accounting
     firm and supply it with all information reasonably necessary for the
     accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto
     agree that the independent public accounting firm's sole responsibility
     shall be to verify the computation of any payment pursuant to this
     Section 9.2 and that matters of interpretation of this Participation
     Agreement or any other Operative Document are not within the scope of the
     independent accountant's responsibility. The fees and disbursements of
     such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against
     by the Facility Lessee under this Section 9.2, the aggregate Taxes
     actually paid by the Tax Indemnitee for any taxable year and not subject
     to indemnification pursuant to this Section 9.2 are less (whether by
     reason of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment
     provided under this Section 9.2(e) shall be deferred until the
     Significant Lease Default or Lease Event of Default has been cured), such
     Tax Indemnitee shall pay to the Facility Lessee the lesser of (A) (y) the
     amount of such Tax Benefit, plus (z) an amount equal to any United States
     federal, state or local income tax benefit resulting to the Tax
     Indemnitee from the payment under clause (y) above and this clause (z)
     (determined using the same assumptions as set forth in the second
     sentence under the definition of After-Tax Basis) and (B) the amount of
     the indemnity paid pursuant to this Section 9.2 giving rise to such Tax
     Benefit; provided, however, that any excess of (A) over (B) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such Tax Benefit, the portion of such Tax Benefit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of
     any Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to
     this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
     Lessee (x) the amount of such refund or credit (net of any Tax payable by
     the Tax Indemnitee as a result of the receipt or accrual of such

                                      58
<PAGE>
     refund or credit) plus (y) an amount equal to any United States federal,
     state or local income tax benefit realized by such Tax Indemnitee by
     reason of such payment to the Facility Lessee (determined using the same
     assumptions as set forth in the second sentence under the definition of
     After-Tax Basis); provided that (A) if at the time such payment is due to
     the Facility Lessee a Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing, such amount shall not be payable
     until such Significant Lease Default or Lease Event of Default has been
     cured, and (B) the amount payable to the Facility Lessee pursuant to this
     sentence shall not exceed the amount of the indemnity payment in respect
     of such refunded or credited Taxes that was made by the Facility Lessee.
     Any excess of (x) and (y) over (B) in this Section 9.2(f) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such refund or credit, the portion of such refund or credit that is
     required to be repaid or recaptured will be treated as Taxes for which
     the Facility Lessee must indemnify the Tax Indemnitee pursuant to this
     Section 9.2 without regard to paragraph (b) hereof. If, in connection
     with a refund or credit of all or part of any Taxes paid, reimbursed or
     advanced by the Facility Lessee pursuant to this Section 9.2, a Tax
     Indemnitee receives an amount representing interest on such refund or
     credit, the Tax Indemnitee promptly shall pay to the Facility Lessee (1)
     the amount of such interest that shall be fairly attributable to such
     Taxes paid, reimbursed or advanced by the Facility Lessee prior to the
     receipt of such refund or credit (net of Taxes payable in respect of the
     receipt or accrual of such interest) and (2) any Tax savings resulting
     from payments made by the Tax Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which
     the Facility Lessee may be liable for indemnity hereunder (a "Tax
     Claim"), such Tax Indemnitee shall give the Facility Lessee written
     notice of such Tax Claim promptly after its receipt, and shall furnish
     the Facility Lessee with copies of such Tax Claim and all other writings
     received from the taxing authority to the extent relating to such claim;
     provided that failure to so notify the Facility Lessee shall not relieve
     the Facility Lessee of any obligation to indemnify the Tax Indemnitee
     hereunder except to the extent that such failure effectively precludes
     the ability to conduct a contest hereunder (and without limiting any
     damage claim or remedy the Facility Lessee may otherwise have for such
     failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility
     Lessee will be entitled to contest (acting through counsel selected by
     the Facility Lessee and reasonably satisfactory to the Tax Indemnitee),
     and control the contest of, any Tax Claim if (A) such Tax Claim may be
     pursued in the name of the Facility Lessee and may be segregated
     procedurally from tax claims for which the Facility Lessee is not
     obligated to indemnify the Tax Indemnitee or (B) the Tax Indemnitee
     requests that the Facility Lessee control such contest. In the case of
     all other Tax Claims, the Tax Indemnitee will contest the Tax Claim if
     the Facility Lessee shall request that the Tax be contested (subject to
     subsection (g)(iii) below), and the following rules shall apply with
     respect to such contest:

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<PAGE>
          (1)   the Tax Indemnitee will control the contest of such Tax Claim
(acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

          (2)   the decisions regarding what actions to be taken shall be made
by the Tax Indemnitee in its sole judgment, and

          (3)   the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without the Facility Lessee's prior written consent except
as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall consult in
good faith with the other party and its designated counsel with respect to such
Tax Claim and shall provide the other party with copies of any reports or
claims (or extracts therefrom) issued by the relevant auditing agents or taxing
authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with
     respect to a Tax Claim will be required or permitted pursuant to this
     Section 9.2, and the Facility Lessee shall be required to pay the
     applicable Taxes without contest, unless:

          (1)   within 30 days after written notice by the Tax Indemnitee to
the Facility Lessee of such Tax Claim (or such shorter period, to be specified
by the Tax Indemnitee in such notice, as required for taking action with
respect to such Tax Claim), the Facility Lessee shall request in writing to the
Tax Indemnitee that such Tax Claim be contested,

          (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

          (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

          (4)   there is no risk of imposition of any criminal penalties or
liabilities,

          (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

          (6)   the Facility Lessee agrees to pay (and pays on demand) and with
no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

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<PAGE>
          (7)   the Tax Indemnitee, if it so requests has been provided at the
Facility Lessee's sole expense with an opinion, reasonably acceptable to such
Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

          (8)   in the case of a judicial appeal, the appeal is not to the U.S.
Supreme Court,

          (9)   if such contest is controlled by the Facility Lessee, prior to
commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity
pursuant to this Section 9.2 with respect to such Tax, which admission shall be
binding on the Facility Lessee unless and to the extent such contest is
determined in a manner that conclusively demonstrates that the Facility Lessee
is not so liable, and

          (10)  if the subject matter of such claim shall be of a continuing
or recurring nature and shall have previously been decided pursuant to this
paragraph (g), there shall have been a change in law after such previously
decided claim and such Tax Indemnitee receives, at the Facility Lessee's sole
cost, an opinion of counsel selected by such Tax Indemnitee and reasonably
acceptable to the Facility Lessee to the effect that such change is favorable
to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary
     contained in this Section 9.2, the Tax Indemnitee at any time may elect
     to decline to take any action or any further action with respect to (and
     the Facility Lessee shall not be permitted to contest) a Tax Claim and
     may in its sole discretion settle or compromise any contest with respect
     to such Tax Claim without the Facility Lessee's consent if the Tax
     Indemnitee:

          (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

          (2)   promptly repays to the Facility Lessee any Tax Advance and any
amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver shall
be without prejudice to the rights of the Tax Indemnitee with respect to any
other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax
     Indemnitee with respect to any Tax that is subject to indemnification
     under this Section 9.2, the Facility Lessee will (1) notify the Tax
     Indemnitee in writing of such requirement not later than 30 days prior to
     the date such report, statement or return is required to be filed
     (determined without regard to extensions) and (2) either (y) unless
     directed by the Tax Indemnitee otherwise, if permitted by applicable law,
     prepare such report, statement or return for filing by the Facility
     Lessee in

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<PAGE>
     such manner as will show the ownership of the Facility by the Owner
     Lessor for United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement
     or return for filing by the Tax Indemnitee; provided that the only
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be,
     will timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the
     Facility Lessee may require such Tax Indemnitee to agree in writing, in a
     form reasonably acceptable to the Facility Lessee, to the terms of this
     Section 9.2 prior to making any payment to such Tax Indemnitee under this
     Section. Subject to the preceding sentence, the Facility Lessee's
     obligations under this Section 9.2 shall inure to the benefit of each and
     every Tax Indemnitee without regard to whether such Tax Indemnitee is a
     party to this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease and the Facility Site Lease
and expressly, severally and as to its own actions only, agrees that, so long
as no Lease Event of Default has occurred and is continuing, it shall not take
or cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with the rights under the Facility Lease and
Facility Site Sublease, including the right to possession, use and quiet
enjoyment of the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no

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<PAGE>
obligation to accept such Additional Equity Investment; and (y) the conditions
set forth below and in Section 2.12 of the Collateral Trust Indenture shall
have been satisfied. The obligation to finance such Improvements through the
issuance of Additional Lessor Notes under Section 2.12 of the Collateral Trust
Indenture (any financing of Improvements through the issuance of such
Additional Lessor Notes under the Collateral Trust Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than
     one such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B) will
     be fully repaid out of additional Basic Rent, as adjusted pursuant to the
     Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined
     without regard to any tax benefits associated with such Improvements,
     unless the Owner Participant is making an Additional Equity Investment)
     shall be made to protect the Owner Participant's Net Economic Return;
     provided that there shall be no changes to the amortization schedule or
     interest amounts and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent incurred
     in connection with any financing or refinancing pursuant to this Section
     11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the proceeds
     of the Additional Lessor Notes shall cure such Significant Lease Default
     or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents;

such Additional Lessor Notes represent an aggregate amount not less than
     $20 million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

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<PAGE>
the Owner Participant shall suffer no adverse accounting effects under
     GAAP as a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner Participant,
     the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit
     rating of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of
     $100,000 and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this Section
     11.1.

          Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, the Facility Lessee shall at all times
have the right to fund Improvements to the Facility other than through the
Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a
     particular maturity, such Additional Lessor Notes shall have a final
     maturity no later than the final maturity date of such Initial Lessor
     Notes and will be fully repaid out of Basic Rent during the Facility
     Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

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<PAGE>
no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner Participant
     may reasonably request, which representations, warranties, covenants and
     agreements shall be of no greater scope than those provided by the
     Facility Lessee on the Closing Date under the Operative Documents to
     which it is a party (except to the extent necessitated by differences
     between existing Operative Documents and the terms and conditions of the
     proposed refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the
     aggregate for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that
     the refinancing (as opposed to the right to request such refinancing)
     shall not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction Parties
that the Calpine Guaranty covers the additional indebtedness contemplated by
this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents. The Owner Participant
will execute such agreements and documents as may be necessary with respect to
any such refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee
     467 Loan Interest shall be adjusted, either upward or downward, in
     accordance with the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's
     option, to re-optimize the Lease Debt; provided such re-optimization
     shall not result in a change to average life by more than six (6) months;

                                      65
<PAGE>
at the request of the Facility Lessee or the Owner Participant, to
     reflect any changes in the Pricing Assumptions, including without
     limitation, (x) the initial interest rate on any of the Lessor Notes
     which is different from the applicable interest rate set forth in the
     Pricing Assumptions, (y) an increase in the Transaction Costs from the
     amount assumed in the Pricing Assumptions, unless the Facility Lessee has
     elected to pay such increase, and (z) a Closing Date other than the
     Scheduled Closing Date; and

at the request of the Facility Lessee or the Owner Participant to reflect
     any enactment, promulgation, release or adoption of, amendment to or
     change in the Code, Treasury Regulations, Revenue Rulings or Revenue
     Procedures ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which
     it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to
     preserve the Owner Participant's Net Economic Return through the Basic
     Lease Term and (B) to the extent consistent with (A) above, to maintain
     operating lease treatment for the Facility Lessee; provided, however,
     that to the extent consistent with preserving the Owner Participant's Net
     Economic Return, all adjustments shall at the option of the Facility
     Lessee be calculated to (x) minimize the average annual Basic Rent over
     the Basic Lease Term and the Lessor Put Renewal Lease Term for the
     Facility Lessee's GAAP accounting purposes and/or (y) minimize the
     present value to the Facility Lessee of Basic Rent; and provided,
     further, that no such adjustment shall require the Owner Participant to
     record a loss as of the date such adjustment is made. Adjustments will be
     computed by the Owner Participant based upon the Pricing Assumptions and
     the Tax Assumptions originally used to calculate the Periodic Rent,
     Termination Value, Allocated Rent, Proportional Rent, Lessor 467 Loan
     Principal Balance, Lessee 467 Loan Principal Balance, Lessor 467 Loan
     Interest and Lessee 467 Loan Interest.

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<PAGE>
     Adjustments made pursuant to this Section 12 shall be subject to
     verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the
     Facility Lease Term assign the Facility Lease or any other Operative
     Document, or any interest therein, without the prior written consent of
     the Owner Lessor, the Owner Participant and, so long as the Lien of the
     Collateral Trust Indenture has not been terminated or discharged, the
     Indenture Trustee and the Pass Through Trustees. Notwithstanding the
     foregoing, upon satisfaction of the conditions in paragraph (b) below,
     the Facility Lessee may assign the Facility Lease or any other Operative
     Document to which it is a party, or any interest therein to any Person,
     without the consent of the Owner Lessor, the Owner Participant, the
     Indenture Trustee or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be
     permitted if (A) after giving effect to such assignment or assignments,
     either (x) Calpine owns, directly or indirectly, at least a majority of
     the Ownership Interest of each assignee (as well as at least a majority
     of the Ownership Interest of any non-assigning Facility Lessee), the
     Calpine Guaranty remains in full force and effect (without a transferee
     of Calpine's obligations thereunder having succeeded thereto in
     accordance with Section 8.4(b) thereof), and Calpine shall have
     reaffirmed in writing its obligations under the Calpine Guaranty or (y)
     Calpine's obligations under the Calpine Guaranty has been succeeded to in
     accordance with Section 8.4(b) thereof, the transferee of Calpine shall
     own, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the
     Ownership Interest of any non-assigning Facility Lessee) and the Calpine
     Guaranty shall remain in full force and effect and (B) satisfaction of
     the following conditions:

the transferee shall assume all the obligations of the Facility Lessee
     under the Operative Documents, and the first priority Lien of the pledge
     of the Collateral as defined in and pursuant to the Facility Lease shall
     continue in effect, pursuant to an assignment and assumption agreement in
     form and substance satisfactory to the Owner Participant, Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received
     an Opinion of Counsel as to such assignment and assumption agreement and
     the satisfaction of the requirements and conditions set forth in this
     Section 13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees or any

                                      67
<PAGE>
     Certificateholder to regulation under PUHCA or state laws and regulations
     regarding the rate and financial or organizational regulation of electric
     utilities in the affected party's reasonable opinion, nor result in a
     Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States,
     any state thereof or the District of Columbia;

the Facility Lessee shall have paid, at no after-tax cost to such
     parties, all reasonable documented out-of-pocket expenses (including
     reasonable attorneys' fees and expenses) of the Owner Lessor, the Lessor
     Manager, the Owner Participant, the Indenture Trustee, the Lease
     Indenture Company and the Pass Through Trustees in connection with such
     assignment;

the Facility Lessee has provided the Indenture Trustee with (x) an indemnity
     against the risk that such assignment will cause a Tax Event to occur
     to any direct or indirect holder of any Lessor Note (including any
     Certificateholder) or (y) an opinion of counsel to the effect that such
     assignment will not cause a Tax Event to occur to any direct holder of
     any Lessor Note and any Certificateholder; and

the transfer shall not cause the Facility to become "tax-exempt use property
     within the meaning of Section 168(h) of the Code (unless the Facility
     Lessee shall make a payment contemporaneously with such transfer
     that in the reasonable judgment of the Owner Participant compensates the
     Owner Participant for the adverse tax consequences therefrom).

Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents,
except for obligations (including Section 9.1 and 9.2 hereof and the Tax
Indemnity Agreement) surviving pursuant to the express terms of the Operative
Documents or which have otherwise accrued but not been paid as of such date and
(ii) the Owner Participant or the OP Guarantor will transfer (by an appropriate
instrument of transfer) the Member Interest to the Facility Lessee (or its
designee); provided, however, that if

                                      68
<PAGE>
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular

                                      69
<PAGE>
instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street

                                      70
<PAGE>
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-3, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone:  (212) 382-7255
               Facsimile:  (212) 382-9033
               Attention:  Managing Director

                                      71
<PAGE>
          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
          Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010-3629
          Telephone No.:  (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto. In
          addition,

                                      72
<PAGE>
          the Facility Lessee shall (unless otherwise directed by the
          applicable Rating Agency) provide to each Rating Agency a copy of
          any information, report or notice it gives to the Indenture Trustee
          hereunder or any other Operative Documents.

                                      73
<PAGE>
Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents regardless of any investigation made by any such
party or on behalf of any such party. In addition, the indemnifications by the
Facility Lessee under Sections 9.1 and 9.2 of this Agreement, subject to
Sections 9.1(b) and 9.2(b), respectively, the Facility Site Lease and the
Calpine Guaranty, shall expressly survive the expiration or early termination
(in either case, for whatever reason) of the Facility Lease or the transfer or
other disposition of the respective interests of the Owner Participant, the
Owner Lessor, the Lessor Manager, the Lease Indenture Company, the Indenture
Trustee, the Pass Through Trustees and the Certificateholders in, to and under
this Agreement, the Assignment Agreement and the other Operative Documents.
Except as expressly provided above or in Section 22.3 of the Facility Lease,
the Tax Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

                                      74
<PAGE>
Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the
     Lessor Manager, the Indenture Trustee, the Lease Indenture Company, the
     Pass Through Trustees, the Pass Through Company or the Certificateholders
     shall have any obligation or duty to the Facility Lessee or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents to which such Person is a party, and none of the
     Owner Participant, the Owner Lessor, the Indenture Trustee, the Lease
     Indenture Company, the Pass Through Trustees, the Pass Through Company or
     the Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through
     Trustees, the Pass Through Company, the Certificateholders or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents, and neither the Facility Lessee nor any other
     Calpine Party (except Calpine to the extent set forth in the Calpine
     Guaranty) shall be liable for performance by any other party hereto of
     such other party's obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering
     into the Operative Documents to which it is a party solely as trustees
     under the Collateral Trust Indenture and the Pass Through Trust
     Agreements, respectively, and not in their individual capacities, except
     as expressly provided herein or therein, and in no case whatsoever shall
     the Lease Indenture Company and the Pass Through Company be personally
     liable for, or for any loss in respect of, any of the statements,
     representations, warranties, agreements or obligations of the Owner
     Lessor hereunder or under any other Operative Document, as to all of
     which the other parties hereto agree to look solely to the Indenture
     Estate and the Lessor Estate, respectively; provided, however, that the
     Lease Indenture Company and the Pass Through Trust Company shall be
     liable hereunder for their own negligence or willful misconduct or for a
     breach of their representations, warranties and covenants made in their
     individual capacity under any Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to
     perform any discretionary act enumerated herein or in any other Operative
     Document (including, without limitation, the right to consent to any
     action which requires their consent and the right to waive any provision
     of, or consent to any change or amendment to, any of the Operative
     Documents)

                                      75
<PAGE>
     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein
     or in the Collateral Trust Indenture or as otherwise required by
     Applicable Law, have any obligation to) request the approval or
     instruction of the Pass Through Trustees as the holder of the Lessor
     Notes, and the Pass Through Trustees may in its sole discretion (but
     shall not, except as otherwise provided in the Operative Documents or as
     otherwise required by Applicable Law, have any obligation to) request the
     approval of the Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days'
     prior notice of any proposed amendment or supplement to the LLC Agreement
     (other than an amendment solely effecting a transfer of the Owner
     Participant's interest in the Lessor Estate) and deliver true, complete
     and fully executed copies to the Facility Lessee of any amendment or
     supplement to the LLC Agreement. No amendment or supplement to the LLC
     Agreement that would reasonably be expected to materially adversely
     affect the interests of the Facility Lessee or the Indenture Trustee
     shall become effective without the written consent of the Indenture
     Trustee and the Facility Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the
     nonexclusive jurisdiction of the Supreme Court of the State of New York,
     New York County (without prejudice to the right of any party to remove to
     the United States District Court for the Southern District of New York)
     and to the nonexclusive jurisdiction of the United States District Court
     for the Southern District of New York for the purposes of any suit,
     action or other proceeding arising out of this Agreement, the other
     Operative Documents, or the subject matter hereof or thereof or any of
     the transactions contemplated hereby or thereby brought by any of the
     parties hereto or their successors or assigns; (ii) hereby irrevocably
     agrees that all claims in respect of such action or proceeding may be
     heard and determined in such New York State court, or in such federal
     court; and (iii) to the extent permitted by Applicable Law, hereby
     irrevocably waives, and agrees not to assert, by way of motion, as a
     defense, or otherwise, in any such suit, action or proceeding any claim
     that it is not personally subject to the jurisdiction of the above-named
     courts, that the suit, action or proceeding is brought in an inconvenient
     forum, that the venue of the suit, action or proceeding is improper or
     that this Agreement, the other Operative Documents, or the subject matter
     hereof or thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
     HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY
     SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE
     OTHER OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY
     OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE
     PARTIES HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                      76
<PAGE>
By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office
     at 111 Eighth Avenue, New York, New York 10011, as its authorized agent
     to receive for and on its behalf service of any summons, complaint or
     other legal process in any such action, suit or proceeding in the State
     of New York for so long as any obligation of the Facility Lessee or the
     Owner Lessor, as applicable, shall remain outstanding hereunder or under
     any of the other Operative Documents. the Facility Lessee shall grant an
     irrevocable power of attorney to CT Corporation System, in respect of
     such appointment and shall maintain such power of attorney in full force
     and effect for so long as any obligation of the Facility Lessee shall
     remain outstanding hereunder or under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of execution
and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing, the obligations
of Calpine with respect to fees and expenses set forth in the letter agreement,

                                      77
<PAGE>
dated July 24, 2001 between Calpine and CSFB and the letter agreement dated
August 1, 2001 between Calpine and Newcourt Capital Securities, Inc. shall not
be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior
     to the Receiving Party's receipt thereof, or which becomes public after
     such receipt, but through no violation by such Receiving Party of this
     Section 14.21;

as may be required by Applicable Law or, upon prompt prior written notice
     to the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving
     Party, or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the
     Receiving Party is a party, provided that the other parties hereto shall
     have been given prompt prior written notice (to the extent permitted by
     law) of such proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the
     Receiving Party; provided, however, that, prior to any such disclosure,
     any such transferee or proposed transferee, as the case may be, shall
     have agreed in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of
     remedies by any party to any of the Operative Documents.

          The foregoing obligation as to confidentiality and non-use shall
survive the termination of this Agreement for a period of five years.

                                      78
<PAGE>
Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case
of a waiver, by the party against which enforcement of such waiver is sought,
and no such waiver shall become effective unless signed copies thereof shall
have been delivered to each such party or (b) in the case of termination,
amendments, supplements or modifications, consented to by all parties hereto;
provided, however, that the consent of the Facility Lessee is not required in
the case of amendments to any Operative Document to which the Facility Lessee
is not a party and which would not increase or accelerate the Facility Lessee's
or the Guarantor's obligations under any of the Operative Documents nor impair
the Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                      79
<PAGE>
          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                    ROCKGEN ENERGY LLC,
                    a Wisconsin limited liability company

                         By: _________________________________
                         Name:
                         Title:
                         Date:
<PAGE>
                    ROCKGEN OL-3 LLC, a Delaware limited liability company

                    By: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
                    not in its individual capacity but solely as
                    Lessor Manager

                    By: _________________________________
                    Name:
                    Title:
                    Date:

                    SBR OP-3 LLC, a Delaware limited liability company

                    By: WELLS FARGO BANK NORTHWEST,
                    NATIONAL ASSOCIATION
                    not in its individual capacity but solely as
                    Lessor Manager

                    By: _________________________________
                    Name:
                    Title:
                    Date:

                    WELLS FARGO BANK NORTHWEST,
                    NATIONAL ASSOCIATION,
               not in its individual capacity, except as expressly provided
               herein, but solely as Lessor Manager



               By:  _________________________________
                    Name:
                    Title:
                    Date:
<PAGE>
                    STATE STREET BANK AND TRUST
                    COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION,

               not in its individual capacity, except to the extent expressly
               provided herein, but solely as Indenture Trustee under the
               Collateral Trust Indenture


                    By:  _________________________________
                    Name:
                    Title:
                    Date:

                    STATE STREET BANK AND TRUST
                    COMPANY OF CONNECTICUT, NATIONAL
                    ASSOCIATION,
               not in its individual capacity, except to the extent expressly
               provided herein, but solely as Pass Through Trustees under the
               Pass Through Trust Agreement

                    By:  _________________________________
                    Name:
                    Title:
                    Date:
<PAGE>
                    CALPINE CORPORATION
                              a Delaware corporation
                    By:  _________________________________
                    Name:
                    Title:
                    Date:
<PAGE>
              APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but
     in another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;
<PAGE>
     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof.

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and
     other words of similar import shall, unless the context requires
     otherwise, refer to the whole of the applicable document and not to any
     particular article, section, subsection, paragraph or clause thereof; and

     (o)   a reference to "including" shall mean including without limiting
     the generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                      2
<PAGE>
     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is
     received or properly accrued, and

                                      3
<PAGE>
     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents, to sell
     electricity therefrom, to enter into any Operative Document or to
     consummate any transaction contemplated thereby, or (b) that is necessary
     so that none of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of
     the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten
     (10) Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal.
     If either the Owner Participant or the Facility Lessee does not appoint
     its appraiser within such ten Business Day period, the determination of
     the other appraiser shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. If the appraisers appointed by the
     Owner Participant and the Facility Lessee are unable to agree upon the
     value, period, amount or other determination in question within thirty
     (30) days, such appraisers shall jointly appoint a third Independent
     Appraiser or, if

                                      4
<PAGE>
     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U. S.C. [sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" OR "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BILL OF SALE" shall mean the Bill of Sale (RG-3) dated as of the
     Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B-1 to the

                                      5
<PAGE>
     Participation Agreement duly completed, executed and delivered on the
     Closing Date pursuant to which the Owner Lessor will purchase the
     Undivided Interest from the Facility Lessee.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interests to Broad
     River Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interest to the Broad
     River Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                      6
<PAGE>
     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and
     the Broad River Ground Interests to the Broad River Owner Lessors, and
     the simultaneous lease of the Broad River Undivided Interests and Broad
     River Ground Interests to the Broad River Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the Broad River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee,
     the Pass Through Trustees and Calpine and designated Participation
     Agreement (BR-1), Participation Agreement (BR-2), Participation Agreement
     (BR-3) and Participation Agreement (BR-4), each dated as of the Closing
     Date, pursuant to which, among other things, the Broad River Facility
     Lessee has agreed to (a) assign and transfer to the applicable Broad
     River Owner Lessors certain undivided leasehold interests in the Broad
     River Facility, and (b) lease from the applicable Broad River Owner
     Lessors such undivided leasehold interest in the Broad River Facility
     pursuant to the Broad River Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                      7
<PAGE>
     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "BUYER(S)" shall mean, individually or collectively, (a) Wisconsin Power
     & Light Company, (b) IES Utilities and (c) Interstate Power Company.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment
     Agreement (RG-3) dated as of the Closing Date in favor of the
     Beneficiaries, substantially in the form of Exhibit H to the
     Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

          "CERTIFICATE PURCHASE AGREEMENT shall mean the Certificate Purchase
Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and the
Initial Purchasers.

          "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in
Section 9.2(a) of the Participation Agreement.

          "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates,
and each of such holder's successors and permitted assigns.

                                      8
<PAGE>
     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     issued on the Closing Date and any certificates issued in replacement
     therefor pursuant to Section 3.3, 3.4 or 3.5 of the Pass Through Trust
     Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage
     and Security Agreement (RG-3), dated as of the Closing Date, between the
     Owner Lessor and the Indenture Trustee, in substantially the form of
     Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Facility Site Lease, shall have
     the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                      9
<PAGE>
     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and other
     properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii) excess
     of cost over fair value of assets of businesses acquired, as determined
     in good faith by the Board of Directors; (iv) any revaluation or other
     write-up in value of assets subsequent to December 31, 1993 as a result
     of a change in the method of valuation in accordance with GAAP; (v)
     unamortized debt discount and expenses and other unamortized deferred
     charges, goodwill, patents, trademarks, service marks, trade names,
     copyrights, licenses, organization or developmental expenses and other
     intangible items; (vi) treasury stock; and (vii) any cash set apart and
     held in a sinking or other analogous fund established for the purpose of
     redemption or other retirement of Capital Stock to the extent such
     obligation is not reflected in Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule
     2 of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                      10
<PAGE>
     minus (ii) the sum of (A) the Equity Portion of Termination Value and (B)
     if such date of determination is a Rent Payment Date, the Equity Portion
     of Periodic Rent due on that date.

     "DEED" means that certain Warranty Deed (RG-3), dated as of October 18,
     2001, from Facility Lessee to Owner Lessor, substantially in the form of
     Exhibit B-2 to the Participation Agreement.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     report of the Engineering Consultant, dated September 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Clayton Group Services, Inc..

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                      11
<PAGE>
     "ENVIRONMENTAL REPORTS" shall mean the Phase I Environmental Site
     Assessment Report, dated September 27, 2001, prepared by the
     Environmental Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

          "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination
of Termination Value or amount determined by reference to Termination Value
payable pursuant to the Operative Documents, shall mean an amount equal to the
excess, if any, of (i) the Termination Value set forth opposite the Termination
Date corresponding to such date of determination on Schedule 2 of the Facility
Lease, and, if such date of determination is a Rent Payment Date, Periodic Rent
due on that date (to the extent payable in arrears) over (ii) the balance,
including scheduled (in accordance with the payment terms of the Lessor Notes)
accrued interest, on the Lessor Notes scheduled (in accordance with the payment
terms of the Lessor Notes) to be outstanding on such date of determination
corresponding to the Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)   the loss of the Facility or use thereof due to destruction
     or damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)  any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an agreed
     constructive or a compromised total loss of the Facility; or

          (iii) (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor,
     of title to its Undivided Interest or leasehold interest of the Ground
     Interest, following exhaustion of all permitted appeals or an election by
     the Facility Lessee in its discretion not to pursue such appeals or
     rights; provided that no such contest (or exercise) shall extend beyond
     the earlier of the date which is (x) six

                                      12
<PAGE>
     months after the loss of such leasehold interest or title, or (y) 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee or (b) Requisition of
     use of, or leasehold in, the Undivided Interest or the Ground Interest by
     any Governmental Entity that shall have resulted in the loss of
     possession of the Undivided Interest or all or any part of the Ground
     Interest that is required for the use or operation of the Facility;
     provided that in any case involving Requisition of use of the Facility,
     or all or any part of the Facility Site that is required for the use or
     operation, of the Facility, such event shall be an Event of Loss only if
     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv) if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and not, in any event, as a
     result of (a) investments, loans or other business activities of the
     Owner Participant or any of its Affiliates in respect of equipment or
     facilities similar in nature to the Facility or any part thereof or in
     any other electrical, cogeneration or other energy or utility related
     equipment or facilities or the general business or other activities of
     the Owner Participant or any of its Affiliates or the nature of any of
     the properties or assets from time to time owned, leased, operated,
     managed or otherwise used or made available for use by the Owner
     Participant or any of its Affiliates or (b) a failure of the Owner
     Participant to perform routine, administrative or ministerial actions the
     performance of which would not subject the Owner Participant or any of
     its Affiliates to any material adverse consequence (in the reasonable
     opinion of such Owner Participant acting in good faith); provided that
     the Facility Lessee and the Owner Lessor and Owner Participant agree to
     cooperate and to take reasonable measures to alleviate the source or
     consequence of any regulation constituting an Event of Loss under this
     paragraph (iv), so long as there shall be no adverse consequences to the
     Owner Lessor or Owner Participant as a result of such cooperation or the
     taking of reasonable measures (the events and circumstances described
     herein this paragraph (iv), a "Regulatory Event of Loss"); or

          (v)  if elected by the Owner Participant, in the event that the FERC
     Owner Lessor EWG Order shall not have been obtained and become final
     within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act; or

                                      13
<PAGE>
          (vi) if elected by the Owner Participant, in the event that the
     FERC Order set forth in clause (v) of the definition of "FERC Orders"
     herein shall not have been obtained and become final within ninety (90)
     days of the Closing Date, such election to be conditioned upon receipt of
     a reasoned legal opinion of nationally recognized independent counsel
     (Owner Participant's outside counsel at Closing to be deemed to meet such
     qualifications) that any pending proceeding, if adversely determined,
     would reasonably be expected to have a material adverse effect on the
     Owner Participant or subject the Owner Participant or the Owner Lessor to
     regulation as public utility company or a holding company under the
     Holding Company Act.

          (vii) one or more of the Buyers under the RockGen PPA has exercised
     the purchase option to acquire the Facility pursuant to the RockGen PPA,
     such purchase option presently being set forth in Section 3.05 thereof.

      The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) or (vi) above shall be the date on which the
     Facility Lessee receives the Owner Participant's election made in
     accordance with such clause (v) or (vi), as applicable. The date of
     occurrence of an Event of Loss in clause (vii) above shall be the date on
     which the Owner Lessor's interest is conveyed pursuant to the terms of
     the Facility Lease.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Indenture Company, or the
     Owner Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to

                                      14
<PAGE>
     Section 2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and
     any payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents, (ii)(A) insurance proceeds, if any,
     payable to the Owner Lessor or the Owner Participant under insurance
     separately maintained by the Owner Lessor or the Owner Participant with
     respect to the Facility as permitted by Section 3(b) of Schedule 5.31 to
     the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document for the benefit of the Owner Lessor or the Owner Participant,
     (iii) any amount payable to the Owner Participant as the purchase price
     of the Owner Participant's right and interest in the Member Interest,
     (iv) all other fees expressly payable to the Owner Participant under the
     Operative Documents, (v) any payments in respect of interest, or any
     payments made on an After-Tax Basis, to the extent attributable to
     payments referred to in clause (i) through (vi) above; (vii) any amounts
     paid to the Owner Lessor as reimbursement for amounts expended pursuant
     to Section 20 of the Facility Lease; (viii) proceeds of the items
     referred to in clause (i) through (vii) above; and (ix) any rights to
     demand, collect, sue for, or otherwise receive and enforce payment of the
     foregoing amounts, including under the Calpine Guaranty, but without
     limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 520 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Christiana, Wisconsin, and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (RG-3), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

     "FACILITY LESSEE" shall have the meaning set forth in the recitals to
     the Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      15
<PAGE>
     "FACILITY SITE LEASE" shall mean the Facility Site Lease (RG-3), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Facility Lessee will lease the Ground Interest to the
     Owner Lessor.

     "FACILITY SITE LESSEE" shall mean Owner Lessor

     "FACILITY SITE LESSOR" shall mean RockGen Energy LLC .

     "FACILITY SITE RENT" shall have the meaning set forth in Section 4.1 of
     the Facility Site Lease.

     "FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease (RG-3),
     dated as of October 18, 2001, between the Facility Lessee and the Owner
     Lessor, substantially in the form of Exhibit E to the Participation
     Agreement, pursuant to which the Owner Lessor will sublease the Ground
     Interest to the Facility Lessee.

     "FACILITY SITE SUBLESSEE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Facility Site Lease and Section 13.1 of the
     Facility Site Sublease.

     "FAIR MARKET RENTAL VALUE" OR "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the obligations relating thereto, (iii) the Undivided Interest
     or the Owner Lessor's Interest, as the case may be, is free and clear of
     all Liens (other than Owner Lessor's Liens, Owner Participant's Liens and
     Indenture Trustee Liens), (iv) taking into account the remaining term of
     the Facility Site Lease, and (v) in the case the Fair Market Rental
     Value, taking into account the terms of the Facility Lease and the other
     Operative Documents. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner
     Lessor pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all faults" basis and shall
     take into account all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens); provided, however, in
     any such case where the Owner Lessor shall be unable to obtain
     constructive possession sufficient to realize the economic benefit of the
     Owner Lessor's Interest, Fair Market Sales Value of the Owner Lessor's
     Interest shall be deemed equal to $0 (zero). If in any case other than in
     the preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a request
     therefor

                                      16
<PAGE>
     has been made, the Fair Market Sales Value of the Owner Lessor's Interest
     shall be determined by appraisal pursuant to the Appraisal Procedures.
     Any fair market value determination of a Severable Improvement shall take
     into consideration any liens or encumbrances to which the Severable
     Improvement being appraised is subject and which are being assumed by the
     transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as
     amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)    a determination by FERC of EWG status of the Facility
     Lessee and Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on or
     before the Closing Date;

          (iii)  either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)    an approval from FERC under Section 203 of the Federal
     Power Act for the transfer of jurisidictional facilities in the
     sale/leaseback contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner is an EWG.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Facility Site Lease.

                                      17
<PAGE>
     "FMV RENEWAL LEASE OPTION" with respect to the Facility Lease Term,
     shall have the meaning set forth in Section 2.2(a)(iii) of the Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 19.3 of the Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

                                      18
<PAGE>
     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such Indebtedness, the amount
     of such obligation being deemed to be the lesser of the value of such
     property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Facility Site Lease.

                                      19
<PAGE>
     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f) of
     the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., not in its individual capacity, except as expressly
     provided herein, but solely as Indenture Trustee under the Operative
     Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof that
     are not related to, or that are in violation of, any Operative Document
     or the transactions contemplated thereby, (ii) Claims against or any act
     or omission of the Lease Indenture Company or the Indenture Trustee, or
     Affiliate thereof that is not related to, or that is in violation of, any
     of such Person's representations, warranties, covenants or agreements in
     an Operative Document or the transactions contemplated thereby or that is
     in breach of any covenant or agreement of the Lease Indenture Company or
     the Indenture Trustee specified therein, (iii) Taxes imposed upon the
     Lease Indenture Company or the Indenture Trustee, or any Affiliate
     thereof that are not indemnified against by the Facility Lessee pursuant
     to any Operative Document or (iv) Claims against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the interest
     of the Lease Indenture Company or the Indenture Trustee in the Lessor
     Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

                                      20
<PAGE>
     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to a Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(a) of such Facility Site
     Sublease.

     "INITIAL TERM" with respect to the Facility Site Lease, shall have the
     meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d)
     of the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., in its individual capacity under the Operative
     Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating

                                      21
<PAGE>
     lease, off-balance sheet loan or similar off-balance sheet financing
     product where such transaction is considered borrowed money indebtedness
     of the lessee for tax purposes but is classified as an operating lease
     under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease or the Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease or the
     Facility Site Sublease, shall have the meaning set forth in Section 16.4
     of the Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and any of the foregoing, but shall not
     include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.2 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

                                      22
<PAGE>
     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straight-line
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents, (b) the Indenture Estate or the Lessor Estate,
     the security interests in the Lessor Estate, or (c) with respect to the
     Owner Participant's (but not the Certificateholders') interest in the
     Undivided Interest, the residual value or remaining useful life of the
     Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (RG-3), dated as of the Closing Date, between the
     Facility Lessee, as landlord, and the Owner Lessor, as tenant, and filed
     with the Recorder of Dane County, Wisconsin.

                                      23
<PAGE>
     "MEMORANDUM OF FACILITY SITE SUBLEASE" shall mean the Memorandum of
     Facility Site Sublease (RG-3), dated as of the Closing Date, between the
     Owner Lessor, as sublandlord, and the Facility Lessee, as subtenant filed
     with the Recorder of Dane County, Wisconsin.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
     (RG-3), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Recorder of Dane County, Wisconsin.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan
     (as defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating Officer,
     the Chief Financial Officer, the Treasurer, the Secretary, any Assistant
     Treasurer, any Assistant Secretary or the Controller or Principal
     Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

                                      24
<PAGE>
     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing Date
     in favor of the Facility Lessee, the Owner Lessor, the Lessor Manager,
     the Trust Company, the Indenture Trustee, the Pass Through Trustees and
     the Certificateholders, or (ii) any other guaranty agreement provided by
     an OP Guarantor in form and substance substantially in the form of
     Exhibit G to the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Bill
     of Sale, the Facility Lease, the Certificates, the Facility Site Lease,
     the Facility Site Sublease, the Collateral Trust Indenture, the Lessor
     Notes, the Pass Through Trust Agreements, the LLC Agreement, the Tax
     Indemnity Agreement, the Calpine Guaranty, the OP Parent Guaranty (if
     any), the Certificate Purchase Agreement, and the Ownership and Operation
     Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any
     replacement Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

      "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
      the meaning specified in Section 8.2 of the Facility Lease.

                                      25
<PAGE>
     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other RockGen
     Calpine Guaranties, the Broad River Calpine Guaranties and the South
     Point Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other RockGen
     Facility Leases, the Broad River Facility Leases and the South Point
     Facility Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other RockGen Owner
     Lessors, the Broad River Owner Lessors and the South Point Owner Lessors.

     "OTHER ROCKGEN BILLS OF SALE" shall mean each of the bills of sale
     executed and delivered pursuant to the Other RockGen Participation
     Agreements.

     "OTHER ROCKGEN CALPINE GUARANTIES" shall mean the other Calpine guaranty
     and payment agreements executed and delivered by Calpine pursuant to the
     Other RockGen Participation Agreements.

     "OTHER ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     RockGen Participation Agreements.

     "OTHER ROCKGEN FACILITY LEASES" shall mean the other RockGen facility
     lease agreements, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee, pursuant to which the
     Other RockGen Owner Lessors will lease the Other RockGen Undivided
     Interests to the Facility Lessee.

     "OTHER ROCKGEN FACILITY SITE LEASES" shall mean the other facility site
     leases, dated as of October 18, 2001, by and between the Other RockGen
     Owner Lessors and the Facility Lessee pursuant to which the Facility
     Lessee will lease the Other RockGen Ground Interests to the Other RockGen
     Owner Lessors.

     "OTHER ROCKGEN FACILITY SITE SUBLEASES" shall mean the other facility
     site subleases, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee pursuant to which the Other
     RockGen Owner Lessors will sublease the Ground Interest to the Facility
     Lessee.

                                      26
<PAGE>
     "OTHER ROCKGEN GROUND INTERESTS" shall mean the undivided interests in
     the Facility Site not conveyed to the Owner Lessor under the Facility
     Site Lease.

     "OTHER ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other RockGen Collateral Trust Indentures.

     "OTHER ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving
     the sale of the Other RockGen Undivided Interests and the lease of the
     Other RockGen Ground Interests to the Other RockGen Owner Lessors, and
     the lease by the Other RockGen Owner Lessors of the Other RockGen
     Undivided Interests and sublease by the Other RockGen Owner Lessors of
     the Other RockGen Ground Interest to the Facility Lessee on substantially
     the same terms and conditions as under, and dated the same date as, the
     Overall Transaction.

     "OTHER ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other RockGen Owner Lessors pursuant to the Other
     RockGen Operative Documents.

     "OTHER ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC, RockGen
     OL-2, LLC and RockGen OL-4, LLC.

     "OTHER ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC and SBR OP-4, LLC.

     "OTHER ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other RockGen Lease Transactions.

     "OTHER ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other RockGen Owner
     Lessor, the Other RockGen Lessor Manager, Other RockGen Owner
     Participant, Other RockGen Indenture Trustee, Pass Through Trustees and
     Calpine and designated Participation Agreement (RG-1), Participation
     Agreement (RG-2) and Participation Agreement (RG-4), each dated as of the
     Closing Date, pursuant to which, among other things, the Facility Lessee
     has agreed to (a) sell to the applicable Other RockGen Owner Lessors
     certain undivided interests in the Facility and lease certain undivided
     interests in the Facility Site, and (b) sublease from the applicable
     Other RockGen Owner Lessors such undivided interest in the Facility Site
     pursuant to the Other RockGen Facility Site Sublease.

     "OTHER ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided interest in
     the Facility not conveyed to the Owner Lessor under the Bill of Sale.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents.

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time,

                                      27
<PAGE>
     such rate to be adjusted automatically, without notice, on the effective
     date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean RockGen OL-3, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: RockGen OL-3, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate
     thereof that is not related to, or that is in violation of, any Operative
     Document or the transactions contemplated thereby or that is in breach of
     any covenant or agreement of the Owner Lessor, the Trust Company or the
     Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-3, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Sites, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document

                                      28
<PAGE>
     or the transactions contemplated thereby or that is in breach of any
     covenant or agreement of the Owner Participant set forth therein, (ii)
     Taxes against the Owner Participant that are not indemnified against by
     the Facility Lessee pursuant to the Operative Documents or (iii) Claims
     against or affecting the Owner Participant arising out of the voluntary
     or involuntary transfer by the Owner Participant of any portion of the
     interest of the Owner Participant in the Member Interest, other than any
     transfer (x) pursuant to the exercise of any of the Facility Lessee's (or
     any Affiliate thereof) rights under the Operative Documents or (y) during
     the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other RockGen Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., in its individual capacity, together with its
     successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context
     may require, of (i) the Pass Through Trust Agreement A, dated as of
     October 18, 2001, and (ii) the Pass Through Trust Agreement B, dated as
     of October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., not in its individual capacity, but solely as Pass
     Through Trustees under each of the Pass Through Trust Agreements, and
     each other Person that may from time to time be acting as a Pass Through
     Trustee in accordance with the provisions of a Pass Through Trust
     Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created
     pursuant to the Pass Through Trust Agreements.

                                      29
<PAGE>
     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum
     of Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents, as well as the rights of
     sublessees and/or assignees to the extent set forth in or expressly
     permitted pursuant to the Facility Lease or any other Operative Document,
     (b) as to the Facility Lessee, Owner Lessor's Liens, Owner

                                      30
<PAGE>
     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any
     tax, assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or
     being contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that
     any taxes, assessments or other charges determined to be due will be
     promptly paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as (i)
     such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
      and would not otherwise reasonably be expected to have a Material
     Adverse Effect, and (ii) adequate reserves consistent with GAAP
     requirements have been established and are maintained, so as to ensure
     that any amounts determined to be due will be promptly paid in full when
     such contest is determined, (e) Liens arising out of judgments or awards,
     but only so long as an appeal or proceeding for review is being
     prosecuted in good faith and so long as (i) such proceedings shall not
     reasonably be expected to give rise to criminal liability or material
     civil liability on the part of the Owner Lessor, the Owner Participant,
     the Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise
     reasonably be expected to have a Material Adverse Effect, and (ii)
     adequate reserves consistent with GAAP requirements have been established
     and are maintained, so as to ensure that any amounts determined to be due
     will be promptly paid in full when such contest is determined, or are
     fully covered by insurance, (f) mineral rights the use and enjoyment of
     which do not materially interfere with the use and enjoyment of the
     Facility, (g) Permitted Encumbrances, (h) Liens, deposits or pledges to
     secure statutory obligations or performance of bids, tenders, contracts
     (other than for the repayment of borrowed money) or leases, or for
     purposes of like general nature in the ordinary course of its business,
     (i) existing Liens that have been disclosed to the Transaction Parties
     prior to the Closing Date and which are reasonably acceptable to the
     Transaction Parties, (j) Liens incident to the ordinary course of
     business that are not incurred in connection with the obtaining of any
     loan, advance or credit in respect of borrowed money permitted to be
     incurred pursuant to the Operative Documents so long as such Liens (x) do
     not in the aggregate materially impair the use of the property or assets
     of the Facility Lessee or the value of such property or assets for the
     purposes of such business and (y) shall not reasonably be expected to
     give rise to criminal liability or unindemnified, material civil
     liability on the part of the Owner Lessor, the Owner Participant, the
     Lessor Manager, the Trust Company, the Indenture Trustee, the Pass
     Through Trustees or any Certificateholders, and would not otherwise

                                      31
<PAGE>
     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other RockGen Owner Lessors and the Other RockGen
     Indenture Trustees in the Facility, the Facility Site and the Ownership
     and Operation Agreement, (l) the interests of the Facility Lessee, the
     Other RockGen Owner Participants, the Other RockGen Owner Lessors, the
     Other RockGen Lessor Managers, the Other RockGen Indenture Trustees, and
     Pass Through Trustees under any of the Other RockGen Operative Documents,
     (m) the Ownership and Operation Agreement and (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such
     plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in

                                      32
<PAGE>
     administrative guidance has been issued by the Internal Revenue Service
     or the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "PURCHASE PRICE" with respect to the Undivided Interest, shall mean
     $56,250,000.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have
     the meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may
     properly advise reporting such position on a tax return in accordance
     with Formal Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
     refinances Indebtedness of another Restricted Subsidiary) including
     Indebtedness that refinances Refinancing Indebtedness;

                                      33
<PAGE>
     provided, however, that (i) if the Indebtedness being refinanced is
     contractually subordinated in right of payment to the Obligations, the
     Refinancing Indebtedness shall be contractually subordinated in right of
     payment to such Obligations to at least the same extent as the
     Indebtedness being refinanced, (ii) the Refinancing Indebtedness is
     scheduled to mature either (a) no earlier than the Indebtedness being
     refinanced or (b) after the Stated Maturity of the Obligations, (iii) the
     Refinancing Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average
     Life of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv)
     of the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                      34
<PAGE>
     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Sublease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002 each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases thereafter (except for the
     last Rent Payment Period which period shall commence on May 31, 2031 and
     end on, and include, October 18, 2031) each six-month period commencing
     on each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is
     not designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the
     Granting Clause of the Collateral Trust Indenture.

                                      35
<PAGE>
     "ROCKGEN PPA" shall mean the Power Purchase Agreement dated as of August
     10, 1998 (as amended by Amendment No. 1 dated December 22, 1998 and
     Amendment No. 2 dated December 16, 1999) by and between the Buyers and
     the Facility Lessee, as the same may hereafter be further amended
     (subject to Section 5.33 of the RockGen PPA).

      "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have
     the meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other RockGen Facility Lease.

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Facility Site Lease,
     shall have the meaning set forth in Section 14.1 of the Facility Site
     Lease.

                                      36
<PAGE>
     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     South Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the South Point Owner Lessor will
     lease the applicable South Point Undivided Interests to the South Point
     Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy Center, LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which South Point Owner Lessor will lease
     the applicable South Point Ground Interests to the South Point Facility
     Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Facility Site Leases.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and
     the South Point Ground Interests to the South Point Owner Lessors, and
     the simultaneous lease of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

                                      37
<PAGE>
     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the South Point Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3)
     and Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee
     has agreed to (a) sell to the applicable South Point Owner Lessors
     certain undivided interests in the South Point Facility, and (b) lease
     from the applicable South Point Owner Lessors such undivided interest in
     the South Point Facility pursuant to the South Point Facility Leases.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the South Point Facility conveyed to the South Point Owner
     Lessors under the South Point Bills of Sale.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)   the sum of all outstanding principal, premium, if any, and
     accrued interest on the Lessor Notes, if any, on such determination date
     (in each case, if such determination date is a Rent Payment Date, before
     taking into account any Basic Rent or Renewal Rent due on such
     determination date).

                                      38
<PAGE>
     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section
     11.1 of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean a survey of the Facility Site, to be delivered after
     the Closing Date pursuant to Section 5.16 of the Participation Agreement,
     which inter alia, will show the location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings ,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

                                      39
<PAGE>
     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (RG-3),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of
     the Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Facility Site Lease, shall
     have, collectively, the meaning set forth in Section 18.1 of the Facility
     Site Lease.

     "TERM" with respect to the Facility Site Lease or the Facility Site
     Sublease, shall have the meaning set forth in Section 2.2(b) of the
     Facility Site Lease or Section 2.1(b) of the Facility Site Sublease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each
     of the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall
     have the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit M: (a) Clarification Letter
     from Duke Energy Trading and Marketing, L.L.C. ("DETM") with respect to
     the Tolling Agreement, dated as of January 8, 1999 (as amended), between
     DETM and the Facility Lessee; and (b) Consent and Agreement from ANR
     Pipeline Company ("ANR") with respect to the Interconnection Agreement,
     dated as of May 28, 1999 (as amended), between ANR and the Facility
     Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

     "TITLE POLICY" shall mean, the title insurance policy (#0303-7538-630)
     dated as of October 18, 2001.

                                      40
<PAGE>
     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)     the reasonable costs of reproducing and printing the Operative
     Documents and all costs and fees, including, but not limited to, filing
     and recording fees and recording, transfer, mortgage, intangible and
     similar taxes in connection with the execution, delivery, filing and
     recording of the Facility Lease, the Facility Site Lease, and any other
     Operative Document and any other document required to be filed or
     recorded pursuant to the provisions hereof or of any other Operative
     Document and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)    the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of Reinhart, Boerner Van Deuren,
     Norris & Rieselbach, S.C., Wisconsin counsel to the Facility Lessee;

     (iv)    the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)     the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)    the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents;

     (viii)  the reasonable fees and expenses of Bingham Dana LLP, counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)    the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

                                      41
<PAGE>
     (x)     the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)    the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)  the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

     (xv)    the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)  the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii) the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

                                      42
<PAGE>
     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents.

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial
     Code as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      43

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.14
<SEQUENCE>17
<FILENAME>f80168ex4-22_14.txt
<DESCRIPTION>EXHIBIT 4.22.14
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.14

                                                                 EXECUTION COPY

                         PARTICIPATION AGREEMENT (RG-4)

                          Dated as of October 18, 2001

                                      among

                     ROCKGEN ENERGY LLC, as Facility Lessee,

                       ROCKGEN OL-4, LLC, as Owner Lessor,

     WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as Lessor Manager,

                       CALPINE CORPORATION, as Guarantor,

                      SBR OP-4, LLC, as Owner Participant,

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Indenture Trustee, and

    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     not in its individual capacity, except
                    as expressly provided herein, but solely
                            as Pass Through Trustees



                                 ROCKGEN PROJECT

===============================================================================

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                                                      PAGE
<S>                                                                                                                   <C>
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT .............................................    3

SECTION 2.PARTICIPATION; CLOSING DATE; TRANSACTION COSTS ..........................................................    3

   Section 2.1  Agreements to Participate .........................................................................    3

   Section 2.2  Closing Date; Procedure for Participation .........................................................    4

   Section 2.3  Transaction Costs .................................................................................    5

SECTION 3.REPRESENTATIONS AND WARRANTIES ..........................................................................    6

   Section 3.1  Representations and Warranties of the Facility Lessee .............................................    6

   Section 3.2  Representations and Warranties of the Owner Lessor ................................................   15

   Section 3.3  Representations and Warranties of the Lessor Manager and the Trust Company ........................   16

   Section 3.4  Representations and Warranties of the Owner Participant ...........................................   18

   Section 3.5  Representations and Warranties of Indenture Trustee and the Lease Indenture Company ...............   20

   Section 3.6  Representations, Warranties and Covenants of the Pass Through Trustees and the Pass Through Company   22

SECTION 4.CLOSING CONDITIONS ......................................................................................   23

   Section 4.1  Completion of the Facility ........................................................................   25

   Section 4.2  Operative Documents ...............................................................................   25

   Section 4.3  Certificates and the Lessor Notes .................................................................   25

   Section 4.4  Equity Investment .................................................................................   25

   Section 4.5  Organizational Documents ..........................................................................   25

   Section 4.6  Representations and Warranties ....................................................................   25

   Section 4.7  Defaults, Events of Default, Events of Loss .......................................................   25

   Section 4.8  Regulatory Approvals ..............................................................................   25

   Section 4.9  Consents ..........................................................................................   26

   Section 4.10 Governmental Actions ..............................................................................   27

</TABLE>

                                        i

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS (continued)

                                                                                      PAGE
<S>                                                                                   <C>
Section 4.11 Insurance ...................................................              27

Section 4.12 Ratings .....................................................              27

Section 4.13 Environmental Report ........................................              27

Section 4.14 Surveys .....................................................              27

Section 4.15 Appraisal; Condition of the Facility ........................              27

Section 4.16 Letter from the Appraiser ...................................              27

Section 4.17 Other Reports ...............................................              28

Section 4.18 Opinion with Respect to Certain Tax Aspects .................              28

Section 4.19 Opinions of Counsel .........................................              28

Section 4.20 Recordings and Filings ......................................              28

Section 4.21 Conditions to Closing .......................................              28

Section 4.22 Taxes .......................................................              28

Section 4.23 No Changes in Applicable Law ................................              29

Section 4.24 Registered Agent for the Facility Lessee and the Owner Lessor              29

Section 4.25 Operating Lease Treatment ...................................              29

Section 4.26 Rent Adjustments ............................................              29

Section 4.27 Title Insurance .............................................              29

Section 4.28 Parent Guaranty .............................................              29

Section 4.29 Letter as to Number of Offerees .............................              29

Section 4.30 Lien Search .................................................              30

Section 4.31 Litigation ..................................................              30

Section 4.32 No Material Adverse Change ..................................              30

Section 4.33 Private Placement Number ....................................              30

Section 4.34 Proceedings and Documents ...................................              30

</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS (continued)
                                                                                    PAGE
<S>                                                                                 <C>
   Section 4.35 No Proposed Tax Law Change ............................              30

   Section 4.36 Payment of Fees and Expenses ..........................              30

SECTION 5.COVENANTS OF FACILITY LESSEE AND GUARANTOR ..................              30

   Section 5.1  Maintenance of Existence ..............................              31

   Section 5.2  Merger, Consolidation, Sale of Substantially All Assets              31

   Section 5.3  Guaranty and Contingent Obligations ...................              31

   Section 5.4  Assignment of Rights ..................................              32

   Section 5.5  Lessor Manager Fees ...................................              32

   Section 5.6  Conduct of Business, Properties, Etc ..................              32

   Section 5.7  Obligations ...........................................              32

   Section 5.8  Books, Records, Access ................................              32

   Section 5.9  Other Information .....................................              33

   Section 5.10 Warranty of Title to Facility Site ....................              33

   Section 5.11 ERISA .................................................              33

   Section 5.12 Certain Contracts and Agreements ......................              34

   Section 5.13 Certain Costs .........................................              34

   Section 5.14 Limitations on Liens ..................................              34

   Section 5.15 Investments ...........................................              34

   Section 5.16 Survey ................................................              35

   Section 5.17 Regulations ...........................................              35

   Section 5.18 Partnerships ..........................................              35

   Section 5.19 Dissolution ...........................................              35

   Section 5.20 Termination of Operative Documents ....................              35

   Section 5.21 Name and Location .....................................              35

</TABLE>

                                       iii

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS (continued)
                                                                                             PAGE
<S>                                                                                          <C>
   Section 5.22. Use of Facility Site ............................................              35

   Section 5.23. Abandonment of Facility .........................................              35

   Section 5.24. Taxes, Other Government Charges and Utility Charges .............              35

   Section 5.25. Compliance with Laws, Instruments, Etc ..........................              36

   Section 5.26. PUHCA ...........................................................              36

   Section 5.27. Further Assurances ..............................................              36

   Section 5.28. No Subsidiaries .................................................              37

   Section 5.29. Permitted Business ..............................................              37

   Section 5.30. Support Arrangements ............................................              37

   Section 5.3. 1Insurance .......................................................              38

   Section 5.32. Tax Status ......................................................              38

   Section 5.33 Transmission Assets .............................................              38

SECTION 6.COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER              39

   Section 6.1 Compliance with the LLC Agreement ................................              39

   Section 6.2 Owner Lessor's Liens .............................................              40

   Section 6.3 Amendments to Operative Documents ................................              40

   Section 6.4 Transfer of the Owner Lessor's Interest ..........................              40

   Section 6.5 Owner Lessor; Lessor Estate ......................................              40

   Section 6.6 Limitation on Indebtedness and Actions ...........................              40

   Section 6.7 Change of Location ...............................................              40

   Section 6.8 Bankruptcy of Owner Lessor .......................................              40

SECTION 7.COVENANTS OF THE OWNER PARTICIPANT ....................................              41

   Section 7.1 Restrictions on Transfer of Member Interest ......................              41

   Section 7.2 Owner Participant's Liens ........................................              44

</TABLE>

                        iv

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS (continued)
                                                                                                PAGE
<S>                                                                                             <C>
   Section 7.3.  Amendments or Revocation of LLC Agreement ..........................            44

   Section 7.4.  Bankruptcy Filings .................................................            44

   Section 7.5.  Instructions .......................................................            44

   Section 7.6.  Right of First Refusal .............................................            44

   Section 7.7  Prohibition on Fundamental Changes ..................................            45

   Section 7.8.  Appointment of Successor Lessor Manager ............................            45

   Section 7.9.  Cooperation ........................................................            45

SECTION 8.COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES ..........            46

   Section 8.1.  Indenture Trustee's Liens ..........................................            46

   Section 8.2.  Pass Through Trustees' Covenant Not to Transfer Lessor Notes .......            46

SECTION 9 INDEMNIFICATION ...........................................................            46

   Section 9.1.  General Indemnity ..................................................            46

   Section 9.2.  General Tax Indemnity ..............................................            53

SECTION 10.FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT ...............................            62

SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS ..............            62

   Section 11.1. Financing Improvements .............................................            62

   Section 11.2. Optional Refinancing of Lease Debt .................................            64

   Section 11.3. Cooperation ........................................................            65

SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS            66

SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS .....            66

   Section 13.1. Transfer of the Facility Lessee Ownership ..........................            67

   Section 13.2. Special Facility Lessee Transfers ..................................            68

SECTION 14.MISCELLANEOUS ............................................................            69

   Section 14.1 Consents; Cooperation ...............................................            69
</TABLE>

                                        v
<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS (continued)

                                                                                          PAGE
<S>                                                                                       <C>
Section 14.2  Successor Owner Lessor .........................................              69

Section 14.3  Bankruptcy of Lessor Estate ....................................              69

Section 14.4  Amendments and Waivers .........................................              69

Section 14.5  Notices ........................................................              70

Section 14.6  Survival .......................................................              74

Section 14.7  Successors and Assigns .........................................              74

Section 14.8  Business Day ...................................................              74

Section 14.9  Governing Law ..................................................              74

Section 14.10 Severability ...................................................              74

Section 14.11 Counterparts ...................................................              74

Section 14.12 Headings and Table of Contents .................................              75

Section 14.13 Limitation of Liability ........................................              75

Section 14.14 Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent               76

Section 14.15 Further Assurances .............................................              77

Section 14.16 Effectiveness ..................................................              77

Section 14.17 Measuring Life .................................................              77

Section 14.18 No Partnership, Etc ............................................              77

Section 14.19 Entire Agreement ...............................................              77

Section 14.20 Public Utility Regulation ......................................              78

Section 14.21 Confidentiality of Information .................................              78

Section 14.22 Reliance .......................................................              79

Section 14.23 Amendments, Etc ................................................              79

</TABLE>

                         vi

<PAGE>

APPENDICES:

         Appendix A      Definitions and Rules of Interpretation
<TABLE>
<S>                       <C>
SCHEDULES:

     Schedule 1-A      Equity Investment
     Schedule 1-B      Indenture Trustee's Account
     Schedule 1-C      Owner Participant's Account
     Schedule 2        Pricing Assumptions
     Schedule 3.1(m)   Environmental Matters - Hazardous Substances
     Schedule 4.20     Recording and Filings
     Schedule 5.31     Maintenance of Insurance

EXHIBITS:

     Exhibit A         Description of Facility
     Exhibit B-1       Form of Bill of Sale
     Exhibit B-2       Form of Warranty Deed
     Exhibit C         Form of Facility Lease Agreement
     Exhibit D         Form of Facility Site Lease
     Exhibit E         Form of Facility Site Sublease
     Exhibit F         Form of Pass Through Trust Agreement
     Exhibit G         Form of OP Parent Guaranty
     Exhibit H         Form of Calpine Guaranty
     Exhibit I         Form of Collateral Trust Indenture
     Exhibit J         Form of OP Assignment and Assumption Agreement
     Exhibit K         List of Competitors
     Exhibit L         Form of Guarantor Assignment and Assumption Agreement
     Exhibit M         Forms of Consents
</TABLE>

                                       vii

<PAGE>

                                     PARTICIPATION AGREEMENT

          This PARTICIPATION AGREEMENT, dated as of October 18, 2001 (as
     amended, supplemented or otherwise modified from time to time, in
     accordance with the provisions hereof, this "Participation Agreement" or
     this "Agreement"), among (i) ROCKGEN ENERGY LLC (herein, together with
     its successors and permitted assigns, called the "Facility Lessee"), a
     limited liability company organized under the laws of the State of
     Wisconsin, (ii) CALPINE CORPORATION, a Delaware corporation, as Guarantor
     (together with its successors and permitted assigns, the "Guarantor")
     under the Calpine Guaranty (RG-4), (the "Calpine Guaranty"), (iii)
     ROCKGEN OL-4, LLC, a Delaware limited liability company (the "Owner
     Lessor"), (iv) SBR OP-4, LLC, a Delaware limited liability company
     (herein, together with its successors and permitted assigns, called the
     "Owner Participant"), (v) STATE STREET BANK AND TRUST COMPANY OF
     CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
     organized and existing under the laws of the United States, not in its
     individual capacity, except as expressly provided herein, but solely as
     trustee under the Collateral Trust Indenture (herein in its capacity as
     trustee under the Collateral Trust Indenture, together with its
     successors and permitted assigns, called the "Indenture Trustee", and
     herein in its individual capacity, together with its successors and
     permitted assigns, called the "Lease Indenture Company"), (vi) STATE
     STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
     national banking association organized and existing under the laws of the
     United States, not in its individual capacity, except as expressly
     provided herein, but solely as trustee under each of the Pass Through
     Trust Agreements (herein in its capacity as trustee under the Pass
     Through Trust Agreements, the "Pass Through Trustees", and herein in its
     individual capacity, together with its successors and permitted assigns,
     the "Pass Through Company"), and (vii) WELLS FARGO BANK NORTHWEST,
     NATIONAL ASSOCIATION, a national banking association organized and
     existing under the laws of the United States, not in its individual
     capacity except as expressly provided herein, but solely as independent
     manager under the LLC Agreement (herein in its capacity as independent
     manager under the LLC Agreement, together with its successors and
     permitted assigns, called the "Lessor Manager", and herein in its
     individual capacity, together with its successors and permitted assigns,
     called the "Trust Company").

                                  WITNESSETH:

          WHEREAS, (a) Facility Lessee, an indirect, wholly-owned
subsidiary of Calpine, will, as of the Closing Date, own a 520 MW gas-fired
combined cycle merchant power plant located near Christiana, Wisconsin and more
fully described in Exhibit A hereto ("Facility");

          WHEREAS, Facility Lessee desires to sell to the Owner Lessor
the Undivided Interest pursuant to the Bill of Sale and lease to the Owner
Lessor the Ground Interest pursuant to the Facility Site Lease, and to lease
the Undivided Interest and sublease the Ground Interest

<PAGE>

from the Owner Lessor pursuant to the Facility Lease and the Facility Site
Sublease, respectively;

          WHEREAS, the Owner Participant desires to cause the Owner
Lessor to purchase such Undivided Interest from the Facility Lessee pursuant to
the Bill of Sale, to lease the Ground Interest from the Facility Lessee
pursuant to the Facility Site Lease, and to lease the Undivided Interest and
sublease the Ground Interest to the Facility Lessee pursuant to the Facility
Lease and Facility Site Sublease, respectively;

          WHEREAS, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, issue the Lessor Notes and sell such Lessor Notes to the relevant
Pass Through Trust, purchase the Undivided Interest from the Facility Lessee
pursuant to the Bill of Sale, lease the Ground Interest from Facility Lessee
pursuant to the Undivided Interest and the Ground Interest to the Facility
Lessee pursuant to the Facility Lease and Facility Site Lease and lease the
Undivided Interest and sublease the Ground Interest to the Facility Lessee
pursuant to the Facility Lease and the Facility Site Sublease, respectively;

          WHEREAS, in order to provide a portion of the Purchase Price
payable by the Owner Lessor in respect of its acquisition of the Undivided
Interest pursuant to the Bill of Sale, the Owner Participant is willing to make
an investment in the Owner Lessor in an amount equal to the Equity Investment,
all in the manner and subject to the conditions set forth herein;

     WHEREAS, on the Closing Date, the Owner Lessor intends to sell the Lessor
Notes to the relevant Pass Through Trust and to grant to the Indenture Trustee
liens and security interests in the Indenture Estate to secure its obligations
thereunder;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, each Pass Through Trustee has entered into a Pass
Through Trust Agreement, pursuant to which such Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;

          WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessee has entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trusts
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trusts;

     WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;

          WHEREAS, pursuant to the Calpine Guaranty, Calpine has
guaranteed all of the obligations of the Facility Lessee under the
Participation Agreement and as of the Closing Date shall guarantee all of the
obligations of the Facility Lessee under the other Operative Documents to which
the Facility Lessee is a party; and

                                      2

<PAGE>

          WHEREAS, the parties hereto desire to consummate the
transactions contemplated hereby.

          NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT

          The capitalized terms used in this Participation Agreement,
including the foregoing recitals, and not otherwise defined herein shall have
the respective meanings specified in Appendix A hereto. The rules of
interpretation set forth in Appendix A shall apply to terms used in this
Participation Agreement and specifically defined herein.

PARTICIPATION; CLOSING DATE; TRANSACTION COSTS

Agreements to Participate. Subject to the terms and conditions of this
Agreement, and in reliance on the agreements, representations and warranties
made herein, the parties agree to participate in the transactions described in
this Section 2.1 on the Closing Date as follows:

the Owner Participant agrees to provide funds in an amount sufficient to (i)
     fund the Equity Investment and (ii) pay the Transaction Costs which the
     Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
     (collectively, the "Owner Participant's Commitment");

the Facility Lessee agrees to sell the Undivided Interest to the Owner Lessor
     on the terms and conditions set forth in the Bill of Sale and to lease
     the Ground Interest to the Owner Lessor on the terms set forth in the
     Facility Site Lease; the Owner Lessor agrees to buy the Undivided
     Interest and to lease the Ground Interest from the Facility Lessee, and
     each agrees to execute and deliver the Bill of Sale and the Facility Site
     Lease;

the Owner Lessor agrees to lease the Undivided Interest to the Facility Lessee
     and to sublease the Ground Interest from the Facility Lessee on the
     terms and conditions set forth in the Facility Lease and Facility Site
     Sublease; the Facility Lessee agrees to lease the Undivided Interest and
     sublease the Ground Interest from the Owner Lessor, and each agrees to
     execute and deliver the respective Facility Lease and the Facility Site
     Sublease;

the Indenture Trustee agrees to act as the trustee under and enter into the
     Collateral Trust Indenture pursuant to which the Lessor Notes will be
     issued;

the Pass Through Trustees agree to use the Proceeds from the sale of the
     Certificates by the Pass Through Trusts to purchase the Lessor Notes
     from the Owner Lessor;

the Owner Lessor agrees to sell to the relevant Pass Through Trusts the
     applicable Lessor Notes and to grant to the Indenture Trustee, for the
     benefit of the Pass Through Trustees, certain liens and security
     interests in the Indenture Estate to secure its obligations thereunder;

the OP Guarantor will guarantee the performance and payment obligations of the
     Owner Participant under the Operative Documents pursuant to the OP
     Parent Guaranty;

                                      3

<PAGE>

the Owner Lessor agrees to use the funds received from the Owner Participant
     and the Pass Through Trusts pursuant to clause (a)(i) and (e),
     respectively, of this Section 2.1 on the Closing Date to pay the Purchase
     Price;

the Owner Participant and the Facility Lessee agree to enter into the Tax
     Indemnity Agreement; and

the parties agree to enter into the agreements referred to above and the other
     Operative Documents, and to cause each Affiliate thereof that is not a
     party hereto but is a party to an Operative Document to enter into such
     Operative Document, as the case may be (in each case, if attached as an
     Exhibit hereto, in substantially the form attached hereto).

Closing Date; Procedure for Participation.

Closing Date. The closing of the transactions contemplated hereby (the
     "Closing") shall take place after 10:00 a.m., New York City time, on the
     Scheduled Closing Date or such other date as the parties hereto shall
     mutually agree (the "Closing Date"), at the offices of Dewey Ballantine
     LLP or at such other place as the parties hereto shall mutually agree.

Procedures for Funding. Unless the Closing Date shall have been postponed
     pursuant to Section 2.2(c), subject to the terms and conditions of this
     Participation Agreement, the Owner Participant shall make the Owner
     Participant's Commitment available not later than 10:00 a.m., New York
     City time, on the Scheduled Closing Date, by transferring or delivering
     such amount, in funds immediately available on such Scheduled Closing
     Date, to the Owner Lessor in New York, New York.

Postponement of the Closing. The Scheduled Closing Date may be postponed from
     time to time for any reason if the Facility Lessee gives the Owner
     Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
     Trustees a facsimile or telephonic (confirmed in writing) notice of such
     postponement and notice of the date to which the Closing has been
     postponed, such notice of postponement to be received by each party no
     later than noon, New York City time, on the Scheduled Closing Date. If,
     prior to receipt of a postponement notice under this Section 2.2(c), the
     Owner Participant shall have provided funds in accordance with Section
     2.2(b), such funds shall be returned to the Owner Participant, as soon as
     reasonably practicable but in no event later than the Business Day
     following the date of such notice, unless the Owner Participant shall
     have otherwise directed. All funds made available pursuant to Section
     2.2(b) will be held by the Owner Lessor in trust for the Owner
     Participant and shall not be part of the Indenture Estate or the Lessor
     Estate, shall be invested by the Owner Lessor in accordance with clause
     (d) below and such funds shall remain the sole property of the Owner
     Participant unless and until released by the Owner Participant and made
     available to the Owner Lessor and applied to pay the Purchase Price or
     Transaction Costs or returned to the Owner Participant, as provided in
     this Agreement.

Investment of Funds. If, on the Scheduled Closing Date, the Owner Participant
     has made the Owner Participant's Commitment available to the Owner
     Lessor in accordance with Section 2.2(b), the Closing does not occur on
     such date and the Owner Lessor is unable to return such funds to the
     Owner Participant on such date, the Owner Lessor shall, subject to
     Section 2.2(c)

                                      4

<PAGE>

     above, use reasonable efforts to invest such funds from time to time at
     the written direction of Calpine, and at Calpine's sole expense and risk,
     in Permitted Investments until such funds can be returned to the Owner
     Participant. If, on the Scheduled Closing Date, the Owner Participant has
     made the Owner Participant's Commitment available to the Owner Lessor in
     accordance with Section 2.2(b), the Closing does not occur on such date
     and the Owner Lessor has not returned such funds to the Owner Participant
     on or before 1:00 p.m., New York City time, on such date, then Calpine
     shall reimburse the Owner Participant for loss of the use of such funds
     at the Applicable Rate for each day, from and including the day that such
     funds were made available to the Owner Lessor by the Owner Participant
     to, but excluding the earlier of (i) the day that such funds have been
     returned to the Owner Participant pursuant to Section 2.2(c) (funds
     received by the Owner Participant after 1:00 p.m., New York City time, of
     any day shall be deemed to be returned on the next succeeding Business
     Day) and (ii) the Closing Date. Subject to payment for the account of the
     Owner Participant of any reimbursement for loss of use of funds due to it
     at the Applicable Rate, any net gain realized on the investment of such
     funds (including interest) shall be paid to Calpine by the Owner Lessor
     on the earlier of (i) the date such funds are returned to the Owner
     Participant pursuant to Section 2.2(c) and (ii) the Closing Date. The
     Owner Lessor shall not be liable for any interest on or loss resulting
     from such investments and, if such funds are made available to the Owner
     Lessor and utilized to pay the Purchase Price or Transaction Costs on the
     Closing Date, Calpine shall reimburse the Owner Lessor for any net loss
     realized on the investment of such funds. If such funds are not so
     utilized, Calpine shall, in addition to its obligation to reimburse the
     Owner Participant for loss of use as provided above, reimburse the Owner
     Participant on the date such funds are returned to the Owner Participant
     for any net loss realized on the investment of such funds. In order to
     obtain funds for payment of the Purchase Price or Transaction Costs or to
     return funds made available to the Owner Lessor by the Owner Participant,
     the Owner Lessor is authorized to sell any investments or obligations
     purchased as aforesaid.

Expiration of Commitments. The obligation of the Owner Participant to make its
     Equity Investment shall expire at 5:00 p.m., New York City time, on
     December 31, 2001. If the Closing Date has not occurred on or before
     December 31, 2001 the Transaction Parties shall have no obligation to
     consummate the transactions contemplated under this Agreement and, except
     as provided in Sections 2.3, 9.1 and 9.2, all obligations of the
     Transaction Parties shall cease and terminate.

Transaction Costs.

If the transactions contemplated by this Agreement are consummated, all
     Transaction Costs up to an amount equal to US$1,125,000, which shall be
     substantiated or otherwise supported in reasonable detail (provided that
     legal bills may be redacted to preserve attorney-client privilege), shall
     be paid within 10 days after the Closing Date by the Owner Lessor (with
     funds provided by the Owner Participant), assuming all invoices have been
     approved by Calpine and received by the Owner Lessor by 7 days after the
     Closing Date. All other Transaction Costs, fees, costs and expenses
     incurred by the Facility Lessee, the Owner Lessor and the Owner
     Participant shall be paid by Calpine. If the Overall Transaction is not
     consummated for any reason (including as a result of the Facility Lessee
     terminating this Agreement pursuant to Section 12(a)), then Calpine shall
     bear all Transaction Costs;

                                      5

<PAGE>

     provided, however, that Calpine shall not be obligated to pay
     Transaction Costs incurred by the Owner Participant if the Overall
     Transaction is not consummated on the basis of the provisions of this
     Agreement due to a failure of the Owner Participant to satisfy any
     condition to the Closing required to be satisfied by the Owner
     Participant.

Following the Closing Date, the Facility Lessee will be responsible for, and
     will pay as Supplemental Rent on an After-Tax Basis to the Owner
     Participant, the annual administration fees, if any, and expenses
     (including reasonable and documented fees and expenses of its outside
     counsel) of the Lessor Manager, the Indenture Trustee (as such and in its
     individual capacity) and the Pass Through Trustees.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Facility Lessee. The Facility Lessee
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Incorporation, etc. The Facility Lessee is a limited liability company duly
     organized, validly existing, and in good standing under the laws of the
     State of Wisconsin. The Facility Lessee is duly licensed or qualified and
     in good standing (as evidenced by a certificate of status issued by the
     Wisconsin Department of Financial Institutions) in each jurisdiction
     where the character of its properties or the nature of its activities
     makes such qualification necessary, and the Facility Lessee has the power
     and authority to (x) own or hold under lease the property it purports to
     own or hold under lease, (y) carry on its business as now being conducted
     and as presently proposed to be conducted and (z) take all actions as may
     be necessary to consummate the transactions contemplated hereunder and
     under the other Operative Documents to which each is a party. The
     Facility Lessee is an indirect wholly-owned subsidiary of Calpine.

Authorization; Enforceability, etc. This Agreement and each of the other
     Operative Documents to which the Facility Lessee is or will be a party
     have been, or when executed and delivered will be, duly authorized,
     executed and delivered by all necessary action by the Facility Lessee,
     and, assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement constitutes and, when executed and
     delivered, the other Operative Documents to which the Facility Lessee is
     or will be a party will constitute the legal, valid and binding
     obligations of the Facility Lessee, enforceable against the Facility
     Lessee in accordance with its terms, except as the same may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting the rights of creditors generally and by general
     principles of equity.

Non-Contravention.  (1) The execution, delivery and performance by the Facility
     Lessee of this Agreement and each of the other Operative Documents to
     which it is or will be a party, the consummation by the Facility Lessee
     of the transactions contemplated hereby and thereby, and compliance by
     the Facility Lessee with the terms and provisions hereof and thereof, do
     not and will not (i) contravene any Applicable Law binding on the
     Facility Lessee or its property, or its organizational documents, (ii)
     constitute a default by the Facility Lessee under, or result in the
     creation of any Lien upon the property of the Facility Lessee (other than
     pursuant to any Operative Document) under any indenture, mortgage or
     other material

                                      6

<PAGE>

     contract, agreement or instrument to which the Facility Lessee is a
     party or by which the Facility Lessee or any of its property is bound,
     (iii) contravene any Organic Document of the Facility Lessee or (iv)
     require the consent or approval of any Person which has not already been
     obtained, in each case with respect to clauses (i), (ii) and (iv) above,
     which would reasonably be expected to have a Material Adverse Effect.

          (2)  Neither the sale of the Undivided Interest or the lease of the
Ground Interest by Facility Lessee to the Owner Lessor, nor the grant by the
Owner Lessor to the Indenture Trustee of the Liens and security interests in
the Undivided Interest and the applicable Operative Documents executed in
connection therewith to secure its obligations thereunder does or will
constitute a default by the Facility Lessee or the Owner Lessors under the
Ownership and Operation Agreement.

Government Actions. The Facility Lessee has all Permits with or from any
     Governmental Entity or under any Applicable Law required (x) for the due
     execution, delivery or performance by the Facility Lessee of this
     Agreement, and the other Operative Documents to which the Facility Lessee
     is or will be a party or (y) without regard to any other transactions or
     other actions of the Owner Participant, the Owner Lessor or any Affiliate
     of any of them or any assignee or transferee of any of the Owner
     Participant, the Owner Lessor (or any Affiliate of any transferee or
     assignee) and assuming that none of the Owner Participant, the Owner
     Lessor or any Affiliate of any of them or any assignee or transferee of
     any of the Owner Participant (or any Affiliate of any such transferee or
     assignee) is an "electric utility" or a "public utility" or a "public
     utility holding company" or any similar entity subject to public utility
     regulation under any Applicable Law immediately prior to the Closing,
     with respect to the participation by the Owner Participant, the Owner
     Lessor in the Overall Transaction, other than (i) any Permit where the
     failure to obtain or maintain such Permit would not be reasonably likely
     to result in a Material Adverse Effect, (ii) the FERC Orders, (iii) as
     may be required under Applicable Law providing for the supervision or
     regulation of the Owner Participant, the Owner Lessor or any Affiliate of
     any of them as a result of investing, lending or other commercial
     activity in which the Owner Participant, the Owner Lessor or any
     Affiliate of any of them is or may be engaged other than the transactions
     contemplated hereby or by any of the other Operative Documents, (iv) as
     may be required under existing Applicable Laws to be obtained, given,
     accomplished or renewed at any time, or from time to time, in each case,
     after the Closing Date and which the Facility Lessee has no reason to
     believe will not be timely obtained and the lack of which would not
     reasonably be expected to have a Material Adverse Effect or involve any
     danger of criminal or material civil liability being incurred by the
     Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
     Through Trustees, (v) in connection with any modification to or
     rebuilding or replacement of the Facility or any portion thereof that may
     occur in the future, (vi) as may be required in connection with any
     refinancing of the Lessor Notes or the Certificates or the issuance of
     Additional Lessor Notes or Additional Certificates, (vii) as may be
     required in consequence of any transfer of the Member Interest or any
     transfer of the Undivided Interest or the Owner Lessor's Interest, or any
     part thereof by the Owner Lessor or the exercise by any such party of
     dispossessory remedies under the Operative Documents or any
     relinquishment of the use or operation of the Facility by the Facility
     Lessee, (viii) appropriate filing and recording to perfect the Lien of
     the Collateral Trust Indenture, if required, and the ownership and

                                      7

<PAGE>

     leasehold interests conveyed pursuant to this Agreement, or (ix) as may
     be required under any Applicable Law enacted or adopted after the date
     hereof.

Litigation. There is no pending or, to the Actual Knowledge of the Facility
     Lessee, threatened, action, suit, investigation or proceeding against
     the Facility Lessee or any other Calpine Party before any Governmental
     Entity which (i) questions the validity of the Operative Documents or the
     ability of the Facility Lessee or such other Calpine Party to perform its
     obligations under the Operative Documents to which the Facility Lessee or
     such other Calpine Party is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to have a Material Adverse
     Effect or otherwise materially adversely affect the Undivided Interest
     leased by the Facility Lessee.

No Defaults. Neither the Facility Lessee nor any other Calpine Party is in
     default, and no condition exists that with notice or lapse of time or
     both would constitute a default, under any mortgage, indenture or other
     contract, agreement or instrument to which the Facility Lessee or such
     other Calpine Party is a party or by which the Facility Lessee or such
     other Calpine Party or its property is bound in any such case where any
     such default, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

Location of Chief Executive Office and Principal Place of Business, etc.   (1)
     The chief executive office and principal place of business of the Facility
     Lessee and the office where the Facility Lessee keeps its company records
     concerning the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site and the Operative Documents is located at: c/o Calpine
     Corporation, 50 West San Fernando Street, 5th Floor, San Jose, CA 95113.

          (2)   The Facility is located on the Facility Site.

          (3)   The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in connection with
the Closing Appraisal.

Title; Liens. (1)   On and before the Closing Date, the Facility Lessee has (i)
     good and valid title to the Facility, free and clear of all Liens other
     than Permitted Closing Date Liens, and (ii) good and valid title to the
     Facility Site free and clear of all Liens other than Permitted Closing
     Date Liens.

          (2)   Upon execution and delivery of the Operative Documents and
recording or filing (as appropriate) of the instruments and documents referred
to in Part I of Schedule 4.20 in accordance with Section 4.20, (A) good and
valid title to the Undivided Interest will be duly, validly and effectively
conveyed and transferred to the Owner Lessor free and clear of all Liens other
than Permitted Closing Date Liens, and (B) good and valid leasehold interest in
the Ground Interest will be duly, validly and effectively granted to the Owner
Lessor upon the terms and conditions in the corresponding Facility Site Lease,
free and clear of all Liens other than Permitted Closing Date Liens.

          (3)   When duly authorized, executed and delivered by each of
the parties thereto, the Collateral Trust Indenture will create a valid and,
when the filings and recordings to be made pursuant to Section 4.20 have been
made, first priority perfected Lien in favor of the Indenture Trustee in the
Indenture Estate and no filing, recording, registration or notice with, or

                                      8

<PAGE>

payment of any fees to, any federal or state Governmental Entity will be
necessary to establish or, except for such filings and recordings as will be
made pursuant to Section 4.20, to perfect, or give record notice of, the Lien
in favor of the Indenture Trustee in the Indenture Estate to the extent such
Lien may be perfected by filings or recordings.

          (4)   None of the Permitted Encumbrances will, on and after the
Closing, interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents) or the use of or the exercise by the
Owner Lessor of its rights under the Bill of Sale or the Facility Site Lease or
the Facility Lease, in a manner which could reasonably be expected to have a
Material Adverse Effect.

Regulation U, etc. No Calpine Party is engaged principally, or as one of its
     principal activities, in the business of extending credit for the
     purpose of purchasing or carrying margin stock (as defined in Regulations
     T, U or X of the Federal Reserve Board), and no part of the proceeds of
     Lessor Notes or the Equity Investment will be used by any Calpine Party,
     directly or indirectly, for the purpose of buying or carrying any margin
     stock within the meaning of Regulation U of the Board of Governors of the
     Federal Reserve System (12 CFR 221), or for the purpose of buying or
     carrying or trading in any securities under such circumstances as to
     involve such Person in a violation of Regulation X of said Board (12 CFR
     224) or to involve any broker or dealer in a violation of Regulation T of
     said Board (12 CFR 220).

Holding Company Act. The Facility Lessee is not an "electric utility company," a
     "holding company", a "subsidiary company" of a "holding company" or an
     "affiliate" of a "holding company" within the meaning of the Holding
     Company Act, and the execution, delivery and performance of the Operative
     Documents to which the Facility Lessee is or will be a party will not
     subject the Facility Lessee to such regulation under the Holding Company
     Act and do not violate any provision of the Holding Company Act or any
     rule or regulation thereunder.

Investment Company Act. The Facility Lessee is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

Securities Act. Neither the Facility Lessee nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same, in any such case, in violation of the
     registration requirements of Section 5 of the Securities Act.

Environmental Matters. Except as set forth in Schedule 3.1(m):

          (1)   The Facility Lessee has not received or has Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility, or the Facility Site; (ii) the

                                      9

<PAGE>

Facility Lessee or any other Calpine Party is or is asserted to be liable, in
whole or in part, for the costs of cleaning up, remedying or responding at any
location (including any location at which any Hazardous Substances have been
generated, stored, treated or disposed by or on behalf of the Facility Lessee
or such other Calpine Party) to a Release or threatened Release of any
Hazardous Substance generated, used or stored at or Released in, on, under or
from the Facility or the Facility Site; (iii) the Facility or the Facility Site
is subject to a Lien in favor of any Governmental Entity in response to a
Release or threatened Release of Hazardous Substances or (iv) the Facility or
the Facility Site is or is asserted to be in violation of or not in compliance
with any Environmental Law, in any case with respect to clauses (ii), (iii) or
(iv), which could reasonably be expected to have a Material Adverse Effect;

          (2)   The Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and

          (3)   To the Facility Lessee's Actual Knowledge, there is not
and has not been any Environmental Condition (A) at, on, under or from the
Facility or the Facility Site, or (B) at, on, under or from any other location
resulting from or arising in connection with the operation by any Person of the
Facility or the Facility Site, that in each case could reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, such Facility
or the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or, maintenance of the Facility or
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the Lessor
Manager, the Indenture Trustee or the Pass Through Trustees.

          (4)   All environmental permits necessary to own, operate, lease
or maintain the Facility and the Facility Site in accordance with the Operative
Documents and the Ownership and Operation Agreement and Environmental Laws have
been obtained on behalf of the Owner Lessor or by the Facility Lessee and they
are final, in proper form, and in full force and effect, with all appeal
periods expired, and the Facility Lessee is in compliance with the provisions
of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits would not reasonably be expected
to have a Material Adverse Effect or involve any danger of (i) foreclosure,
sale, forfeiture or loss of, or imposition of a material lien on, the Facility
or the Facility Site, (ii) the impairment of the ownership (or leasehold or
easement interest in), use, operation or maintenance of the Facility or the
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the
Indenture Trustee, the Lessor Manager, the Pass Through Trustees or the
Certificateholders.

Operation and Use. Assuming the Facility will continue to be operated
     substantially as operated as of the Closing Date, the rights and
     interests to be possessed on the Closing Date by the Facility Lessee with
     respect to the Undivided Interest and the Ground Interest and based upon
     the Facility Lessee's reasonable expectations and on Applicable Law in
     effect on and as of the Closing Date, the rights and interests made
     available to the Owner Lessor pursuant to the Operative Documents and the
     rights contemplated by the Facility Lease to be made available under such
     Operative Documents, permit on a commercially practicable basis

                                      10

<PAGE>

     during the Facility Lease Term and the period following the expiration or
     termination of the Facility Lease Term, as applicable, until the end of
     the Facility's useful life as set forth in the Closing Appraisal, (i) the
     location, occupation, interconnection, maintenance and repair of each
     Facility, (ii) the use, operation and possession of the Facility, (iii)
     as of the Closing Date, the use, operation, possession, maintenance,
     replacement, renewal and repair of all Improvements required to be made
     to the Facility, (iv) adequate ingress to and egress from the Facility in
     connection with the ownership, use, operation, possession, maintenance or
     repair of the Facility and (v) the transmission of electricity from the
     Facility substantially in the manner currently transmitted as of the
     Closing Date.

Tax Returns. The Facility Lessee and each other Calpine Party has filed all
     federal, state and local income tax returns which are required to be
     filed by it and has paid all Taxes shown to be due and payable on such
     returns or pursuant to any assessment received by it (other than Taxes
     and assessments the payment of which is being contested in good faith by
     such Person and with respect to which appropriate accounting reserves
     have to the extent required by GAAP been set aside) and neither the
     Facility Lessee nor any other Calpine Party has any Actual Knowledge of
     any actual or proposed assessment in connection therewith which, either
     in any case or in the aggregate, would reasonably be expected to have a
     Material Adverse Effect.

Jurisdiction. In accordance with Section 14.14 hereof, the Facility Lessee has
     validly submitted to the jurisdiction of the Supreme Court of the State
     of New York, New York County and the United States District Court for the
     Southern District of New York.

Applicable Law. The Facility Lessee is in compliance with all Applicable Law,
     including all applicable zoning, use and building codes, laws,
     regulations and ordinances relating to the operations, maintenance, use,
     lease or ownership of the Facility and the Facility Site, except where
     the noncompliance would not reasonably be expected to have a Material
     Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture
     or loss of, or imposition of a material lien on, the Facility or the
     Facility Site, (ii) the impairment of the ownership (or leasehold or
     easement interest in), use, operation or maintenance of the Facility or
     the Facility Site in any material respect, or (iii) any criminal or
     material civil liability being incurred by the Owner Participant, the
     Owner Lessor, the Lessor Manager, the Indenture Trustee or the Pass
     Through Trustees, including subjecting the Owner Participant or the Owner
     Lessor to regulation as a public utility under Applicable Law. None of
     the Calpine Parties is in default of any judgments, orders or decrees of
     any Governmental Entity relating to such Facility or the Facility Site.

ERISA. Assuming the accuracy of the representations of the other parties hereto
     and the Certificateholders in the Certificates, the execution and
     delivery of the Operative Documents and the issuance and sale of the
     Lessor Notes under the Collateral Trust Indenture and the Certificates
     under the Pass Through Trust Agreements will be exempt from, or will not
     involve any transaction which is subject to, the prohibitions of either
     Section 406 of ERISA or Section 4975 of the Code and will not involve any
     transaction in connection with which a penalty could be imposed under
     Section 502(i) of ERISA or a tax could be imposed pursuant to Section
     4975 of the Code.

                                      11

<PAGE>

Insurance. All insurance required to be obtained pursuant to Schedule 5.31 is
     in full force and effect.

No Default; No Event of Loss; Burdensome Buyout. No Lease Default or Lease
     Event of Default, exists or will exist upon execution and delivery of
     the Operative Documents. No Event of Loss exists or will exist upon the
     execution and delivery of the Operative Documents. To the Actual
     Knowledge of the Facility Lessee, no Burdensome Buyout Event has occurred
     or will occur upon the execution and delivery of the Operative Documents
     and the Facility Lessee does not have Actual Knowledge of any event that
     could reasonably be expected to result in a Burdensome Buyout Event.

Special Assessments. There is no action pending or, to the Facility Lessee's
     Actual Knowledge, threatened by a Governmental Entity or other Person to
     specially assess the Facility or the Facility Site for any public
     improvements constructed or to be constructed which would reasonably be
     expected to have a Material Adverse Effect.

Utility Services. The Facility and the Facility Site have available all services
     of public utilities necessary for use and operation of the Facility as
     currently being used and as contemplated by the applicable Operative
     Documents, except where the failure to have any such services or public
     utilities available would not result in a material adverse effect with
     respect to the Facility.

Eminent Domain. There is no action pending with respect to, or threatened by a
     Governmental Entity or other Person to initiate, a Requisition of any of
     the Undivided Interest, the Facility, the Ground Interest or the Facility
     Site, which would reasonably be expected to have a Material Adverse
     Effect.

Permitted Liens. There are no violations or proceedings or actions pending or
     threatened, with respect to any easements, reciprocal easement
     agreements, declarations, development agreements or recorded restrictions
     or covenants relating to the Facility or the Facility Site, which would
     reasonably be expected to have a Material Adverse Effect.

Access; Egress. Access to and egress from the Facility and the Facility Site is
     available and provided by public streets and/or private roads fully
     accessible by the Facility Lessee. To the Facility Lessee's Actual
     Knowledge, there are no plans of any Governmental Entity to change the
     highway or road system in the vicinity of the Facility or the Facility
     Site, or to restrict or change access from any such highway or road to
     the Facility or the Facility Site, in either case, in any manner which
     would reasonably be expected to have a Material Adverse Effect.

Notices. To the Facility Lessee's Actual Knowledge, (i) there are no outstanding
     written notices from any Governmental Entity of any violation of, or
     that the Facility or Facility Site is not in compliance with, any and all
     Applicable Laws relating to the Facility and Facility Site or the
     ownership, use, occupancy and operation thereof and (ii) there are no
     outstanding written notices that any repairs or work or capital
     improvements are required to be done at or with respect to the Facility
     or Facility Site by any Governmental Entity or by any insurance company
     which currently issues any insurance to the Facility Lessee or by any
     board of fire

                                      12

<PAGE>

     underwriters or other body exercising similar functions, except, in
     either case with respect to (i) or (ii) above, where such violation,
     noncompliance or repairs could not reasonably be expected to have a
     Material Adverse Effect.

Business. The Facility Lessee has not conducted any business other than the
     acquisition, construction, development, ownership, operation,
     maintenance, leasing and financing of the Facility and Facility Site and
     activities incidental thereto.

Intellectual Property. To the Actual Knowledge of the Facility Lessee, the
     Facility Lessee has the right to use all patents, trademarks, service
     marks, trade names, copyrights, licenses and other rights which are
     necessary for the operation of its business as presently conducted and to
     transfer all such rights to the Owner Lessor subsequent to termination of
     the Facility Lease, except to the extent failure to possess such rights
     would not reasonably be likely to result in a Material Adverse Effect.

Land Not in Flood Zone. No portion of the Facility or the Facility Site includes
     improved real property that is located in an area that has been
     identified by the Director of the Federal Emergency Management Agency as
     an area having special flood hazards and in which flood insurance has
     been made available under the National Flood Insurance Act of 1968, as
     amended.

No Fraudulent Conveyances. The Facility Lessee is consummating the
     transactions contemplated hereby (including the transfer of certain of
     its assets and properties to the Owner Lessor) in good faith and without
     any intent to defraud creditors of the Facility Lessee or subsequent
     purchasers. The execution and delivery of the Operative Documents to
     which the Facility Lessee is a party will not render the Facility Lessee
     insolvent under GAAP or leave the Facility Lessee with assets whose
     present fair valuation of assets is less than the present fair valuation
     of the Facility Lessee's debts. As used in this Section 3.1(dd), "debts"
     includes any and all liabilities, whether matured or unmatured,
     liquidated or unliquidated, absolute, fixed or contingent, and whether or
     not such liabilities are required under GAAP to be shown on the Facility
     Lessee's balance sheet. The execution and delivery of the Operative
     Documents to which the Facility Lessee is a party will not leave it with
     property remaining in its hands which would constitute unreasonably small
     assets or capital, and the Facility Lessee has and, after giving effect
     to such transactions will have, an adequate amount of assets and capital
     to engage in its business now and in the future, based on the actual and
     anticipated needs for capital of the businesses anticipated to be
     conducted by the Facility Lessee, and based upon the other information
     described herein. After giving effect to the transactions contemplated
     under the Operative Documents, the Facility Lessee will be able to pay
     all of its debts and liabilities, including unrecorded contingent
     liabilities, as they mature, the Facility Lessee will have positive cash
     flow after paying all of its scheduled and anticipated debt as it
     matures, and the Facility Lessee will realize sufficient monies from
     current assets in the ordinary and usual course of business to pay
     recurring current debt, short-term debt and long-term debt as such debts
     mature.

No Additional Fees. Except for the fees referred to in clause (xiv) and (xv)
     of the definition of Transaction Costs, the Facility Lessee has not paid
     or become obligated to pay any fee or

                                      13

<PAGE>

     commission to any broker, finder or intermediary for or on account of
     arranging the financing of the transactions contemplated by the Operative
     Documents.

Status under Certain Statutes. Neither the Facility Lessee, the Owner
     Participant, the Owner Lessor, The Lessor Manager, the Indenture
     Trustee, the Pass Through Trustees nor any Certificateholder solely as a
     result of execution, delivery and performance of, and the consummation of
     the transactions contemplated by the Operative Documents shall be or
     become (i) subject to regulation as a "public utility company," "holding
     company," an "affiliate" of a "holding company" or a "subsidiary company"
     of a "holding company" within the meaning of PUHCA or (ii) a "public
     utility" (except that the Facility Lessee will be a public utility
     subject to the Federal Power Act with authority to sell wholesale
     electricity at market-based rates and with waivers of regulations
     customarily granted to a public utility that sells wholesale power at
     market-based rates), a "transmitting utility," or an "electric utility"
     within the meaning of the Federal Power Act, (iii) subject to state
     regulation of rates or organizational requirements for electric utilities.

Material Omission. Neither the Offering Circular (including any preliminary
     offering circular approved by the Facility Lessee for distribution) nor
     the written information furnished to the Owner Lessor, the Owner
     Participant, the Lessor Manager, the Indenture Trustee and the Pass
     Through Trustees by or on behalf of the Facility Lessee or any of its
     Affiliates in connection with the transactions contemplated hereby
     contains any untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements contained
     therein, in light of the circumstances under which they were made, not
     misleading; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Facility Lessee, or (ii) the descriptions
     of the Operative Documents or the tax consequences to beneficial owners
     of Certificates; provided, further, each of the Transaction Parties
     acknowledge and agrees that (i) Calpine has heretofore provided to the
     Appraiser, solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Wisconsin energy markets and (3)
     information passed along from other Persons and (ii) that the Facility
     Lessee makes no representation or warranty whatsoever with respect to the
     information described in clause (i) above except to the extent expressly
     set forth in Section 4(b) of the Tax Indemnity Agreement.

Exempt Wholesale Generator. The Facility Lessee is an "exempt wholesale
     generator" under PUHCA. The Facility is interconnected with the high
     voltage network operated by American Transmission Company and has access
     to transmission services and ancillary services sufficient to sell the
     net generating capacity of the Facility at wholesale, and the Facility
     Lessee has the authority to sell wholesale electric power from the net
     generating capacity of such generating Facility at market-based rates.

FERC Orders. The Facility Lessee has duly filed with FERC the filings referenced
     in Section 4.8 and, except with respect to the FERC Owner Lessor EWG
     Orders and the FERC Orders referred to in clause (v) of the definition of
     "FERC Orders" in Appendix A hereto, received from FERC the orders
     referenced therein.

                                      14

<PAGE>

Fully Taxable. As of the Closing Date, each Person owning an Ownership Interest
     (i) is fully taxable at the highest federal tax rate and (ii) expects to
     be fully taxable at the highest federal tax rate throughout the Facility
     Lease Term; for the avoidance of doubt, this representation is not
     intended to be construed as nor shall it be deemed to be a guaranty as to
     any such Person's future taxation.

Commencement of Commercial Operations and Compliance. To the knowledge of the
     Facility Lessee, the Facility has commenced commercial operations and is
     currently capable of producing at least 520 MW of capacity and complies
     in all material respects with the other specifications set forth in the
     purchase and construction contracts for the Facility.

Representations and Warranties of the Owner Lessor. The Owner Lessor represents
and warrants that as of the date of execution and delivery hereof and as of the
Closing Date:

Due Organization. The Owner Lessor is a duly organized and validly existing
     limited liability company under the laws of the State of Delaware of
     which the Owner Participant is the sole member, and has the power and
     authority to enter into and perform its obligations under this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement and each of the
     other Operative Documents (other than the Lessor Notes) to which the
     Owner Lessor is or will be a party has been or when executed and
     delivered will be duly authorized, executed and delivered by the Owner
     Lessor, and (ii) assuming the due authorization, execution and delivery
     of this Agreement by each party hereto other than the Owner Lessor, this
     Agreement constitutes and when executed and delivered each of the other
     Operative Documents (other than the Lessor Notes) to which it is or will
     be a party will be the legal, valid and binding obligations of the Owner
     Lessor, enforceable against the Owner Lessor in accordance with its
     terms, except as the same may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     the rights of creditors generally and by general principles of equity.

          (2)   Upon the execution of the Lessor Notes by the Owner Lessor
in accordance with the Collateral Trust Indenture and delivery of such Lessor
Notes against payment therefor, the Lessor Notes will constitute legal, valid
and binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.

Non-Contravention. The execution and delivery by the Owner Lessor of this
     Agreement and the other Operative Documents to which it is or will be a
     party, the consummation by the Owner Lessor of the transactions
     contemplated hereby and thereby, and the compliance by the Owner Lessor
     with the terms and provisions hereof and thereof, do not and will not
     contravene any Applicable Law of the United States of America or the
     State of Delaware, or the LLC Agreement or the Owner Lessor's other
     organizational documents or contravene the provisions of, or constitute a
     default by the Owner Lessor under any indenture, mortgage or other
     material contract, agreement or instrument to which the Owner Lessor is a
     party or by which the Owner Lessor or its property is bound, or in the
     creation of any Owner Lessor's

                                      15

<PAGE>

     Lien; provided, however, that no representation is made with respect to
     the right, power or authority of the Owner Lessor to act as operator of
     the Facility following a Lease Event of Default or the expiration or
     termination of the Facility Lease.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Lessor, as the case may be, of the LLC
     Agreement, the Collateral Trust Indenture, the Lessor Notes, this
     Agreement or the other Operative Documents to which the Owner Lessor is
     or will be a party, other than any such authorization or approval or
     other action or notice or filing as has been duly obtained, taken or
     given.

Litigation. There is no pending or, to the Actual Knowledge of the Owner Lessor,
     threatened, action, suit, investigation or proceeding against the Owner
     Lessor before any Governmental Entity which (i) questions the validity of
     the Operative Documents or the ability of the Owner Lessor to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if determined adversely to it, could reasonably be expected
     to materially adversely affect the ability of the Owner Lessor to perform
     its obligations under this Agreement or any other Operative Document to
     which it is or will be a party or would materially adversely affect the
     Facility, the Facility Site or any interest therein or part thereof or
     the Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Owner Lessor's right, title and interest in and to the Lessor Estate
     is free of all Owner Lessor's Liens.

Location of Registered Office; Location of Corporate Records. The registered
     office of the Owner Lessor is 1209 Orange Street, Wilmington, Delaware
     19801, and the Owner Lessor will keep its corporate records concerning
     the Facility, the Facility Site, the Operative Documents and the South
     Point Ground Lease with the Lessor Manager, at the Lessor Manager's
     address set forth in Section 14.5 hereof.

Securities Act. Neither the Owner Lessor nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the Member Interest, the Lessor Notes or the Certificates or
     any part thereof or solicited any offer to acquire any of the same in
     violation of the registration requirements of Section 5 of the Securities
     Act.

Representations and Warranties of the Lessor Manager and the Trust Company. The
Trust Company (only with respect to representations and warranties expressly
relating to the Trust Company) and the Lessor Manager hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Trust Company is national banking association duly
     organized and validly existing and in good standing under the laws of
     the United States, has the corporate

                                      16

<PAGE>

     power and authority, as Lessor Manager and/or in its individual capacity
     to the extent expressly provided herein or in the LLC Agreement, to enter
     into and perform its obligations under the LLC Agreement, this Agreement
     and each of the other Operative Documents to which it is a party.

Due Authorization, Enforceability; etc. (1) (i) The LLC Agreement has been duly
     authorized, executed and delivered by the Trust Company, and (ii)
     assuming the due authorization, execution and delivery of the LLC
     Agreement by the Owner Participant, the LLC Agreement constitutes the
     legal, valid and binding obligation of the Trust Company, enforceable
     against it in its individual capacity or as Lessor Manager, as the case
     may be, in accordance with its terms, except as may be limited by
     bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principals of equity.

          (2)   Execution. This Agreement and each of the other Operative
Documents to which the Trust Company or the Lessor Manager is or will be a
party has been or when executed and delivered will be duly authorized, executed
and delivered by the Trust Company or the Lessor Manager, and (ii) assuming the
due authorization, execution and delivery of this Agreement by each party
hereto other than the Trust Company or the Lessor Manager, this Agreement
constitutes and when executed and delivered each of the other Operative
Documents to which it is or will be a party will be the legal, valid and
binding obligations of the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, enforceable against the Lessor
Manager and, to the extent expressly provided herein, the Trust Company, in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement and the other Operative Documents to which it
     is or will be a party, the consummation by the Trust Company, in its
     individual capacity or as Lessor Manager, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Trust Company, in its individual capacity or as Lessor Manager, as the
     case may be, with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law of the State of Utah governing the
     Trust Company or any United States federal law governing the banking or
     trust powers of the Trust Company, or the LLC Agreement or its
     organizational documents or bylaws or contravene the provisions of, or
     constitute a default by the Trust Company under any indenture, mortgage
     or other material contract, agreement or instrument to which the Trust
     Company is a party or by which the Trust Company or its property is
     bound, or in the creation of any Owner Lessor's Lien; provided, however,
     that no representation is made with respect to the right, power or
     authority of the Trust Company or the Lessor Manager to act as operator
     of the Facility following a Lease Event of Default.

Governmental Actions. Assuming the representations and warranties of the
     Facility Lessee contained in paragraphs (j), (k), (l), (m), (q), (z),
     (ff) and (hh) of Section 3.1 are true, no authorization or approval or
     other action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the

                                      17

<PAGE>

     Trust Company or the Lessor Manager, as the case may be, of the LLC
     Agreement, this Agreement or the other Operative Documents to which the
     Trust Company or the Lessor Manager is or will be a party, other than any
     such authorization or approval or other action or notice or filing as has
     been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Trust
     Company, threatened, action, suit, investigation or proceeding against
     the Trust Company either in its individual capacity or as Lessor Manager,
     as the case may be, before any Governmental Entity which (i) questions
     the validity of the Operative Documents or the ability of the Owner
     Lessor to perform its obligations under the Operative Documents to which
     it is or will be a party or (ii) if determined adversely to it, could
     reasonably be expected to materially adversely affect the ability of the
     Trust Company either in its individual capacity or as Lessor Manager, as
     the case may be, to perform its obligations under the LLC Agreement, this
     Agreement or any other Operative Document to which it is or will be a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the Lien of the Indenture
     Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Lessor's Liens attributable to
     the Trust Company, in its individual capacity, or the Lessor Manager.

Securities Act. Neither the Trust Company, the Lessor Manager nor anyone
     authorized by either of such Persons has directly or indirectly offered
     or sold any interest in the Member Interest, the Lessor Notes or the
     Certificates or any part thereof, or in any similar security or lease,
     the offering of which, for the purposes of the Securities Act, would be
     deemed to be part of the same offering as the offering of the Member
     Interest, the Lessor Notes or the Certificates or any part thereof or
     solicited any offer to acquire any of the same in violation of the
     registration of Section 5 of the Securities Act.

Representations and Warranties of the Owner Participant. The Owner Participant
represents and warrants that as of the date of execution and delivery hereof
and as of the Closing Date:

Due Organization. The Owner Participant is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware and has the power and authority to enter into and
     perform its obligations under this Agreement, the LLC Agreement and the
     Tax Indemnity Agreement. The Owner Participant is a direct wholly owned
     subsidiary of Newcourt Capital USA Inc.

Due Authorization, Enforceability; etc. This Agreement, the LLC Agreement and
     the Tax Indemnity Agreement have been or when executed and delivered
     will be duly authorized, executed and delivered by the Owner Participant
     and assuming the due authorization, execution and delivery by each other
     party thereto, this Agreement, the LLC Agreement, the Tax Indemnity
     Agreement and any other Operative Document to which the Owner Participant
     is or will be a party constitute or when executed and delivered will
     constitute the legal, valid and binding obligations of the Owner
     Participant, enforceable against the Owner Participant in accordance with
     their respective terms, except as the same may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the rights of creditors generally and by general principles of
     equity.

                                      18

<PAGE>

Non-Contravention. The execution and delivery by the Owner Participant of this
     Agreement, the LLC Agreement, the Tax Indemnity Agreement and any other
     Operative Document to which the Owner Participant is or will be a party,
     the consummation by the Owner Participant of the transactions
     contemplated hereby and thereby, and the compliance by the Owner
     Participant with the terms and provisions hereof and thereof, do not and
     will not contravene any Applicable Law binding on the Owner Participant,
     or its organizational documents, or contravene the provisions of, or
     constitute a default under any indenture, mortgage or other material
     contract, agreement or instrument to which the Owner Participant is a
     party or by which the Owner Participant or its property is bound or
     result in the creation of any Owner Participant's Lien (other than any
     Lien created under any Operative Document) upon the Lessor Estate, the
     Facility Site or any interest therein or part thereof (it being
     understood that no representation or warranty is being made as to (i) any
     Applicable Laws relating to the particular nature of the Facility or the
     Facility Site or (ii) other than its representations set forth in Section
     3.4(g), ERISA or Section 4975 of the Code).

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and
     (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity is required for the due execution, delivery or
     performance by the Owner Participant of this Agreement, the LLC
     Agreement, the Tax Indemnity Agreement or any other Operative Document to
     which the Owner Participant is or will be a party, other than any
     authorization or approval or other action or notice or filing as has been
     duly obtained, taken or given (it being understood that no representation
     or warranty is being made as to any Applicable Laws relating to the
     Facility or the Facility Site).

Litigation. There is no pending or, to the Actual Knowledge of the Owner
     Participant, threatened, action, suit, investigation or proceeding
     against the Owner Participant before any Governmental Entity which (i)
     questions the validity of the Operative Documents or the ability of the
     Owner Participant to perform its obligations under the Operative
     Documents to which it is or will be a party or (ii) if determined
     adversely to it, could reasonably be expected to materially adversely
     affect the ability of the Owner Participant to perform its obligations
     under the LLC Agreement, this Agreement or any other Operative Document
     to which it is or will be a party or would materially adversely affect
     the Facility, the Facility Site or any interest therein or part thereof
     or the Lien of the Indenture Trustee on the Indenture Estate.

Liens. The Lessor Estate is free of any Owner Participant's Liens.

ERISA. No part of the funds to be used by the Owner Participant to make its
     investment pursuant to this Agreement, directly or indirectly,
     constitutes or is deemed to constitute assets (within the meaning of
     ERISA and any applicable rules, regulations and court decisions
     thereunder) of any "employee benefit plan" (as defined in Section 3(3) of
     ERISA) that is subject to ERISA, of any Transaction Party and ERISA
     Affiliate thereof.

Acquisition for Investment. The Owner Participant is purchasing the Member
     Interest to be acquired by it for its own account with no present
     intention of distributing such Member Interest or any part thereof in any
     manner which would require registration under or would

                                      19

<PAGE>

     violate the Securities Act, but without prejudice, however, to the right
     of the Owner Participant at all times to sell or otherwise dispose of all
     or any part of such Member Interest under an exemption from registration
     available under such Act.

Securities Act. Neither the Owner Participant nor anyone authorized by it has
     directly or indirectly offered or sold any interest in the Member
     Interest, the Lessor Notes or the Certificates or any part thereof, or in
     any similar security or lease, or in any security or lease the offering
     of which for the purposes of the Securities Act would be deemed to be
     part of the same offering as the offering of the Member Interest, the
     Lessor Notes or the Certificates or any part thereof or solicited any
     offer to acquire any of the same in violation of the registration
     requirements of Section 5 of the Securities Act.

Holding Company Act and Federal Power Act. Immediately prior to executing this
     Agreement, the Owner Participant is not an "electric utility", "electric
     utility company", "public utility", "public-utility company", "holding
     company" or a "subsidiary company" or "affiliate" of any of the
     foregoing, under the Federal Power Act or the Holding Company Act.

Investment Company Act. The Owner Participant is not an "investment company" or
     a company controlled by an "investment company" within the meaning of
     the Investment Company Act of 1940.

Regulatory Event of Loss. The Owner Participant is not aware of any fact or
     circumstance that would constitute a Regulatory Event of Loss.

Representations and Warranties of Indenture Trustee and the Lease Indenture
Company. The Lease Indenture Company and the Indenture Trustee hereby severally
represent and warrant that as of the date of execution and delivery hereof and
as of the Closing Date:

Due Organization. The Lease Indenture Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Indenture
     Trustee and/or in its individual capacity to the extent expressly
     provided herein or in the Collateral Trust Indenture, to enter into and
     perform its obligations under the Collateral Trust Indenture, this
     Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc. (1) (i) This Agreement has been duly
     authorized, executed and delivered by the Indenture Trustee and the
     Lease Indenture Company, and (ii) assuming the due authorization,
     execution and delivery of this Agreement by each party hereto other than
     the Indenture Trustee and the Lease Indenture Company, this Agreement
     constitutes a legal, valid and binding obligation of the Lease Indenture
     Company and the Indenture Trustee, enforceable against the Lease
     Indenture Company or the Indenture Trustee, as the case may be, in
     accordance with its terms, except as the same may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting the rights of creditors generally and by general
     principles of equity.

          (2)   (i) Each of the other Operative Documents to which the
Indenture Trustee is or will be a party has been or when executed and delivered
will be duly authorized, executed and delivered by the Indenture Trustee, and
(ii) assuming the due authorization, execution and

                                      20

<PAGE>

delivery of each of the other Operative Documents by each party thereto other
than the Indenture Trustee, each of the other Operative Documents to which the
Indenture Trustee is or will be a party constitutes or when executed and
delivered will be a legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Lease Indenture Company, in
     its individual capacity or as Indenture Trustee, as the case may be, of
     this Agreement and the other Operative Documents to which it is or will
     be a party, the consummation by the Lease Indenture Company, in its
     individual capacity or as Indenture Trustee, as the case may be, of the
     transactions contemplated hereby and thereby, and the compliance by the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, with the terms and provisions hereof and
     thereof, do not and will not contravene any Applicable Law of the State
     of Connecticut or the United States of America governing the Lease
     Indenture Company or the banking or trust powers of the Lease Indenture
     Company, or its articles of association or by-laws, or contravene the
     provisions of, or constitute a default by the Lease Indenture Company
     under or pursuant to any indenture, mortgage or other material contract,
     agreement or instrument to which the Lease Indenture Company is a party
     or by which the Lease Indenture Company or its property is bound, or
     result in the creation of any Lien attributable to the Lease Indenture
     Company upon the Indenture Estate, the Facility Site or any interest
     therein or any part thereof (other than the Lien of the Collateral Trust
     Indenture), which would materially adversely affect the ability of the
     Lease Indenture Company, in its individual capacity or as Indenture
     Trustee, as the case may be, to perform its obligations under this
     Agreement or the other Operative Documents to which it is or will be a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     the Indenture Trustee in the Indenture Estate; provided, however, that no
     representation or warranty is made with respect to the right, power or
     authority of the Lease Indenture Company or the Indenture Trustee to act
     as operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and
     (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity of the State of Delaware or of the United State of
     America governing its banking or trust powers is required for the due
     execution, delivery or performance by the Lease Indenture Company or the
     Indenture Trustee, as the case may be, of this Agreement or the other
     Operative Documents to which the Indenture Trustee is or will be a party,
     other than any such authorization or approval or other action or notice
     or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the Actual Knowledge of the Lease
     Indenture Company, threatened, action, suit, investigation or proceeding
     against the Lease Indenture Company before any Governmental Entity which
     (i) questions the validity of the Operative Documents or the ability of
     the Lease Indenture Company or the Indenture Trustee to perform its
     obligations under the Operative Documents to which it is or will be a
     party or (ii) if

                                      21

<PAGE>

     determined adversely to it, could reasonably be expected to materially
     adversely affect the ability of the Lease Indenture Company to perform
     its obligations under this Agreement or any other Operative Document to
     which it is or will be a party or could reasonably be expected to
     materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the Lien of the Indenture Trustee on
     the Indenture Estate.

Representations, Warranties and Covenants of the Pass Through Trustees and the
     Pass Through Company. The Pass Through Company and the Pass Through
     Trustees hereby severally represent and warrant that as of the date of
     execution and delivery hereof and as of the Closing Date:

Due Organization. The Pass Through Company is a national banking association
     duly organized, validly existing and in good standing under the laws of
     the United States, has the corporate power and authority, as Pass Through
     Trustee and/or in its individual capacity to the extent expressly
     provided herein or in the Pass Through Trust Agreements, to enter into
     and perform its obligations under the Pass Through Trust Agreements, this
     Agreement and each of the other Operative Documents to which it is or
     will be a party.

Due Authorization, Enforceability; etc.

(A)  This Agreement has been duly authorized, executed and delivered by the Pass
     Through Trustees and the Pass Through Company and (B) assuming the due
     authorization, execution and delivery of this Agreement by each party
     hereto other than each Pass Through Trustee and the Pass Through Company,
     as the case may be, this Agreement constitutes a legal, valid and binding
     obligation of the Pass Through Company and each Pass Through Trustee,
     enforceable against the Pass Through Company or each Pass Through
     Trustee, as the case may be, in accordance with its terms, except as the
     same may be limited by bankruptcy, insolvency, fraudulent conveyance,
     reorganization, arrangement, moratorium or other laws relating to or
     affecting the rights of creditors generally and by general principles of
     equity.

(A)  Each of the other Operative Documents to which the Pass Through Company or
     any Pass Through Trustee is or will be a party has been or when executed
     and delivered will be duly authorized, executed and delivered by the Pass
     Through Company or such Pass Through Trustee, as the case may be, and (B)
     assuming the due authorization, execution and delivery of each of the
     other Operative Documents by each party thereto other than the Pass
     Through Company or such Pass Through Trustee, as the case may be, each of
     the other Operative Documents to which the Pass Through Company or any
     Pass Through Trustee is or will be a party constitutes or when executed
     and delivered will constitute a legal, valid and binding obligation of
     the Pass Through Company or such Pass Through Trustee, enforceable
     against the Pass Through Company or such Pass Through Trustee, as the
     case may be, in accordance with its terms, except as the same may be
     limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
     arrangement, moratorium or other laws relating to or affecting the rights
     of creditors generally and by general principles of equity.

Non-Contravention. The execution and delivery by the Pass Through Company, in
     its individual capacity or as Pass Through Trustee, as the case may be,
     of this Agreement and the other Operative Documents to which it is or
     will be a party, the consummation by the Pass

                                      22

<PAGE>

     Through Company, in its individual capacity or as Pass Through Trustee,
     as the case may be, of the transactions contemplated hereby and thereby,
     and the compliance by the Pass Through Company, in its individual
     capacity or as Pass Through Trustee, as the case may be, with the terms
     and provisions hereof and thereof, do not and will not contravene any
     Applicable Law of the United States of America or the State of
     Connecticut governing the Pass Through Company or the banking or trust
     powers of the Pass Through Company, or its organizational documents or
     by-laws, or contravene the provisions of, or constitute a default by the
     Pass Through Company under, or result in the creation of any Lien
     attributable to the Pass Through Company upon the Certificates or any
     indenture, mortgage or other material contract, agreement or instrument
     to which the Pass Through Company is a party or by which the Pass Through
     Company or its property is bound which would materially adversely affect
     the ability of the Pass Through Company, in its individual capacity or as
     Pass Through Trustee, as the case may be, to perform its obligations
     under this Agreement or the other Operative Documents to which it is a
     party or would materially adversely affect the Facility, the Facility
     Site or any interest therein or part thereof or the security interest of
     any Pass Through Trustee in the Indenture Estate; provided, however, that
     no representation is made with respect to the right, power or authority
     of the Pass Through Company or any Pass Through Trustee to act as
     operator of the Facility following a Lease Event of Default.

Governmental Action. Assuming the representations and warranties of the Facility
     Lessee contained in paragraphs (j), (k), (l), (m), (q), (z), (ff) and
     (hh) of Section 3.1 are true, no authorization or approval or other
     action by, and no notice to or filing or registration with, any
     Governmental Entity governing its banking or trust powers is required for
     the due execution, delivery or performance by the Pass Through Company or
     any Pass Through Trustee, as the case may be, of this Agreement or the
     other Operative Documents to which such Pass Through Trustee is or will
     be a party, other than any such authorization or approval or other action
     or notice or filing as has been duly obtained, taken or given.

Litigation. There is no pending or, to the knowledge of the Pass Through
     Company, threatened action, suit, investigation or proceeding against
     the Pass Through Company either in its individual capacity or as Pass
     Through Trustee, before any Governmental Entity which, if determined
     adversely to it, would materially adversely affect the ability of the
     Pass Through Company, in its individual capacity or as Pass Through
     Trustee, as the case may be, to perform its obligations under this
     Agreement or the other Operative Documents to which it is a party or
     would materially adversely affect the Facility, the Facility Site or any
     interest therein or part thereof or the security interest of any Pass
     Through Trustee in the Indenture Estate or which questions the validity
     or enforceability of any Operative Document to which the Pass Through
     Company or any Pass Through Trustee is a party.

CLOSING CONDITIONS

          The obligations of the Owner Participant, the Owner Lessor,
the Lessor Manager, the Lease Indenture Company, the Indenture Trustee, the
Pass Through Company, the Pass Through Trustees, the Guarantor and the Facility
Lessee to consummate the transactions contemplated hereby on the Closing Date
shall be subject to the following conditions, except that the obligations of
any Person shall not be subject to such Person's own performance or compliance,
and each of the Transaction Parties (other than the Certificateholders) shall
provide

                                      23

<PAGE>

such proof of satisfaction of these conditions as any other Transaction Party
shall reasonably request.

                                      24

<PAGE>

Completion of the Facility. The Facility shall have commenced commercial
operations and shall currently be capable of producing at least 520 MW of
capacity and shall comply in all material respects with the other
specifications set forth in the purchase and construction contracts for the
Facility.

Operative Documents. On or before the Closing Date, each of the Operative
Documents to be delivered at or before the Closing (as well as any other
agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the
form attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and
effect, and executed counterparts of each shall have been delivered to each of
the parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto).

Certificates and the Lessor Notes. Each of the conditions precedent contained
in the Certificate Purchase Agreement shall have been satisfied or waived by
the Initial Purchasers and such Initial Purchasers shall have purchased the
Certificates pursuant to and in accordance with, the terms of the Certificate
Purchase Agreement and the Proceeds shall have been provided to the Owner
Lessor through the purchase by the Pass Through Trustees of the applicable
Lessor Notes.

Equity Investment. The Owner Participant shall have made or caused to be made
the Equity Investment available to the Owner Lessor at the place and in the
manner contemplated by Section 2.

Organizational Documents. Each of the Transaction Parties shall have received
certified copies of the organizational documents of each of the other parties
hereto and resolutions of the board of directors of each such other corporate
party duly authorizing the transaction and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement,
the taking of all corporate and other proceedings in connection therewith and
compliance with the conditions herein or therein set forth and the incumbency
of all officers signing any of the Operative Documents. Each of the foregoing
documents shall be reasonably satisfactory to each recipient thereof.

Representations and Warranties. The representations and warranties of each
party hereto set forth in Section 3 shall be true and correct on and as of the
Closing Date with the same effect as though made on and as of the Closing Date.

Defaults, Events of Default, Events of Loss. No Lease Event of Default, Lease
Indenture Event of Default, Event of Loss or Burdensome Buyout Event or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default, Event of Loss or
Burdensome Buyout Event shall have occurred and be continuing.

Regulatory Approvals. Except with respect to the FERC Owner Lessor EWG Orders
and the FERC Orders set forth in clause (v) of the definition of "FERC Orders"
set forth in Appendix A hereto, the Owner Participant and the Pass Through
Trustees shall have received evidence of receipt of the FERC Orders.

                                      25

<PAGE>

Consents. (a) All permits, licenses, approvals and consents (including
     management, credit and other internal approvals of the Transaction
     Parties, but excluding the Third Party Consents referred to in (b) below)
     necessary to consummate the Overall Transaction and to own and operate
     the Facility as currently operated shall have been duly obtained and
     shall be in full force and effect and in the form and substance
     satisfactory to each of the Transaction Parties.

Each Third Party Consent shall have been obtained and shall be in full force and
     effect substantially in the form attached hereto as Exhibit O which is
     applicable to the relevant third party granting such consent; provided
     that if any Third Party Consent is not substantially in the form attached
     hereto as Exhibit O, an authorized officer of Calpine shall provide a
     certificate to the Owner Lessor, the Indenture Trustee and the Pass
     Through Trustee certifying that any differences between the form of such
     consent attached hereto and the executed version are not materially
     adverse to any of the Indenture Trustee, the Pass Through Trustee, the
     Noteholders, the Certificateholders or the Owner Lessor.

                                      26

<PAGE>

Governmental Actions. All actions, if any, required to have been taken by any
Governmental Entity on or prior to the Closing Date in connection with the
transactions contemplated by any Operative Document, including, without
limitation, the FERC Orders, shall have been taken and, except with respect to
the FERC Owner Lessor EWG Orders and the FERC Orders set forth in clause (v) of
the definition of "FERC Orders" set forth in Appendix A hereto, all Applicable
Permits required to be in effect on the Closing Date in connection with the
consummation of the transactions contemplated by the Operative Documents shall
have been issued and shall be in full force and effect; and all such Applicable
Permits shall be final, in full force and effect on the Closing Date.

Insurance. Insurance (including all related endorsements) complying with the
requirements of Schedule 5.31 shall be in full force and effect and all
premiums thereon shall be current. The Owner Participant, the Manager, the
Lessor Manager, the Indenture Trustee and the Pass Through Trustees shall have
received a certificate or certificates (or binders, if certificates are not
then available) dated the Closing Date of Summit Global Partners Insurance
Services or an independent insurance broker or carrier reasonably satisfactory
to such Persons stating that such insurance complies with the requirements of
Schedule 5.31, is in full force and effect and all premiums then due and
payable in connection therewith have been paid.

Ratings. The Certificates shall have been rated at least Ba1 by Moody's and BB+
by S&P.

Environmental Report. The Owner Participant, the Manager, the Indenture Trustee
and the Pass Through Trustees shall have received copies of the Environmental
Reports which shall be in form and substance satisfactory to such parties. The
Facility Lessee shall cause the Environmental Consultant to deliver at the same
time a reliance letter addressed to the Owner Lessor, the Manager and the Owner
Participant allowing them to rely on such reports as if addressed to each of
them.

Surveys. The Owner Participant shall have received a bringdown certificate
(which certificate shall be in form and substance satisfactory to the Owner
Participant) from the surveyor with respect to its survey of the Facility Site
dated February 22, 2000.

Appraisal; Condition of the Facility. The Owner Participant shall have received
the Closing Appraisal prepared by the Appraiser addressed and delivered only to
the Owner Participant and in form and substance satisfactory to the Owner
Participant, together with a letter of the Appraiser certifying that its
conclusions set forth in the Closing Appraisal are true and correct as of the
Closing Date. The Indenture Trustee, the Pass Through Trustees and the Initial
Purchasers shall have received a copy of the verification of value, useful life
and estimated residual value prepared by the Appraiser in connection with the
appraisal of assets subject to the Facility Lease, each of which will be
reasonably satisfactory to the recipient.

Letter from the Appraiser. Each of the Owner Lessor and the Manager shall have
received a satisfactory letter of the Appraiser setting forth the conclusions
of the Closing Appraisal as to the fair market value and remaining economic
useful life of the Facility as of the Closing Date and the methodology of
determination thereof.

                                      27

<PAGE>

Other Reports. The Owner Participant, the Indenture Trustee and the Pass
Through Trustees shall have received copies of the reports of the Engineering
Consultant, the Insurance Consultant, and the Power Market Consultant, which
reports shall be dated as of the Closing Date and shall otherwise each be in
form and substance reasonably satisfactory to the recipients.

Opinion with Respect to Certain Tax Aspects. The Owner Participant shall have
received the opinion, dated the Closing Date, of Dewey Ballantine LLP addressed
and delivered only to the Owner Participant as to certain tax matters and in
form and substance satisfactory to the Owner Participant.

Opinions of Counsel. Each of the relevant Transaction Parties shall have
received an opinion or opinions, dated the Closing Date, of (a) Ronald W.
Fischer, Esq., in-house counsel to the Facility Lessee and Guarantor (which
opinion shall include, without limitation, a favorable opinion with respect to
the sale by the Facility Lessee of its interest in the Undivided Interest to
the Owner Lessor), (b) Thelen Reid & Priest LLP, special counsel to the
Facility Lessee and Guarantor, (c) Davis Wright & Tremaine LLP, special
regulatory counsel to the Facility Lessee, (d) Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C., Wisconsin counsel to the Facility Lessee, the Owner
Participant, the Owner Lessor and the Initial Purchasers, (e) Karen Scowcroft,
Esq., in-house counsel to the Equity Investor, (f) Dewey Ballantine LLP,
counsel to the Owner Participant and to the Owner Lessor, (g) Bingham Dana LLP,
counsel to the Lease Indenture Company and the Indenture Trustee, (h) Bingham
Dana LLP, counsel to the Pass Though Trustees and the Pass Through Company, and
(i) Ray Quinney & Nebeker, in-house counsel to the Lessor Manager, in each case
in form and substance reasonably satisfactory to each Transaction Party. Each
such Person expressly consents to the rendering by its counsel of the opinion
referred to in this Section 4.19 and acknowledges that such opinion shall be
deemed to be rendered at the request and upon the instructions of such Person,
each of whom has consulted with and has been advised by its counsel as to the
consequences of such request, instructions and consent. Furthermore, each such
counsel shall, to the extent requested, permit the Rating Agencies and the
Initial Purchasers to rely on their opinion as if such opinion were addressed
to such parties.

Recordings and Filings. All filings and recordings listed on Schedule 4.20
hereto shall have been duly made and all filing, recordation, transfer and
other fees payable in connection therewith shall have been paid; and the filing
of all precautionary financing statements under the Uniform Commercial Code of
Wisconsin and any other documents as may be reasonably requested by counsel to
the Owner Participant, the Indenture Trustee or the Pass Through Trustees to
perfect (i) the Owner Lessor's Interest, or any part thereof or interest
therein and (ii) and the Lien of the Indenture Trustee on the Indenture Estate.

Conditions to Closing. All conditions required to have been satisfied by on or
before the Closing Date under the Operative Documents shall have been satisfied
or waived and the Owner Participant shall be satisfied that the Facility shall
be in the condition described in the Closing Appraisal.

Taxes. All Taxes, if any, due and payable on or before the Closing Date in
connection with the execution, delivery, recording and filing of this Agreement
or any other Operative Document, or any document or instrument contemplated
thereby shall have been duly paid in full.

                                      28

<PAGE>

No Changes in Applicable Law. No change shall have occurred in Applicable Law
or the interpretation thereof by any competent court or other Governmental
Entity that would make it illegal for the Owner Participant, the Owner Lessor,
the Lessor Manager, the Indenture Trustee, the Pass Through Trustees or the
Facility Lessee, to participate in any of the transactions contemplated by the
Operative Documents or would materially adversely affect the Facility or the
Facility Site. On the Closing Date, each Certificateholder's purchase of Lessor
Notes shall (i) be permitted by the laws and regulations of each jurisdiction
to which such Certificateholder is subject, (ii) not violate any Applicable Law
(including Regulation U, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject any Certificateholder to any tax, penalty
or liability under or pursuant to any Applicable Law, which Applicable Law was
not in effect on the date hereof. If requested by any Certificateholder, such
Certificateholder shall have received an Officer's Certificate of the Owner
Lessor, in form and substance satisfactory to such Certificateholder,
certifying as to such matters of fact as such Certificateholder may reasonably
specify to enable such Certificateholder to determine whether such purchase is
so permitted.

Registered Agent for the Facility Lessee and the Owner Lessor. National
Registered Agents, Inc. shall have been appointed by the Facility Lessee, and
CT Corporation System shall have been appointed by the Owner Lessor, each as
registered agent for service of process in the State of New York as provided in
the Operative Documents and each of National Registered Agents, Inc. and CT
Corporation System shall have accepted such appointments.

Operating Lease Treatment. The present value of Basic Rent payable during the
Basic Lease Term under the Facility Lease (taking into account any rent
adjustment through or contemplated on the Closing Date), together with all rent
payable under the related Facility Site Lease, discounted at the Discount Rate,
shall satisfy the 90 percent test for operating lease classification under FASB
13. The Facility Lessee shall have received confirmation from Arthur Andersen
LLP that the Facility Lease will be treated as an operating lease under FASB 13
and FASB 98 for the purposes of GAAP.

Rent Adjustments. The aggregate of all rent adjustments made on or before, or
contemplated to be made on, the Closing Date (other than adjustments to reflect
a change in Transaction Costs or the actual interest rates on the Certificates)
shall not cause either (i) the pre-tax net present value of Basic Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Basic Rent to increase by more than 2%.

Title Insurance. The Title Policy shall have been delivered to the Owner
Participant, the Owner Lessor, the Indenture Trustee, as the case may be, with
copies to the Pass Through Trustees.

Parent Guaranty. The OP Guarantor shall have executed and delivered to the
other Transaction Parties an OP Parent Guaranty in the form of Exhibit G hereto.

Letter as to Number of Offerees. (i) The Owner Participant and the
Certificateholders shall have received a certification from the Facility Lessee
as to the number of offerees by it of the Lessor Estate and (ii) the Facility
Lessee shall have received certification from the Newcourt Capital Securities,
Inc. as to the number of offerees by it of the Lessor Estate and (iii) the
Facility Lessee shall have received certification from CSFB as to the number of
offerees by it of the Lessor Estate.

                                      29

<PAGE>

Lien Search. The Owner Participant (with a copy to the Indenture Trustee) shall
have received Lien searches with respect to the Facility Lessee in form and
substance satisfactory to the Owner Participant.

Litigation. There shall be no actions, investigations, suits or proceedings
pending or threatened against the Facility Lessee and/or the Calpine Parties or
their properties before any court or Governmental Entity which, individually or
in the aggregate, would, if adversely determined, be reasonably likely to have
a Material Adverse Effect (including, but not limited to, the Facility Lessee,
the Owner Participant, the Owner Lessor or the Certificateholders being subject
to or not exempted from regulation as a "public utility company" or a "holding
company" under PUHCA or under state laws and regulations respecting the rates
or the financial and organizational regulation of electric utilities), nor
shall any order, judgment or decree have been issued or proposed by any
Governmental Entity at the time of the Closing Date, to set aside, restrain,
enjoin or prevent the consummation of the Operative Documents or any of the
Transactions contemplated by any of the Operative Documents.

No Material Adverse Change. The annual reports, information, documents and
other reports referred to in Section 3.2(a) of the Calpine Guaranty shall have
been received by the Owner Participant, and there shall have been no material
adverse change in the financial condition, business assets or operation of
Calpine and its Consolidated Subsidiaries since the date of such annual
reports, information, documents and other reports.

Private Placement Number. A private placement number issued by S&P's CUSIP
Service bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Certificates.

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the Facility Lessee, the Owner Participant and the Initial Purchasers and their
respective special counsel, and such parties and their respective special
counsel shall have received all such information and counterpart originals or
certified or other copies of such documents and certificates as each such party
or its special counsel may reasonably request in connection with the matters
contemplated hereby and by the other Operative Documents.

No Proposed Tax Law Change. There has been no Proposed Tax Law Change for which
an adjustment has not been made pursuant to Section 12 of this Agreement.

Payment of Fees and Expenses. Without limiting the provisions of Section 2.3,
all Transaction Costs invoiced at least 3 Business Days prior to Closing to the
Owner Participant with a copy to the Facility Lessee shall be paid promptly
after the Closing Date (but no later than October 29, 2001).

COVENANTS OF FACILITY LESSEE AND GUARANTOR

          The Facility Lessee and the Guarantor, to the extent provided
below, covenant as follows;

                                      30

<PAGE>

Maintenance of Existence. Except as permitted by Section 5.2, the Facility
Lessee, at its own cost and expense, will at all times do or cause to be done
all things necessary to preserve and keep in full force and effect both its
legal existence and its qualification to do business in any state in which the
conduct of its business or the ownership or leasing of assets used in its
business requires such qualification and where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.

Merger, Consolidation, Sale of Substantially All Assets. The Facility Lessee
covenants and agrees as follows:

The Facility Lessee will not consolidate or merge with or into any other
     Person, or sell, assign, convey, lease, transfer or otherwise dispose
     of, all or substantially all of its properties or assets to any Person or
     Persons in one or a series of transactions, unless (i) immediately after
     giving effect to any such transaction or transactions, either (A) Calpine
     would own, directly or indirectly, at least a majority of the Ownership
     Interest of each succeeding or surviving entity, the Calpine Guaranty
     remains in full force and effect (without a transferee of Calpine's
     obligations thereunder having succeeded thereto in accordance with
     Section 8.4(b) thereof) and Calpine shall have reaffirmed in writing its
     obligations under the Calpine Guaranty and the other Operative Documents
     to which Calpine is a party in a manner reasonably satisfactory to the
     Owner Participant and the Owner Lessor or (B) Calpine's obligations under
     the Calpine Guaranty have been succeeded to in accordance with Section
     8.4(b) of the Calpine Guaranty, the transferee of Calpine shall own,
     directly or indirectly, at least a majority of the Ownership Interest of
     each succeeding or surviving entity and the Calpine Guaranty shall remain
     in full force and effect, (ii) immediately after giving effect to such
     transaction, the requirements set forth in Section 13.1(b)(i) through
     (vi) of this Agreement (with appropriate conforming changes to take into
     account the nature of the transactions referred to hereunder) have been
     satisfied in connection with such transfer, and (iii) each succeeding or
     surviving entity shall be organized under the laws of the United States,
     any state thereof or the District of Columbia.

Upon the consummation of such transaction described in Section 5.2(a), the
     resulting, surviving or succeeding entity, if other than the Facility
     Lessee, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Facility
     Lessee under this Participation Agreement and each other Operative
     Document to which the Facility Lessee was a party immediately prior to
     such transaction, with the same effect as if such entity had been named
     herein and therein. The Facility Lessee will pay the costs and expenses
     (including reasonable attorneys' fees and expenses) of the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture Trustee,
     the Pass Through Trustees and the Certificateholders in connection with
     any transaction contemplated by this Section 5.2.

Guaranty and Contingent Obligations. The Facility Lessee will not create,
incur, assume or suffer to exist any Indebtedness (including without limitation
any guaranty or other contingent obligations) except (i) by reason of
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Facility Lessee's business, (ii)
indemnities in respect of unfiled mechanics' liens and other liens permitted by
clause (d) of the definition of "Permitted Liens", (iii) contingent obligations
set forth in, or incurred in connection with, or indemnities set forth in, the
Operative Documents, (iv) unsecured indemnities provided

                                      31

<PAGE>

by, and other unsecured contingent obligation incurred by, the Facility Lessee
in connection with either (x) easements relating to its applicable interest in
the Facility or the Facility Site or (y) any contract, agreement or other
document or instrument relating to the RockGen project which is entered into in
the ordinary course of the Facility Lessee's business, (v) customary
indemnities in favor of the title insurers providing the title policies
covering the Facility Site or any portion thereof or any easement or
appurtenant right relating thereto in respect of claims by the holder of
mechanics' liens, (vi) the indemnities referred to in Section 9.1 and 9.2 of
the Participation Agreement or pursuant to the Tax Indemnity Agreement and
(vii) unsecured Indebtedness incurred in accordance with Section 11.1 or 11.2
hereof.

Assignment of Rights. The Facility Lessee shall not assign any of its rights or
obligations except as permitted by the Operative Documents.

Lessor Manager Fees. The Facility Lessee and Calpine shall pay the fees, costs
and expenses of the Lessor Manager (including the reasonable compensation and
expenses of its counsel), as set forth in a letter agreement approved by the
Facility Lessee arising out of the Owner Lessor's and the Owner Participant's
discharge of their duties under or in connection with the Operative Documents,
as in effect on the Closing Date.

Conduct of Business, Properties, Etc. Except as otherwise expressly permitted
under this Agreement, the Facility Lessee shall (a) perform and comply with all
of its contractual obligations under the Operative Documents to which it is a
party and all other material agreements and contracts by which it is bound,
unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.

Obligations. The Facility Lessee shall pay all of its obligations, howsoever
arising, as and when due and payable except such as may be contested in good
faith or as to which a bona fide dispute may exist; provided, that (i) adequate
reserves consistent with GAAP requirements are maintained for such contested or
disputed obligations or (ii) the Facility Lessee otherwise establishes and
maintains adequate security arrangements for the payment of such contested or
disputed obligations which are reasonably acceptable to the Owner Participant.

Books, Records, Access. The Facility Lessee shall maintain or cause to be
maintained adequate books, accounts and records with respect to itself, the
Facility and Facility Site and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Entity having jurisdiction thereof, and permit employees, agents
and representatives of the Owner Lessor, the Owner Participant, and, so long as
the Lien of the Collateral Trust Indenture shall have not been terminated or
discharged, the Indenture Trustee, the Pass Through Trustees and the
Certificateholders, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or Lease
Event of Default) expense to the Facility Lessee to inspect, the Facility and
Facility Site, to examine or audit all of or any of the Facility Lessee's
books, accounts and records and make copies and memoranda thereof and, together
with such consultants, to observe the operation, maintenance and repair of the
Facility; provided, however, any such inspection shall be conducted in
accordance with Section 12 of the Facility Lease.

                                      32

<PAGE>

Other Information.

The Facility Lessee shall furnish, or shall cause to be furnished to, the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees, and their respective authorized
     representatives from time to time such information as such party shall
     reasonably request concerning the Facility and Facility Site including
     information concerning the condition, operation, maintenance and use of
     the Facility and Facility Site and such other financial or operating
     information as it shall reasonably request and which is routinely made
     available to creditors of the Facility Lessee, to the extent it possesses
     such information; provided that, the Facility Lessee reserves the right
     not to provide any information that is not otherwise publicly available
     to any transferee Owner Participant (or its Owner Lessor) if it
     reasonably believes in its good faith judgment that such transferee Owner
     Participant or any Affiliate thereof is a competitor or is an Affiliate
     of a competitor of the Facility Lessee or its Affiliates in the
     competitive power market, unless, before receiving any such information,
     such transferee Owner Participant shall have put in place (to the
     reasonable satisfaction of the Facility Lessee) appropriate
     confidentiality arrangements. To the extent such information consists of
     information contained in records kept by the Facility Lessee or any
     Affiliate, such information shall be furnished without cost to the
     recipient.

          (b)   The Facility Lessee will advise the Owner Participant, the
Owner Lessor, the OP Guarantor, the Pass Through Trustees and the Indenture
Trustee promptly in writing of the occurrence of any Significant Lease Default,
Lease Event of Default or Lease Indenture Event of Default (to the extent the
Facility Lessee has Actual Knowledge of any such Lease Indenture Event of
Default) and, as soon as practicable thereafter, will provide a description
thereof and a statement as to the actions, if any, the Facility Lessee proposes
to take with respect thereto.

Warranty of Title to Facility Site.

Each Facility Lessee shall maintain good and valid fee, title to, or easement or
     other surface rights in, as applicable, its Facility Site, subject only
     to Permitted Liens.

Each Facility Lessee shall maintain good and valid title to all of its other
     properties and assets (other than properties and assets disposed of in
     the ordinary course of business including any sale, transfer or other
     disposition of any obsolete, surplus or worn out equipment, parts,
     supplies or other materials or assets to the extent permitted by the
     Operative Documents), subject only to Permitted Liens.

ERISA. The Facility Lessee shall not establish, maintain or contribute to, any
Plan. If any Plan is established, maintained or contributed to by either the
Facility Lessee or any ERISA Affiliate, or if the Facility Lessee or any ERISA
Affiliate becomes obligated to contribute to any Plan, (a) with respect to each
such Plan, the Facility Lessee or such ERISA Affiliate (i) shall have at all
times fulfilled in all material respects their obligations under the minimum
funding standards of ERISA and the Code, (ii) shall not allow any such Plan to
have an Unfunded Current Liability, (iii) shall, with respect to each Plan (and
each related trust, if any) which is intended to be qualified under Sections
401(a) and 501(a) of the Code, obtain a determination letter from the

                                      33

<PAGE>

Internal Revenue Service to the effect that such Plan (and trust, if any) meets
the requirements of Sections 401(a) and 501(a) of the Code, and (iv) shall at
all times be in compliance in all material respects with applicable provisions
of ERISA and the Code, and (b) within fifteen (15) days after (i) the
occurrence of any reportable event (as defined in Section 4043(c) of ERISA)
with respect to any Plan, (ii) the complete or partial withdrawal by the
Facility Lessee or any ERISA Affiliate from any Multiemployer Plan, (iii) to
the extent the Facility Lessee or any ERISA Affiliate is notified that any
Multiemployer Plan has entered reorganization status, has become insolvent, or
has terminated (or any Multiemployer Plan notifies the Facility Lessee or any
ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA, (iv)
the institution of any action to terminate a Plan in a distress termination
under Section 4041(c) of ERISA, or (v) in the case of the breach of any other
covenant contained in this Section 5.11, the Facility Lessee shall report such
occurrence or breach to the Indenture Trustee, the Pass Through Trustees, the
Owner Lessor and the Owner Participant and furnish such information as such
Persons may reasonably request with respect thereto.

Certain Contracts and Agreements. Without the consent of the Owner Participant,
the Facility Lessee agrees that, except as required by the Operative Documents,
it will not enter into or become bound by any contract or agreement providing
for the sale of energy produced from the Facility, or the purchase of services
to be performed at, for or in connection with, the Facility or any other
contract or agreement relating to the Facility that (i) has a term that extends
beyond the Basic Lease Term or the scheduled expiration of any Renewal Lease
Term then in effect or elected by the Facility Lessee, unless such contract or
agreement may be terminated by the Facility Lessee without material costs or
obligation prior to the Basic Lease Term or the scheduled expiration of such
Renewal Lease Term, as the case may be or (ii) results in any lien,
encumbrance, restriction or agreement relating to the Facility which extends
beyond the expiration of the Facility Lease Term or which binds the Facility or
the owner of the Facility beyond the expiration of the Facility Lease Term;
provided that nothing in this Section 5.12 shall prevent the Operator from
entering agreements to operate the Facility in accordance with the Operative
Documents.

Certain Costs. The Facility Lessee agrees to pay to the Owner Lessor as
Supplemental Rent (i) overdue interest with respect to the Lessor Notes issued
under the Collateral Trust Indenture if the same is due and payable because of
the occurrence of a Lease Indenture Event of Default which is attributable to a
Lease Event of Default and (ii) an amount equal to any Make-Whole Amount which
has become due and payable with respect to the Lessor Notes under the
Collateral Trust Indenture.

Limitations on Liens. The Facility Lessee shall not, directly or indirectly,
create, assume or permit to exist any Lien, securing a charge or obligation on
the Facility, the Facility Site, or on any of its other properties real or
personal, whether now owned or hereafter acquired, except Permitted Liens.

Investments. The Facility Lessee shall not make or permit to remain outstanding
any advances, loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, except Permitted
Investments.

                                      34

<PAGE>

Survey. The Facility Lessee shall use diligent and commercially reasonable
efforts to deliver a copy of the Survey as soon as practicable, such survey to
be an ALTA survey or other survey in form and substance reasonably satisfactory
to the Owner Participant, provided that the failure to do so shall not
constitute, in whole or in part, the basis of any default under any Operative
Document.

Regulations. The Facility Lessee shall not, directly or indirectly, apply the
proceeds of the sale of Lessor Notes or any other revenues to the purchasing or
carrying of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.

Partnerships. The Facility Lessee shall not become a general or limited partner
in any partnership or a joint venturer in any joint venture.

Dissolution. The Facility Lessee shall not liquidate or dissolve, except
pursuant to transactions permitted under Section 5.2.

Termination of Operative Documents. The Facility Lessee shall not without the
prior written consent of the Owner Participant and, except as otherwise
provided in Section 8 of the Collateral Trust Indenture and so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee, (a) cause or consent to or (b) permit, any amendment,
modification, extension, termination, variance or waiver of timely compliance
with any terms or conditions of any Operative Document.

Name and Location. The Facility Lessee shall not change its name or the
location of its chief executive office or place of business without notice to
the Owner Lessor, the Lessor Manager, the Indenture Trustee, the Pass Through
Trustees and the Owner Participant at least thirty (30) days prior to such
change.

Use of Facility Site. The Facility Lessee shall not use, or permit to be used,
the Facility Site for any purpose other than for the operation and maintenance
of the Facility, except as otherwise required or permitted under the Operative
Documents.

Abandonment of Facility. The Facility Lessee shall not voluntarily abandon the
operation, maintenance or repair the Facility, except as otherwise permitted by
the Operative Documents.

Taxes, Other Government Charges and Utility Charges. The Facility Lessee shall
pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to the Facility Lessee, its
interests in the Facility Site and Facility, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility or the Facility Site, and all assessments and charges lawfully made by
any Governmental Entity for public improvements that may be secured by a Lien
on any part of the Facility; provided, that the Facility Lessee may contest in
good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when the Facility Lessee is in
good faith contesting the same, so long as (a) adequate reserves consistent
with GAAP requirements (or other security arrangements reasonably satisfactory
to the Indenture Trustee and the Owner Participant) are

                                      35

<PAGE>

established and maintained in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties
or other costs relating thereto, or other adequate provision for the payment
thereof shall have been made, and (b) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
immediately paid after resolution of such contest.

Compliance with Laws, Instruments, Etc. At its expense, the Facility Lessee
shall promptly (a) comply or cause compliance with all Applicable Laws,
including those relating to pollution control, environmental protection, equal
employment opportunity plans, Plans and employee safety, with respect to
itself, the Facility or the Facility Site, whether or not compliance therewith
shall require structural changes in the Facility or any part thereof or require
major changes in operational practices or interfere with the use and enjoyment
of the Facility or any part thereof, and (b) procure, maintain and comply, or
cause to be procured, maintained and complied with, all Applicable Permits,
except in the case of clause (a) or (b) above (1) as may be contested in
accordance with Section 7 or 8 of the Facility Lease and (2) the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest
the validity or application of any such Applicable Laws in any reasonable
manner which does not involve any danger of (i) foreclosure, sale, forfeiture
or loss of, or imposition of a material Lien on the Facility, (ii) impair the
use, operation or maintenance of the Facility in any material respect, (iii)
any criminal liability being incurred by the Owner Participant, the Owner
Lessor, the Lessor Manager, the Indenture Trustee, the Lease Indenture Company,
the Pass Through Trustees, the Pass Through Company or any Certificateholder,
(iv) the Owner Participant, the Owner Lessor, the Lessor Manager, the Indenture
Trustee, the Lease Indenture Company, the Pass Through Trustees, the Pass
Through Company or any Certificateholder being subjected to any unindemnified
civil liability or of the Owner Participant or the Owner Lessor being subject
to regulation as a public utility under Applicable Law, or (v) any Material
Adverse Effect.

PUHCA. The Facility Lessee shall not take any action or fail to take any action
within its control that would subject the Owner Lessor, the Lessor Manager, the
Owner Participant, the Indenture Trustee or the Pass Through Trustees to
regulation under PUHCA.

Further Assurances. The Facility Lessee, at its own cost, expense and
liability, will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may be necessary
in order to carry out the intent and purposes of this Participation Agreement
and the other Operative Documents, and the transactions contemplated hereby and
thereby. The Facility Lessee, at its own cost, expense and liability, will
cause such financing statements and fixture filings (and continuation
statements with respect thereto) as may be necessary and such other documents
as the Owner Participant, the Owner Lessor and, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Undivided Interest, the Ground Interest, any
Component or any portion of any thereof or any interest therein and the first
priority Lien intended to be created by the Collateral Trust Indenture therein.
The Facility Lessee shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture Trustee
or the Pass Through Trustees such information with respect to the Facility or
the Facility Site or the transactions contemplated by the Operative Documents
to which the Facility Lessee is a party as may be required to enable the Owner
Participant, the Owner Lessor or, so long as the Lien of the Collateral Trust
Indenture shall not have been terminated or discharged, the Indenture

                                      36

<PAGE>

Trustee or the Pass Through Trustees, as the case may be, to timely file with
any Governmental Entity any reports and obtain any licenses or permits required
to be filed or obtained by the Owner Lessor under any Operative Document, the
Owner Participant as the owner of the Member Interest or the Indenture Trustee.
The Facility Lessee will preserve, protect, defend and enforce, or cause to be
preserved, protected, defended and enforced, the rights of itself, the Owner
Lessor and the Owner Participant under each and every Operative Document to
which it is a party (including by assignment and assumption of the rights
thereunder), including using commercially reasonable efforts to prosecute suits
to enforce any such rights and, at the request of Indenture Trustee, so long as
the Lien of the Collateral Trust Indenture has not been discharged or
terminated (and thereafter at the request of the Owner Participant), permit the
Indenture Trustee and the Owner Participant, at their respective cost and
expense, to participate in such capacity as it may choose in any such suit, any
defense thereof or in the preparation therefor; provided, however, that upon
the occurrence and during the continuance of any Lease Event of Default, if the
Indenture Trustee or the Owner Participant request that certain actions be
taken and the Facility Lessee fails to take the requested action, or to cause
the requested action to be taken within (5) Business Days, the Indenture
Trustee, so long as the Lien of the Collateral Trust Indenture has not been
discharged or terminated, and the Owner Lessor may, at the Facility Lessee's
reasonable expense, enforce, in its own name, or the Facility Lessee's name,
such rights of the Facility Lessee.

No Subsidiaries. The Facility Lessee shall not create or suffer to exist any
Subsidiaries.

Permitted Business. The Facility Lessee shall not engage in any business or
activities other than the lease, operation, maintenance and marketing and sale
of the output, fuel or other products from, or related or incidental to, the
Facility leased by the Facility Lessee. Notwithstanding any of the foregoing
the Facility Lessee may not change the nature of its business.

Support Arrangements. The Facility Lessee agrees that, to the extent that the
rights described in Section 3.1(n) which have already been made available to
the Owner Lessor prior to the expiration or termination of the Facility Lease
Term, and any rights assigned pursuant to the last sentence of this Section
5.30, are insufficient to permit on a commercially practicable basis during the
period following the expiration or termination of the Facility Lease Term,
until the end of the Facility's useful life as set forth in the Closing
Appraisal, (i) the location, occupation, interconnection (including with
respect to electricity, steam, gas and water), maintenance and repair of the
Facility, (ii) the use, operation and possession of the Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to the Facility, (iv) adequate ingress to
and egress from the Facility in connection with the ownership, use, maintenance
or operation of the Facility, (v) adequate transmission of electricity from the
Facility to enable such Person to deliver the net electrical and steam output
of the Facility on a commercially reasonable basis and (vi) the interest of the
Owner Lessor (or any successor) in the Undivided Interest or the Ground
Interest, the Facility Lessee will cause Calpine to provide, and Calpine will
provide, the Owner Lessor with any additional services relating to the Owner
Lessor's Interest and operation of the Facility substantially in the same

                                      37

<PAGE>

manner as operated as of the Closing Date (to the extent Calpine or any
Affiliate thereof then owns or controls the physical assets and/or contractual
rights necessary to provide such services (or can enter into contracts on a
commercially reasonable basis for such ownership, control or other rights) and
remains in the business of providing such services) necessary to permit the
Owner Lessor to use the Facility as described in (i) through (vi) above. Such
arrangements will provide for fair market value compensation to Calpine
(payable periodically on no more frequently than a monthly and no less
frequently than on a quarterly basis) and will terminate upon the expiration or
termination of the Facility Site Lease, or earlier at the option of the Owner
Lessor. The Facility Lessee shall also, subject to obtaining any required third
party consents, assign to the Owner Lessor upon termination of the Facility
Lease any support or similar agreements to the extent relating to the Facility
it has with third parties.

Insurance. The Facility Lessee shall comply with the covenants set forth in
Schedule 5.31.

Tax Status. The Facility Lessee and each Person owning an Ownership Interest
therein will not voluntarily take any action to cause the Facility Lessee to be
subject to taxation as a separate entity for federal income tax purposes.

Transmission Assets.

If and to the extent that on the Closing Date the FERC Order referred to in
     clause (v) of the definition thereof has not been obtained with respect
     to the jurisdictional facilities referred to therein (which facilities
     are identified in Exhibit A as Transmission Assets (the "Transmission
     Assets")), the Owner Participant shall, upon 5 days' prior written notice
     to the Facility Lessee, and subject to the grant of the aforesaid order,
     cause the Owner Lessor to acquire an undivided interest equal to the
     Owner Lessor's Percentage in the Facility Lessee's right, title and
     interest in the Transmission Assets, for a price equal to $1.00. Upon
     payment by the Owner Lessor of such amount, the Facility Lessee shall
     execute and deliver such documentation as is reasonably requested by the
     Owner Lessor to transfer such undivided interest in the Facility Lessee's
     right, title and interest in the Transmission Assets to the Owner Lessor.
     Upon such transfer such Undivided Interest shall be and shall be deemed
     to be an integral part of the Undivided Interest (to the extent
     constituting a portion of the Facility) and the Ground Interest (to the
     extent constituting a portion of the leasehold interest in the Facility
     Site) for all purposes of the Operative Documents without the necessity
     of amending or supplementing any Operative Document, subject nevertheless
     to Section 14.15 hereof.

Without limiting Section 10 hereof or Section 4.2 of the Facility Lease, the
     Facility Lessee agrees that from and after the Closing Date and until
     the earlier to occur of (A) the transfer referred to in clause (a) above
     and (B) the termination of the Facility Lease, the Facility Lessee shall
     make available to the Owner Lessor, for no additional compensation, such
     rights in the Transmission Assets solely to the extent as shall be
     necessary so that the representation in Section 3.1(n) will be correct to
     the same extent as if such transfer had occurred on the Closing Date.

                                      38

<PAGE>

COVENANTS OF THE OWNER LESSOR, THE TRUST COMPANY AND THE LESSOR MANAGER

Compliance with the LLC Agreement. Each of the Owner Lessor, the Trust Company
and the Lessor Manager hereby severally covenants and agrees that during the
Facility Lease Term it will:

comply with all of the terms of the LLC Agreement applicable to it; and

not amend, supplement, or otherwise modify Section 9.1, 9.3, 13.1 or clause (i)
     of Section 13.2 of the LLC Agreement without the prior written consent
     of the Facility Lessee so long as no Significant Lease Default or Lease
     Event of Default has occurred and is continuing and the Indenture Trustee
     so long as the Lien of the Collateral Trust Indenture has not been
     terminated or discharged.

                                      39

<PAGE>

Owner Lessor's Liens. The Owner Lessor, the Trust Company and the Lessor
Manager each covenants severally and as to itself only that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify the Facility Lessee,
the Owner Participant and the Indenture Trustee of the imposition of any such
Lien of which it has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor's Lien
attributable to it.

Amendments to Operative Documents. The Lessor Manager, the Trust Company and
the Owner Lessor each covenants severally and as to itself only that it will
not unless such action is expressly permitted by the Operative Documents (a)
through its own action terminate any Operative Document to which it is a party,
(b) amend, supplement, waive or modify (or consent to any such amendment,
supplement, waiver or modification) such Operative Documents in any manner or
(c) except as provided in Section 11 hereof or Section 2.10 or Section 5.6 of
the Collateral Trust Indenture, take any action to prepay or refund the Lessor
Notes or amend any of the payment terms of the Lessor Notes without, in each
case, the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default shall have occurred and be
continuing and, in the case of clause (a) or (b), the Indenture Trustee so long
as the Lien of the Collateral Trust Indenture has not been terminated or
discharged.

Transfer of the Owner Lessor's Interest. Other than as permitted by the
Operative Documents, each of the Lessor Manager and the Owner Lessor covenants
that it will not assign, pledge, sell, lease, convey or otherwise transfer any
of its then existing right, title or interest in and to the Owner Lessor's
Interest, the Lessor Estate or the other Operative Documents.

Owner Lessor; Lessor Estate. Each of the Trust Company, the Lessor Manager and
the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy, insolvency or similar law (as now or hereafter in
effect).

Limitation on Indebtedness and Actions. Each of the Lessor Manager and the
Owner Lessor covenants that it will not incur any Indebtedness nor enter into
any business or activity except as required or expressly permitted by any
Operative Document.

Change of Location. The Owner Lessor shall provide the Owner Participant, the
Indenture Trustee, the Certificateholders, the Pass Through Trustees and the
Facility Lessee 30 days' written notice of any relocation of the Owner Lessor's
chief executive office or the place where documents and records relating to the
Owner Lessor or the Lessor Estate are kept from the location set forth in
Section 3.2(g) and of any change in its name.

Bankruptcy of Owner Lessor. Each of the Trust Company, the Lessor Manager and
the Owner Lessor hereby agrees severally and as to itself only that it shall
not voluntarily take any action that shall, or cause any action to be taken
that is intended to, submit the Owner Lessor, as debtor, to any proceeding
under any Applicable Law involving bankruptcy, insolvency, reorganization or
other laws affecting the rights of creditors generally unless a Lease Event of
Default or a Significant Lease Default shall have occurred and be continuing
(in which case, if the Lien of the Collateral Trust Indenture shall not have
been discharged, the Trust Company or the Owner

                                      40

<PAGE>

Lessor shall not take any such action unless the Indenture Trustee shall have
given its prior written consent to such action in its sole discretion.

COVENANTS OF THE OWNER PARTICIPANT

Restrictions on Transfer of Member Interest.

The Owner Participant covenants and agrees that it shall not during the
     Facility Lease Term assign, convey or transfer any of its right, title
     or interest in the Member Interest without the prior written consent of
     the Facility Lessee and, so long as the Lien of the Collateral Trust
     Indenture has not been terminated or discharged, without the prior
     written consent of the Indenture Trustee; provided, however, that the
     Owner Participant may, subject to Section 7.6, assign, convey or transfer
     all or any part of its interest in the Member Interest without such
     consent to a Person (the "Transferee") which shall assume the duties and
     obligations of the Owner Participant under the Operative Documents with
     respect to the interest being transferred pursuant to an OP Assignment
     and Assumption Agreement substantially in the form of Exhibit J hereto,
     if each of the following conditions shall have been satisfied on or prior
     to such transfer:

the Facility Lessee, the Indenture Trustee and the Pass Through Trustees shall
     have received an opinion(s) of counsel (including an opinion with respect
     to a guaranty pursuant to clause (iii) of this Section 7.1, if
     applicable), which opinion(s) and counsel are reasonably satisfactory to
     each such recipient and consistent in scope to the opinions delivered on
     behalf of the Owner Participant at the Closing, including that all
     regulatory approvals required in connection with such transfer or
     necessary to assume the Owner Participant's obligations under the
     Operative Documents shall have been obtained and that the proposed
     transfer of the Member Interest will not require registration under the
     Securities Act;

the Transferee shall be a "United States person" within the meaning of Section
     7701(a)(30) of the Code;

the Transferee shall be either (A) an Affiliate of the transferor Owner
     Participant which does not otherwise qualify under clause (B) below (but
     in any event, such Affiliate shall not be a Competitor of Calpine);
     provided that all of the payment and performance obligations of the
     Transferee with respect to the interest being transferred under the
     Operative Documents shall be guaranteed by the transferor Owner
     Participant, or a Person then providing a guaranty of the transferor
     Owner Participant's obligations hereunder, pursuant to an OP Parent
     Guaranty or (B) a Person which meets, or the payment and performance
     obligations of which with respect to the interest being transferred under
     the Operative Documents are guaranteed (pursuant to a OP Parent Guaranty)
     by a Person (the transferor Owner Participant or such other guarantor,
     the "Transferee Guarantor") which meets, the following criteria: (1) the
     tangible net worth of the Transferee or Transferee Guarantor, is at least
     equal to $75 million calculated in accordance with GAAP; and (2) unless
     waived in writing by the Facility Lessee prior to such transfer, such
     Transferee is not a Competitor of Calpine or in material litigation
     against the Facility Lessee or any Affiliate of the Facility Lessee
     without the consent of the Facility Lessee; and

                                      41

<PAGE>

upon consummation of such transfer, there shall not be more than four (4) Owner
     Participants for the Overall Transaction; provided that any related
     Owner Participants that shall have the same decision maker and vote their
     interest together as a single vote shall count as one for purposes of
     this clause (iv).

          Notwithstanding the foregoing, the restrictions set forth in
Section 7.1 shall not inure to the benefit of the Facility Lessee if such
transfer occurs during the continuance of a Significant Lease Default or Lease
Event of Default.

For purposes of determining whether a Transferee is a "Competitor" of Calpine,
     Calpine shall provide to the transferor Owner Participant on or prior to
     the Closing Date a list of entities which Calpine reasonably believes in
     its good faith judgment are competitors of Calpine or any of its
     Affiliates, in the business in which Calpine or any of its Affiliates is
     engaged as of the Closing Date, which list shall be attached to this
     Agreement as Exhibit K. Any such Person on such list shall be deemed to
     be a "Competitor" for purposes of Section 7.1(a). The initial list of
     Competitors may be modified or supplemented (in a manner consistent with
     the first sentence of this clause (b)), from time to time, but no later
     than five (5) Business Days after the Facility Lessee receives each
     notice from the Owner Participant of its intent to transfer its interest
     and, in addition, no more than once in any calendar year plus each time
     the Facility Lessee receives such notice of transfer from the Owner
     Participant, and such list as modified shall govern for the purposes of
     this Section 7.1(b).

The Facility Lessee shall not be responsible for any adverse tax consequence to
     the Owner Lessor or the Owner Participant resulting from any transfer
     pursuant to this Section 7.1 and the Pricing Assumptions shall not be
     changed as a result of any such transfer.

The Owner Participant shall give the Owner Lessor, the Indenture Trustee and
     the Facility Lessee ten (10) Business Days' prior written notice of such
     transfer, specifying the name and address of any proposed Transferee and
     such additional information as shall be necessary to determine whether
     the proposed transfer satisfies the requirements of this Section 7.1. If
     requested by the Owner Participant or the Indenture Trustee, the Facility
     Lessee will acknowledge qualifying transfers. All reasonable fees,
     expenses and charges of the Indenture Trustee, the Pass Through Trustees,
     and the Facility Lessee (including reasonable attorneys' fees and
     expenses in connection with any such transfer or proposed transfer),
     including any of the foregoing relating to any amendments to the
     Operative Documents required in connection therewith, shall be paid on an
     After-Tax Basis by the Owner Lessor, without any right of indemnification
     from the Facility Lessee or any other Person; provided, however, that the
     Owner Participant shall have no obligation to pay fees, expenses or
     charges of the Facility Lessee as a result of any transfer while a
     Significant Lease Default or a Lease Event of Default is continuing, in
     which case the Facility Lessee shall be obligated to pay such costs.

Upon any such transfer in compliance with this Section 7.1, (i) such Transferee
     shall (x) be deemed the "Owner Participant" for all purposes, and (y)
     enjoy the rights and privileges and perform the obligations of the Owner
     Participant hereunder and under each of the OP Assignment and Assumption
     Agreement, the Calpine Guaranty and each other Operative Document to
     which such Owner Participant is a party, and each reference in this
     Agreement,

                                      42

<PAGE>

     the Calpine Guaranty and each other Operative Document to the "Owner
     Participant" shall thereafter be deemed to include such Transferee for
     all purposes and (ii) the transferor Owner Participant and the OP
     Guarantor, if any, of such transferor Owner Participant's obligations
     shall be released from all obligations hereunder and under each other
     Operative Document to which such transferor or OP Guarantor is a party or
     by which such transferor Owner Participant or OP Guarantor is bound to
     the extent such obligations are expressly assumed by a Transferee meeting
     the requirements of this Section 7.1; provided, however, that in no event
     shall any such transfer waive or release the transferor or its OP
     Guarantor from any liability accruing or existing in respect of any
     period occurring on or prior to or occurring simultaneously with such
     transfer.

The transfer restrictions set forth in Section 7.1 (other than the requirement
     that the Owner Participant and the Transferee enter into an OP
     Assignment and Assumption Agreement) shall also apply to any transfer of
     the equity ownership interests of an Owner Participant which has as its
     sole (or substantially equivalent to sole) business activity its
     participation in the transactions contemplated by the Operative
     Documents. In the case of such a transfer of equity ownership interests
     which satisfies such restrictions of this Section 7.1, the Owner
     Participant's obligations under the Operative Documents shall continue,
     but the Owner Participant shall, except in the case of a transfer to a
     transferee described in clause (a)(iii)(A) above, procure a new OP Parent
     Guaranty from a guarantor meeting the requirements of clause (a)(iii)(B)
     above.

                                      43

<PAGE>

Owner Participant's Liens. The Owner Participant covenants that it will not
directly or indirectly create, incur, assume or suffer to exist any Owner
Participant's Lien and the Owner Participant shall promptly notify the Facility
Lessee and the Indenture Trustee of the imposition or existence of any such
Lien of which the Owner Participant has Actual Knowledge and shall promptly, at
its own expense, take such action as may be necessary to duly discharge such
Owner Participant's Lien.

Amendments or Revocation of LLC Agreement. Notwithstanding anything to the
contrary contained in the LLC Agreement, the Owner Participant covenants that
during the Facility Lease Term it will not (a) amend, supplement, or otherwise
modify Section 9.1, 9.3, 13.1 or clause (i) of 13.2 of the LLC Agreement
without the prior written consent of the Facility Lessee so long as no
Significant Lease Default or Lease Event of Default has occurred and is
continuing, and without the prior written consent of the Indenture Trustee so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, or (b) revoke, or otherwise waive compliance with or terminate the
LLC Agreement without the prior written consent of the Facility Lessee so long
as no Significant Lease Default or Lease Event of Default has occurred and is
continuing, and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.

Bankruptcy Filings. The Owner Participant agrees that it will not file a
petition, or join in the filing of a petition, seeking reorganization,
arrangement, adjustment or composition of, or in respect of, the Owner Lessor
under the Bankruptcy Code, or any other applicable federal or state law or the
law of the District of Columbia.

Instructions. The Owner Participant agrees that it will not instruct the Owner
Lessor to take any action prohibited by this Agreement or any other Operative
Document.

Right of First Refusal. In the event the Owner Participant desires to sell,
lease, convey or otherwise transfer its Member Interest or cause the Owner
Lessor to sell all or substantially all of the Owner Lessor's Interest at any
time during the three (3) year period commencing on the termination or
expiration of the Facility Lease (except in the event that a Lease Event of
Default shall have existed at such time of termination or expiration), any such
sale or other transfer shall be subject to the Facility Lessee's right of first
refusal on the terms and conditions set forth in this Section 7.6. The Owner
Participant shall give the Facility Lessee prompt written notice of all bona
fide offers that have been received from any other Person to purchase or
acquire its interest of the Owner Lessor's Interest or the Member Interest of
the Owner Participant, and which offers it wishes to accept, together with a
full and complete statement of the price and all of the terms, conditions and
provisions contained in such offers. The Facility Lessee shall thereafter have
the right within a period of 45 days from and after the receipt by them of such
notice (the "Notice Period") to notify the Owner Participant of its intent to
exercise its right of first refusal. If the Facility Lessee elects to exercise
the right provided in the preceding sentence, it will within 60 days of such
notice (the "Agreement Period") execute a contract on the same terms and
conditions as the offer giving rise to such right. If the Facility Lessee does
not give such notice to the Owner Participant within the 45 day period or
execute such a contract within 60 days of such notice, the Owner Participant
will be free to proceed under the terms and conditions set forth in its notice
to the Facility Lessee, unless the failure to execute the contract within 60
days is attributable to acts or omissions of the Owner Participant. In the
event that

                                      44

<PAGE>

such terms are revised in any way that changes the agreement for sale, lease,
conveyance or transfer such that the terms of the sale are less favorable to
the Owner Participant (it being understood and agreed that any reduction in the
price or a change in the terms of payment thereof in a manner beneficial to the
potential purchaser shall be deemed to be less favorable to the Owner
Participant), the Owner Participant shall again comply with the notice and
right of first refusal provisions of this Section prior to entering into such
revised agreement; provided that, for such revised offer, the Notice Period
shall be 10 Business Days from the date of such new notice, and the Agreement
Period shall not exceed 45 days from the date of the Facility Lessee's notice
accepting such new terms.

          Notwithstanding the foregoing, if, concurrently with the Owner
Participant's offer to sell its Member Interest pursuant to this Section 7.6,
it or one of its Affiliates offers to sell any interest in an owner lessor who
has entered into any Other RockGen Facility Lease, then the Facility Lessee
shall exercise its purchase rights under this Section 7.6 only if, concurrently
therewith, it exercises its purchase rights under Section 7.6 of each such
Other RockGen Facility Lease.

Prohibition on Fundamental Changes. If the Owner Participant is an entity which
has as its sole (or substantially equivalent to sole) business activity, the
participation in the transactions contemplated by the Operative Documents, the
Owner Participant shall not change its form of organization and shall not enter
into or engage in any business other than as contemplated by the Operative
Documents and the activities related thereto.

Appointment of Successor Lessor Manager. Notwithstanding any other provision of
this Agreement, a successor Lessor Manager shall not be appointed by the Owner
Participant without the consent of the Facility Lessee and, so long as the Lien
of the Collateral Trust Indenture has not been terminated or discharged and the
Indenture Trustee unless such successor Lessor Manager (a) meets the
requirements of the LLC Agreement, (b) has a combined capital and surplus of at
least $150 million, and (c) the Facility Lessee and, so long as Lien of the
Collateral Trust Indenture has not been terminated or discharged, the Indenture
Trustee, shall have received at the expense of Facility Lessee on an After-Tax
Basis: (i) an opinion or opinions of counsel, such counsel and such opinion to
be reasonably acceptable to such parties, to the effect that no regulatory
consents or approvals are required, or (ii) such other documentation reasonably
satisfactory to the Facility Lessee or the Indenture Trustee as the case may be.

Cooperation. The Owner Lessor agrees, and each of the Owner Participant and the
Lessor Manager agree to cause the Owner Lessor to, at the request of the
Facility Lessee and at the sole cost and expense of the Facility Lessee on an
After-Tax Basis, take such actions as may be necessary for the Owner Lessor to
take as the holder of the leasehold interest in the Facility for purposes of
obtaining the valid and effective issue, transfer or amendment, as the case may
be, of all Governmental Approvals to the extent the same are required for the
use, ownership, operation or maintenance of the Facility, the Facility Site,
the Undivided Interest, the Ground Interest or any Component by the Facility
Lessee or any permitted assignee of the Facility Lessee in the manner
contemplated by the Operative Documents, except to the extent the same involves
any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of

                                      45

<PAGE>

the use, operation or maintenance of the Facility or the Facility Site in any
material respect, (ii) the risk of criminal liability being incurred by the
Owner Lessor, the Owner Participant, the Equity Investor or the OP Guarantor,
or (so long as the Lessor Notes are outstanding and the Lien of the Lease
Indenture has not been discharged) the Indenture Trustee or the Pass Through
Trustee or any of their respective Affiliates or (iii) material risk of any
material adverse effect on the interests of the Owner Lessor, the Owner
Participant, the Equity Investor or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Collateral Trust Indenture has not
been discharged) the Indenture Trustee or the Pass Through Trustee or any of
their respective Affiliates (including, without limitation, subjecting any such
Person to regulation as a public utility under any applicable law. The Facility
Lessee shall pay on an After-Tax Basis all reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of counsel) of
the Owner Lessor and each other Person party to an Operative Document incurred
in connection with any such action. It is understood and agreed that, with
respect to the action requested of it, and taken by it, under this Section 7.9,
the Owner Lessor, the Owner Participant and the Lessor Manager shall make no
representation or warranty as to, and shall have no responsibility for, the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.

COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEES

Indenture Trustee's Liens. Neither the Lease Indenture Company, nor the
Indenture Trustee will directly or indirectly create, incur, assume or suffer
to exist any Indenture Trustee's Lien attributable to it and arising out of
events or conditions not related to its rights in the Indenture Estate or the
administration thereof, and will promptly notify the Owner Participant, the
Lessor Manager, the Owner Lessor and the Facility Lessee of the imposition of
any such Lien of which it has Actual Knowledge and shall promptly (and in any
event within 30 days of obtaining Actual Knowledge of such Lien), at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.

Pass Through Trustees' Covenant Not to Transfer Lessor Notes. The Pass Through
Trustees agree that it will not transfer any Lessor Note (or any part thereof)
to any entity (except to a successor Pass Through Trustee appointed pursuant to
the terms of the Pass through Trust Agreement) until it receives from such
entity a certification which makes a representation and warranty as of the date
of such transfer that no part of the funds to be used by it for the purchase
and holding of such Lessor Note (or any part thereof) constitutes assets of any
Plan or that such purchase and holding will be covered by a prohibited
transaction class exemption issued by the U.S. Department of Labor.

INDEMNIFICATION

General Indemnity.

Claims Indemnified. Subject to the exclusions stated in paragraph (b) below, the
     Facility Lessee agrees to indemnify, protect, defend and hold harmless,
     and do hereby indemnify the Owner Participant, the Owner Lessor, the
     Trust Company, in its individual capacity, the Lessor Manager, the Lease
     Indenture Company in its individual capacity, the Indenture Trustee, each
     Certificateholder, the Pass

                                      46

<PAGE>

     Through Trustees, and their respective Affiliates, successors, assigns,
     agents, directors, officers and employees (each an "Indemnitee") against
     any and all Claims (whether or not any of the transactions contemplated
     by the Operative Documents are consummated) imposed on, incurred or
     suffered by or asserted against any Indemnitee in any way relating to or
     resulting from or arising out of or attributable to:

the construction, financing, refinancing, acquisition, operation, rebuilding,
     warranty, ownership, possession, maintenance, repair, lease, condition,
     alteration, modification, restoration, refurbishing, return, purchase,
     sale or other disposition, insuring, sublease, or other use or non-use of
     the Undivided Interest, the Ground Interest, the Facility, the Facility
     Site, or any Component or any portion of any thereof or any interest
     therein;

the conduct of the business or affairs of the Facility Lessee or Calpine and
     any other business or affairs conducted at the Facility or the Facility
     Site;

the manufacture, design, purchase, acceptance, rejection, delivery or condition
     of, or improvement to, the Facility, the Facility Site, or any
     Component, or any portion of any thereof or any interest therein;

the Facility Lease, the Facility Site Lease, the Facility Site Sublease, or any
     other Operative Document, the execution or delivery thereof or the
     performance, enforcement, attempted enforcement or amendment of any terms
     thereof, or the transactions contemplated thereby or resulting therefrom;

any Environmental Condition at, related to or caused by the Facility, the
     Facility Site or any Component, or any portion thereof, including, for
     the avoidance of doubt, any such Environmental Condition existing prior
     to the Closing Date;

the offer, issuance, sale, acquisition or delivery of the Lessor Notes, the
     Certificates, any Additional Lessor Notes, any Additional Certificates
     or any refinancing thereof;

the reasonable and documented costs and expenses of the Transaction Parties in
     connection with amendments or supplements to the Operative Documents
     requested by the Facility Lessee, or resulting from the actions of the
     Facility Lessee or in connection with any Lease Default or Lease Event of
     Default;

the imposition of any Lien other than with respect to a particular Indemnitee
     (or a Related Party), an Owner Lessor's Lien, an Owner Participant's
     Lien or Indenture Trustee's Lien attributable to such Indemnitee;

any violation by, or liability relating to, the Facility Lessee or any other
     Calpine Party, the Facility or the Facility Site, of, or under, any
     Applicable Law, whether now or hereafter in effect (including
     Environmental Laws), or any action of any Governmental Entity or other
     Person taken with respect to the Facility, the Facility Site, the
     Operative Documents or the interests of the Owner Participant, the Owner
     Lessor, the Indenture Trustee or the Pass Through Trustees, or under the
     Operative Documents or the presence, use, storage, release, threatened
     release, transportation, arrangement for transportation, treatment,
     arrangement for treatment, manufacture, disposal or arrangement for
     disposal of any Hazardous Substance in,

                                      47

<PAGE>

     at, under or from the Facility or the Facility Site, including, for the
     avoidance of doubt, any of the foregoing existing or occurring prior to
     the Closing Date;

the non-performance or breach by the Facility Lessee or any Calpine Party of
     any obligation contained in this Agreement or any other Operative
     Document or the falsity or inaccuracy of any representation, warranty or
     obligation of any such Person contained in this Agreement or any other
     Operative Document;

the continuing fees (if any) and expenses of the Owner Lessor and the Lessor
     Manager (including the reasonable compensation and expenses of their
     respective counsel) arising out of the Owner Lessor's discharge of its
     duties under or in connection with the Operative Documents (other than
     the Facility Lease and the Facility Site Lease);

the continuing fees (if any) and expenses of the Lease Indenture Company, the
     Indenture Trustee, the Pass Through Company, the Pass Through Trustees,
     (including the reasonable compensation and expenses of their respective
     counsel, accountants and other professional persons) arising out of the
     discharge of their respective duties as provided in the Operative
     Documents; or

any Applicable Permits including any obligations imposed by FERC in connection
     with the Facility or the Facility Site.

Claims Excluded. Any Claim, to the extent relating to or resulting from or
     arising out of or attributable to any of the following, is excluded from
     the Facility Lessee's obligations to indemnify, defend, protect and hold
     harmless any Indemnitee under this Section 9.1:

(A)  acts, omissions or events with respect to the Facility first occurring
     after the later of (x) expiration or early termination of the Facility
     Lease and, where required by the Facility Lease, surrender to the Owner
     Lessor or its successor of its interest in the Facility in compliance
     with the provisions of the Facility Lease or (y) if the Owner Lessor
     exercises its option set forth in Article VI of the Facility Site Lease,
     the performance by the Facility Lessee of all obligations required to be
     performed by it thereunder, or (B), if the Closing Date does not occur,
     acts, omission or events occurring after the date set forth in Section
     2.2(e);

with respect to a particular Indemnitee and Related Parties, any offer, sale,
     assignment, transfer or other disposition (voluntary or involuntary) by
     or on behalf of (A) in the case of the Owner Participant, the Owner
     Participant of its Member Interest or with respect to any Related Party,
     its direct or indirect interest in the Owner Participant, (B) in the case
     of the Owner Lessor, and if such action is taken at the written direction
     of the Owner Participant, the Owner Participant, and Related Parties, the
     Owner Lessor of all or any of the Owner Lessor's Interest, (C) the
     Indenture Trustee of all or any of its interest in the Lessor Notes,
     unless, in any such case referred to in this paragraph (ii), such
     transfer is required by the terms of the Operative Documents or occurs
     during the continuance of a Lease Event of Default; (provided that this
     paragraph (ii) shall not serve to cap the indemnity to be received by a
     transferee Indemnitee for a Claim (other than a Claim relating solely to
     or arising solely out of any offer, transfer, sale, assignment or other
     disposition of any such rights or interests)

                                      48

<PAGE>

     based on what the relevant transferor Indemnitee would have received had
     no such transfer occurred);

with respect to any Indemnitee, any Claim attributable to (i) the gross
     negligence or willful misconduct of such Indemnitee or a Related Party
     except to the extent such gross negligence or willful misconduct is
     attributable to any breach by the Facility Lessee (or any of them) or any
     other Calpine Party of any covenant, representation or warranty contained
     in any Operative Document or (ii) any violation of Applicable Law by any
     such Person except to the extent attributable to a violation of
     Applicable Law by the Facility Lessee or any other Calpine Party or to
     any breach by the Facility Lessee or such other Calpine Party of any
     covenant, representation or warranty contained in any Operative Document;

as to any Indemnitee, any Claim to the extent attributable to the
     noncompliance of such Indemnitee or a Related Party, with any of the
     terms of, or any misrepresentation or breach of warranty by such
     Indemnitee or Related Party contained in any Operative Document made by
     such Indemnitee or Related Party or any breach by such Indemnitee or a
     Related Party of any covenant contained in any Operative Document or any
     breach by such Indemnitee or a Related Party of any covenant contained in
     any Operative Document made by such Indemnitee or Related Party except to
     the extent attributable to any breach by the Facility Lessee or any other
     Calpine Party of any covenant, representation or warranty contained in
     any Operative Document;

any Claim constituting or arising from an Owner Lessor's Lien;

with respect to the Indenture Trustee and the Lease Indenture Company, any
     Claim constituting or arising from a Indenture Trustee's Lien;

with respect to the Owner Participant, any claim constituting or arising from
     an Owner Participant's Lien;

any Claim that is a Tax, or is a cost of contesting a Tax whether or not the
     Facility Lessee is required to indemnify therefor pursuant to Section
     9.2 hereof or under the Tax Indemnity Agreement;

any failure on the part of the Lessor Manager to distribute in accordance with
     the LLC Agreement any amounts received by it under the Operative
     Documents and distributable by it thereunder;

a Claim arising out of a Indenture Default or Lease Indenture Event of
     Default that is not also (or attributable to) a Lease Default or Lease
     Event of Default;

with respect to a particular Indemnitee and Related Party, any obligation or
     liability expressly assumed in any Operative Document by the Indemnitee
     seeking indemnification;

any Claim that constitutes scheduled principal and/or interest on the Lessor
     Notes, Additional Lessor Notes, or the corresponding payments under the
     Certificates or any Additional Certificates; and

                                      49

<PAGE>

any Claim relating to the payment of any amount which constitutes Transaction
     Costs which the Owner Participant is obligated to pay pursuant to
     Section 2.3(a) hereof or any other amount to the extent such Indemnitee
     or a Related Party has expressly agreed in any Operative Document to pay
     such amount without express right of reimbursement;

provided that the terms "omission," "gross negligence" and "willful
misconduct," when applied with respect to the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Pass Through Trustees or any Affiliate
of any thereof, shall not include any liability imputed as a matter of law to
such Indemnitee solely by reason of any such entity's interest in the Facility
or the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of the Facility Lessee under this Agreement or
any other Operative Document. Nothing herein shall be deemed to constitute a
guaranty of any useful life or any present or future residual value of the
Facility or a guaranty that any amount of any Secured Indebtedness will be paid.

Insured Claims. Subject to the provisions of paragraph (e) of this Section 9.1,
     in the case of any Claim indemnified by the Facility Lessee hereunder
     which is covered by a policy of insurance maintained by the Facility
     Lessee, each Indemnitee agrees, unless it and each other Indemnitee shall
     waive its rights to indemnification (for itself and each Related Party
     thereto) in a manner reasonably acceptable to the Facility Lessee, to
     cooperate, at the sole cost and expense of the Facility Lessee, with
     insurers in exercise of their rights to investigate, defend or compromise
     such Claim.

After-Tax Basis. The Facility Lessee agrees that any payment or indemnity
     pursuant to this Section 9.1 in respect of any Claim shall be made on an
     After-Tax Basis to the Indemnitees.

Claims Procedure. Each Indemnitee shall promptly after such Indemnitee shall
     have Actual Knowledge thereof notify the Facility Lessee of any Claim as
     to which indemnification is sought; provided, that the failure so to
     notify the Facility Lessee shall not reduce or affect the Facility
     Lessee's liability which it may have to such Indemnitee under this
     Section 9.1, and no payment hereunder by the Facility Lessee to an
     Indemnitee shall be deemed to constitute a waiver or release of any right
     or remedy that the Facility Lessee may have against any such Indemnitee
     for actual damages resulting directly from the failure or delay of such
     Indemnitee to give the Facility Lessee such notice. Subject to the
     foregoing, any amount payable to any Indemnitee pursuant to this Section
     9.1 shall be paid within thirty (30) days after receipt of such written
     demand therefor from such Indemnitee, accompanied by a certificate of
     such Indemnitee stating in reasonable detail the basis for the
     indemnification thereby sought and (if such Indemnitee is not a party
     hereto) an agreement to be bound by the terms hereof as if such
     Indemnitee were such a party. The foregoing shall not, however,
     constitute an obligation to disclose confidential information of any kind
     without the execution of an appropriate confidentiality agreement.
     Promptly after the Facility Lessee receives notification of such Claim
     accompanied by a written statement describing in reasonable detail the
     Claims which are the subject of and basis for such indemnity and the
     computation of the amount so payable, the Facility Lessee shall, without
     affecting its obligations hereunder, notify such Indemnitee whether it
     intends to pay, object to, compromise or defend any matter involving the
     asserted liability of such Indemnitee. The Facility Lessee shall have the
     right to investigate and so long as no Significant Lease Default or Lease
     Event of Default

                                      50

<PAGE>

     shall have occurred and be continuing, the Facility Lessee shall have
     the right in its sole discretion, to defend or compromise any Claim for
     which indemnification is sought under this Section 9.1 which the Facility
     Lessee acknowledges is subject to indemnification hereunder; provided
     that no such defense or compromise shall involve any danger of (i)
     foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any
     part of the Facility, the Undivided Interest, the Ground Interest, the
     Facility Site, the Lessor Estate or the Indenture Estate or the
     impairment of the Facility or the Facility Site, in any material respect
     or (ii) any criminal liability being incurred or any material adverse
     effect on such Indemnitee; provided, further, that no Claim shall be
     compromised by the Facility Lessee on a basis that admits any criminal
     violation or gross negligence or willful misconduct on the part of such
     Indemnitee without the express written consent of such Indemnitee; and
     provided, further, that to the extent that other Claims unrelated to the
     transactions contemplated by the Operative Documents are part of the same
     proceeding involving such Claim, the Facility Lessee may assume
     responsibility for the contest or compromise of such Claim only if the
     same may be and is severed from such other Claims (and each Indemnitee
     agrees to use reasonable efforts to obtain such a severance). In the
     event that in the course of the investigation or defense of a claim, the
     Facility Lessee shall in good faith reasonably determine that it is not
     liable for indemnification with respect thereto under this Section 9.1,
     it may give notice to the applicable Indemnitee of such fact; and, in
     such case, any acknowledgment, theretofore made by the Facility Lessee of
     liability with respect to such claim under this Section 9.1 shall be
     deemed revoked, and the Facility Lessee may thereupon cease to defend
     such claim; provided that (i) the Facility Lessee shall have given the
     Indemnitee reasonable prior notice of its intention to renounce such
     acknowledgment, (ii) the Facility Lessee's conduct regarding the defense
     of such claim or any decision to withdraw from such defense shall not
     prejudice or have prejudiced the Indemnitee's ability to contest such
     claim (taking into account, among other things, the timing of the
     Facility Lessee's withdrawal and the theory or theories upon which the
     Facility Lessee shall have based its defense), and (iii) the Facility
     Lessee shall have given such Indemnitee all materials, documents and
     records relating to its defense of such claim as such Indemnitee shall
     have reasonably requested in connection with the assumption by such
     Indemnitee of the defense of such claim at the cost and expense of the
     Facility Lessee. In the event that the Facility Lessee shall cease to
     defend any claim pursuant to the preceding sentence, the Facility Lessee
     shall indemnify each Indemnitee, without regard to any exclusion that
     might otherwise apply hereunder, to the extent that the actions of the
     Facility Lessee in defending such claim or the manner or time of the
     Facility Lessee's election to withdraw from the defense of such claim
     shall have caused such Indemnitee to incur any loss, cost, liability or
     expense which such Indemnitee would not have incurred had the Facility
     Lessee not ceased to defend such claim in such manner or such time. If
     the Facility Lessee elect, subject to the foregoing, to compromise or
     defend any such asserted liability, it may do so at its own expense and
     by counsel selected by it. Upon the Facility Lessee's election to
     compromise or defend such asserted liability and prompt notification to
     such Indemnitee of its intent to do so, such Indemnitee shall cooperate
     at the Facility Lessee's expense with all reasonable requests of the
     Facility Lessee in connection therewith and will provide the Facility
     Lessee with all information not within the control of the Facility Lessee
     as is reasonably available to such Indemnitee which the Facility Lessee
     may reasonably request; provided, however, that such Indemnitee shall
     not, unless otherwise required by Applicable Law, be obligated to
     disclose to the Facility Lessee or any other Person, or permit

                                      51

<PAGE>

     the Facility Lessee or any other Person to examine (i) any income tax
     returns of the Owner Participant or (ii) any confidential information or
     pricing information not generally accessible by the public possessed by
     the Owner Participant (and, in the event that any such information is
     made available, the Facility Lessee shall treat such information as
     confidential and shall take all actions reasonably requested by such
     Indemnitee for purposes of obtaining a stipulation from all parties to
     the related proceeding providing for the confidential treatment of such
     information from all such parties). Where the Facility Lessee, or the
     insurers under a policy of insurance maintained by the Facility Lessee
     undertakes the defense of such Indemnitee with respect to a Claim (with
     counsel reasonably satisfactory to such Indemnitee and without
     reservation of rights against such Indemnitee), no additional legal fees
     or expenses of such Indemnitee in connection with the defense of such
     Claim shall be indemnified hereunder unless such fees or expenses were
     incurred at the request of the Facility Lessee or such insurers.
     Notwithstanding the foregoing, an Indemnitee may participate at its own
     expense in any judicial proceeding controlled by the Facility Lessee
     pursuant to the preceding provisions, but only to the extent that such
     party's participation does not in the reasonable opinion of counsel to
     the Facility Lessee interfere with such control or defense of such claim;
     provided, however, that such party's participation does not constitute a
     waiver of the indemnification provided in this Section 9.1; provided,
     further, that if and to the extent that (i) such Indemnitee is advised by
     counsel that an actual or potential conflict of interest exists where it
     is advisable for such Indemnitee to be represented by separate counsel or
     (ii) there is a risk that such Indemnitee may be subject to criminal
     liability and such Indemnitee informs the Facility Lessee that such
     Indemnitee desires to be represented by separate counsel, such Indemnitee
     shall have the right to control its own defense of such Claim and the
     reasonable fees and expenses of such defense (including, without
     limitation, the reasonable fees and expenses of such separate counsel)
     shall be borne by the Facility Lessee. So long as no Lease Event of
     Default described in clause (a), (b), (g) or (h) of Section 16 of the
     Facility Lease has occurred and be continuing, no Indemnitee shall enter
     into any settlement or other compromise with respect to any Claim without
     the prior written consent of the Facility Lessee unless (i) the
     Indemnitee waives its rights to indemnification hereunder or (ii) the
     Facility Lessee has not acknowledged their indemnity obligation with
     respect thereto and there is a significant risk that a default judgment
     will be entered against such Indemnitee. Nothing contained in this
     Section 9.1(e) shall be deemed to require an Indemnitee to contest any
     Claim or to assume responsibility for or control of any judicial
     proceeding with respect thereto.

Subrogation. To the extent that a Claim indemnified by the Facility Lessee under
     this Section 9.1 is in fact paid in full by the Facility Lessee or an
     insurer under an insurance policy maintained by the Facility Lessee (so
     long as no Lease Event of Default shall have occurred and be continuing),
     such insurer shall be subrogated to the rights and remedies of the
     Indemnitee on whose behalf such Claim was paid to the extent of such
     payment (other than rights of such Indemnitee under insurance policies
     maintained at its own expense) with respect to the transaction or event
     giving rise to such Claim. Should an Indemnitee receive any refund, in
     whole or in part, with respect to any Claim paid by the Facility Lessee
     hereunder, it shall promptly pay over to the Facility Lessee the lesser
     of (i) the amount refunded reduced by the amount of any Tax incurred by
     reason of the receipt or accrual of such refund and increased by the
     amount of any Tax (but not in excess of the amount of such reduction)
     saved as a result of such payment or (ii) the amount the Facility Lessee
     or any of

                                      52

<PAGE>

     their insurers has paid in respect of such Claim; provided that, so long
     as a Significant Lease Default or Lease Event of Default shall have
     occurred and is continuing such amount may be held by the Owner Lessor as
     security for the Facility Lessee's obligations under the Facility Lease
     and the other Operative Documents.

Minimize Claims. The Owner Participant, the Owner Lessor, and each of the other
     Transaction Parties will use their respective reasonable and diligent
     efforts to minimize Claims indemnifiable by the Facility Lessee under
     this Section 9.1, including by complying with reasonable requests by the
     Facility Lessee to do or to refrain from doing any act if such compliance
     is, in the good faith opinion of the Owner Participant, the Owner Lessor,
     or such other Transaction Party, as the case may be, of a purely
     ministerial nature or otherwise has no unindemnified adverse impact on
     the Owner Participant, the Owner Lessor, or such Transaction Party, as
     the case may be, or any Affiliate of any thereof or on the business or
     operations of any of the foregoing.

General Tax Indemnity.

Indemnity. Except as provided in paragraph (b), the Facility Lessee agrees to
     indemnify each of the Owner Participant, the Owner Lessor, any OP
     Guarantor, the Trust Company in its individual capacity, the Lessor
     Manager, the Lease Indenture Company in its individual capacity, the
     Indenture Trustee, the Pass Through Company in its individual capacity,
     the Pass Through Trustees, each Certificateholder and their respective
     successors and assigns, the past and present partners or members of or
     holders of the ownership interests in, as the case may be, the Owner
     Participant (each of the foregoing, together with any Affiliate thereof,
     a "Tax Indemnitee") for, to hold each Tax Indemnitee harmless from and to
     defend each Tax Indemnitee against all Taxes that are imposed upon or
     with respect to or borne by or asserted against any Tax Indemnitee, the
     Facility, the Undivided Interest, the Facility Site, the Ground Interest,
     or any portion or Component thereof or any interest therein, or upon any
     Operative Document or interest therein, or in any way arising out of, in
     connection with or relating to, any of the following:

the acceptance, rejection, delivery, construction, financing, refinancing,
     acquisition, operation, warranty, ownership, possession, maintenance,
     repair, lease, condition, alteration, modification, restoration,
     refurbishing, rebuilding, return, transport, assembly, repossession,
     servicing, dismantling, abandonment, retirement, decommissioning,
     preparation, installation, storage, replacement, purchase, sale or other
     disposition, insuring, sublease, or other use or non-use of, the
     imposition of any lien (or incurrence of any liability to refund or pay
     over any amount as a result of any lien) on, the Facility, the Undivided
     Interest, the Ground Interest, the Facility Site or any portion or
     Component thereof or any interest therein;

the Facility, the Facility Site, the Undivided Interest, the Ground Interest,
     any portion thereof or Component or interest therein, the applicability
     of the Facility Lease to the Facility or the Undivided Interest, or the
     conduct of the business or affairs of the Facility Lessee or Calpine, the
     Facility or the Facility Site;

                                      53

<PAGE>

the manufacture, design, purchase, acceptance, rejection, delivery,
     non-delivery, redelivery or condition of, or improvement to, the
     Facility, the Facility Site or any portion or Component thereof, or any
     interest therein;

the Facility Lease, or any other Operative Document, the execution or delivery
     thereof, any other documents contemplated thereby or the performance,
     enforcement or amendment of any terms thereof;

the payment or receipt of Periodic Rent and Supplemental Rent or any other
     payment, receipt or earning under the Facility Lease or the Facility
     Site Lease or arising from the Facility, the Undivided Interest, the
     Ground Interest, the Facility Site, or any portion or Component thereof
     or any interest therein;

any other amount paid or payable pursuant to the Operative Documents;

the conveyance of title to the Undivided Interest; or

otherwise relating to the transactions contemplated by the Operative Documents.

          Notwithstanding anything herein to the contrary and without
regard to paragraph (b) hereof, the Facility Lessee will indemnify the Owner
Participant and the Owner Lessor on an After-Tax Basis for any Taxes collected
by way of withholding (and any interest, penalties or additions to tax
associated therewith) (or for the failure to withhold taxes) imposed on the
Lessor Notes or the Additional Lessor Notes or any other payments to each
Certificateholder or the Indenture Trustee (each a "Certificateholder
Indemnitee"), including any penalties, interest, or additions to tax applicable
in connection therewith; provided, however, that if the Facility Lessee is
required, for any reason, to indemnify the Owner Participant or the Owner
Lessor with respect to any failure to withhold such tax, and the withholding
tax would otherwise be an Excluded Tax under Section 9.2(b) without regard to
the first sentence of this paragraph, then the Certificateholder Indemnitee
with respect to which such withholding was not made will pay the amount of tax
not withheld to the relevant taxing authority if such taxes remain unpaid or
will reimburse the Facility Lessee for the amount of tax not withheld, but paid
to such taxing authority, on demand, plus interest at (a) the Lease Debt Rate
during the period commencing on the date the Facility Lessee shall have made
the indemnity payment to such taxing authority and ending the earlier of the
date of repayment by such Tax Indemnitee and five Business Days after the date
the Facility Lessee demands reimbursement thereof pursuant to this sentence,
and (b) the Overdue Rate for the period thereafter to the date the Facility
Lessee actually receives such payment.

Excluded Taxes. The indemnity provided for in paragraph (a) above shall not
     extend to any of the following Taxes (the "Excluded Taxes"):

Taxes imposed by the United States federal government or any state or local
     government, any political subdivision of any of the foregoing, imposed
     on, based on or measured by gross or net income, receipts, capital gain,
     capital or net worth, or conduct of business (other than, in each case,
     Taxes that are or are in the nature of sales, use, rental, license, value
     added (to the extent value added taxes are not imposed in clear and
     direct substitution for income taxes) or property taxes) ("Income
     Taxes"), including any such Taxes collected by way of

                                      54

<PAGE>

     withholding, minimum or alternative minimum taxes, and franchise taxes;
     provided that this exclusion (i) shall not affect any express requirement
     that payments be made on an "after-tax" basis;

Taxes imposed on a Tax Indemnitee other than a Certificateholder Indemnitee
     that are attributable to any act, event or omission by such Tax Indemnitee
     that occurs after expiration or other termination of the Facility Lease
     and surrender of the Undivided Interest to the Owner Lessor or its
     successors (or in the case of a Certificateholder Indemnitee, Taxes
     imposed for any period after the repayment of the Lease Debt) in
     accordance with the Facility Lease, (as opposed to any act, event or
     omission occurring prior to or simultaneous with such expiration,
     termination or surrender (or, in the case of a Certificateholder
     Indemnitee, such repayment)), provided that this exclusion shall not
     apply so long as a Lease Event of Default shall have occurred and be
     continuing;

Taxes imposed on a Tax Indemnitee that are attributable to the gross negligence
     or willful misconduct of such Tax Indemnitee, unless such negligence or
     misconduct is imputed to such Tax Indemnitee solely as a result of its
     participation in the transactions contemplated by the Operative Documents
     and not as a result of any action or inaction by such Tax Indemnitee;

Taxes imposed on a Tax Indemnitee arising from a breach by such Tax Indemnitee
     of any of its representations, warranties or covenants under any
     Operative Document except to the extent attributable to any breach by the
     Facility Lessee or any other Calpine Party of any covenant,
     representation or warranty contained in any Operative Document;

Taxes(A) that are attributable to any voluntary direct or indirect assignment,
     sale, transfer or other voluntary disposition or an involuntary direct
     or indirect transfer or disposition arising out of or caused by a
     bankruptcy or similar proceeding for relief of debtors in which such Tax
     Indemnitee is a debtor or a foreclosure by a creditor of (1) in the case
     of the Owner Lessor or the Owner Participant, the Owner Participant of
     all or part of its Member Interest or Undivided Interest, (2) in the case
     of the Owner Lessor or the Owner Participant, the Owner Lessor of all or
     part of its interest in the Facility or the Facility Site (other than to
     a successor Lessor Manager), or (3) in the case of the Indenture Trustee,
     the Indenture Trustee of any interest in the Lease Debt or the Indenture
     Estate, or (4) in the case of the Owner Lessor or the Owner Participant
     any direct or indirect interest in the Owner Lessor or the Owner
     Participant, including by reason of an election made pursuant to Section
     338 of the Code, in each case to the extent imposed by reason of any
     transfer described in this clause (v)(A), or (B) to the extent that,
     under law in effect on the date of the transfer such Taxes exceed the
     amount of Taxes that would be indemnified hereunder had there been no
     such assignment, sale, transfer or other voluntary disposition, unless
     such transfer or disposition occurs during the continuance of a Lease
     Event of Default or is otherwise pursuant to the Facility Lessee's
     exercise of its rights under the Operative Documents; provided that this
     exclusion shall not apply with respect to any initial syndication of
     interests in the Owner Participant accomplished prior to December 29,
     2001;

Taxes imposed on a Tax Indemnitee that would not have been imposed but for the
     creation or existence of any Owner Lessor's Lien or Owner Participant's
     Lien attributable to such Tax Indemnitee;

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Taxes that are included as a part of the cost of the Facility;

Taxes imposed on the Lessor Manager or the Indenture Trustee that are based on
     or measured by the fees or other compensation received by the Lessor
     Manager or Indenture Trustee for acting in their respective capacities.

With respect to the Owner Participant, Taxes for which the Facility Lessee is
     obligated to indemnify the Owner Participant under the Tax Indemnity
     Agreement (or which are expressly excluded from indemnification
     thereunder);

Taxes that are imposed on a Tax Indemnitee (other than a Certificateholder
     Indemnitee) resulting from the Owner Lessor not being treated as a
     grantor trust or other conduit entity for federal, state or local income
     tax purposes, but only to the extent such Taxes exceed Taxes indemnified
     hereunder that otherwise would have been imposed and are otherwise
     indemnifiable;

Taxes imposed on a Tax Indemnitee that are attributable to the failure of such
     Tax Indemnitee to comply with certification, information, documentation,
     reporting or other similar requirements concerning the nationality,
     residence, identity or connection with the jurisdiction imposing such
     Taxes; provided that the foregoing exclusion shall only apply if such
     compliance is required by statute or regulation of the jurisdiction
     imposing such Taxes as a precondition to relief or exemption from or
     reduction in such Taxes, such Tax Indemnitee is eligible to comply with
     such requirement, the Facility Lessee shall have given such Tax
     Indemnitee timely written notice of such requirement and the Tax
     Indemnitee shall have determined in good faith that compliance with any
     such requirement shall not result in any identified non-immaterial
     adverse effect to its interests or to those of its Affiliates;

Taxes consisting of interest, penalties, additions to tax or fines resulting
     from a failure of such Tax Indemnitee to properly and timely file
     returns as required by a taxing authority unless such failure is
     attributable to the Facility Lessee not providing information that it is
     expressly required to provide under the Operative Documents;

Taxes imposed on any Tax Indemnitee resulting from an amendment, modification,
     supplement to or waiver of any provision of, any Operative Document
     which amendment, modification, supplement or waiver was not requested by
     or consented to by the Facility Lessee, and as to which the Facility
     Lessee is not a party and the Tax Indemnitee (or, in the case of the
     Owner Participant, the Owner Lessor if acting at the express direction of
     the Owner Participant or any Related Party) is a party, provided that
     this exclusion shall not apply if such amendment, modification,
     supplement or waiver (A) was required by applicable law or the Operative
     Documents, (B) may be necessary or appropriate to, and is in conformity
     with, any amendment to any Operative Document requested by the Facility
     Lessee in writing, or (C) was expressly consented to by a Calpine Party
     in writing;

Taxes imposed as a result of, or in connection with, any "prohibited
     transaction," within the meaning of Section 4975 of the Code, Section
     406 of ERISA or any comparable laws of any Governmental Entity, engaged
     in by any Tax Indemnitee (which for this purpose shall include any ERISA
     Affiliate thereof) resulting from the breach by such Tax Indemnitee of

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     any of its representations or warranties contained in Section 3.4(g) or
     Section 8.2 of the Participation Agreement;

Taxes to the extent such Taxes would not have been imposed on a Tax Indemnitee
     if such Tax Indemnitee were a United States Person; and

Taxes imposed that would not have been imposed on a Tax Indemnitee but for the
     activities in the taxing jurisdiction of such Tax Indemnitee or any
     Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents other than Taxes that are or are in the nature of
     sales, use, rental or license taxes, value added taxes (except to the
     extent value added taxes are imposed in clear and direct substitution for
     income taxes) or property taxes.

Payment. Notwithstanding anything to the contrary herein and without regard to
     paragraph (b) hereof, any payment by the Facility Lessee pursuant to
     this Section 9.2 shall be increased by amounts necessary to ensure that
     all such payments are made on an After-Tax Basis. Each payment required
     to be made by the Facility Lessee to a Tax Indemnitee pursuant to this
     Section 9.2 shall be paid either (i) when due directly to the applicable
     taxing authority by the Facility Lessee if it is permitted to do so, or
     (ii) where direct payment is not permitted, and with respect to gross up
     amounts, in immediately available funds to such Tax Indemnitee by the
     later of (A) 10 days following the Facility Lessee's receipt of the Tax
     Indemnitee's written demand for the payment pursuant to clause (g)(i)
     below (which demand shall be accompanied by a written statement of the
     Tax Indemnitee describing in reasonable detail the Taxes for which the
     Tax Indemnitee is demanding payment and the computation of such Taxes),
     (B) subject to paragraph (g) below, in the case of amounts which are
     being contested pursuant to such paragraph (g), at the time and in
     accordance with a final determination of such contest or (C) in the case
     of any indemnity demand for which the Facility Lessee has requested
     review and determination pursuant to paragraph (d) below, the completion
     of such review and determination; provided, however, in no event later
     than the date which is one Business Day prior to the date on which such
     Taxes are required to be paid to the applicable taxing authority. Any
     amount payable to the Facility Lessee pursuant to paragraph (e) or (f)
     below shall be paid promptly after the Tax Indemnitee realizes a Tax
     Benefit giving rise to a payment under paragraph (e) or receives a refund
     or credit giving rise to a payment under paragraph (f), as the case may
     be, and shall be accompanied by a statement of the Tax Indemnitee
     computing in reasonable detail the amount of such payment. Upon the final
     determination of any contest pursuant to paragraph (g) below in respect
     of any Taxes for which the Facility Lessee has made a Tax Advance, the
     amount of the Facility Lessee's obligation under paragraph (a) above
     shall be determined as if such Tax Advance had not been made. Any
     obligation of the Facility Lessee under this Section 9.2 and the Tax
     Indemnitee's obligation to repay the Tax Advance will be satisfied first
     by set off against each other, and any difference owing by either party
     will be paid within 10 days of such final determination.

Independent Examination. Within 10 days after the Facility Lessee receives any
     computation from the Tax Indemnitee, the Facility Lessee may request in
     writing that an independent public accounting firm selected by the Tax
     Indemnitee and reasonably acceptable to the Facility Lessee review and
     determine on a confidential basis the amount of any indemnity payment by
     the Facility Lessee to the Tax Indemnitee pursuant to this Section 9.2 or
     any

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<PAGE>

     payment by a Tax Indemnitee to the Facility Lessee pursuant to paragraph
     (e) or (f) below. The Tax Indemnitee shall cooperate with such accounting
     firm and supply it with all information reasonably necessary for the
     accounting firm to conduct such review and determination (but not tax
     returns and books); provided that such accounting firm shall agree in
     writing in a manner reasonably satisfactory to the Tax Indemnitee to
     maintain the confidentiality of such information. The parties hereto
     agree that the independent public accounting firm's sole responsibility
     shall be to verify the computation of any payment pursuant to this
     Section 9.2 and that matters of interpretation of this Participation
     Agreement or any other Operative Document are not within the scope of the
     independent accountant's responsibility. The fees and disbursements of
     such accounting firm will be paid by the Facility Lessee; provided that
     such fees and disbursements will be paid by the Tax Indemnitee if the
     verification results in an adjustment in the Facility Lessee's favor of 5
     percent or more of the indemnity payment or payments computed by the Tax
     Indemnitee.

Tax Benefit. If, as the result of any Taxes paid or indemnified against by the
     Facility Lessee under this Section 9.2, the aggregate Taxes actually
     paid by the Tax Indemnitee for any taxable year and not subject to
     indemnification pursuant to this Section 9.2 are less (whether by reason
     of a deduction, credit, allocation or apportionment of income or
     otherwise) than the amount of such Taxes that otherwise would have been
     payable by such Tax Indemnitee (a "Tax Benefit"), then to the extent such
     Tax Benefit was not taken into account in determining the amount of
     indemnification payable by the Facility Lessee under paragraph (a) or (c)
     above and provided no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing (in which event the payment
     provided under this Section 9.2(e) shall be deferred until the
     Significant Lease Default or Lease Event of Default has been cured), such
     Tax Indemnitee shall pay to the Facility Lessee the lesser of (A) (y) the
     amount of such Tax Benefit, plus (z) an amount equal to any United States
     federal, state or local income tax benefit resulting to the Tax
     Indemnitee from the payment under clause (y) above and this clause (z)
     (determined using the same assumptions as set forth in the second
     sentence under the definition of After-Tax Basis) and (B) the amount of
     the indemnity paid pursuant to this Section 9.2 giving rise to such Tax
     Benefit; provided, however, that any excess of (A) over (B) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such Tax Benefit, the portion of such Tax Benefit that is required to
     be repaid or recaptured will be treated as Taxes for which the Facility
     Lessee must indemnify the Tax Indemnitee pursuant to this Section 9.2
     without regard to paragraph (b) hereof.

          Notwithstanding anything to the contrary herein, each
Certificateholder Indemnitee shall determine the allocation of any tax
benefits, savings, credit, deduction or allocation in its sole good faith
discretion and each position to be taken on its tax return shall be in its sole
control and it shall not be required to disclose any tax return or related
documentation to any Person.

Refund. If a Tax Indemnitee obtains a refund or credit of all or part of any
     Taxes paid, reimbursed or advanced by the Facility Lessee pursuant to
     this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
     Lessee (x) the amount of such refund or credit (net of any Tax payable by
     the Tax Indemnitee as a result of the receipt or accrual of such

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     refund or credit) plus (y) an amount equal to any United States federal,
     state or local income tax benefit realized by such Tax Indemnitee by
     reason of such payment to the Facility Lessee (determined using the same
     assumptions as set forth in the second sentence under the definition of
     After-Tax Basis); provided that (A) if at the time such payment is due to
     the Facility Lessee a Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing, such amount shall not be payable
     until such Significant Lease Default or Lease Event of Default has been
     cured, and (B) the amount payable to the Facility Lessee pursuant to this
     sentence shall not exceed the amount of the indemnity payment in respect
     of such refunded or credited Taxes that was made by the Facility Lessee.
     Any excess of (x) and (y) over (B) in this Section 9.2(f) shall be
     carried forward and reduce the Facility Lessee's obligations to make
     subsequent payments to such Tax Indemnitee pursuant to this Section 9.2.
     If it is subsequently determined that the Tax Indemnitee was not entitled
     to such refund or credit, the portion of such refund or credit that is
     required to be repaid or recaptured will be treated as Taxes for which
     the Facility Lessee must indemnify the Tax Indemnitee pursuant to this
     Section 9.2 without regard to paragraph (b) hereof. If, in connection
     with a refund or credit of all or part of any Taxes paid, reimbursed or
     advanced by the Facility Lessee pursuant to this Section 9.2, a Tax
     Indemnitee receives an amount representing interest on such refund or
     credit, the Tax Indemnitee promptly shall pay to the Facility Lessee (1)
     the amount of such interest that shall be fairly attributable to such
     Taxes paid, reimbursed or advanced by the Facility Lessee prior to the
     receipt of such refund or credit (net of Taxes payable in respect of the
     receipt or accrual of such interest) and (2) any Tax savings resulting
     from payments made by the Tax Indemnitee under (1) and (2).

Contest.

Notice of Contest. If a written claim for payment is made by any taxing
     authority against a Tax Indemnitee for any Taxes with respect to which
     the Facility Lessee may be liable for indemnity hereunder (a "Tax
     Claim"), such Tax Indemnitee shall give the Facility Lessee written
     notice of such Tax Claim promptly after its receipt, and shall furnish
     the Facility Lessee with copies of such Tax Claim and all other writings
     received from the taxing authority to the extent relating to such claim;
     provided that failure to so notify the Facility Lessee shall not relieve
     the Facility Lessee of any obligation to indemnify the Tax Indemnitee
     hereunder except to the extent that such failure effectively precludes
     the ability to conduct a contest hereunder (and without limiting any
     damage claim or remedy the Facility Lessee may otherwise have for such
     failure).

Control of Contest. Subject to subsection (g)(iii) below, the Facility Lessee
     will be entitled to contest (acting through counsel selected by the
     Facility Lessee and reasonably satisfactory to the Tax Indemnitee), and
     control the contest of, any Tax Claim if (A) such Tax Claim may be
     pursued in the name of the Facility Lessee and may be segregated
     procedurally from tax claims for which the Facility Lessee is not
     obligated to indemnify the Tax Indemnitee or (B) the Tax Indemnitee
     requests that the Facility Lessee control such contest. In the case of
     all other Tax Claims, the Tax Indemnitee will contest the Tax Claim if
     the Facility Lessee shall request that the Tax be contested (subject to
     subsection (g)(iii) below), and the following rules shall apply with
     respect to such contest:

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          (1)   the Tax Indemnitee will control the contest of such Tax Claim
(acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessee) at the Facility Lessee's expense,

          (2)   the decisions regarding what actions to be taken shall be made
by the Tax Indemnitee in its sole judgment, and

          (3)   the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without the Facility Lessee's prior written consent except
as provided in paragraph (g)(iv) below.

          In either case, the party conducting such contest shall
consult in good faith with the other party and its designated counsel with
respect to such Tax Claim and shall provide the other party with copies of any
reports or claims (or extracts therefrom) issued by the relevant auditing
agents or taxing authority relating to such Tax Claim.

Conditions of Contest. Notwithstanding the foregoing, no contest with respect to
     a Tax Claim will be required or permitted pursuant to this Section 9.2,
     and the Facility Lessee shall be required to pay the applicable Taxes
     without contest, unless:

          (1)   within 30 days after written notice by the Tax Indemnitee to
the Facility Lessee of such Tax Claim (or such shorter period, to be specified
by the Tax Indemnitee in such notice, as required for taking action with
respect to such Tax Claim), the Facility Lessee shall request in writing to the
Tax Indemnitee that such Tax Claim be contested,

          (2)   no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessee has provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee and the Indenture Trustee, both as to coverage
and credit,

          (3)   there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facility, the Facility Site, the Undivided
Interest, the Ground Interest, or any portion or Component thereof or any
interest therein as a result of such Tax Claim; provided that this clause (3)
shall not apply if the Facility Lessee posts security satisfactory to the Tax
Indemnitee, both as to coverage and credit, in its sole discretion,

          (4)   there is no risk of imposition of any criminal penalties or
liabilities,

          (5)   if such contest involves payment of such Tax, the Facility
Lessee will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),

          (6)   the Facility Lessee agrees to pay (and pays on demand) and with
no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with
the contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),

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          (7)   the Tax Indemnitee, if it so requests has been provided at the
Facility Lessee's sole expense with an opinion, reasonably acceptable to such
Tax Indemnitee, of independent tax counsel selected by the Tax Indemnitee and
reasonably acceptable to the Facility Lessee to the effect that there is a
Reasonable Basis for contesting such Tax Claim,

          (8)   in the case of a judicial appeal, the appeal is not to the U.S.
Supreme Court,

          (9)   if such contest is controlled by the Facility Lessee, prior to
commencement of a judicial action with respect to the contest, the Facility
Lessee shall have admitted in writing its liability to pay an indemnity
pursuant to this Section 9.2 with respect to such Tax, which admission shall be
binding on the Facility Lessee unless and to the extent such contest is
determined in a manner that conclusively demonstrates that the Facility Lessee
is not so liable, and

          (10)   if the subject matter of such claim shall be of a continuing
or recurring nature and shall have previously been decided pursuant to this
paragraph (g), there shall have been a change in law after such previously
decided claim and such Tax Indemnitee receives, at the Facility Lessee's sole
cost, an opinion of counsel selected by such Tax Indemnitee and reasonably
acceptable to the Facility Lessee to the effect that such change is favorable
to the position asserted in the previous contest.

Waiver of Indemnification. Notwithstanding anything to the contrary contained in
     this Section 9.2, the Tax Indemnitee at any time may elect to decline to
     take any action or any further action with respect to (and the Facility
     Lessee shall not be permitted to contest) a Tax Claim and may in its sole
     discretion settle or compromise any contest with respect to such Tax
     Claim without the Facility Lessee's consent if the Tax Indemnitee:

          (1)   waives its right to any indemnity payment by the Facility
Lessee pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and

          (2)   promptly repays to the Facility Lessee any Tax Advance and any
amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.

          Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax Claim.

Reports.

If any report, statement or return is required to be filed by a Tax Indemnitee
     with respect to any Tax that is subject to indemnification under this
     Section 9.2, the Facility Lessee will (1) notify the Tax Indemnitee in
     writing of such requirement not later than 30 days prior to the date such
     report, statement or return is required to be filed (determined without
     regard to extensions) and (2) either (y) unless directed by the Tax
     Indemnitee otherwise, if permitted by applicable law, prepare such
     report, statement or return for filing by the Facility Lessee in

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     such manner as will show the ownership of the Facility by the Owner
     Lessor for United States federal, state and local income tax purposes (if
     applicable), send a copy of such report, statement or return to the Tax
     Indemnitee and timely file such report, statement or return with the
     appropriate taxing authority, or (z) in all other cases, prepare and
     furnish to such Tax Indemnitee not later than 30 days prior to the date
     such report, statement or return is required to be filed (determined
     without regard to extensions) a proposed form of such report, statement
     or return for filing by the Tax Indemnitee; provided that the only
     consequence for failure to file after compliance by the Facility Lessee
     with the requirements hereof shall be a loss of indemnification from the
     Facility Lessee in respect of any Tax to the extent resulting from such
     failure.

Each of the Tax Indemnitee and the Facility Lessee, as the case may be, will
     timely provide the other, at the Facility Lessee's expense, with all
     information (other than books or income tax returns that such party
     reasonably deems confidential) in its possession that the other party may
     reasonably require and request to satisfy its tax filing obligations.

Non-Parties. If a Tax Indemnitee is not a party to this Agreement, the Facility
     Lessee may require such Tax Indemnitee to agree in writing, in a form
     reasonably acceptable to the Facility Lessee, to the terms of this
     Section 9.2 prior to making any payment to such Tax Indemnitee under this
     Section. Subject to the preceding sentence, the Facility Lessee's
     obligations under this Section 9.2 shall inure to the benefit of each and
     every Tax Indemnitee without regard to whether such Tax Indemnitee is a
     party to this Agreement.

FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT

          Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Facility Lease and the Facility
Site Lease and expressly, severally and as to its own actions only, agrees
that, so long as no Lease Event of Default has occurred and is continuing, it
shall not take or cause to be taken any action or direct that any action be
taken, which is contrary to or inconsistent with the rights under the Facility
Lease and Facility Site Sublease, including the right to possession, use and
quiet enjoyment of the Undivided Interest and the Ground Interest.

SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS

Financing Improvements. Upon the request of the Facility Lessee delivered at
least 90 days prior to financing a portion of the cost of any Required or
Non-Severable Improvement, the Owner Lessor and the Indenture Trustee agree to
cooperate with the Facility Lessee to (a) issue Additional Lessor Notes under
the Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the Initial Lessor Notes and/or any Additional Lessor Notes then
outstanding; (b) execute and deliver one or more supplements to the Collateral
Trust Indenture for purpose of subjecting the Owner Lessor's interest in any
such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by clause
(iv) below; provided, however, that (x) the Owner Participant shall have been
given the opportunity, but shall have no obligation, to provide all or part of
the funds required to finance any such Improvement by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but the Facility Lessee shall have no

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obligation to accept such Additional Equity Investment; and (y) the conditions
set forth below and in Section 2.12 of the Collateral Trust Indenture shall
have been satisfied. The obligation to finance such Improvements through the
issuance of Additional Lessor Notes under Section 2.12 of the Collateral Trust
Indenture (any financing of Improvements through the issuance of such
Additional Lessor Notes under the Collateral Trust Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:

except with respect to Required Improvements, there shall be no more than one
     such financing in any calendar year;

the Additional Lessor Notes (A) shall have a final maturity no later than the
     final maturity of the Lessor Notes issued on the Closing Date and (B)
     will be fully repaid out of additional Basic Rent, as adjusted pursuant
     to the Facility Lease, during the Facility Lease Term;

the Additional Lessor Notes shall have an average life to maturity equal to the
     average life to maturity of the Lessor Notes issued on the Closing Date;

appropriate increases to Basic Rent and Termination Value (determined without
     regard to any tax benefits associated with such Improvements, unless the
     Owner Participant is making an Additional Equity Investment) shall be
     made to protect the Owner Participant's Net Economic Return; provided
     that there shall be no changes to the amortization schedule or interest
     amounts and payment dates on the then outstanding Lessor Notes;

the Facility Lessee shall have paid, on an After-Tax Basis, all reasonable
     costs and expenses of the Transaction Parties, including the reasonable
     fees and expenses of counsel to the Owner Participant, the Owner Lessor,
     the Indenture Trustee, the Lease Indenture Company, the Pass Through
     Company and the Pass Through Trustees, in each case to the extent
     incurred in connection with any financing or refinancing pursuant to this
     Section 11 whether or not the financing is consummated;

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing unless the Improvements to be constructed with the
     proceeds of the Additional Lessor Notes shall cure such Significant Lease
     Default or Lease Event of Default and such Improvements shall be made in
     compliance with the Operative Documents;

such Additional Lessor Notes represent an aggregate amount not less than $20
     million, nor greater than 100% of the costs of the Improvements being
     financed; provided that the aggregate balance of the Lessor Notes for the
     Undivided Interest never exceeds 80% of the fair market value (which fair
     market value shall be determined by an appraiser selected by the Facility
     Lessee and reasonably acceptable to the Owner Participant) of the
     Undivided Interest taking into account the fair market value of such
     Improvements;

the Owner Participant shall have received a favorable opinion of its tax
     counsel satisfactory to such Owner Participant to the effect that such
     financing creates no incremental tax risk not indemnified to the Owner
     Participant's satisfaction (including additional indebtedness incurred to
     finance the Improvements not constituting "qualified nonrecourse
     indebtedness" within the meaning of Treasury Regulations Section
     1-861-10T(b));

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the Owner Participant shall suffer no adverse accounting effects under GAAP as
     a result of such financing;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions or certificates as the Owner
     Participant, the Indenture Trustee may reasonably request;

the Facility Lessee or the Guarantor shall have, at such time, a credit rating
     of at least Investment Grade from S&P and Moody's;

the Facility Lessee shall pay to (a) the Owner Participant a fee of $100,000
     and (b) the Pass Through Trustees for the benefit of the
     Certificateholders, to be shared by such Certificateholders on a pro rata
     basis, a fee of $100,000 for each such financing, in each case under
     clauses (a) and (b) above, other than the first financing; and

Calpine shall have affirmed to the Transaction Parties that the Calpine
     Guaranties cover the additional indebtedness contemplated by this
     Section 11.1.

          Notwithstanding the prior provision dealing with the financing
of Improvements through the Facility Lease, the Facility Lessee shall at all
times have the right to fund Improvements to the Facility other than through
the Facility Lease; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Lease on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution
control, no Improvement shall materially decrease the value, residual value,
utility or remaining economic useful life of the Facility immediately prior to
such Improvement or cause the Facility to become limited-use property.

Optional Refinancing of Lease Debt. The Facility Lessee shall have the right,
exercisable at any time on no more than three occasions, to request the Owner
Lessor (and the Owner Lessor shall reasonably consider and not unreasonably
withhold its consent), to refund or refinance the Lease Debt, in whole but not
in part, through the issuance of Additional Lessor Notes; provided that all
conditions to the issuance of such Additional Lessor Notes contained in Section
2.12 of the Collateral Trust Indenture shall have been satisfied and all
applicable Make-Whole Amounts shall have been paid. Any refinancing under this
Section 11.2 shall also be subject to satisfaction of the following additional
conditions:

the Owner Lessor shall be able to issue and sell such debt in an amount
     adequate to accomplish such refunding or refinancing;

with respect to the refinancing of the Initial Lessor Notes of a particular
     maturity, such Additional Lessor Notes shall have a final maturity no
     later than the final maturity date of such Initial Lessor Notes and will
     be fully repaid out of Basic Rent during the Facility Lease Term;

appropriate adjustments to Basic Rent and Termination Value shall be made to
     preserve the Owner Participant's Net Economic Return; provided that no
     adjustments shall be made to the amortization schedule;

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no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing;

the Owner Participant shall suffer no adverse accounting effects under GAAP;

the Facility Lessee shall have made or delivered such representations,
     warranties, covenants, opinions and certificates as the Owner
     Participant may reasonably request, which representations, warranties,
     covenants and agreements shall be of no greater scope than those provided
     by the Facility Lessee on the Closing Date under the Operative Documents
     to which it is a party (except to the extent necessitated by differences
     between existing Operative Documents and the terms and conditions of the
     proposed refinancing);

all documentation in connection with such refinancing shall be reasonably
     satisfactory to the Owner Lessor and the Owner Participant;

the Owner Participant shall receive a consent fee of $100,000 in the aggregate
     for each refinancing after the first such refinancing;

the Lease Debt as financed constitutes qualified nonrecourse indebtedness
     within the meaning of Treasury Regulations Section 1-861-10T(b) and the
     Owner Participant shall have received an opinion satisfactory to it to
     such effect; and

the Owner Participant shall receive an opinion satisfactory to it that the
     refinancing (as opposed to the right to request such refinancing) shall
     not result in any incremental tax risk not indemnified to the Owner
     Participant's satisfaction.

          Calpine shall have affirmed in writing to the Transaction
Parties that the Calpine Guaranty covers the additional indebtedness
contemplated by this Section 11.2.

Cooperation. The Owner Participant will cooperate with and assist the Facility
Lessee in connection with any refinancing and/or assumption of the Lease Debt,
so long as such refinancing and/or assumption of the Lease Debt is in
accordance with the terms of the Operative Documents. The Owner Participant
will execute such agreements and documents as may be necessary with respect to
any such refinancing and will instruct the Owner Lessor to act accordingly.

CERTAIN ADJUSTMENTS TO PERIODIC RENT, TERMINATION VALUE AND OTHER AMOUNTS

Prior to or on the Closing Date, Periodic Rent, Termination Value, Allocated
     Rent, Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467
     Loan Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan
     Interest shall be adjusted, either upward or downward, in accordance with
     the Facility Lease:

at the request of the Facility Lessee, and at the Facility Lessee's option, to
     re-optimize the Lease Debt; provided such re-optimization shall not
     result in a change to average life by more than six (6) months;

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at the request of the Facility Lessee or the Owner Participant, to reflect any
     changes in the Pricing Assumptions, including without limitation, (x)
     the initial interest rate on any of the Lessor Notes which is different
     from the applicable interest rate set forth in the Pricing Assumptions,
     (y) an increase in the Transaction Costs from the amount assumed in the
     Pricing Assumptions, unless the Facility Lessee has elected to pay such
     increase, and (z) a Closing Date other than the Scheduled Closing Date;
     and

at the request of the Facility Lessee or the Owner Participant to reflect any
     enactment, promulgation, release or adoption of, amendment to or change
     in the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
     ("Tax Law Change") enacted prior to the Closing;

provided that if any adjustment required by this paragraph (a) would result in
(i) the Facility Lease not qualifying as an operating lease for the Facility
Lessee under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments
made on or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest
rate of the Certificates) shall cause either (x) the after-tax net present
value of Basic Rent discounted at 6% to increase by more than 100 basis points
or (y) the total Basic Rent to increase by more than 2%, then in either such
case, the Facility Lessee shall not be obligated to close the Overall
Transaction. Any adjustments pursuant to Section 3.4 of the Facility Lease
shall comply with Applicable Law (including any final or proposed Treasury
Regulations issued under Section 467 of the Code) as well as the requirements
of Revenue Procedure 2001-28 and Sections 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 2001-29 in a manner such that amending the Facility Lease
complies with the "safe harbors" under such Treasury Regulations or otherwise
does not cause the Facility Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any Treasury
Regulations issued thereunder, in each case, to the extent of such compliance
on the Closing Date.

After the Closing Date, Periodic Rent, Termination Value, Allocated Rent,
     Proportional Rent, Lessor 467 Loan Principal Balance, Lessee 467 Loan
     Principal Balance, Lessor 467 Loan Interest and Lessee 467 Loan Interest
     shall be adjusted at the request of the Facility Lessee or the Owner
     Participant in accordance with the terms of the Facility Lease to which
     it is a party.

Any adjustment pursuant to this Section 12 shall be calculated (A) to preserve
     the Owner Participant's Net Economic Return through the Basic Lease Term
     and (B) to the extent consistent with (A) above, to maintain operating
     lease treatment for the Facility Lessee; provided, however, that to the
     extent consistent with preserving the Owner Participant's Net Economic
     Return, all adjustments shall at the option of the Facility Lessee be
     calculated to (x) minimize the average annual Basic Rent over the Basic
     Lease Term and the Lessor Put Renewal Lease Term for the Facility
     Lessee's GAAP accounting purposes and/or (y) minimize the present value
     to the Facility Lessee of Basic Rent; and provided, further, that no such
     adjustment shall require the Owner Participant to record a loss as of the
     date such adjustment is made. Adjustments will be computed by the Owner
     Participant based upon the Pricing Assumptions and the Tax Assumptions
     originally used to calculate the Periodic Rent, Termination Value,
     Allocated Rent, Proportional Rent, Lessor 467 Loan Principal Balance,
     Lessee 467 Loan Principal Balance, Lessor 467 Loan Interest and Lessee
     467 Loan Interest.

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     Adjustments made pursuant to this Section 12 shall be subject to
     verification as provided in Section 3.4 of the Facility Lease.

TRANSFER OF THE FACILITY LESSEE OWNERSHIP; SPECIAL LESSEE TRANSFERS

Transfer of the Facility Lessee Ownership.

The Facility Lessee covenants and agrees that it shall not during the Facility
     Lease Term assign the Facility Lease or any other Operative Document, or
     any interest therein, without the prior written consent of the Owner
     Lessor, the Owner Participant and, so long as the Lien of the Collateral
     Trust Indenture has not been terminated or discharged, the Indenture
     Trustee and the Pass Through Trustees. Notwithstanding the foregoing,
     upon satisfaction of the conditions in paragraph (b) below, the Facility
     Lessee may assign the Facility Lease or any other Operative Document to
     which it is a party, or any interest therein to any Person, without the
     consent of the Owner Lessor, the Owner Participant, the Indenture Trustee
     or any other Transaction Party.

Assignment under Section 13(a) above by the Facility Lessee shall be permitted
     if (A) after giving effect to such assignment or assignments, either (x)
     Calpine owns, directly or indirectly, at least a majority of the
     Ownership Interest of each assignee (as well as at least a majority of
     the Ownership Interest of any non-assigning Facility Lessee), the Calpine
     Guaranty remains in full force and effect (without a transferee of
     Calpine's obligations thereunder having succeeded thereto in accordance
     with Section 8.4(b) thereof), and Calpine shall have reaffirmed in
     writing its obligations under the Calpine Guaranty or (y) Calpine's
     obligations under the Calpine Guaranty has been succeeded to in
     accordance with Section 8.4(b) thereof, the transferee of Calpine shall
     own, directly or indirectly, at least a majority of the Ownership
     Interest of each assignee (as well as at least a majority of the
     Ownership Interest of any non-assigning Facility Lessee) and the Calpine
     Guaranty shall remain in full force and effect and (B) satisfaction of
     the following conditions:

the transferee shall assume all the obligations of the Facility Lessee under
     the Operative Documents, and the first priority Lien of the pledge of
     the Collateral as defined in and pursuant to the Facility Lease shall
     continue in effect, pursuant to an assignment and assumption agreement in
     form and substance satisfactory to the Owner Participant, Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee;

the Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustees shall have received
     an Opinion of Counsel as to such assignment and assumption agreement and
     the satisfaction of the requirements and conditions set forth in this
     Section 13.1(b) (except for clauses (iii) and (vi) hereof);

no Significant Lease Default or Lease Event of Default shall have occurred and
     be continuing at the time of or immediately following such transfer;

the transfer shall not subject any of the Facility Lessee, the Owner
     Participant, the Owner Lessor, the Lessor Manager, the Indenture
     Trustee, the Pass Through Trustees or any

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<PAGE>

     Certificateholder to regulation under PUHCA or state laws and regulations
     regarding the rate and financial or organizational regulation of electric
     utilities in the affected party's reasonable opinion, nor result in a
     Regulatory Event of Loss;

the transferee shall be organized under the laws of the United States, any
     state thereof or the District of Columbia;

the Facility Lessee shall have paid, at no after-tax cost to such parties, all
     reasonable documented out-of-pocket expenses (including reasonable
     attorneys' fees and expenses) of the Owner Lessor, the Lessor Manager,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustees in connection with such assignment;

the Facility Lessee has provided the Indenture Trustee with (x) an indemnity
     against the risk that such assignment will cause a Tax Event to occur to
     any direct or indirect holder of any Lessor Note (including any
     Certificateholder) or (y) an opinion of counsel to the effect that such
     assignment will not cause a Tax Event to occur to any direct holder of
     any Lessor Note and any Certificateholder; and

the transfer shall not cause the Facility to become "tax-exempt use property
     within the meaning of Section 168(h) of the Code (unless the Facility
     Lessee shall make a payment contemporaneously with such transfer that in
     the reasonable judgment of the Owner Participant compensates the Owner
     Participant for the adverse tax consequences therefrom).

Special Facility Lessee Transfers. Upon the occurrence and during the
continuance of a Special Lessee Transfer Event, the Facility Lessee (or its
designee as provided below) may (a) terminate the Facility Lease in accordance
with its terms, or (b) upon not less than 30 days' written notice to the Owner
Participant, the Indenture Trustee and the Pass Through Trustees, purchase
subject to the limitations set forth in Section 7.1, all of the Member Interest
(any purchase under clause (b) being referred to a the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, the Facility
Lessee (or its designee) shall pay to the Owner Participant or the OP
Guarantor, the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including
all reasonable and documented costs and expenses of the Owner Participant or
the OP Guarantor and all sales, use, value added and other Taxes covered and
not excluded by Section 9.2 hereof associated with the Special Lessee Transfer
pursuant to this Section 13.2, to the extent such amounts have not otherwise
been reimbursed by the Facility Lessee pursuant to this Section 13.2, it being
understood that any transfer pursuant to this Section 13.2 shall not be
considered a voluntary transfer for purposes of Section 9.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 13.2 (or
on such later date of transfer of the Member Interest in accordance with clause
(ii) below) (i) the Facility Lessee shall cease to have any liability to the
Owner Participant or the OP Guarantor with respect to the Operative Documents,
except for obligations (including Section 9.1 and 9.2 hereof and the Tax
Indemnity Agreement) surviving pursuant to the express terms of the Operative
Documents or which have otherwise accrued but not been paid as of such date and
(ii) the Owner Participant or the OP Guarantor will transfer (by an appropriate
instrument of transfer) the Member Interest to the Facility Lessee (or its
designee); provided, however, that if

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the Lien of the Collateral Trust Indenture has not been terminated or
discharged, such transfer shall not be made to the Facility Lessee, but shall
be made to the Facility Lessee's designee promptly upon the Facility Lessee's
designation of such designee and such designee will agree not to transfer the
Member Interest to the Facility Lessee until the Lien is terminated or
discharged. At the time of any transfer under this Section 13.2, the Owner
Participant or the OP Guarantor shall represent and warrant as to the absence
of Liens attributable to the Owner Participant on the Member Interest. It is
understood and agreed among the parties hereto that the transaction
contemplated by this Section 13.2 shall not effect a merger of the Facility
Lessee's interest in the Facility and the Facility Site with the Owner Lessor's
Interest. The Facility Lessee will pay, on an After-Tax Basis, all reasonable
and documented transaction costs and expenses of the parties (including
reasonable attorneys' fees and disbursements) in connection with any transfer
pursuant to this Section 13.2. Subsequent to such transfer, the Facility Lessee
and the Owner Lessor may, without the consent of the Indenture Trustee or the
Pass Through Trustees, waive the Regulatory Event of Loss or the Burdensome
Termination Event that gave rise to the Special Lessee Transfer Event and the
Facility Lease shall continue in full force and effect in accordance with its
terms.

MISCELLANEOUS

Consents; Cooperation. The Owner Participant covenants and agrees that it shall
not unreasonably withhold its consent to any consent requested of the Owner
Lessor under the terms of the Operative Documents that by its terms is not to
be unreasonably withheld by the Owner Lessor.

Successor Owner Lessor. The parties hereto agree that the transfer or
assignment pursuant to the terms of the LLC Agreement by the Owner Lessor to a
successor Owner Lessor, will not violate the terms of any Operative Document.

Bankruptcy of Lessor Estate. If (i) all or any part of the Lessor Estate
becomes the property of a debtor subject to the reorganization provisions of
Title 11 of the United States Code, as amended from time to time, (ii) pursuant
to such reorganization provisions the Owner Participant is required, by reason
of the Owner Participant being held to have recourse liability to the debtor or
the trustee of the debtor directly or indirectly, to make payment on account of
any amount payable as principal or interest on the Lessor Notes, and (iii) the
Indenture Trustee actually receives any Excess Amount, as defined below, which
reflects any payment by the Owner Participant on account of clause (ii) above,
the Indenture Trustee shall promptly refund to the Owner Participant such
Excess Amount (and, to the extent so refunded, such amount owing under the
Lessor Notes shall be reinstated). For purposes of this Section 14.3, "Excess
Amount" means the amount by which such payment exceeds the amount which would
have been received by the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in clause (ii) above.
Nothing contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds
thereof) of the Owner Participant as contemplated by this Participation
Agreement (other than referred to in clause (ii)).

Amendments and Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular

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<PAGE>

instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party hereto.

Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, by overnight mail or courier service, (b) in the case of
notice by United States mail, certified or registered, postage prepaid, return
receipt requested, upon receipt thereof, or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to each party hereto at its
address set forth below or, in the case of any such party hereto, at such other
address as such party may from time to time designate by written notice to the
other parties hereto:

          If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Northbrook Office
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Attention:   Senior Counsel
          Telephone:   (847) 559-9800
          Facsimile:   (847) 559-1805

          with a copy to:

               Calpine Corporation
               50 West San Fernando Street, 5th Floor
               San Jose, California  95113
               Attention: Asset Manager and General Counsel
               Telephone: (408) 995-5115
               Facsimile: (408) 995-0505

     If to the Guarantor:

          Calpine Corporation
          50 West San Fernando Street, 5th Floor
          San Jose, California  95113
          Attention: Asset Manager and General Counsel
          Telephone: (408) 995-5115
          Facsimile: (408) 995-0505

          If to the Owner Lessor, the Trust Company or the Lessor Manager:

          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street

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          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          If to the Owner Participant:

          SBR OP-4, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile:  (801) 246-5053
          Attention: Corporate Trust Services

          with a copy to:

               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, New York  10036
               Telephone:  (212) 382-7255
               Facsimile:  (212) 382-9033
               Attention:  Managing Director

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          If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut, National
             Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
             Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

          If to the Pass Through Trustees:

          State Street Bank and Trust Company of Connecticut, National
             Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone No.: (860) 244-1822
          Facsimile No.: (860) 244-1889
          Attn: Corporate Trust Department

               with a copy to:

          State Street Bank and Trust Company of California, National
             Association
          633 West 5th Street, 12th floor
          Los Angeles, California 90071
          Telephone No.: (213) 362-7373
          Facsimile No.: (213) 362-7357
               Attention: Corporate Trust Department

     If to the Manager:

          Credit Suisse First Boston
          Eleven Madison Avenue
          New York, New York 10010-3629
          Telephone No.:  (212) 325-2000
          Attention: Richard O'Day

          A copy of all notices provided for herein shall be sent by the
          party giving such notice to each of the other parties hereto. In
          addition,

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          the Facility Lessee shall (unless otherwise directed by the
          applicable Rating Agency) provide to each Rating Agency a copy of
          any information, report or notice it gives to the Indenture Trustee
          hereunder or any other Operative Documents.

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Survival. All warranties, representations, indemnities and covenants made by
any party hereto, herein or in any certificate or other instrument delivered by
any such party or on behalf of any such party under this Agreement shall be
considered to have been relied upon by each other party hereto and shall
survive the consummation of the transactions contemplated hereby and in the
other Operative Documents regardless of any investigation made by any such
party or on behalf of any such party. In addition, the indemnifications by the
Facility Lessee under Sections 9.1 and 9.2 of this Agreement, subject to
Sections 9.1(b) and 9.2(b), respectively, the Facility Site Lease and the
Calpine Guaranty, shall expressly survive the expiration or early termination
(in either case, for whatever reason) of the Facility Lease or the transfer or
other disposition of the respective interests of the Owner Participant, the
Owner Lessor, the Lessor Manager, the Lease Indenture Company, the Indenture
Trustee, the Pass Through Trustees and the Certificateholders in, to and under
this Agreement, the Assignment Agreement and the other Operative Documents.
Except as expressly provided above or in Section 22.3 of the Facility Lease,
the Tax Indemnity Agreement or as otherwise expressly provided in the Operative
Documents, the representations, warranties, covenants and agreements of the
Transaction Parties under the Operative Documents shall terminate and be of no
further force and effect effective upon the expiration or earlier termination
of the Facility Lease.

Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Member Interest of the
Owner Participant permitted under Section 7.1 and each successive transferee or
transferees of Lessor Notes permitted under Section 2.8 of the Collateral Trust
Indenture. Except as expressly provided herein or in the other Operative
Documents, no party hereto may assign its interests herein without the prior
written consent of the other parties hereto.

Business Day. Notwithstanding anything herein or in any other Operative
Document to the contrary, if the date on which any payment is to be made
pursuant to this Agreement or any other Operative Document is not a Business
Day, the payment otherwise payable on such date shall be payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.

Governing Law. This Agreement has been delivered in the State of New York and
shall be in all respects governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity and
performance without giving effect to the conflicts of laws provisions thereof
except New York General Obligations Law Section 5-1401.

Severability. If any provision hereof shall be invalid, illegal or
unenforceable under Applicable Law, the validity, legality and enforceability
of the remaining provisions hereof shall not be affected or impaired thereby.

Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.

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Headings and Table of Contents. The headings of the sections of this Agreement
and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof.

Limitation of Liability.

None of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
     Manager, the Indenture Trustee, the Lease Indenture Company, the Pass
     Through Trustees, the Pass Through Company or the Certificateholders
     shall have any obligation or duty to the Facility Lessee or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents to which such Person is a party, and none of the
     Owner Participant, the Owner Lessor, the Indenture Trustee, the Lease
     Indenture Company, the Pass Through Trustees, the Pass Through Company or
     the Certificateholders shall be liable for performance by any other party
     hereto of such other party's obligations or duties hereunder. Without
     limitation of the generality of the foregoing, under no circumstances
     whatsoever shall the Owner Participant be liable to the Facility Lessee
     for any action or inaction on the part of the Owner Lessor in connection
     with the transactions contemplated herein, whether or not such action or
     inaction is caused by willful misconduct or gross negligence of the Owner
     Lessor, unless such action or inaction is at the written direction of the
     Owner Participant.

Neither the Facility Lessee nor any other Calpine Party shall have any
     obligation or duty to the Owner Participant, the Owner Lessor, the
     Indenture Trustee, the Lease Indenture Company, the Pass Through
     Trustees, the Pass Through Company, the Certificateholders or to others
     with respect to the transactions contemplated hereby, except those
     obligations or duties expressly set forth in this Agreement and the other
     Operative Documents, and neither the Facility Lessee nor any other
     Calpine Party (except Calpine to the extent set forth in the Calpine
     Guaranty) shall be liable for performance by any other party hereto of
     such other party's obligations or duties hereunder.

The Lease Indenture Company and the Pass Through Company are entering into the
     Operative Documents to which it is a party solely as trustees under the
     Collateral Trust Indenture and the Pass Through Trust Agreements,
     respectively, and not in their individual capacities, except as expressly
     provided herein or therein, and in no case whatsoever shall the Lease
     Indenture Company and the Pass Through Company be personally liable for,
     or for any loss in respect of, any of the statements, representations,
     warranties, agreements or obligations of the Owner Lessor hereunder or
     under any other Operative Document, as to all of which the other parties
     hereto agree to look solely to the Indenture Estate and the Lessor Estate,
     respectively; provided, however, that the Lease Indenture Company and the
     Pass Through Trust Company shall be liable hereunder for their own
     negligence or willful misconduct or for a breach of their representations,
     warranties and covenants made in their individual capacity under any
     Operative Document.

The right of the Indenture Trustee or the Pass Through Trustees to perform any
     discretionary act enumerated herein or in any other Operative Document
     (including, without limitation, the right to consent to any action which
     requires their consent and the right to waive any provision of, or
     consent to any change or amendment to, any of the Operative Documents)

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<PAGE>

     shall not be construed as a duty, and neither the Indenture Trustee nor
     the Pass Through Trustees shall be liable or answerable for other than
     its negligence or willful misconduct in the performance of such acts. In
     connection with any such discretionary acts, the Indenture Trustee may in
     its sole discretion (but shall not, except as otherwise provided herein
     or in the Collateral Trust Indenture or as otherwise required by
     Applicable Law, have any obligation to) request the approval or
     instruction of the Pass Through Trustees as the holder of the Lessor
     Notes, and the Pass Through Trustees may in its sole discretion (but
     shall not, except as otherwise provided in the Operative Documents or as
     otherwise required by Applicable Law, have any obligation to) request the
     approval of the Certificateholders.

The Owner Participant will give the Facility Lessee at least 15 days' prior
     notice of any proposed amendment or supplement to the LLC Agreement
     (other than an amendment solely effecting a transfer of the Owner
     Participant's interest in the Lessor Estate) and deliver true, complete
     and fully executed copies to the Facility Lessee of any amendment or
     supplement to the LLC Agreement. No amendment or supplement to the LLC
     Agreement that would reasonably be expected to materially adversely
     affect the interests of the Facility Lessee or the Indenture Trustee
     shall become effective without the written consent of the Indenture
     Trustee and the Facility Lessee.

Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent.

Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive
     jurisdiction of the Supreme Court of the State of New York, New York
     County (without prejudice to the right of any party to remove to the
     United States District Court for the Southern District of New York) and
     to the nonexclusive jurisdiction of the United States District Court for
     the Southern District of New York for the purposes of any suit, action or
     other proceeding arising out of this Agreement, the other Operative
     Documents, or the subject matter hereof or thereof or any of the
     transactions contemplated hereby or thereby brought by any of the parties
     hereto or their successors or assigns; (ii) hereby irrevocably agrees
     that all claims in respect of such action or proceeding may be heard and
     determined in such New York State court, or in such federal court; and
     (iii) to the extent permitted by Applicable Law, hereby irrevocably
     waives, and agrees not to assert, by way of motion, as a defense, or
     otherwise, in any such suit, action or proceeding any claim that it is
     not personally subject to the jurisdiction of the above-named courts,
     that the suit, action or proceeding is brought in an inconvenient forum,
     that the venue of the suit, action or proceeding is improper or that this
     Agreement, the other Operative Documents, or the subject matter hereof or
     thereof may not be enforced in or by such court.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
     IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH
     SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
     OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF
     THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE
     PARTIES HERETO OR THEIR SUCCESSORS OR ASSIGNS.

                                      76

<PAGE>

By the execution and delivery of this Agreement, the Facility Lessee
     designate, appoint and empower National Registered Agents, Inc., 440
     Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
     designates, appoints and empowers CT Corporation System, with an office
     at 111 Eighth Avenue, New York, New York 10011, as its authorized agent
     to receive for and on its behalf service of any summons, complaint or
     other legal process in any such action, suit or proceeding in the State
     of New York for so long as any obligation of the Facility Lessee or the
     Owner Lessor, as applicable, shall remain outstanding hereunder or under
     any of the other Operative Documents. the Facility Lessee shall grant an
     irrevocable power of attorney to CT Corporation System, in respect of
     such appointment and shall maintain such power of attorney in full force
     and effect for so long as any obligation of the Facility Lessee shall
     remain outstanding hereunder or under any of the Operative Documents.

Further Assurances. Each party hereto will promptly and duly execute and
deliver such further documents to make such further assurances for and take
such further action reasonably requested by any party to whom such first party
is obligated, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Agreement and the other Operative Documents.

Effectiveness. This Agreement has been dated as of the date first above written
for convenience only. This Agreement shall be effective on the date of
execution and delivery by each of the parties hereto.

Measuring Life. If and to the extent that any of the options, rights and
privileges granted under this Agreement, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Agreement, whichever of (a) and (b) is shorter.

No Partnership, Etc. The parties hereto intend that nothing contained in this
Participation Agreement or any other Operative Document shall be deemed or
construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.

Entire Agreement. This Agreement, together with the other applicable Operative
Documents, constitutes the entire agreement of the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersedes all oral
and all prior written agreements and understandings with respect to such
subject matter; provided that, notwithstanding the foregoing, the obligations
of Calpine with respect to fees and expenses set forth in the letter agreement,

                                      77

<PAGE>

dated July 24, 2001 between Calpine and CSFB and the letter agreement dated
August 1, 2001 between Calpine and Newcourt Capital Securities, Inc. shall not
be superceded hereby and shall remain in full force and effect.

Public Utility Regulation. the Facility Lessee, the Owner Lessor and the Owner
Participant agree to cooperate and to take reasonable measures to alleviate the
source or consequence of any regulation constituting a Regulatory Event of
Loss, at the cost and expense of the Facility Lessee, so long as there shall be
no adverse consequences to the Owner Lessor or the Owner Participant as the
result of such cooperation or taking of reasonable measures.

Confidentiality of Information. Each of the parties hereto agrees that any
information (x) contained herein or in the other Operative Documents (including
any terms, conditions, agreements, financial projections, and other financial
and operating information contained herein or therein, and the terms of any
insurance policies required or otherwise maintained pursuant hereto), (y)
disclosed or to be disclosed by one such party to another such party (for
purposes of this Section 14.21, each of the parties to this Agreement being
referred to herein as a "Receiving Party") in connection with this Agreement or
any other Operative Document, or (z) otherwise received in connection with this
Agreement or any other Operative Document (or the transactions contemplated
thereby) and designated by the disclosing party in writing as confidential,
shall, in each case, be kept confidential by the Receiving Party and shall not
be used otherwise than in connection with the business of the Parties
contemplated hereunder except:

to the extent such information is generally available to the public prior to
     the Receiving Party's receipt thereof, or which becomes public after
     such receipt, but through no violation by such Receiving Party of this
     Section 14.21;

as may be required by Applicable Law or, upon prompt prior written notice to
     the affected party, by judicial process;

as may be independently developed by the Receiving Party other than in
     connection with the transactions contemplated hereby with respect to the
     Facility or the Facility Site;

as may be disclosed to counsel, auditors or accountants to the Receiving Party,
     or to the National Association of Insurance Commissioners;

to the extent used in connection with any litigation to which the Receiving
     Party is a party, provided that the other parties hereto shall have been
     given prompt prior written notice (to the extent permitted by law) of
     such proposed disclosure;

as may be disclosed to any transferee or proposed transferee of the Receiving
     Party; provided, however, that, prior to any such disclosure, any such
     transferee or proposed transferee, as the case may be, shall have agreed
     in writing to be bound by the terms of this Section 14.21; or

as may be necessary or desirable in connection with the enforcement of remedies
     by any party to any of the Operative Documents.

         The foregoing obligation as to confidentiality and non-use
shall survive the termination of this Agreement for a period of five years.

                                      78

<PAGE>

Reliance. Calpine and the Facility Lessee agree that the Transaction Parties
may rely on the Environmental Reports.

Amendments, Etc. No Operative Document nor any of the terms thereof (including
the terms of this Section 14.23) may be terminated, amended, supplemented,
waived or modified, except by an instrument in writing (a) signed in the case of
a waiver, by the party against which enforcement of such waiver is sought, and
no such waiver shall become effective unless signed copies thereof shall have
been delivered to each such party or (b) in the case of termination, amendments,
supplements or modifications, consented to by all parties hereto; provided,
however, that the consent of the Facility Lessee is not required in the case of
amendments to any Operative Document to which the Facility Lessee is not a party
and which would not increase or accelerate the Facility Lessee's or the
Guarantor's obligations under any of the Operative Documents nor impair the
Facility Lessee's or the Guarantor's rights under any of the Operative
Documents. Notwithstanding the foregoing, Section 5.6 of the Collateral Trust
Indenture shall not be amended without the Guarantor's consent.

                                      79

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.

                   ROCKGEN ENERGY LLC,
                   a Wisconsin limited liability company

                        By:_________________________________
                        Name:
                        Title:
                        Date:

<PAGE>

                        ROCKGEN OL-4 LLC, a Delaware limited
                        liability company

                        By: WELLS FARGO BANK NORTHWEST, NATIONAL
                        ASSOCIATION
                        not in its individual capacity but solely as
                        Lessor Manager

                        By:_________________________________
                        Name:
                        Title:
                        Date:

                        SBR OP-4 LLC, a Delaware limited liability company

                        By: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
                        not in its individual capacity but solely as
                        Lessor Manager

                        By:_________________________________
                        Name:
                        Title:
                        Date:

                        WELLS FARGO BANK NORTHWEST,
                        NATIONAL ASSOCIATION,
                 not in its individual capacity, except as expressly
                 provided herein, but solely as Lessor Manager

                        By:_________________________________
                        Name:
                        Title:
                        Date:

<PAGE>

                        STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                        NATIONAL ASSOCIATION,
                 not in its individual capacity, except to the extent
                 expressly provided herein, but solely as Indenture
                 Trustee under the Collateral Trust Indenture

                        By:_________________________________
                        Name:
                        Title:
                        Date:

                        STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                        NATIONAL ASSOCIATION,
                 not in its individual capacity, except to the extent
                 expressly provided herein, but solely as Pass Through
                 Trustees under the Pass Through Trust Agreement

                        By:_________________________________
                        Name:
                        Title:
                        Date:

<PAGE>

                        CALPINE CORPORATION
                                          a Delaware corporation

                        By:_________________________________
                        Name:
                        Title:
                        Date:

<PAGE>

             APPENDIX A - DEFINITIONS AND RULES OF INTERPRETATION

RULES OF INTERPRETATION

          In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:

     (a)   the terms set forth in this Appendix A or in any such Operative
     Document shall have the meanings herein provided for and any term used in
     an Operative Document and not defined therein or in this Appendix A but
     in another Operative Document shall have the meaning herein or therein
     provided for in such other Operative Document;

     (b)   any term defined in this Appendix A by reference to another
     document, instrument or agreement shall continue to have the meaning
     ascribed thereto whether or not such other document, instrument or
     agreement remains in effect;

     (c)   words importing the singular include the plural and vice versa;

     (d)   words importing a gender include any gender;

     (e)   a reference to a part, clause, section, paragraph, article, party,
     annex, appendix, exhibit, schedule or other attachment to or in respect
     of an Operative Document is a reference to a part, clause, section,
     paragraph, or article of, or a party, annex, appendix, exhibit, schedule
     or other attachment to, such Operative Document unless, in any such case,
     otherwise expressly provided in any such Operative Document;

     (f)   a reference to any statute, regulation, proclamation, ordinance or
     law includes all statutes, regulations, proclamations, ordinances or laws
     varying, consolidating or replacing the same from time to time, and a
     reference to a statute includes all regulations, policies, protocols,
     codes, proclamations and ordinances issued or otherwise applicable under
     that statute unless, in any such case, otherwise expressly provided in
     any such statute or in such Operative Document;

     (g)   a definition of or reference to any document, schedule, exhibit,
     instrument or agreement includes an amendment or supplement to, or
     restatement, replacement, modification or novation of, any such document,
     schedule, exhibit, instrument or agreement unless otherwise specified in
     such definition or in the context in which such reference is used;

     (h)   a reference to a particular section, paragraph or other part of a
     particular statute shall be deemed to be a reference to any other
     section, paragraph or other part substituted therefor from time to time;

<PAGE>

     (i)   if a capitalized term describes, or shall be defined by reference
     to, a document, instrument or agreement that has not as of any particular
     date been executed and delivered and such document, instrument or
     agreement is attached as an exhibit to the Participation Agreement (as
     hereinafter defined), such reference shall be deemed to be to such form
     and, following such execution and delivery and subject to paragraph (g)
     above, to the document, instrument or agreement as so executed and
     delivered;

     (j)   a reference to any Person (as hereinafter defined) includes such
     Person's successors and permitted assigns;

     (k)   any reference to "days" shall mean calendar days unless "Business
     Days" (as hereinafter defined) are expressly specified;

     (l)   if the date as of which any right, option or election is
     exercisable, or the date upon which any amount is due and payable, is
     stated to be on a date or day that is not a Business Day, such right,
     option or election may be exercised, and such amount shall be deemed due
     and payable, on the next succeeding Business Day with the same effect as
     if the same was exercised or made on such date or day (without, in the
     case of any such payment, the payment or accrual of any interest or other
     late payment or charge, provided such payment is made on such next
     succeeding Business Day);

     (m)   any reference to the satisfaction, release and/or discharge of the
     Collateral Trust Indenture or the Collateral Documents (each as
     hereinafter defined) or the Lien (as hereinafter defined) thereof or
     words of similar import shall, whether or not so expressly stated, be
     deemed to be a reference to the satisfaction, release and discharge in
     full and cancellation of the Lien of the Collateral Trust Indenture or
     the Collateral Documents, as the case may be, in accordance with the
     express provisions thereof.

     (n)   words such as "hereunder", "hereto", "hereof" and "herein" and other
     words of similar import shall, unless the context requires otherwise,
     refer to the whole of the applicable document and not to any particular
     article, section, subsection, paragraph or clause thereof; and

     (o)   a reference to "including" shall mean including without limiting the
     generality of any description preceding such term, and for purposes
     hereof and of each Operative Document the rule of ejusdem generis shall
     not be applicable to limit a general statement, followed by or referable
     to an enumeration of specific matters, to matters similar to those
     specifically mentioned.

DEFINED TERMS

     "467 LOAN PRINCIPAL BALANCE" shall have the meaning set forth in Section
     3.2(d) of the Facility Lease.

     "ACCEPTABLE BANK" shall mean, for the purposes of Section 5.3 of the
     Facility Lease, a banking institution, the senior long-term unsecured
     debt of which is rated at least A by

                                      2

<PAGE>

     S&P and by Moody's, and which maintains an office or corresponding bank
     located in New York City.

     "ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party,
     actual knowledge of, or receipt of written notice by, an officer (or
     other employee whose responsibilities include the administration of the
     Overall Transaction) of such Transaction Party.

     "ADDITIONAL CERTIFICATES" shall mean any additional certificates issued
     by the Pass Through Trusts in connection with the issuance of Additional
     Lessor Notes.

     "ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
     Participant shall provide (in its sole and absolute discretion) to
     finance all or a portion of the Owner Lessor's Percentage of the cost of
     any Required or Non-Severable Improvement financed pursuant to Section
     11.1 of the Participation Agreement.

     "ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section
     2.12(a) of the Collateral Trust Indenture.

     "AFFILIATE" of a particular Person shall mean, at any time, (a) any
     Person directly or indirectly controlling, controlled by or under common
     control with such particular Person and (b) any Person beneficially
     owning or holding, directly or indirectly, 10% or more of any class of
     voting or equity interest of such first Person or any corporation of
     which such first Person beneficially owns or holds, in the aggregate,
     directly or indirectly, 10% or more of any class of voting or equity
     interest. For purposes of this definition, "control" when used with
     respect to any particular Person shall mean the power to direct the
     management and policies of such Person, directly or indirectly, whether
     through the ownership of voting securities, by contract or otherwise, and
     the terms "controlling" and "controlled" have meanings correlative to the
     foregoing; provided, however, that under no circumstances shall the Lease
     Indenture Company be considered to be an Affiliate of either the
     Indenture Trustee or any Certificateholder, nor shall any of the
     Indenture Trustee or any Certificateholder be considered to be an
     Affiliate of the Lease Indenture Company, nor shall the Lease Indenture
     Company, the Indenture Trustee, solely because any Operative Document
     contemplates that any of them may request or act at the instruction of
     any such Person or such Person's Affiliate.

     "AFTER-TAX BASIS" shall mean, in the context of determining the amount
     of a payment to be made on such basis, the payment of an amount which,
     after reduction by the net increase in Taxes of the recipient (actual or
     constructive) of such payment, which net increase shall be calculated by
     taking into account any reduction in such Taxes resulting from any Tax
     benefits realized or to be realized by the recipient as a result of such
     payment, shall be equal to the amount required to be paid. In calculating
     the amount payable by reason of this provision, all income taxes payable
     and tax benefits realized or to be realized shall be determined on the
     assumptions that (i) the recipient shall be subject to the applicable
     income taxes at the highest marginal tax rates then applicable to
     corporate taxpayers taxed on the same basis as the recipient that are in
     effect in the applicable jurisdictions at the time such amount is
     received or properly accrued, and

                                      3

<PAGE>

     (ii) all related tax benefits are utilized at the highest marginal rates
     then applicable to corporate taxpayers taxed on the same basis as the
     recipient that are then in effect in the applicable jurisdictions.

     "AGREEMENT PERIOD" shall have the meaning set forth in Section 7.6 of
     the Participation Agreement.

     "ALLOCATED RENT" shall have the meaning specified in Section 3.2(b) of
     the Facility Lease.

     "APPLICABLE LAW" shall mean, without limitation, all applicable laws,
     including, without limitation, all Environmental Laws, and treaties,
     judgments, decrees, injunctions, writs and orders of any court,
     arbitration board or Governmental Entity and rules, regulations, orders,
     ordinances, licenses and permits of any Governmental Entity.

     "APPLICABLE PERMIT" shall mean any Permit, including any zoning,
     environmental protection, pollution, sanitation, FERC, safety, siting or
     building Permit, (a) that is necessary at any given time in light of the
     stage of development, construction or operation of the Facility or
     Facility Site to acquire, operate, maintain, repair, own, lease or use
     the Facility, the Undivided Interest (if any), the Ground Interest or
     Facility Site as contemplated by the Operative Documents, to sell
     electricity therefrom, to enter into any Operative Document or to
     consummate any transaction contemplated thereby, or (b) that is necessary
     so that none of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholder nor any Affiliate of any of them may be deemed by any
     Governmental Entity to be subject to regulation under PUHCA or under any
     other Applicable Law relating to electric utilities, generators,
     wholesalers or retailers, in each case as a result of the operation of
     the Facility or the sale of electricity therefrom.

     "APPLICABLE RATE" shall mean the Prime Rate plus 1% per annum.

     "APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.

     "APPRAISAL PROCEDURE" shall mean (except with respect to the Closing
     Appraisal and any appraisal to determine Fair Market Sales Value or Fair
     Market Rental Value during any period when a Lease Event of Default shall
     have occurred and be continuing), an appraisal conducted by an appraiser
     or appraisers in accordance with the following procedures. Within ten
     (10) Business Days of written notice from the initiating party of the
     commencement of an Appraisal Procedure, the Owner Participant and the
     Facility Lessee will each appoint one Independent Appraiser, which
     Independent Appraisers shall attempt to agree upon the Fair Market Sales
     Value or Fair Market Rental Value that is the subject of the appraisal.
     If either the Owner Participant or the Facility Lessee does not appoint
     its appraiser within such ten Business Day period, the determination of
     the other appraiser shall be conclusive and binding on the Owner
     Participant and the Facility Lessee. If the appraisers appointed by the
     Owner Participant and the Facility Lessee are unable to agree upon the
     value, period, amount or other determination in question within thirty
     (30) days, such appraisers shall jointly appoint a third Independent
     Appraiser or, if

                                      4

<PAGE>

     such appraisers do not appoint a third Independent Appraiser, the Owner
     Participant and the Facility Lessee shall jointly appoint the third
     Independent Appraiser. In such case, the average of the determinations of
     the three appraisers shall be conclusive and binding on the Owner
     Participant and the Facility Lessee, unless the determination of one
     appraiser is disparate from the middle determination by more than twice
     the amount by which the third determination is disparate from the middle
     determination, in which case the determination of the most disparate
     appraiser shall be excluded, and the average of the remaining two
     determinations shall be conclusive and binding on the Owner Participant
     and the Facility Lessee. Any appraisal determined in accordance with the
     foregoing must be delivered within thirty (30) days after the date on
     which the last of the appraisers is appointed pursuant to the process set
     forth above.

     "ASSIGNED DOCUMENTS" shall have the meaning specified in clause (1) of
     the Granting Clause of the Collateral Trust Indenture.

     "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as
     at the time of determination, the present value (discounted at the rate
     of interest set forth or implicit in the terms of such lease (or, if not
     practicable to determine such rate, the weighted average rate of interest
     borne by the Certificates outstanding under the Pass Through Trust
     Agreement (calculated, in the event of the issuance of any original issue
     discount Lessor Notes, based on the imputed interest rate with respect
     thereto)), compounded annually) of the total obligations of the lessee
     for rental payments during the remaining term of the lease included in
     such Sale/Leaseback Transaction (including any period for which such
     lease has been extended).

     "AVERAGE LIFE" means, as of the date of determination, with respect to
     any Indebtedness or Preferred Stock, the quotient obtained by dividing
     (i) the sum of the products of (A) the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of such Indebtedness or scheduled redemption or similar payment with
     respect to such Indebtedness or Preferred Stock multiplied by (B) the
     amount of such payment by (ii) the sum of all such payments.

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978,
     as amended from time to time, 11 U. S.C.[sec] 101 et seq.

     "BANKRUPTCY LAW" means Title 11 of the United States Code or any similar
     Federal or State law for the relief of debtors.

     "BASIC LEASE TERM" shall have the meaning specified in Section 3.1 of
     the Facility Lease.

     "BASIC RENT" shall have the meaning specified in Section 3.2(a) of the
     Facility Lease.

     "BENEFICIARY" or "BENEFICIARIES" with respect to the Calpine Guaranty,
     shall have the meaning set forth in Section 4 thereof.

     "BILL OF SALE" shall mean the Bill of Sale (RG-4) dated as of the
     Closing Date between the Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit B-1 to the

                                      5

<PAGE>

     Participation Agreement duly completed, executed and delivered on the
     Closing Date pursuant to which the Owner Lessor will purchase the
     Undivided Interest from the Facility Lessee.

     "BOARD OF DIRECTORS" means the Board of Directors or General Partner, as
     applicable, of the Guarantor or the Facility Lessee, as the context
     requires, or any authorized committee of either thereof.

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

     "BROAD RIVER ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the Broad River
     Participation Agreements.

     "BROAD RIVER CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     Broad River Participation Agreements.

     "BROAD RIVER COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Broad
     River Participation Agreements.

     "BROAD RIVER FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interests to Broad
     River Facility Lessee.

     "BROAD RIVER FACILITY LESSEE" shall mean Broad River Energy LLC.

     "BROAD RIVER FACILITY SITE" shall have the meaning set forth in the
     recitals to the Broad River Facility Site Leases.

     "BROAD RIVER FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable Broad River Owner Lessor and the Broad River
     Facility Lessee, pursuant to which the applicable Broad River Owner
     Lessor will lease the applicable Broad River Ground Interest to the Broad
     River Facility Lessee.

     "BROAD RIVER GROUND INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility Site conveyed to the Broad River
     Owner Lessors under the Broad River Assignment Agreements.

     "BROAD RIVER INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Broad River Collateral Trust Indentures.

                                      6

<PAGE>

     "BROAD RIVER LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Broad River Owner Lessors pursuant to the Broad
     River Operative Documents.

     "BROAD RIVER OWNER LESSORS" shall mean Broad River OL-1, LLC, Broad
     River OL-2, LLC, Broad River OL-3, LLC and Broad River OL-4, LLC.

     "BROAD RIVER OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "BROAD RIVER LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the Broad River Undivided Interests and
     the Broad River Ground Interests to the Broad River Owner Lessors, and
     the simultaneous lease of the Broad River Undivided Interests and Broad
     River Ground Interests to the Broad River Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the Broad River Overall Transaction.

     "BROAD RIVER OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Broad River Lease Transactions.

     "BROAD RIVER OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the Broad River Operative Documents.

     "BROAD RIVER PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the other three separate participation agreements entered into
     by the Broad River Facility Lessee, the applicable Broad River Owner
     Lessor, the applicable Broad River Lessor Manager, the applicable Broad
     River Owner Participant, the applicable Broad River Indenture Trustee,
     the Pass Through Trustees and Calpine and designated Participation
     Agreement (BR-1), Participation Agreement (BR-2), Participation Agreement
     (BR-3) and Participation Agreement (BR-4), each dated as of the Closing
     Date, pursuant to which, among other things, the Broad River Facility
     Lessee has agreed to (a) assign and transfer to the applicable Broad
     River Owner Lessors certain undivided leasehold interests in the Broad
     River Facility, and (b) lease from the applicable Broad River Owner
     Lessors such undivided leasehold interest in the Broad River Facility
     pursuant to the Broad River Facility Leases.

     "BROAD RIVER UNDIVIDED INTERESTS" shall mean the undivided leasehold
     interests in the Broad River Facility conveyed to the Broad River Owner
     Lessors under the Broad River Assignment Agreement.

     "BURDENSOME BUYOUT EVENT" shall mean the occurrence of any event which
     gives the Facility Lessee the right to terminate the Facility Lease
     pursuant to Section 13.1 or Section 13.2 thereof.

     "BURDENSOME TERMINATION NOTICE" shall mean a notice required in
     accordance with Section 13.1 or Section 13.2, as the case may be, of the
     Facility Lease upon the exercise of a termination option by the Facility
     Lessee.

                                      7

<PAGE>

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
     day on which commercial banking institutions are authorized or required
     by law, regulation or executive order to be closed in New York, New York,
     the city and the state in which the Corporate Trust Office of the
     Indenture Trustee is located or the city and state in which the Pass
     Through Trustees are located.

     "BUYER(S)" shall mean, individually or collectively, (a) Wisconsin Power
     & Light Company, (b) IES Utilities and (c) Interstate Power Company.

     "CALPINE" shall mean Calpine Corporation, a Delaware corporation.

     "CALPINE DOCUMENTS" shall mean have the meaning set forth in Section 3.1
     of the Calpine Guaranty.

     "CALPINE GUARANTY " shall mean the Calpine Guaranty and Payment
     Agreement (RG-4) dated as of the Closing Date in favor of the
     Beneficiaries, substantially in the form of Exhibit H to the
     Participation Agreement.

     "CALPINE GUARANTY EVENT OF DEFAULT" shall mean any of the "Events of
     Default" as specified in Section 7.1 of the Calpine Guaranty.

     "CALPINE PARTIES" shall mean Calpine, the Facility Lessee, Calpine
     Northbrook Services, LLC, and each other Affiliate of Calpine that is
     party to any Operative Document.

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

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

     "CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase
     Agreement, dated the Closing Date, among the Facility Lessee, Calpine, and
     the Initial Purchasers.

     "CERTIFICATEHOLDER INDEMNITEE" shall have the meaning set forth in Section
     9.2(a) of the Participation Agreement.

     "CERTIFICATEHOLDERS" shall mean each of the holders of Certificates, and
     each of such holder's successors and permitted assigns.

                                      8

<PAGE>

     "CERTIFICATES" shall mean the 8.400% Pass Through Certificates Series A
     issued on the Closing Date and any certificates issued in replacement
     therefor pursuant to Section 3.3, 3.4 or 3.5 of the Pass Through Trust
     Agreement.

     "CLAIM(S)" individually or collectively as the context may require,
     shall mean any liability (including in respect of negligence (whether
     passive or active or other torts), strict or absolute liability in tort
     or otherwise, warranty, latent or other defects (regardless of whether or
     not discoverable), statutory liability, property damage, bodily injury or
     death), obligation, loss, settlement, damage, penalty, claim, action,
     suit, proceeding (whether civil or criminal), judgment, penalty, fine and
     other legal or administrative sanction, judicial or administrative
     proceeding, cost, expense or disbursement, including reasonable legal,
     investigation and expert fees, expenses and reasonable related charges,
     of whatsoever kind and nature.

     "CLOSING" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CLOSING APPRAISAL" shall mean the appraisal, dated as of the Closing
     Date, prepared by the Appraiser with respect to the Owner Lessor's
     Interest.

     "CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
     Participation Agreement.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
     time to time, and any successor statute.

     "COLLATERAL DOCUMENTS" shall mean the Collateral Trust Indenture and the
     financing statements.

     "COLLATERAL TRUST INDENTURE" shall mean the Indenture of Trust, Mortgage
     and Security Agreement (RG-4), dated as of the Closing Date, between the
     Owner Lessor and the Indenture Trustee, in substantially the form of
     Exhibit I to the Participation Agreement.

     "COMMENCEMENT DATE" with respect to the Facility Site Lease, shall have
     the meaning specified in Section 2.1(a) of the Facility Site Lease.

     "COMPETITOR" shall have the meaning specified in Section 7.1(b) of the
     Participation Agreement.

     "COMPONENT" shall mean any appliance, part, instrument, appurtenance,
     accessory, furnishing, equipment or other property of whatever nature
     that may from time to time be incorporated in the Facility, except to the
     extent constituting Improvements or spare parts while being held for
     future use.

     "CONSOLIDATED CURRENT LIABILITIES," as of the date of determination,
     means the aggregate amount of consolidated liabilities of the Guarantor
     and its consolidated Restricted Subsidiaries which may properly be
     classified as current liabilities (including taxes accrued as estimated),
     after eliminating (i) all inter-company items between the

                                      9

<PAGE>

     Guarantor and its Subsidiaries and (ii) all current maturities of
     long-term Indebtedness, all as determined in accordance with GAAP.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
     determination, as applied to the Guarantor, the total amount of
     Consolidated assets (less accumulated depreciation or amortization,
     allowances for doubtful receivables, other applicable reserves and
     other properly deductible items) under GAAP which would appear on a
     Consolidated balance sheet of the Guarantor and its Subsidiaries,
     determined in accordance with GAAP, and after giving effect to purchase
     accounting and after deducting therefrom, to the extent otherwise
     included, the amounts of: (i) Consolidated Current Liabilities; (ii)
     minority interests in consolidated Restricted Subsidiaries held by
     Persons other than the Guarantor or a Restricted Subsidiary; (iii)
     excess of cost over fair value of assets of businesses acquired, as
     determined in good faith by the Board of Directors; (iv) any
     revaluation or other write-up in value of assets subsequent to December
     31, 1993 as a result of a change in the method of valuation in
     accordance with GAAP; (v) unamortized debt discount and expenses and
     other unamortized deferred charges, goodwill, patents, trademarks,
     service marks, trade names, copyrights, licenses, organization or
     developmental expenses and other intangible items; (vi) treasury stock;
     and (vii) any cash set apart and held in a sinking or other analogous
     fund established for the purpose of redemption or other retirement of
     Capital Stock to the extent such obligation is not reflected in
     Consolidated Current Liabilities.

     "CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any
     date any Subsidiary or other entity the accounts of which would be
     consolidated in accordance with GAAP with those of such Person in its
     consolidated financial statements as of such date.

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

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Indenture
     Trustee, the office of such Person in the city in which at any particular
     time its corporate trust business shall be principally administered.

     "CSFB" shall mean Credit Suisse First Boston.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
     official under any Bankruptcy Law.

     "DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to the Termination
     Value payable pursuant to the Operative Documents, shall mean an amount
     equal to the excess of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule
     2 of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears)

                                      10

<PAGE>

     minus (ii) the sum of (A) the Equity Portion of Termination Value and
     (B) if such date of determination is a Rent Payment Date, the Equity
     Portion of Periodic Rent due on that date.

     "DEED" means that certain Warranty Deed (RG-4), dated as of October 18,
     2001, from Facility Lessee to Owner Lessor, substantially in the form of
     Exhibit B-2 to the Participation Agreement.

     "DEFAULT" means any event which is, or after notice or passage of time
     or both would be, a Calpine Guaranty Event of Default.

     "DEPRECIATION DEDUCTION" shall have the meaning specified in Section
     1(a) of the Tax Indemnity Agreement.

     "DISCOUNT RATE" shall mean the Facility Lessee's incremental borrowing
     rate as determined by the Facility Lessee in accordance with FASB 13.

     "DOLLARS" or the sign "$" shall mean United States dollars or other
     lawful currency of the United States.

     "ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of
     the Collateral Trust Indenture.

     "ENGINEERING CONSULTANT" shall mean Stone and Webster Consultants, Inc.

     "ENGINEERING REPORT" shall mean, with respect to the Facility, the
     report of the Engineering Consultant, dated September 12, 2001.

     "ENVIRONMENTAL CONDITION" shall mean any action, omission, event,
     condition or circumstance, including, without limitation, the presence of
     any Hazardous Substance, which does or reasonably could (i) require
     assessment, investigation, abatement, correction, removal or remediation,
     (ii) give rise to any obligation or liability of any nature (whether
     civil or criminal, arising under a theory of negligence or strict
     liability, or otherwise) under any Environmental Law, (iii) create or
     constitute a public or private nuisance or trespass, or (iv) constitute a
     violation of or non-compliance with any Environmental Law.

     "ENVIRONMENTAL CONSULTANT" shall mean Clayton Group Services, Inc..

     "ENVIRONMENTAL LAWS" shall mean any international, national, Native
     American, provincial, regional, federal, state, municipal or local laws,
     ordinances, rules, orders, statutes, decrees, judgments, injunctions,
     directives, permits, licenses, approvals, codes, regulations, common or
     decisional law (including principles of tort, negligence, trespass,
     nuisance, strict liability, contribution and indemnification) or other
     requirement of any Governmental Entity relating to the environment, the
     safety or health of human beings or other living organisms, natural
     resources or toxic, explosive, corrosive, flammable, infectious,
     radioactive or other Hazardous Substances, as each may from time to time
     be amended, supplemented or supplanted.

                                      11

<PAGE>

     "ENVIRONMENTAL REPORTS" shall mean the Phase I Environmental Site
     Assessment Report, dated September 27, 2001, prepared by the
     Environmental Consultant.

     "EQUITY INVESTMENT" shall mean the amount specified with respect thereto
     on Schedule 1-A to the Participation Agreement.

     "EQUITY INVESTOR" shall mean Newcourt Capital USA Inc.

     "EQUITY PORTION OF PERIODIC RENT" shall mean for any Rent Payment Date
     the difference between (i) Periodic Rent scheduled to be paid under the
     Facility Lease on such Rent Payment Date and (ii) the principal and
     interest scheduled to be paid on the Lessor Notes on such Rent Payment
     Date.

     "EQUITY PORTION OF TERMINATION VALUE" in respect of any determination of
     Termination Value or amount determined by reference to Termination Value
     payable pursuant to the Operative Documents, shall mean an amount equal to
     the excess, if any, of (i) the Termination Value set forth opposite the
     Termination Date corresponding to such date of determination on Schedule 2
     of the Facility Lease, and, if such date of determination is a Rent
     Payment Date, Periodic Rent due on that date (to the extent payable in
     arrears) over (ii) the balance, including scheduled (in accordance with
     the payment terms of the Lessor Notes) accrued interest, on the Lessor
     Notes scheduled (in accordance with the payment terms of the Lessor Notes)
     to be outstanding on such date of determination corresponding to the
     Facility Lease.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
     ERISA) which together with the Facility Lessee or a Subsidiary of the
     Facility Lessee would be deemed to be a "single employer" (i) within the
     meaning of Section 414(b), (c), (m) and/or (o) of the Code or (ii) as a
     result of the Facility Lessee or a Subsidiary of the Facility Lessee
     being or having been a general partner of such person.

     "EVENT OF LOSS" shall mean any of the following events:

          (i)   the loss of the Facility or use thereof due to destruction or
     damage to the Facility that renders repair uneconomic or that renders
     the Facility permanently unfit for normal use or which does not satisfy
     the preconditions for repair of the Facility set forth in Section 10 of
     the Facility Lease; or

          (ii)   any damage to the Facility that results in an insurance
     settlement with respect thereto on the basis of a total loss or an
     agreed constructive or a compromised total loss of the Facility; or

          (iii)   (a) seizure, condemnation, confiscation or taking of, or
     requisition (a "Requisition") of title to the Facility by any
     Governmental Entity that shall have resulted in loss by the Owner Lessor,
     of title to its Undivided Interest or leasehold interest of the Ground
     Interest, following exhaustion of all permitted appeals or an election by
     the Facility Lessee in its discretion not to pursue such appeals or
     rights; provided that no such contest (or exercise) shall extend beyond
     the earlier of the date which is (x) six

                                      12

<PAGE>

     months after the loss of such leasehold interest or title, or (y) 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee or (b) Requisition of
     use of, or leasehold in, the Undivided Interest or the Ground Interest by
     any Governmental Entity that shall have resulted in the loss of
     possession of the Undivided Interest or all or any part of the Ground
     Interest that is required for the use or operation of the Facility;
     provided that in any case involving Requisition of use of the Facility,
     or all or any part of the Facility Site that is required for the use or
     operation, of the Facility, such event shall be an Event of Loss only if
     loss of possession continues beyond the Basic Lease Term or any Renewal
     Lease Term then in effect or elected by the Facility Lessee; or

          (iv)   if elected in writing by the Owner Participant, such
     election to be made only in circumstances where the termination of the
     Facility Lease shall remove the basis of the regulation described below,
     subjection of the Owner Participant or the Owner Lessor to any public
     utility regulation of any Governmental Entity or law which in the
     reasonable opinion of the Owner Participant is burdensome, or the
     subjection of the Owner Participant's or the Owner Lessor's interest in
     the Facility Lease to any rate of return regulation by any Governmental
     Entity, in either case by reason of the participation of the Owner
     Lessor, the Owner Participant or the OP Guarantor in the transactions
     contemplated by the Operative Documents and not, in any event, as a
     result of (a) investments, loans or other business activities of the
     Owner Participant or any of its Affiliates in respect of equipment or
     facilities similar in nature to the Facility or any part thereof or in
     any other electrical, cogeneration or other energy or utility related
     equipment or facilities or the general business or other activities of
     the Owner Participant or any of its Affiliates or the nature of any of
     the properties or assets from time to time owned, leased, operated,
     managed or otherwise used or made available for use by the Owner
     Participant or any of its Affiliates or (b) a failure of the Owner
     Participant to perform routine, administrative or ministerial actions the
     performance of which would not subject the Owner Participant or any of
     its Affiliates to any material adverse consequence (in the reasonable
     opinion of such Owner Participant acting in good faith); provided that
     the Facility Lessee and the Owner Lessor and Owner Participant agree to
     cooperate and to take reasonable measures to alleviate the source or
     consequence of any regulation constituting an Event of Loss under this
     paragraph (iv), so long as there shall be no adverse consequences to the
     Owner Lessor or Owner Participant as a result of such cooperation or the
     taking of reasonable measures (the events and circumstances described
     herein this paragraph (iv), a "Regulatory Event of Loss"); or

          (v)   if elected by the Owner Participant, in the event that the
     FERC Owner Lessor EWG Order shall not have been obtained and become
     final within ninety (90) days of the Closing Date, such election to be
     conditioned upon receipt of a reasoned legal opinion of nationally
     recognized independent counsel (Owner Participant's outside counsel at
     Closing to be deemed to meet such qualifications) that any pending
     proceeding, if adversely determined, would reasonably be expected to have
     a material adverse effect on the Owner Participant or subject the Owner
     Participant or the Owner Lessor to regulation as a public utility company
     or a holding company under the Holding Company Act; or

                                      13

<PAGE>

          (vi)   if elected by the Owner Participant, in the event that
     the FERC Order set forth in clause (v) of the definition of "FERC
     Orders" herein shall not have been obtained and become final within
     ninety (90) days of the Closing Date, such election to be conditioned
     upon receipt of a reasoned legal opinion of nationally recognized
     independent counsel (Owner Participant's outside counsel at Closing to be
     deemed to meet such qualifications) that any pending proceeding, if
     adversely determined, would reasonably be expected to have a material
     adverse effect on the Owner Participant or subject the Owner Participant
     or the Owner Lessor to regulation as public utility company or a holding
     company under the Holding Company Act.

          (vii)   one or more of the Buyers under the RockGen PPA has
     exercised the purchase option to acquire the Facility pursuant to the
     RockGen PPA, such purchase option presently being set forth in Section
     3.05 thereof.

     The date of occurrence of an Event of Loss described in clauses (i) or
     (ii) above shall be the date of the Facility Lessee's notice to the Owner
     Lessor, the Owner Participant, the Indenture Trustee and the Pass Through
     Trustees pursuant to Section 10.1 of the Facility Lease that it does not
     elect to rebuild the Facility pursuant to Section 10.3 of the Facility
     Lease but to pay Termination Value and terminate the Facility Lease
     pursuant to Section 10.2 thereof, or the date an Event of Loss is deemed
     to occur pursuant to the last sentence of Section 10.1 of the Facility
     Lease. The date of occurrence of an Event of Loss described in clause
     (iii)(a) above shall be the earlier of (A) the date which is six months
     following the loss of title, (B) the date upon which the Facility Lessee
     shall have concluded all efforts to contest such loss of title or
     exercise its rights of eminent domain, and (C) the date which is 48
     months prior to the end of the Basic Lease Term or any Renewal Lease Term
     then in effect or elected by the Facility Lessee (if an event described
     in clause (iii)(a) shall be continuing at such time). The date of
     occurrence of an Event of Loss described in clause (iii)(b) above shall
     be the date of requisition of title to the Facility Site or, in the case
     of a requisition of use of the Facility Site, the date which is the
     scheduled expiration date of the Basic Lease Term or any Renewal Lease
     Term then in effect or elected by the Facility Lessee, as the case may be
     (if an event described in clause (iii)(b) shall be continuing at such
     time). The date of occurrence of an Event of Loss described in clause
     (iv) above shall be the date on which the Facility Lessee receives the
     Owner Participant's election made in accordance with such clause (iv)
     during any period when an event is continuing which upon election by
     Owner Participant in accordance with such clause (iv) would constitute a
     Regulatory Event of Loss. The date of occurrence of an Event of Loss
     described in clause (v) or (vi) above shall be the date on which the
     Facility Lessee receives the Owner Participant's election made in
     accordance with such clause (v) or (vi), as applicable. The date of
     occurrence of an Event of Loss in clause (vii) above shall be the date on
     which the Owner Lessor's interest is conveyed pursuant to the terms of
     the Facility Lease.

     "EXCEPTED PAYMENTS" shall mean and include (i)(A) any right, title or
     interest to any indemnity (whether or not constituting Supplemental Rent
     and whether or not a Lease Event of Default exists) payable to either the
     Owner Lessor, the Lessor Manager, the Trust Indenture Company, or the
     Owner Participant or to their respective Indemnitees and successors and
     permitted assigns (other than the Indenture Trustee) pursuant to

                                      14

<PAGE>

     Section 2.3, 9.1, 9.2, 11.1 or 11.2 of the Participation Agreement, and
     any payments under any Tax Indemnity Agreement (provided that Excepted
     Payments shall not include any Periodic Rent) or (B) any amount payable
     by the Facility Lessee to the Owner Lessor or the Owner Participant to
     reimburse any such Person for its costs and expenses in exercising its
     rights under the Operative Documents, (ii)(A) insurance proceeds, if any,
     payable to the Owner Lessor or the Owner Participant under insurance
     separately maintained by the Owner Lessor or the Owner Participant with
     respect to the Facility as permitted by Section 3(b) of Schedule 5.31 to
     the Participation Agreement or (B) proceeds of personal injury or
     property damage liability insurance maintained under any Operative
     Document for the benefit of the Owner Lessor or the Owner Participant,
     (iii) any amount payable to the Owner Participant as the purchase price
     of the Owner Participant's right and interest in the Member Interest,
     (iv) all other fees expressly payable to the Owner Participant under the
     Operative Documents, (v) any payments in respect of interest, or any
     payments made on an After-Tax Basis, to the extent attributable to
     payments referred to in clause (i) through (vi) above; (vii) any amounts
     paid to the Owner Lessor as reimbursement for amounts expended pursuant
     to Section 20 of the Facility Lease; (viii) proceeds of the items
     referred to in clause (i) through (vii) above; and (ix) any rights to
     demand, collect, sue for, or otherwise receive and enforce payment of the
     foregoing amounts, including under the Calpine Guaranty, but without
     limiting clause (v) of this definition above.

     "EXCESS AMOUNT" shall have the meaning specified in Section 14.3 of the
     Participation Agreement, and, with respect to the Collateral Trust
     Indenture, the meaning specified in Section 9.13 thereof.

     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
     amended.

     "EXCLUDED TAXES" shall have the meaning specified in Section 9.2(b) of
     the Participation Agreement.

     "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an entity which is an
     "exempt wholesale generator" as defined in Section 32 of PUHCA.

     "FACILITY" shall mean a 520 MW nameplate capacity gas-fired simple cycle
     merchant power plant located in Christiana, Wisconsin, and more fully
     described in Exhibit A to the Participation Agreement. The Facility does
     not include the Facility Site.

     "FACILITY LEASE" shall mean, the Facility Lease Agreement (RG-4), dated
     as of October 18, 2001, between the Owner Lessor and the Facility Lessee,
     substantially in the form of Exhibit C to the Participation Agreement.

     "FACILITY LEASE TERM" with respect to the Facility Lease, shall mean the
     term of the Facility Lease, including the Basic Lease Term and all
     Renewal Lease Terms.

      "FACILITY LESSEE" shall have the meaning set forth in the recitals to
     the Participation Agreement.

     "FACILITY SITE" shall have the meaning set forth in the recitals to the
     Facility Site Lease.

                                      15

<PAGE>

     "FACILITY SITE LEASE" shall mean the Facility Site Lease (RG-4), dated
     as of October 18, 2001, between Facility Lessee and the Owner Lessor,
     substantially in the form of Exhibit D to the Participation Agreement,
     pursuant to which Facility Lessee will lease the Ground Interest to the
     Owner Lessor.

     "FACILITY SITE LESSEE" shall mean Owner Lessor

     "FACILITY SITE LESSOR" shall mean RockGen Energy LLC .

     "FACILITY SITE RENT" shall have the meaning set forth in Section 4.1 of
     the Facility Site Lease.

     "FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease (RG-4),
     dated as of October 18, 2001, between the Facility Lessee and the Owner
     Lessor, substantially in the form of Exhibit E to the Participation
     Agreement, pursuant to which the Owner Lessor will sublease the Ground
     Interest to the Facility Lessee.

     "FACILITY SITE SUBLESSEE EVENT OF DEFAULT" shall have the meaning set
     forth in Section 13.1 of the Facility Site Lease and Section 13.1 of the
     Facility Site Sublease.

     "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with
     respect to any property or service as of any date, the cash rent or cash
     price obtainable in an arm's-length lease, sale or supply, respectively,
     between an informed and willing lessee or purchaser under no compulsion
     to lease or purchase and an informed and willing lessor or seller or
     supplier under no compulsion to lease or sell or supply the property or
     service in question, and shall, in the case of the Undivided Interest or
     the Owner Lessor's Interest, be determined (except pursuant to Section 17
     of the Facility Lease or as otherwise provided below or in the Operative
     Documents) on the basis and assumption that (i) the conditions contained
     in Sections 7 and 8 of the Facility Lease shall have been complied with
     in all respects, (ii) the lessee or buyer shall have rights in, or an
     assignment of, the Operative Documents to which the Owner Lessor is a
     party and the obligations relating thereto, (iii) the Undivided Interest
     or the Owner Lessor's Interest, as the case may be, is free and clear of
     all Liens (other than Owner Lessor's Liens, Owner Participant's Liens and
     Indenture Trustee Liens), (iv) taking into account the remaining term of
     the Facility Site Lease, and (v) in the case the Fair Market Rental
     Value, taking into account the terms of the Facility Lease and the other
     Operative Documents. If the Fair Market Sales Value of the Owner Lessor's
     Interest is to be determined during the continuance of a Lease Event of
     Default or in connection with the exercise of remedies by the Owner
     Lessor pursuant to Section 17 of the Facility Lease, such value shall be
     determined by an Independent Appraiser appointed solely by the Owner
     Lessor on an "as-is", "where-is" and "with all faults" basis and shall
     take into account all Liens (other than Owner Lessor's Liens, Owner
     Participant's Liens and Indenture Trustee Liens); provided, however, in
     any such case where the Owner Lessor shall be unable to obtain
     constructive possession sufficient to realize the economic benefit of the
     Owner Lessor's Interest, Fair Market Sales Value of the Owner Lessor's
     Interest shall be deemed equal to $0 (zero). If in any case other than in
     the preceding sentence the parties are unable to agree upon a Fair Market
     Sales Value of the Owner Lessor's Interest within 30 days after a request
     therefor

                                      16

<PAGE>

     has been made, the Fair Market Sales Value of the Owner Lessor's
     Interest shall be determined by appraisal pursuant to the Appraisal
     Procedures. Any fair market value determination of a Severable
     Improvement shall take into consideration any liens or encumbrances to
     which the Severable Improvement being appraised is subject and which are
     being assumed by the transferee.

     "FASB 13" shall mean the Statement of the Financial Accounting Standards
     Board No. 13, as amended and interpreted from time to time.

     "FASB 98" shall mean the Statement of the Financial Accounting Standards
     Board No. 98, as amended and interpreted from time to time.

     "FEDERAL POWER ACT" or "FPA" shall mean the Federal Power Act, as
     amended.

     "FERC" shall mean the Federal Energy Regulatory Commission of the United
     States or any successor or predecessor agency thereto.

     "FERC ORDERS" shall mean any or all of the following of the FERC Orders
     required pursuant to Section 4.8 of the Participation Agreement:

          (i)   a determination by FERC of EWG status of the Facility Lessee
     and Owner Lessor and the Owner Participant;

          (ii)   an approval from FERC for the Facility Lessee to sell
     power at market-based rates under Section 205 of the FPA effective on or
     before the Closing Date;

          (iii)   either an approval by FERC of the issuance of securities
     and the assumption of obligations necessary to effect the sale/leaseback
     pursuant to Section 204 of the Federal Power Act or blanket authorization
     to issue securities and assume obligations under such Section;

          (iv)   Intentionally Omitted; and

          (v)   an approval from FERC under Section 203 of the Federal
      Power Act for the transfer of jurisidictional facilities in the
     sale/leaseback contemplated by the Operative Documents.

     "FERC OWNER LESSOR EWG ORDER" shall mean the orders issued by the FERC
     determining that the Owner is an EWG.

     "FINAL DETERMINATION" shall have the meaning specified in Section 9 of
     the Tax Indemnity Agreement.

     "FIRST RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(a) of the Facility Lease.

     "FIRST WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning specified in Section 2.2(a)(i) of the
     Facility Site Lease.

                                      17

<PAGE>

     "FMV RENEWAL LEASE OPTION" with respect to the Facility Lease Term,
     shall have the meaning set forth in Section 2.2(a)(iii) of the Facility
     Site Lease.

     "FMV RENEWAL LEASE TERM" with respect to the Facility Lease, shall have
     the meaning specified in Section 15.2 of the Facility Lease.

     "FORECLOSURE TRANSFER" with respect to the Facility Site Lease, shall
     have the meaning set forth in Section 19.3 of the Facility Site Lease.

     "GAAP" shall mean generally accepted accounting principles.

     "GOVERNMENTAL ACTIONS" shall mean all authorizations, consents,
     approvals, waivers, exceptions, variances, filings, permits, orders,
     licenses, exemptions and declarations of or with any Governmental Entity
     and shall include those citing, environmental and operating permits and
     licenses (including the Applicable Permits) that are required for the use
     and operation of the Facility, the Undivided Interest (if any), the
     Ground Interest and the Facility Site.

     "GOVERNMENTAL ENTITY" shall mean and include any international,
     national, Native American, provincial, regional, state, municipal or
     local government, any political subdivision of any thereof or any board,
     commission, department, division, organ, instrumentality, court or agency
     of any thereof.

     "GROUND INTEREST" shall mean the Owner Lessor's 25% undivided leasehold
     interest in the Facility Site.

     "GUARANTOR" shall mean Calpine Corporation.

     "GUARANTOR ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment
     and assumption agreement in form and substance substantially in the form
     of Exhibit L to the Participation Agreement.

     "HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
     substance, hazardous waste, toxic substance, petroleum or
     petroleum-derived substance, waste, or additive, asbestos, PCBs,
     radioactive material, or other compound, element, material or substance
     in any form whatsoever (including products) regulated, restricted or
     controlled by or under any Environmental Law.

     "HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act
     of 1935, as amended.

     "IMPROVEMENT" shall mean an addition, betterment or enlargement of the
     Facility. Improvements shall include any Required Improvements or
     Optional Improvements, but do not include Components.

     "INCOME TAXES" shall have the meaning set forth in Section 9.2(b)(i) of
     the Participation Agreement.

                                      18

<PAGE>

     "INCUR" means, as applied to any obligation, to create, incur, issue,
     assume, guarantee or in any other manner become liable with respect to,
     contingently or otherwise, such obligation, and "Incurred," "Incurrence"
     and "Incurring" shall each have a correlative meaning; provided, however,
     that any amendment, modification or waiver of any provision of any
     document pursuant to which Indebtedness was previously Incurred shall not
     be deemed to be an Incurrence of Indebtedness as long as (i) such
     amendment, modification or waiver does not (A) increase the principal or
     premium thereof or interest rate thereon, (B) change to an earlier date
     the Stated Maturity thereof or the date of any scheduled or required
     principal payment thereon or the time or circumstances under which such
     Indebtedness may or shall be redeemed, (C) if such Indebtedness is
     contractually subordinated in right of payment to the Obligations, modify
     or affect, in any manner adverse to the Beneficiaries, such subordination
     or (D) if the Guarantor is the obligor thereon, provide that a Restricted
     Subsidiary shall be an obligor and (ii) such Indebtedness would, after
     giving effect to such amendment, modification or waiver as if it were an
     Incurrence, comply with clause (i) of the first proviso to the definition
     of "Refinancing Indebtedness."

     "INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
     Person for borrowed money, (ii) all obligations of such Person evidenced
     by bonds, debentures, notes or other similar instruments, (iii) all
     obligations of such Person to pay the deferred purchase price of property
     or services, (iv) all indebtedness created or arising under any
     conditional sale or other title retention agreement with respect to
     property acquired by such Person (even though the rights and remedies of
     the seller or lender under such agreement in the event of default are
     limited to repossession or sale of such property), (v) all Lease
     Obligations of such Person (including payments of Termination Value and
     any other amounts owed pursuant to the Operative Documents), (vi) all
     obligations, contingent or otherwise, of such Person under acceptance,
     letter of credit or similar facilities, (vii) all unconditional
     obligations of such Person to purchase, redeem, retire, defease or
     otherwise acquire for value any capital stock or other equity interests
     of such Person or any warrants, rights or options to acquire such capital
     stock or other equity interests, (viii) all net obligations under
     "swaps", "caps", "floors", "collars", or other interest rate hedging
     contracts or similar arrangements, (ix) all Indebtedness of any other
     Person of the type referred to in clauses (i) through (viii), guaranteed
     by such Person or for which such Person shall otherwise (including
     pursuant to any keepwell, makewell or similar arrangement) become
     directly or indirectly liable, and (x) all Indebtedness of the type
     referred to in clauses (i) through (ix) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on property (including accounts and
     contracts rights) owned by such Person, even though such Person has not
     assumed or become liable for the payment of such Indebtedness, the amount
     of such obligation being deemed to be the lesser of the value of such
     property or the amount of the obligation so secured.

     "INDEMNITEE" shall have the meaning specified in Section 9.1(a) of the
     Participation Agreement.

     "INDEMNITOR" shall have the meaning set forth in Section 13.3 of the
     Facility Site Lease.

                                      19

<PAGE>

     "INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence,
     which, with the passage of time or the giving of notice or both, would
     become an Lease Indenture Event of Default under Section 4.2(e) or (f) of
     the Collateral Trust Indenture.

     "INDENTURE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become an Lease
     Indenture Event of Default.

     "INDENTURE ESTATE" shall have the meaning specified in the Granting
     Clause of the Collateral Trust Indenture.

     "INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., not in its individual capacity, except as expressly
     provided herein, but solely as Indenture Trustee under the Operative
     Documents.

     "INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices
     to the Indenture Trustee from time to time pursuant to Section 9.5 of the
     Collateral Trust Indenture.

     "INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified with
     respect thereto on Schedule 1-B to the Participation Agreement or such
     other account of the Indenture Trustee, as the Indenture Trustee may from
     time to time specify in a notice to the other parties to the
     Participation Agreement.

     "INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate,
     the Facility, the Facility Site or any part thereof or any interest
     therein arising as a result of (i) Taxes against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof that
     are not related to, or that are in violation of, any Operative Document
     or the transactions contemplated thereby, (ii) Claims against or any act
     or omission of the Lease Indenture Company or the Indenture Trustee, or
     Affiliate thereof that is not related to, or that is in violation of, any
     of such Person's representations, warranties, covenants or agreements in
     an Operative Document or the transactions contemplated thereby or that is
     in breach of any covenant or agreement of the Lease Indenture Company or
     the Indenture Trustee specified therein, (iii) Taxes imposed upon the
     Lease Indenture Company or the Indenture Trustee, or any Affiliate
     thereof that are not indemnified against by the Facility Lessee pursuant
     to any Operative Document or (iv) Claims against or affecting the Lease
     Indenture Company or the Indenture Trustee, or any Affiliate thereof
     arising out of the voluntary or involuntary transfer by the Lease
     Indenture Company or the Indenture Trustee of any portion of the interest
     of the Lease Indenture Company or the Indenture Trustee in the Lessor
     Estate, other than pursuant to the Operative Documents.

     "INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial
     property appraiser who is a member of the Appraisal Institute having
     experience in the business of evaluating facilities similar to the
     Facility.

     "INITIAL LESSOR NOTES" shall have the meaning set forth in Section 2.2
     of the Collateral Trust Indenture.

                                      20

<PAGE>

     "INITIAL PURCHASERS" shall mean CSFB, Banc of America Securities LLC,
     Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

     "INITIAL SUBLEASE TERM" with respect to a Facility Site Sublease, shall
     have the meaning set forth in Section 2.1(a) of such Facility Site
     Sublease.

     "INITIAL TERM" with respect to the Facility Site Lease, shall have the
     meaning specified in Section 2.1(a) of the Facility Site Lease.

     "INSURANCE CONSULTANT" shall mean Marsh USA, Inc.

     "INVESTMENT BANKER" shall have the meaning set forth in Section 2.10(d) of
      the Collateral Trust Indenture.

     "INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940.

     "INVESTMENT GRADE" with respect to a Rating Agency, shall mean, with
     respect to S&P, BBB- or higher, and with respect to Moody's, Baa3 or
     higher, or, if after the Closing Date a different system of ratings is
     established, the term shall mean a rating in one of such Rating Agency's
     generic rating categories that is comparable to such ratings.

     "IRS" shall mean the Internal Revenue Service of the United States
     Department of Treasury or any successor agency.

     "L/C BANK" shall mean the Acceptable Bank providing a letter of credit
     pursuant to Section 5.3 of the Facility Lease.

     "LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.

     "LEASE DEBT RATE" shall mean the applicable interest rate accruing on
     Lessor Notes.

     "LEASE DEFAULT" shall mean any event or occurrence, which, with the
     passage of time or the giving of notice or both, would become a Lease
     Event of Default.

     "LEASE EVENT OF DEFAULT" with respect to the Facility Lease, shall have
     the meaning specified in Section 16 of the Facility Lease.

     "LEASE INDENTURE COMPANY" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., in its individual capacity under the Operative
     Documents.

     "LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning set forth in
     Section 4.2 of the Collateral Trust Indenture.

     "LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
     represented by obligations under a lease that is required to be
     capitalized for financial reporting purposes, (ii) with respect to
     operating leases of electric generating facilities, the termination value
     or similar amount payable by the lessee under such lease and (iii) the
     principal amount of financial obligations under any synthetic lease, tax
     retention operating

                                      21

<PAGE>

     lease, off-balance sheet loan or similar off-balance sheet financing
     product where such transaction is considered borrowed money indebtedness
     of the lessee for tax purposes but is classified as an operating lease
     under GAAP.

     "LEASEHOLD LIEN" with respect to the Facility Site Lease or the Facility
     Site Sublease, shall have the meaning set forth in Section 16.4 of the
     Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LEASEHOLD MORTGAGEE" with respect to the Facility Site Lease or the
     Facility Site Sublease, shall have the meaning set forth in Section 16.4
     of the Facility Site Lease or Section 15.3 of the Facility Site Sublease.

     "LESSEE 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSEE 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN INTEREST" with respect to the Facility Lease, shall
     have the meaning specified in Section 3.2(d) of the Facility Lease.

     "LESSOR 467 LOAN PRINCIPAL BALANCE" with respect to the Facility Lease,
     shall have the meaning set forth in Section 3.2(d) of the Facility Lease.

     "LESSOR ESTATE" shall mean all the estate, right, title and interest of
     the Owner Lessor in, to and under the Undivided Interest, the Ground
     Interest and the Operative Documents, including all funds advanced to the
     Owner Lessor by the Owner Participant, all installments and other
     payments of Periodic Rent, Supplemental Rent or Termination Value under
     the Facility Lease, condemnation awards, purchase price, sale proceeds,
     insurance proceeds and all other proceeds, rights and interests of any
     kind for or with respect to the estate, right, title and interest of the
     Owner Lessor in, to and under the Undivided Interest, the Ground Interest
     and the Operative Documents and any of the foregoing, but shall not
     include Excepted Payments.

     "LESSOR MANAGER" shall mean Wells Fargo Bank Northwest, National
     Association not in its individual capacity, but solely as an independent
     manager under the LLC Agreement and each other Person that may from time
     to time be acting as Independent Manager in accordance with the
     provisions of the LLC Agreement.

     "LESSOR NOTE(S)" shall mean, individually or collectively as the context
     may require, the Initial Lessor Notes and Additional Lessor Notes, each
     issued pursuant to the Collateral Trust Indenture.

     "LESSOR PUT RENEWAL LEASE TERM" with respect to the Facility Lease,
     shall have the meaning specified in Section 15.2 of the Facility Lease.

     "LIEN" shall mean any mortgage, security deed, security title, pledge,
     lien, charge, encumbrance, lease, and security interest or title
     retention arrangement.

                                      22

<PAGE>

     "LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between the Owner
     Participant and the Lessor Manager, pursuant to which the Owner Lessor
     shall be governed.

     "MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination,
     shall mean Noteholders holding in aggregate more than 50% of the total
     outstanding principal amount of the Lessor Notes; provided, however, that
     any Note held by the Facility Lessee, the Guarantor or any Affiliate of
     either such party shall not be considered outstanding for purposes of
     this definition.

     "MAKE-WHOLE AMOUNT" shall mean, with respect to any Lessor Note subject
     to redemption pursuant to the Lease Indenture, an amount equal to the
     Discounted Present Value calculated for such Lessor Note being redeemed
     less the unpaid principal amount of such Lessor Note; provided that the
     Make Whole Amount shall not be less than zero. For purposes of this
     definition, the "Discounted Present Value" of any Lessor Note subject to
     redemption pursuant to the Lease Indenture shall be equal to the
     discounted present value, as of the date of redemption, of all principal
     and interest payments scheduled to become due in respect of such Lessor
     Note, after the date of such redemption calculated using a discount rate
     equal to the sum of (i) the yield to maturity on the U.S. Treasury
     security having an average life equal to the remaining average life of
     such Lessor Note and trading in the secondary market at the price closest
     to par and (ii) 50 basis points; provided, however, that if there is no
     U.S. Treasury security having an average life equal to the remaining
     average life of such Lessor Note, such discount rate shall be calculated
     using a yield to maturity interpolated or extrapolated on a straightline
     basis (rounding to the nearest calendar month, if necessary) from the
     yields to maturity for two U.S. Treasury securities having average lives
     most closely corresponding to the remaining life of such Lessor Note and
     trading in the secondary market at the price closest to par.

     "MANAGER" shall mean CSFB.

     "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean a
     material adverse effect on (a) the economic prospects, operations,
     assets, financial position, results of operation or business of the
     Guarantor, including a material adverse effect on (i) the Facility, the
     Undivided Interest, the Facility Site or the Ground Interest which
     adversely affects the ability of the Guarantor to perform its obligations
     under the Operative Documents or (ii) the validity or enforceability of
     the Operative Documents, (b) the Indenture Estate or the Lessor Estate,
     the security interests in the Lessor Estate, or (c) with respect to the
     Owner Participant's (but not the Certificateholders') interest in the
     Undivided Interest, the residual value or remaining useful life of the
     Facility.

     "MEMBER INTEREST" shall mean the interest of the Owner Participant in
     the Owner Lessor.

     "MEMORANDUM OF FACILITY SITE LEASE" shall mean the Memorandum of
     Facility Site Lease (RG-4), dated as of the Closing Date, between the
     Facility Lessee, as landlord, and the Owner Lessor, as tenant, and filed
     with the Recorder of Dane County, Wisconsin.

                                      23

<PAGE>

     "MEMORANDUM OF FACILITY SITE SUBLEASE" shall mean the Memorandum of
     Facility Site Sublease (RG-4), dated as of the Closing Date, between the
     Owner Lessor, as sublandlord, and the Facility Lessee, as subtenant filed
     with the Recorder of Dane County, Wisconsin.

     "MEMORANDUM OF LEASE" shall mean the Memorandum of Facility Lease
     (RG-4), dated as of the Closing Date, between the Owner Lessor and the
     Facility Lessee filed with the Recorder of Dane County, Wisconsin.

     "MOODY'S" shall mean Moody's Investors Service, Inc. and any successor
     thereto.

     "MULTIEMPLOYER PLAN" shall mean any Plan that is a multiemployer plan
     (as defined in Section 4001(a)(3) of ERISA).

     "NOTE REGISTER" shall have the meaning specified in Section 2.8 of the
     Collateral Trust Indenture.

     "NOTEHOLDER(S)" shall mean any holder of record (as reflected on the
     Note Register) from time to time of a Lessor Note outstanding.

     "NOTICE PERIOD" shall have the meaning set forth in Section 7.6 of the
     Participation Agreement.

     "OBLIGATIONS" shall have the meaning set forth in Section 2.2 of the
     Calpine Guaranty.

     "OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in
     Section 14.1 of the Facility Lease.

     "OFFERING CIRCULAR" shall mean the Offering Circular, dated October 11,
     2001, with respect to the Certificates.

     "OFFICER" shall mean, solely with respect to the Guarantor, the
     Chairman, the President, any Vice President, the Chief Operating Officer,
     the Chief Financial Officer, the Treasurer, the Secretary, any Assistant
     Treasurer, any Assistant Secretary or the Controller or Principal
     Accounting Officer of the Guarantor.

     "OFFICER'S CERTIFICATE" shall mean with respect to any Person, a
     certificate signed (i) in the case of a corporation, by the Chairman of
     the Board, the President, or a Vice President of such Person or any
     Person authorized by or pursuant to the organizational documents, the
     by-laws or any resolution of the Board of Directors or Executive
     Committee of such Person (whether general or specific) to execute,
     deliver and take actions on behalf of such Person in respect of any of
     the Operative Documents, (ii) in the case of a partnership, by the
     Chairman of the Board of Directors, the President or any Vice President,
     the Treasurer or an Assistant Treasurer of a corporate general partner
     and (iii) in the case of an Indenture Trustee, a certificate signed by a
     Responsible Officer of such Indenture Trustee.

                                      24

<PAGE>

     "OFFICIAL RECORDS" shall have the meaning specified in the recitals to
     the Facility Site Lease.

     "OP ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
     assumption agreement in form and substance substantially in the form of
     Exhibit J to the Participation Agreement.

     "OP GUARANTOR" shall mean Newcourt Credit Group USA Inc., or any Person
     that shall guaranty the obligations of a Transferor under the Operative
     Documents in accordance with Section 7.1 of the Participation Agreement.

     "OP LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
     Company Agreement, dated as of October 1, 2001, between Newcourt Capital
     USA Inc. and the Lessor Manager, pursuant to which the Owner Participant
     shall be governed.

     "OP PARENT GUARANTY" shall mean, as applicable, (i) that certain
     guaranty of Newcourt Credit Group USA Inc., dated as of the Closing Date
     in favor of the Facility Lessee, the Owner Lessor, the Lessor Manager,
     the Trust Company, the Indenture Trustee, the Pass Through Trustees and
     the Certificateholders, or (ii) any other guaranty agreement provided by
     an OP Guarantor in form and substance substantially in the form of
     Exhibit G to the Participation Agreement.

     "OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Bill of
     Sale, the Facility Lease, the Certificates, the Facility Site Lease, the
     Facility Site Sublease, the Collateral Trust Indenture, the Lessor Notes,
     the Pass Through Trust Agreements, the LLC Agreement, the Tax Indemnity
     Agreement, the Calpine Guaranty, the OP Parent Guaranty (if any), the
     Certificate Purchase Agreement, and the Ownership and Operation Agreement.

     "OPERATOR" shall mean Calpine Northbrook Services, LLC or any
     replacement Operator appointed pursuant to the Operative Documents.

     "OPINION OF COUNSEL" shall mean, with respect to any Calpine Party, a
     written opinion (i) from Ronald W. Fischer or any other internal counsel
     of Calpine, as to matters contained in such opinions delivered at
     Closing, and as to all other matters, Thelen Reid & Priest LLP and/or
     Davis Wright & Tremaine LLP, or any other outside legal counsel
     reasonably acceptable to the Owner Participant, (ii) in form and
     substance (with respect to qualifications, exception, assumption and the
     like) substantially equivalent to the legal opinions delivered at
     Closing, with any material modification or supplements thereto to be
     reasonably acceptable to the Owner Participant, or in any such other form
     as may be reasonably acceptable to the Owner Participant, and (iii) the
     scope of which shall cover due authorization, execution, delivery and
     enforceability of the applicable agreement(s), and exemption from
     regulation, in each case, substantially in the form set forth in the
     opinions delivered at Closing with any material modifications thereto to
     be reasonably acceptable to the Owner Participant.

     "OPTIONAL IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.2 of the Facility Lease.

                                      25

<PAGE>

     "ORGANIC DOCUMENT" shall mean, with respect to any Person that is a
     corporation, its certificate of incorporation, its by-laws and all
     shareholder agreements, voting trusts and similar arrangements applicable
     to any of its authorized shares of capital stock; with respect to any
     Person that is a limited partnership, its certificate of limited
     partnership and partnership agreement; with respect to any Person that is
     a limited liability company, its certificate of formation and its limited
     liability company agreement, in each case, as from time to time amended,
     supplemented, amended and restated, or otherwise modified and in effect
     from time to time; and with respect to any Person that is a business
     trust, its certificate of business trust and its trust agreement, in each
     case, as from time to time amended, supplemented, amended and restated,
     or otherwise modified and in effect from time to time.

     "OTHER CALPINE GUARANTIES" shall mean collectively, the Other RockGen
     Calpine Guaranties, the Broad River Calpine Guaranties and the South
     Point Calpine Guaranties.

     "OTHER FACILITY LEASES" shall mean collectively, the Other RockGen
     Facility Leases, the Broad River Facility Leases and the South Point
     Facility Leases.

     "OTHER OWNER LESSORS" shall mean collectively, the Other RockGen Owner
     Lessors, the Broad River Owner Lessors and the South Point Owner Lessors.

     "OTHER ROCKGEN BILLS OF SALE" shall mean each of the bills of sale
     executed and delivered pursuant to the Other RockGen Participation
     Agreements.

     "OTHER ROCKGEN CALPINE GUARANTIES" shall mean the other Calpine guaranty
     and payment agreements executed and delivered by Calpine pursuant to the
     Other RockGen Participation Agreements.

     "OTHER ROCKGEN COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the Other
     RockGen Participation Agreements.

     "OTHER ROCKGEN FACILITY LEASES" shall mean the other RockGen facility
     lease agreements, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee, pursuant to which the
     Other RockGen Owner Lessors will lease the Other RockGen Undivided
     Interests to the Facility Lessee.

     "OTHER ROCKGEN FACILITY SITE LEASES" shall mean the other facility site
     leases, dated as of October 18, 2001, by and between the Other RockGen
     Owner Lessors and the Facility Lessee pursuant to which the Facility
     Lessee will lease the Other RockGen Ground Interests to the Other RockGen
     Owner Lessors.

     "OTHER ROCKGEN FACILITY SITE SUBLEASES" shall mean the other facility
     site subleases, dated as of October 18, 2001, by and between the Other
     RockGen Owner Lessors and the Facility Lessee pursuant to which the Other
     RockGen Owner Lessors will sublease the Ground Interest to the Facility
     Lessee.

                                      26

<PAGE>

     "OTHER ROCKGEN GROUND INTERESTS" shall mean the undivided interests in
     the Facility Site not conveyed to the Owner Lessor under the Facility
     Site Lease.

     "OTHER ROCKGEN INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the Other RockGen Collateral Trust Indentures.

     "OTHER ROCKGEN LEASE TRANSACTIONS" shall mean the transactions involving
     the sale of the Other RockGen Undivided Interests and the lease of the
     Other RockGen Ground Interests to the Other RockGen Owner Lessors, and
     the lease by the Other RockGen Owner Lessors of the Other RockGen
     Undivided Interests and sublease by the Other RockGen Owner Lessors of
     the Other RockGen Ground Interest to the Facility Lessee on substantially
     the same terms and conditions as under, and dated the same date as, the
     Overall Transaction.

     "OTHER ROCKGEN LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the Other RockGen Owner Lessors pursuant to the Other
     RockGen Operative Documents.

     "OTHER ROCKGEN OWNER LESSORS" shall mean RockGen OL-1, LLC, RockGen
     OL-2, LLC and RockGen OL-3, LLC.

     "OTHER ROCKGEN OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC and SBR OP-3, LLC.

     "OTHER ROCKGEN OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the Other RockGen Lease Transactions.

     "OTHER ROCKGEN PARTICIPATION AGREEMENTS" shall mean a collective
     reference to each of the other three separate participation agreements
     entered into by the Facility Lessee, the applicable Other RockGen Owner
     Lessor, the Other RockGen Lessor Manager, Other RockGen Owner
     Participant, Other RockGen Indenture Trustee, Pass Through Trustees and
     Calpine and designated Participation Agreement (RG-1), Participation
     Agreement (RG-2) and Participation Agreement (RG-3), each dated as of the
     Closing Date, pursuant to which, among other things, the Facility Lessee
     has agreed to (a) sell to the applicable Other RockGen Owner Lessors
     certain undivided interests in the Facility and lease certain undivided
     interests in the Facility Site, and (b) sublease from the applicable
     Other RockGen Owner Lessors such undivided interest in the Facility Site
     pursuant to the Other RockGen Facility Site Sublease.

     "OTHER ROCKGEN UNDIVIDED INTERESTS" shall mean the undivided interest in
     the Facility not conveyed to the Owner Lessor under the Bill of Sale.

     "OVERALL TRANSACTION" shall mean all of the transactions contemplated by
     the Operative Documents.

     "OVERDUE RATE" shall mean a rate per annum equal to the prime commercial
     lending rate of the Chase Manhattan Bank (as publicly announced to be
     effect from time to time,

                                      27

<PAGE>

     such rate to be adjusted automatically, without notice, on the effective
     date of any change in such rate) plus 1%.

     "OWNER LESSOR" shall mean RockGen OL-4, LLC, a Delaware limited
     liability company created for the benefit of the Owner Participant.

     "OWNER LESSOR'S ACCOUNT" shall mean Wells Fargo Bank Northwest, National
     Association, Salt Lake City, Utah, ABA # 121-000-248, Account: Corporate
     Trust Services, Account # 051-0922115, Credit to: RockGen OL-4, LLC.

     "OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
     interest in and to the Undivided Interest and the Ground Interest.

     "OWNER LESSOR'S LIEN(S)" individually or collectively as the context may
     require, shall mean any Lien on the Lessor Estate, the Facility Sites, or
     any part of any thereof or interest therein arising as a result of (i)
     Taxes against or affecting the Owner Lessor, the Trust Company or the
     Lessor Manager or any Affiliate thereof that are not related to, or that
     are in violation of, any Operative Document or the transactions
     contemplated thereby, (ii) Claims against or any act or omission of the
     Owner Lessor, the Trust Company or the Lessor Manager or Affiliate
     thereof that is not related to, or that is in violation of, any Operative
     Document or the transactions contemplated thereby or that is in breach of
     any covenant or agreement of the Owner Lessor, the Trust Company or the
     Lessor Manager specified therein, (iii) Taxes imposed upon the Owner
     Lessor, the Trust Company or the Lessor Manager or any Affiliate thereof
     that are not indemnified against by the Facility Lessee pursuant to any
     Operative Document or (iv) Claims against or affecting the Owner Lessor,
     the Trust Company or the Lessor Manager or any Affiliate thereof arising
     out of the voluntary or involuntary transfer by the Owner Lessor, the
     Trust Company or the Lessor Manager of any portion of the interest of the
     Owner Lessor in the Owner Lessor's Interest, other than pursuant to the
     Operative Documents.

     "OWNER LESSOR'S PERCENTAGE" shall mean 25%.

     "OWNER PARTICIPANT" shall mean SBR OP-4, LLC, a Delaware limited
     liability company.

     "OWNER PARTICIPANT'S ACCOUNT" shall mean the account maintained by the
     Owner Participant at the bank specified with respect thereto on Schedule
     1-C to the Participation Agreement, or such other account of the Owner
     Participant, as the Owner Participant may from time to time specify in a
     notice to the Indenture Trustee pursuant to Section 9.5 of the Collateral
     Trust Indenture.

     "OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's
     investment in the Owner Lessor contemplated by Section 2.1(a) of the
     Participation Agreement.

     "OWNER PARTICIPANT'S LIEN(S)" individually or collectively as the
     context may require, shall mean any Lien on the Lessor Estate, the
     Facility Sites, or any part of any thereof or interest therein arising as
     a result of (i) Claims against or any act or omission of the Owner
     Participant that is not related to, or that is in violation of, any
     Operative Document

                                      28

<PAGE>

     or the transactions contemplated thereby or that is in breach of any
     covenant or agreement of the Owner Participant set forth therein, (ii)
     Taxes against the Owner Participant that are not indemnified against by
     the Facility Lessee pursuant to the Operative Documents or (iii) Claims
     against or affecting the Owner Participant arising out of the voluntary
     or involuntary transfer by the Owner Participant of any portion of the
     interest of the Owner Participant in the Member Interest, other than any
     transfer (x) pursuant to the exercise of any of the Facility Lessee's (or
     any Affiliate thereof) rights under the Operative Documents or (y) during
     the continuance of a Lease Event of Default.

     "OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner
     Participant's anticipated (i) after-tax yield, calculated according to
     the multiple investment sinking fund method of analysis, and (ii)
     periodic GAAP income and aggregate after-tax cash flow.

     "OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and
     Operation Agreement, dated as of October 18, 2001, among the Facility
     Lessee, the Owner Lessor and the Other RockGen Owner Lessors.

     "OWNERSHIP INTEREST" shall mean, with respect to the Facility Lessee (or
     any assigns of the Facility Lessee), any and all equity interest in the
     Facility Lessee (or such assignee of the Facility Lessee) howsoever
     designated (whether capital stock, partnership interest, member interest
     or any equivalent interest).

     "PARTICIPATION AGREEMENT" shall mean the Participation Agreement, dated
     as of October 18, 2001, among the Facility Lessee, the Guarantor, the
     Owner Lessor, the Owner Participant, Wells Fargo Bank Northwest, National
     Association, not in its individual capacity, except as expressly provided
     therein, but solely as Lessor Manager, State Street Bank and Trust
     Company of Connecticut, as Indenture Trustee, and State Street Bank and
     Trust Company of Connecticut, as Pass Through Trustees.

     "PASS THROUGH COMPANY" shall mean State Street Bank and Trust Company of
     Connecticut, N.A., in its individual capacity, together with its
     successors and permitted assigns.

     "PASS THROUGH TRUST AGREEMENT" shall mean one or more, as the context
     may require, of (i) the Pass Through Trust Agreement A, dated as of
     October 18, 2001, and (ii) the Pass Through Trust Agreement B, dated as
     of October 18, 2001, in each case between the Facility Lessee and a Pass
     Through Trustee.

     "PASS THROUGH TRUSTEES" shall mean State Street Bank and Trust Company
     of Connecticut, N.A., not in its individual capacity, but solely as Pass
     Through Trustees under each of the Pass Through Trust Agreements, and
     each other Person that may from time to time be acting as a Pass Through
     Trustee in accordance with the provisions of a Pass Through Trust
     Agreement.

     "PASS THROUGH TRUSTS" shall mean the pass through trusts created
     pursuant to the Pass Through Trust Agreements.

                                      29

<PAGE>

     "PAYING AGENT" shall have the meaning set forth in Section 2.6 of the
     Collateral Trust Indenture.

     "PERIODIC RENT" with respect to the Facility Lease, shall mean the sum
     of Basic Rent and Renewal Rent, if any, as specified in Schedule 1 to the
     Facility Lease.

     "PERMIT" shall mean any action, approval, certificate, consent, waiver,
     exemption, variance, franchise, order, permit, authorization, right or
     license of or from, and any filing with a Governmental Entity.

     "PERMITTED CLOSING DATE LIENS" shall mean Permitted Liens described in
     clause (a), (b), (d), (f), (g), (i), (j), (k), (l), (m), (n) and (o) of
     the definition thereof.

     "PERMITTED ENCUMBRANCES" shall mean with respect to the Facility Site,
     all matters shown as exceptions on Schedule B to each of the Title
     Policies as in effect on the Closing Date.

     "PERMITTED INVESTMENTS" shall mean investments in securities that are:
     (i) direct obligations of the United States or any agency thereof; (ii)
     obligations fully guaranteed by the United States or any agency thereof;
     (iii) certificates of deposit or bankers acceptances issued by commercial
     banks (or any of their affiliates) organized under the laws of the United
     States or of any political subdivision thereof or under the laws of
     Canada, Japan, Switzerland or any country that is a member of the
     European Economic Community having a combined capital and surplus of at
     least $250 million and having long-term unsecured debt securities then
     rated "A" or better by S&P or "A2" or better by Moody's (but at the time
     of investment not more than $25,000,000 may be invested in such
     certificates of deposit from any one bank); (iv) repurchase obligations
     with a term of not more than seven days for underlying securities of the
     types described in clauses (i) and (ii) above, entered into with any
     financial institution meeting the qualifications specified in clause
     (iii) above; (v) open market commercial paper of any corporation
     incorporated or doing business under the laws of the United States or of
     any political subdivision thereof having a rating of at least "A-1" from
     S&P and "P-1" from Moody's (but at the time of investment not more than
     $25,000,000 may be invested in such commercial paper from any one
     company); (vi) auction rate securities or money market preferred stock
     having one of the two highest ratings obtainable from either S&P or
     Moody's (or, if at any time neither S&P nor Moody's is rating such
     obligations, then from another nationally recognized rating service
     acceptable to the Depositary); and (vii) investments in money market
     funds or money market mutual funds sponsored by any securities broker
     dealer of recognized national standing (or an affiliate thereof), having
     an investment policy that requires substantially all the invested assets
     of such fund to be invested in investments described in any one or more
     of the foregoing clauses having a rating of "A" or better by S&P or "A2"
     or better by Moody's.

     "PERMITTED LIENS" shall mean (a) the rights and interests of the parties
     as provided in the Operative Documents, as well as the rights of
     sublessees and/or assignees to the extent set forth in or expressly
     permitted pursuant to the Facility Lease or any other Operative Document,
     (b) as to the Facility Lessee, Owner Lessor's Liens, Owner

                                      30

<PAGE>

     Participant's Liens and Indenture Trustee's Liens, (c) Liens for any tax,
     assessment or other governmental charge, either secured by a bond
     reasonably acceptable to the Indenture Trustee and the Pass Through
     Trustees and, so long as no Lease Indenture Event of Default which is not
     a Lease Event of Default exists, the Owner Lessor, or not yet due or
     being contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, or (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to assure such Persons that
     any taxes, assessments or other charges determined to be due will be
     promptly paid in full when such contest is determined, (d) materialmen's,
     mechanics', workers', repairmen's, employees' or other like Liens arising
     in the ordinary course of business or in connection with the maintenance
     or repair of the Facility, for amounts not yet due or for amounts being
     contested in good faith and by appropriate proceedings, so long as
     (i) such proceedings shall not reasonably be expected to give rise to
     criminal liability or material civil liability on the part of the Owner
     Lessor, the Owner Participant, the Lessor Manager, the Trust Company, the
     Indenture Trustee, the Pass Through Trustees or any Certificateholders,
     and would not otherwise reasonably be expected to have a Material Adverse
     Effect, and (ii) adequate reserves consistent with GAAP requirements have
     been established and are maintained, so as to ensure that any amounts
     determined to be due will be promptly paid in full when such contest is
     determined, (e) Liens arising out of judgments or awards, but only so
     long as an appeal or proceeding for review is being prosecuted in good
     faith and so long as (i) such proceedings shall not reasonably be
     expected to give rise to criminal liability or material civil liability
     on the part of the Owner Lessor, the Owner Participant, the Lessor
     Manager, the Trust Company, the Indenture Trustee, the Pass Through
     Trustees or any Certificateholders, and would not otherwise reasonably be
     expected to have a Material Adverse Effect, and (ii) adequate reserves
     consistent with GAAP requirements have been established and are
     maintained, so as to ensure that any amounts determined to be due will be
     promptly paid in full when such contest is determined, or are fully
     covered by insurance, (f) mineral rights the use and enjoyment of which
     do not materially interfere with the use and enjoyment of the Facility,
     (g) Permitted Encumbrances, (h) Liens, deposits or pledges to secure
     statutory obligations or performance of bids, tenders, contracts (other
     than for the repayment of borrowed money) or leases, or for purposes of
     like general nature in the ordinary course of its business, (i) existing
     Liens that have been disclosed to the Transaction Parties prior to the
     Closing Date and which are reasonably acceptable to the Transaction
     Parties, (j) Liens incident to the ordinary course of business that are
     not incurred in connection with the obtaining of any loan, advance or
     credit in respect of borrowed money permitted to be incurred pursuant to
     the Operative Documents so long as such Liens (x) do not in the aggregate
     materially impair the use of the property or assets of the Facility
     Lessee or the value of such property or assets for the purposes of such
     business and (y) shall not reasonably be expected to give rise to
     criminal liability or unindemnified, material civil liability on the part
     of the Owner Lessor, the Owner Participant, the Lessor Manager, the Trust
     Company, the Indenture Trustee, the Pass Through Trustees or any
     Certificateholders, and would not otherwise

                                      31

<PAGE>

     reasonably be expected to have a Material Adverse Effect, (k) the
     interests of the Other RockGen Owner Lessors and the Other RockGen
     Indenture Trustees in the Facility, the Facility Site and the Ownership
     and Operation Agreement, (l) the interests of the Facility Lessee, the
     Other RockGen Owner Participants, the Other RockGen Owner Lessors, the
     Other RockGen Lessor Managers, the Other RockGen Indenture Trustees, and
     Pass Through Trustees under any of the Other RockGen Operative Documents,
     (m) the Ownership and Operation Agreement and (n) the interest of the
     co-owners of the Facility as tenants in common in the Facility and the
     rights of such owners under the Ownership and Operation Agreement.

     "PERSON" shall mean any individual, corporation, cooperative,
     partnership, joint venture, association, joint-stock company, limited
     liability company, other entity, trust, unincorporated organization or
     government or any agency or political subdivision thereof or any other
     entity.

     "PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA,
     which is maintained or contributed to by (or to which there is an
     obligation to contribute of) the Facility Lessee or a Subsidiary of the
     Facility Lessee or an ERISA Affiliate, and each such plan for the five
     year period immediately following the latest date on which Facility
     Lessee, or a Subsidiary of Facility Lessee or an ERISA Affiliate
     maintained, contributed to or had an obligation to contribute to such
     plan.

     "POWER MARKET CONSULTANT" shall mean Pace Energy Global Services, LLC.

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

     "PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" (attached as
     Schedule 2 to the Participation Agreement) for the Facility Lease,.

     "PRIME RATE" shall mean the rate of interest publicly announced by
     Citibank, N.A. from time to time as its prime rate.

     "PROCEEDS" shall mean the proceeds from the sale of the Certificates by
     the Pass Through Trust to the Certificateholders on the Closing Date.

     "PROPORTIONAL RENTAL AMOUNT" shall have the meaning set forth in Section
     3.2(c) of the Facility Lease.

     "PROPOSED TAX LAW CHANGE" shall mean a Tax Law Change (a) that has been
     reported out of the Senate Finance Committee of the House Ways and Means
     Committee, (b) that has been included in the issuance or amendment of a
     proposed Treasury Regulation, (c) that is part of a bill that has been
     introduced into the House of Representatives or the Senate and which has
     been publicly endorsed by the Executive Branch or the Department of
     Treasury, or (d) with respect to which a notice of a specific proposed
     change in

                                      32

<PAGE>

     administrative guidance has been issued by the Internal Revenue Service
     or the Department of Treasury and which has been published in the Federal
     Register.

     "PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of
     the practices, methods and acts engaged in or approved by a significant
     portion of the competitive electric generating industry at such time, or
     (b) with respect to any matter to which clause (a) does not apply, any of
     the practices, methods and acts which, in the exercise of reasonable
     judgment at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. "Prudent Industry
     Practice" is not intended to be limited to the optimum practice, method
     or act to the exclusion of all others, but rather to be a spectrum of
     possible practices, methods or acts having due regard for, among other
     things, manufacturers' warranties and the requirements of any
     Governmental Entity of competent jurisdiction.

     "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
     amended.

     "PURCHASE PRICE" with respect to the Undivided Interest, shall mean
     $56,250,000.

     "QUALIFYING CASH BIDS" with respect to the Facility Lease, shall have
     the meaning specified in Section 13.2 of the Facility Lease.

     "RATING AGENCIES" shall mean S&P and Moody's.

     "REASONABLE BASIS" for a position shall exist if tax counsel may
     properly advise reporting such position on a tax return in accordance
     with Formal Opinion 85-352 issued by the Standing Committee on Ethics and
     Professional Responsibility of the American Bar Association (or any
     successor to such opinion).

     "REBUILDING CLOSING DATE" with respect to the Facility Lease, shall have
     the meaning specified in Section 10.3(e) of the Facility Lease.

     "RECEIVING PARTY" shall have the meaning set forth in Section 14.21 of
     the Participation Agreement.

     "REDEMPTION DATE" shall mean, when used with respect to any Note to be
     redeemed, the date fixed for such redemption by or pursuant to the
     Collateral Trust Indenture or the respective Note, which date shall be a
     Termination Date.

     "REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
     replaces, renews, repays or extends (including pursuant to any defeasance
     or discharge mechanism) (collectively, "refinances," and "refinanced"
     shall have a correlative meaning) any Indebtedness of the Guarantor or a
     Restricted Subsidiary existing on the date of the Guaranty or Incurred in
     compliance with the Indenture, dated as of August 10, 2000, between the
     Guarantor and Wilmington Trust Company, as Trustee (including
     Indebtedness of the Guarantor that refinances Indebtedness of any
     Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
     refinances Indebtedness of another Restricted Subsidiary) including
     Indebtedness that refinances Refinancing Indebtedness;

                                      33

<PAGE>

     provided, however, that (i) if the Indebtedness being refinanced is
     contractually subordinated in right of payment to the Obligations, the
     Refinancing Indebtedness shall be contractually subordinated in right of
     payment to such Obligations to at least the same extent as the
     Indebtedness being refinanced, (ii) the Refinancing Indebtedness is
     scheduled to mature either (a) no earlier than the Indebtedness being
     refinanced or (b) after the Stated Maturity of the Obligations, (iii) the
     Refinancing Indebtedness has an Average Life at the time such Refinancing
     Indebtedness is Incurred that is equal to or greater than the Average
     Life of the Indebtedness being refinanced and (iv) such Refinancing
     Indebtedness is in an aggregate principal amount (or if issued with
     original issue discount, an aggregate issue price) that is equal to or
     less than the aggregate principal amount (or if issued with original
     issue discount, the aggregate accreted value) then outstanding (plus fees
     and expenses, including any premium, swap breakage and defeasance costs)
     under the Indebtedness being refinanced; and provided, further, that
     Refinancing Indebtedness shall not include (x) Indebtedness of a
     Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor
     or (y) Indebtedness of the Guarantor or a Restricted Subsidiary that
     refinances Indebtedness of an Unrestricted Subsidiary.

     "REGISTRAR" shall have the meaning set forth in Section 2.8 of the
     Collateral Trust Indenture.

     "REGULATORY EVENT OF LOSS" shall have meaning specified in clause (iv)
     of the definition of "Event of Loss".

     "RELATED PARTY" shall mean, with respect to any Person or its successors
     and assigns, an Affiliate of such Person or its successors and assigns
     and any director, officer, servant, employee or agent of that Person or
     any such Affiliate or their respective successors and assigns; provided
     that none of the Trust Company, the Lessor Manager or the Owner Lessor
     shall be treated as Related Parties to each other and none of the Trust
     Company, the Owner Lessor or the Lessor Manager shall be treated as a
     Related Party to any Owner Participant Equity Investor except that, for
     purposes of Section 9 of the Participation Agreement, the Owner Lessor
     will be treated as a Related Party to an Owner Participant to the extent
     that the Owner Lessor acts on the express direction or with the express
     consent of an Owner Participant.

     "RELEASE" shall mean any release, pumping, pouring, emptying, injecting,
     escaping, leaching, migrating, dumping, seepage, spill, flow, leak,
     discharge, disposal or emission.

     "RENEWAL RENT" with respect to the Facility Lease, shall mean the rent
     payable during any Renewal Lease Term, in each case as determined in
     accordance with Section 15.4 of the Facility Lease.

     "RENEWAL LEASE TERM" with respect to the Facility Lease, shall mean the
     First Renewal Lease Term, the Second Renewal Term, any FMV Renewal Lease
     Term or the Lessor Put Renewal Term.

                                      34

<PAGE>

     "RENEWAL SITE LEASE TERM(S)" individually or collectively as the context
     shall require, with respect to the Facility Site Lease, shall have the
     meaning set forth in Section 2.2(b) of the Facility Site Lease.

     "RENEWAL TERM" shall have the meaning set forth in Section 2.1(b) of the
     Facility Site Sublease.

     "RENT" shall mean Basic Rent, Renewal Rent and Supplemental Rent.

     "RENT PAYMENT DATE" with respect to the Facility Lease, shall mean,
     January 18, 2002 each May 30 and November 30 occurring thereafter
     (through and including May 30, 2031) and October 18, 2031.

     "RENT PAYMENT PERIOD" with respect to the Facility Lease, shall mean (i)
     in the case of the first Rent Payment Period the period commencing on the
     Closing Date and ending on January 18, 2002 (ii) in the case of the
     second Rent Payment Period, the period commencing on January 19, 2002 and
     ending on May 30, 2002 and (iii) in all cases thereafter (except for the
     last Rent Payment Period which period shall commence on May 31, 2031 and
     end on, and include, October 18, 2031) each six-month period commencing
     on each Rent Payment Date through and including the following May 30 or
     November 30 as the case may be.

     "REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2
     of the Facility Lease.

     "REQUIRED IMPROVEMENT" with respect to the Facility Lease, shall have
     the meaning specified in Section 8.1 of the Facility Lease.

     "REQUISITION" shall have the meaning specified in clause (iii) of the
     definition of "Event of Loss".

     "RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its
     Chairman of the Board, its President, any Senior Vice President, the
     Chief Financial Officer, any Vice President, the Treasurer or any other
     management employee (a) that has the power to take the action in question
     and has been authorized, directly or indirectly, by the Board of
     Directors or equivalent body of such Person, (b) working under the direct
     supervision of such Chairman of the Board, President, Senior Vice
     President, Chief Financial Officer, Vice President or Treasurer and (c)
     whose responsibilities include the administration of the Overall
     Transaction and (ii) with respect to the Pass Through Trustees and the
     Indenture Trustee an officer in their respective corporate trust
     departments.

     "RESTRICTED SUBSIDIARY" means any Subsidiary of the Guarantor that is
     not designated an Unrestricted Subsidiary by the Board of Directors.

     "REVENUES" shall have the meaning specified in clause (2) of the
     Granting Clause of the Collateral Trust Indenture.

                                      35

<PAGE>

     "ROCKGEN PPA" shall mean the Power Purchase Agreement dated as of August
     10, 1998 (as amended by Amendment No. 1 dated December 22, 1998 and
     Amendment No. 2 dated December 16, 1999) by and between the Buyers and
     the Facility Lessee, as the same may hereafter be further amended
     (subject to Section 5.33 of the RockGen PPA).

     "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
     now owned or hereafter acquired whereby the Guarantor or a Subsidiary
     transfers such property to a Person and leases it back from such Person,
     other than leases for a term of not more than 36 months or between the
     Guarantor and a Wholly Owned Subsidiary or between Wholly Owned
     Subsidiaries.

     "SCHEDULED CLOSING DATE" shall mean October 18, 2001.

     "SEC" shall mean the Securities and Exchange Commission.

     "SECOND RENEWAL LEASE TERM" with respect to the Facility Lease, shall
     have the meaning specified in Section 15.1(b) of the Facility Lease.

     "SECOND WINTERGREEN RENEWAL LEASE OPTION" with respect to the Facility
     Site Lease, shall have the meaning set forth in Section 2.2(a)(ii) of the
     Facility Site Lease.

     "SECTION 467 INTEREST" with respect to the Facility Lease, shall have
     the meaning set forth in Section 3.2(d) of the Facility Lease.

     "SECTION 467 LOAN" with respect to the Facility Lease, shall have the
     meaning specified in Section 3.2(d) of the Facility Lease.

     "SECURED INDEBTEDNESS" shall have the meaning specified in Section 1(b)
     of the Collateral Trust Indenture.

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

     "SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily
     removable without causing material damage to the Facility.

     "SIGNIFICANT LEASE DEFAULT" shall mean, with respect to the Facility
     Lease, (i) an event that is, or solely with the passage of time or the
     giving of notice (or both) would become, a "Lease Event of Default" under
     clauses (a), (b), (c), (g), (h) or (k) of Section 16 of the Facility
     Lease, (ii) the failure of the Facility Lessee to comply in any material
     respect with its obligations under Section 6 of the Facility Lease and
     (iii) the occurrence and continuation of a Significant Lease Default
     under any Other RockGen Facility Lease.

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

     "SITE LEASE EVENT OF DEFAULT" with respect to the Facility Site Lease,
     shall have the meaning set forth in Section 14.1 of the Facility Site
     Lease.

                                      36

<PAGE>

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. or any successor thereto.

     "SOUTH POINT ASSIGNMENT AGREEMENTS" shall mean each of the assignment
     agreements executed and delivered pursuant to the South Point
     Participation Agreements.

     "SOUTH POINT CALPINE GUARANTIES" shall mean the Calpine guaranty and
     payment agreements executed and delivered by Calpine pursuant to the
     South Point Participation Agreements.

     "SOUTH POINT COLLATERAL TRUST INDENTURES" shall mean each of the
     collateral trust indentures executed and delivered pursuant to the South
     Point Participation Agreements.

     "SOUTH POINT FACILITY LEASES" shall mean a collective reference to each
     of the four facility lease agreements, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which the South Point Owner Lessor will
     lease the applicable South Point Undivided Interests to the South Point
     Facility Lessee.

     "SOUTH POINT FACILITY LESSEE" shall mean South Point Energy Center, LLC.

     "SOUTH POINT FACILITY SITE" shall have the meaning set forth in the
     recitals to the South Point Facility Site Leases.

     "SOUTH POINT FACILITY SITE LEASES" shall mean a collective reference to
     each of the four facility site leases, dated as of October 18, 2001, by
     and between the applicable South Point Owner Lessor and the South Point
     Facility Lessee, pursuant to which South Point Owner Lessor will lease
     the applicable South Point Ground Interests to the South Point Facility
     Lessee.

     "SOUTH POINT GROUND INTERESTS" shall mean the undivided leasehold
     interests in the South Point Facility Site conveyed to the South Point
     Owner Lessors under the South Point Facility Site Leases.

     "SOUTH POINT INDENTURE TRUSTEES" shall mean each of the indenture
     trustees relating to the South Point Collateral Trust Indentures.

     "SOUTH POINT LEASE TRANSACTIONS" shall mean the transactions involving
     the assignment and transfer of the South Point Undivided Interests and
     the South Point Ground Interests to the South Point Owner Lessors, and
     the simultaneous lease of the South Point Undivided Interests and the
     South Point Ground Interests to the South Point Facility Lessee on
     substantially the same terms and conditions as under, and dated the same
     date as, the South Point Overall Transaction.

     "SOUTH POINT LESSOR MANAGERS" shall mean each of the lessor managers
     acting on behalf of the South Point Owner Lessors pursuant to the South
     Point Operative Documents.

                                      37

<PAGE>

     "SOUTH POINT OWNER LESSORS" shall mean South Point OL-1, LLC South Point
     OL-2, LLC, South Point OL-3, LLC and South Point OL-4, LLC.

     "SOUTH POINT OWNER PARTICIPANTS" shall mean SBR OP-1, LLC, SBR OP-2,
     LLC, SBR OP-3, LLC and SBR OP-4, LLC.

     "SOUTH POINT OPERATIVE DOCUMENTS" shall mean the other "Operative
     Documents" for each of the South Point Lease Transactions.

     "SOUTH POINT OVERALL TRANSACTION" shall mean all of the transactions
     contemplated by the South Point Operative Documents.

     "SOUTH POINT PARTICIPATION AGREEMENTS" shall mean a collective reference
     to each of the four separate participation agreements entered into by the
     South Point Facility Lessee, the applicable South Point Owner Lessor, the
     applicable South Point Lessor Manager, the applicable South Point Owner
     Participant, the applicable South Point Indenture Trustee, the Pass
     Through Trustees and Calpine and designated Participation Agreement
     (SP-1), Participation Agreement (SP-2), Participation Agreement (SP-3)
     and Participation Agreement (SP-4), each dated as of the Closing Date,
     pursuant to which, among other things, the South Point Facility Lessee
     has agreed to (a) sell to the applicable South Point Owner Lessors
     certain undivided interests in the South Point Facility, and (b) lease
     from the applicable South Point Owner Lessors such undivided interest in
     the South Point Facility pursuant to the South Point Facility Leases.

     "SOUTH POINT UNDIVIDED INTERESTS" shall mean the undivided ownership
     interests in the South Point Facility conveyed to the South Point Owner
     Lessors under the South Point Bills of Sale.

     "SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section
     13.2 of the Participation Agreement.

     "SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount
     determined as follows (but without duplication):

     (a)   (i) if the determination shall be a Termination Date, the
     Termination Value under the Facility Lease on such date, or (ii) if such
     date shall not be a Termination Date, the Termination Value under the
     Facility Lease on the immediately succeeding Termination Date; plus

     (b)   (i) any unpaid Basic Rent or Renewal Rent due before the date of
     determination plus (ii) if the determination date is a Rent Payment Date,
     the Basic Rent or Renewal Rent due on that date (to the extent payable in
     arrears); minus

     (c)   the sum of all outstanding principal, premium, if any, and accrued
     interest on the Lessor Notes, if any, on such determination date (in each
     case, if such determination date is a Rent Payment Date, before taking
     into account any Basic Rent or Renewal Rent due on such determination
     date).

                                      38

<PAGE>

     "SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of (i) a
     Regulatory Event of Loss, (ii) a Burdensome Buyout Event under Section
     13.1 of the Facility Lease, or (iii) if the Owner Lessor has agreed to
     sell and the Facility Lessee has agreed to buy the Undivided Interest, a
     Burdensome Buyout Event under Section 13.2 of the Facility Lease.

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

     "SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
     corporation or other entity of which sufficient securities or other
     ownership interests having ordinary voting power to elect a majority of
     the board of directors or other Persons performing similar functions are
     at the time directly or indirectly owned by such parent.

     "SUPPLEMENTAL FINANCING" shall have the meaning specified in Section
     11.1 of the Participation Agreement.

     "SUPPLEMENTAL RENT" shall mean any and all amounts, liabilities and
     obligations (other than Basic Rent and Renewal Rent) which the Facility
     Lessee assumes or agrees to pay under the Operative Documents (whether or
     not identified as "Supplemental Rent") to the Owner Lessor or any other
     Person, including, without limitation, Termination Value.

     "SURVEY" shall mean a survey of the Facility Site, to be delivered after
     the Closing Date pursuant to Section 5.16 of the Participation Agreement,
     which inter alia, will show the location of the Facility Site.

     "TAX" or "TAXES" shall mean all fees (including license, documentation
     and registration fees), taxes (including, without limitation, income
     taxes, receipts, franchise, rental, turn over sales taxes, use taxes,
     stamp taxes, value-added taxes, excise taxes, ad valorem taxes and
     property taxes (personal and real, tangible and intangible)), licenses,
     exports, duties, recording charges, levies, assessments, withholdings ,
     fees, assessments and other charges and impositions of any nature, plus
     all related interest, penalties, fines and additions to tax, now or
     hereafter imposed by any federal, state, local or foreign government or
     other taxing authority.

     "TAX ADVANCE" shall have the meaning specified in Section 9.2(g)(iii)(5)
     of the Participation Agreement.

     "TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
     Indemnity Agreement.

     "TAX BENEFIT" shall have the meaning set forth in Section 9.2(e) of the
     Participation Agreement.

     "TAX CLAIM" shall have the meaning set forth in Section 9.2(g)(i) of the
     Participation Agreement.

                                      39

<PAGE>

     "TAX EVENT" shall mean any event or transaction that will be a taxable
     transaction to the holders of the Lessor Notes (or any Certificateholder)
     or result in an adverse change in the tax characterization of the Pass
     Through Trust.

     "TAX INDEMNITEE" shall have the meaning set forth in Section 9.2(a) of
     the Participation Agreement.

     "TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (RG-4),
     dated as of the Closing Date, between the Facility Lessee and the Owner
     Participant.

     "TAX LAW CHANGE" shall have the meaning specified in Section 12(a) of
     the Participation Agreement.

     "TAX REPRESENTATION" shall mean each of the items described in Section 4
     of the Tax Indemnity Agreement.

     "TAXES AND ASSESSMENTS" with respect to the Facility Site Lease, shall
     have, collectively, the meaning set forth in Section 18.1 of the Facility
     Site Lease.

     "TERM" with respect to the Facility Site Lease or the Facility Site
     Sublease, shall have the meaning set forth in Section 2.2(b) of the
     Facility Site Lease or Section 2.1(b) of the Facility Site Sublease.

     "TERMINATION DATE" with respect to the Facility Lease, shall mean each
     of the monthly dates during the Facility Lease Term identified as a
     "Termination Date" on Schedule 2 of the Facility Lease.

     "TERMINATION PAYMENT DATE" with respect to the Facility Lease, shall
     have the meaning specified in Section 10.2(a) of the Facility Lease.

     "TERMINATION VALUE" with respect to the Facility Lease and each
     Termination Date, shall mean the amount specified on Schedule 2 to the
     Facility Lease as the corresponding "Termination Value".

     "THIRD PARTY CONSENTS" shall mean each of the following consents, the
     form of which is attached hereto as Exhibit M: (a) Clarification Letter
     from Duke Energy Trading and Marketing, L.L.C. ("DETM") with respect to
     the Tolling Agreement, dated as of January 8, 1999 (as amended), between
     DETM and the Facility Lessee; and (b) Consent and Agreement from ANR
     Pipeline Company ("ANR") with respect to the Interconnection Agreement,
     dated as of May 28, 1999 (as amended), between ANR and the Facility
     Lessee.

     "TIA" shall mean the Trust Indenture Act of 1939.

     "TITLE COMPANY" shall mean, First American Title Insurance Company.

     "TITLE POLICY" shall mean, the title insurance policy (#0303-7538-630)
     dated as of October 18, 2001.

                                      40

<PAGE>

     "TRANSACTION COSTS" shall mean the following costs, to the extent
     substantiated or otherwise supported in reasonable detail:

     (i)   the reasonable costs of reproducing and printing the Operative
     Documents and all costs and fees, including, but not limited to, filing
     and recording fees and recording, transfer, mortgage, intangible and
     similar taxes in connection with the execution, delivery, filing and
     recording of the Facility Lease, the Facility Site Lease, and any other
     Operative Document and any other document required to be filed or
     recorded pursuant to the provisions hereof or of any other Operative
     Document and any Uniform Commercial Code filing fees in respect of the
     perfection of any security interests created by any of the Operative
     Documents or as otherwise reasonably required by the Owner Lessor or the
     Indenture Trustee and surveyor fees;

     (ii)   the reasonable fees and expenses of Dewey Ballantine LLP, counsel
     to the Owner Participant and the Owner Lessor for their services rendered
     in connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (iii)   the reasonable fees and expenses of Reinhart, Boerner Van Deuren,
     Norris & Rieselbach, S.C.,Wisconsin counsel to the Facility Lessee;

     (iv)   the reasonable fees and expenses of Thelen Reid & Priest LLP,
     counsel to the Facility Lessee and the Guarantor for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and other Operative Documents;

     (v)   the reasonable fees and expenses of Davis Wright & Tremaine LLP,
     special regulatory counsel to the Facility Lessee;

     (vi)   the reasonable fees and expenses of Skadden, Arps, Slate, Meagher
     and Flom LLP, counsel to the Underwriter, for their services rendered in
     connection with the negotiation, execution and delivery of the
     Participation Agreement and the other Operative Documents;

     (vii)   the reasonable fees and expenses for services rendered in
     connection with the recording of the Memorandum of Lease, the Memorandum
     of Facility Site Lease and the other applicable Operative Documents;

     (viii)   the reasonable fees and expenses of Bingham Dana LLP, counsel for
     the Indenture Trustee and the Lease Indenture Company and the Pass
     Through Company and the Pass Through Trustees, for their services
     rendered in connection with the negotiation, execution and delivery of
     the Participation Agreement and the other Operative Documents;

     (ix)   the reasonable fees, expenses and disbursements of the Indenture
     Trustee and Pass Through Trustees in connection with the execution and
     delivery of the Participation Agreement and the other Operative Documents
     to which either one is or will be a party;

                                      41

<PAGE>

     (x)  the fees and expenses of the Engineering Consultant, for its
     services rendered in connection with delivering the Engineering Report
     required by Section 4.17 of the Participation Agreement;

     (xi)   the fees and expenses of the other consultants listed in Section
     4.17 of the Participation Agreement, for their respective services
     rendered in connection with delivering the reports required by such
     Section 4.17;

     (xii)   the fees and expenses of the Appraiser, for its services rendered
     in connection with delivering the Closing Appraisal required by Section
     4.15 of the Participation Agreement;

     (xiii)   the fees and expenses of the Environmental Consultant retained by
     the Owner Participant;

     (xiv)   the debt and equity arrangement fees set forth in the letter
     agreement dated July 24, 2001 between CSFB and Calpine, and its
     reasonable out-of-pocket costs and expenses payable to the Underwriter;

     (xv)   the reasonable underwriting fees, legal fees, expenses and
     disbursement of the Initial Purchasers and any discounts or commissions
     in connection with the sale of the Certificates;

     (xvi)   all reasonable costs and expenses incurred pursuant to the
     syndication and/or sale of the debt and equity;

     (xvii)   the fees and expenses of the Rating Agencies in connection with
     the rating of the Certificates;

     (xviii)   the out-of-pocket expenses of the Owner Participant, Indenture
     Trustee and the Pass Through Trustees incurred in connection with the
     Overall Transaction including cost of the title insurance and fees and
     expenses, if any, related to delivery of any non-consolidation opinions;
     and

     (xix)   the fees and expenses set forth in the letter agreement dated
     August 1, 2001 between Newcourt Capital Securities, Inc. and Calpine.

     Notwithstanding the foregoing, Transaction Costs shall not include
     internal costs and expenses such as salaries and overhead of whatsoever
     kind or nature nor costs incurred by the parties to the Participation
     Agreement pursuant to arrangements with third parties for services (other
     than those expressly referred to above), such as computer time
     procurement (other than out-of-pocket expenses of the Owner Participant),
     financial analysis and consulting, advisory services, and costs of a
     similar nature.

     "TRANSACTION PARTY" shall mean, individually or collectively, as the
     context shall require, all or any of the parties to the Operative
     Documents (including the Lease Indenture Company and the Pass Through
     Company).

                                      42

<PAGE>

     "TRANSACTIONS" shall mean, collectively, each of the transactions
     contemplated under the Participation Agreement and the other Operative
     Documents.

     "TRANSFEREE" shall mean a transferee of the Owner Participant permitted
     by Section 7.1 of the Participation Agreement.

     "TRANSFEREE GUARANTOR" shall have the meaning set forth in Section
     7.1(a)(iii) of the Participation Agreement.

     "TREASURY REGULATIONS" shall mean regulations, including temporary
     regulations, promulgated under the Code.

     "TRUST COMPANY" shall mean Wells Fargo Bank Northwest, National
     Association.

     "UNDERWRITER" shall mean CSFB.

     "UNDIVIDED INTEREST" shall mean the Owner Lessor's 25% undivided
     interest in the Facility.

     "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
     by which the value of the accumulated plan benefits under the Plan
     determined on a plan termination basis in accordance with actuarial
     assumptions at such time consistent with those prescribed by the PBGC for
     purposes of Section 4044 of ERISA, exceeds the fair market value of all
     plan assets allocable to such liabilities under Title IV of ERISA
     (excluding any accrued but unpaid contributions).

     "UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial
     Code as in effect in the applicable jurisdiction.

     "UNITED STATES PERSON" shall have the meaning specified in Section
     7701(a)(30) of the Code or any successor provision thereto.

     "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
     determination shall be designated an Unrestricted Subsidiary by the Board
     of Directors in the manner provided by the Indenture, dated as of August
     10, 2000, between the Guarantor and Wilmington Trust Company, as Trustee
     and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "VERIFIER" shall have the meaning specified in Section 3.4(c) of the
     Facility Lease.

     "WHOLLY OWNED SUBSIDIARY" means a Subsidiary (other than an Unrestricted
     Subsidiary) all the Capital Stock of which (other than directors'
     qualifying shares) is owned by the Guarantor or another Wholly Owned
     Subsidiary.

                                      43

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.15
<SEQUENCE>18
<FILENAME>f80168ex4-22_15.txt
<DESCRIPTION>EXHIBIT 4.22.15
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.15


RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

===============================================================================

                       INDENTURE OF TRUST, DEED OF TRUST,
                        ASSIGNMENT OF RENTS AND LEASES,
                   SECURITY AGREEMENT AND FINANCING STATEMENT


                          Dated as of October 18, 2001


                                    between


                              SOUTH POINT OL-1, LLC

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank

                    _________________________________________


                              SOUTH POINT FACILITY

===============================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                      Page

<S>                                                                                   <C>
SECTION 1.   DEFINITIONS............................................................. 10

SECTION 2.   THE LESSOR NOTES........................................................ 11
     Section 2.1.   Limitation on Lessor Notes....................................... 11
     Section 2.2.   Initial Lessor Notes............................................. 11
     Section 2.3.   Execution and Authentication of Lessor Notes..................... 12
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes................... 12
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee.......................................................... 13
     Section 2.6.   Method of Payment................................................ 14
     Section 2.7.   Application of Payments.......................................... 15
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.............. 16
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes................ 17
     Section 2.10.  Redemptions; Assumption.......................................... 17
     Section 2.11.  Payment of Expenses on Transfer.................................. 22
     Section 2.12.  Additional Lessor Notes.......................................... 23
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend..................................................... 26
     Section 2.14.  Security for and Parity of Lessor Notes.......................... 26
     Section 2.15.  Acceptance of the Indenture Trustee.............................. 26

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE... 27
     Section 3.1.   Distribution of Periodic Rent.................................... 27
     Section 3.2.   Payments Following Event of Loss or Other Early Termination...... 29
     Section 3.3.   Payments After Lease Indenture Event of Default.................. 30
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..... 31
     Section 3.5.   Application of Certain Other Payments............................ 31
     Section 3.6.   Other Payments................................................... 32
     Section 3.7.   Excepted Payments................................................ 32
     Section 3.8.   Distributions to the Owner Lessor................................ 33
     Section 3.9.   Payments Under Assigned Documents................................ 33
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee........ 33
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF
             INDENTURE TRUSTEE....................................................... 37
     Section 4.1.   Covenants of Owner Lessor........................................ 37
     Section 4.2.   Lease Indenture Events of Default................................ 38
     Section 4.3.   Remedies of the Indenture Trustee................................ 40
     Section 4.4.   Right to Cure Certain Lease Events of Default.................... 43
     Section 4.5.   Rescission of Acceleration....................................... 46
     Section 4.6.   Return of Indenture Estate, Etc.................................. 47
     Section 4.7.   Power of Sale and Other Remedies................................. 48
     Section 4.8.   Appointment of Receiver.......................................... 50
     Section 4.9.   Remedies Cumulative.............................................. 51
     Section 4.10.  Waiver of Various Rights by the Owner Lessor..................... 51
     Section 4.11.  Discontinuance of Proceedings.................................... 52
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the
                    Facility Lease................................................... 52
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc......... 53
     Section 4.14.  Further Assurances............................................... 53
     Section 4.15.  Waiver of Past Defaults.......................................... 53

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND
             DUTIES OF OWNER LESSOR.................................................. 54
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default........... 54
     Section 5.2.   Actions Upon Instructions Generally.............................. 54
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease................................................... 55
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification........... 55
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions........................ 55
     Section 5.6.   Certain Rights of the Owner Lessor............................... 56
     Section 5.7.   Restrictions on Dealing with Indenture Estate.................... 59
     Section 5.8.   Filing of Financing Statements and Continuation Statements....... 59

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR...................................... 60
     Section 6.1.   Acceptance of Trusts and Duties.................................. 60
     Section 6.2.   Absence of Certain Duties........................................ 62
     Section 6.3.   Representations and Warranties................................... 63
     Section 6.4.   No Segregation of Moneys; No Interest............................ 63
     Section 6.5.   Reliance; Agents; Advice of Experts.............................. 64
</TABLE>

                                      ii
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>

SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE
             TRUSTEES................................................................ 65
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appoin-
                    tment of Successor............................................... 65
     Section 7.2.   Appointment of Additional and Separate Trustees.................. 67

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
             AND OTHER DOCUMENTS..................................................... 69
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations....................................... 69
     Section 8.2.   Supplemental Indentures and other Amendments Without
                    Consent.......................................................... 70
     Section 8.3.   Conditions to Action by the Indenture Trustee.................... 72

SECTION 9.   MISCELLANEOUS........................................................... 72
     Section 9.1.   Surrender, Defeasance and Release................................ 72
     Section 9.2.   Conveyances Pursuant to the Site Lease........................... 73
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances....................................................... 73
     Section 9.4.   Indenture for Benefit of Certain Persons Only.................... 73
     Section 9.5.   Notices; Furnishing Documents, etc............................... 74
     Section 9.6.   Severability..................................................... 76
     Section 9.7.   Limitation of Liability.......................................... 76
     Section 9.8.   Written Changes Only............................................. 76
     Section 9.9.   Counterparts..................................................... 76
     Section 9.10.  Successors and Permitted Assigns................................. 77
     Section 9.11.  Headings and Table of Contents................................... 77
     Section 9.12.  Governing Law.................................................... 77
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..... 77
     Section 9.14.  Withholding Taxes: Information Reporting......................... 78
     Section 9.15.  Fixture Financing Statement...................................... 80
</TABLE>

                                       iii
<PAGE>
EXHIBITS

Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility

APPENDIX A Definitions

                                      iv
<PAGE>
INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY
AGREEMENT AND FINANCING STATEMENT

     This INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FINANCING STATEMENT (as amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof,
this "Indenture"), dated as of October 18, 2001, between SOUTH POINT OL-1, LLC,
a Delaware limited liability company created for the benefit of the Owner
Participant referred to below, as trustor (as such term is defined in Arizona
Revised Statutes, Section 33-801, et seq.) (the "Owner Lessor"), having an
address as set forth in Section 9.5 of this Indenture, STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as beneficiary and trustee
(as such term is defined in Arizona Revised Statutes, Section 33-801, et seq.)
on behalf of the Noteholders (the "Indenture Trustee") and as the Account Bank,
having an address as set forth in Section 9.5 of this Indenture.

                                  WITNESSETH:

     WHEREAS, Calpine Construction Finance Company ("CCFC") has assigned the
Undivided Interest and the Ground Interest to the Owner Lessor pursuant to the
certain Assignment Agreement, a memorandum of which shall be recorded with this
Indenture in the appropriate registry of land records described in Exhibit A
attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with
South Point Energy Center, LLC (the "Facility Lessee") pursuant to which the
Facility Lessee has subleased from the Owner Lessor for a term of years the
Owner Lessor's Undivided Interest in the Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time in accordance with the provisions thereof, the "Facility Site
Lease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

                                       1
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D
hereto and made a part hereof and the Facility Site is more particularly
described on Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assumed from CCFC and (ii) grant to the Indenture Trustee the security
interests herein provided;

     WHEREAS, this Indenture is regarded as and shall constitute a deed of
trust under the laws of the State of Arizona, as an absolute and current
assignment of rents, leases, income, issues, royalties and profits pursuant to
the laws of the State of Arizona including, among other provisions, Arizona
Revised Statutes ("A.R.S.") Section(s) ("ss.") 33-702.B, 33-807(C) and 12-241,
et seq. as a security agreement and grant by the Owner Lessor, as debtor, to and
in favor of the Indenture Trustee, as the Secured Party, of a security interest
in the Indenture Estate (as such term is hereinafter defined) under the Uniform
Commercial Code as enacted and in effect from time to time in the State of
Arizona and under the Uniform Commercial Code as enacted and in effect from time
to time in the States of New York and Delaware, and as a fixture filing and a
financing statement under the laws of the Uniform Commercial Code as enacted and
in effect in the State of Arizona from time to time;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter
into this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time, (b) the conveyance and assignment to
the Indenture Trustee on the Closing Date of the Undivided Interests conveyed to
the Owner Lessor and the Owner Lessor's right, title and interest in and under
the Operative Documents executed in connection therewith and all payments and
other amounts received hereunder or thereunder in accordance herewith (excluding
Excepted Payments) and (c) security for the payment and performance of the
obligations described or referred to in this Indenture;

     WHEREAS, all things have been done to make the Lessor Notes, when
executed by the Owner Lessor, authenticated and delivered hereunder and issued,
the valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

                                       2
<PAGE>
     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to secure
(i) the prompt payment when and as due of the principal of and the Make-Whole
Amount, if any, and interest on the Lessor Notes and of all other amounts owing
with respect to all Lessor Notes from time to time outstanding hereunder, and
the prompt payment when and as due of any and all other amounts from time to
time owing in respect of the Secured Indebtedness and (ii) the performance and
observance by the Owner Lessor for the benefit of the holders of the Lessor
Notes and the Indenture Trustee of all other obligations, agreements, and
covenants of the Owner Lessor set forth hereinafter and in the Lessor Notes, the
Operative Documents and the other documents, certificates and agreements
delivered in connection therewith:

                            GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee as
trustee under ARS [sec] 33-801, et seq., in trust, with power of sale, for the
benefit of the holders of the Lessor Notes from time to time, a first priority
security interest in and deed of trust lien on all estate, right, title and
interest of the Owner Lessor in, to and under the following described real and
personal property, rights, interests and privileges, whether now held or
hereafter acquired and all easements, rights of way, access agreements,
leasehold interests, leasehold and other estates, ground leases, hereditaments
and other rights now or hereafter existing, covering all or part thereof, or
appurtenant or attaching thereto, together with all structures, buildings and
other improvements now or hereafter upon, constructed upon or located in whole
or in part upon the same; together with all fixtures, machinery, and all
articles and items of property now or hereafter attached to, or used or adapted
for use in the operation, maintenance or use thereof; together with all rents,
issues, royalties, income and profits thereof under present and future leases,
occupancy and use agreements (which collectively, including all property
hereafter specifically subjected to the security interest created by this
Indenture by any supplement hereto, exclusive of Excepted Payments) are included
within, and are hereafter referred to as, the "Indenture Estate"):

     (1)   the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility Lessee
thereunder (including Rent); any rights of the Owner Lessor as assignee of the
Facility Lessee under the Facility Lease; the Facility Site Lease and all
payments of any kind by the Facility Lessee thereunder; the Assignment Agreement
(and all rights with respect to the Ground Lease conveyed

                                       3
<PAGE>
thereby); the Owner Lessor's interest in all tangible property located on or at
or attached to the Facility Site as to which an interest in such tangible
property arises under applicable real estate law ("fixtures"); the Calpine
Guaranty, the South Point Ground Lease, the Ownership and Operation Agreement
and all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or at law or in equity or
otherwise, arising out of any Lease Default or Lease Event of Default and (y)
any right to restitution from the Facility Lessee, any sublessee or any other
person in respect of any determination of invalidity of any such document;

     (2)   all rents (including Periodic Rent and Supplemental Rent),
royalties, issues, profits, revenues, proceeds, damages, claims, warranties and
other income from the property described in this Granting Clause, including,
without limitation, all payments or proceeds payable to the Owner Lessor as the
result of the sale of the Property Interest or the lease or other disposition of
the Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)   any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof

                                       4
<PAGE>
or to accept surrender or redelivery of the Facility or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner Lessor,
whether acting under any sublease of the Facility or any assignment thereof or
by statute or at law or in equity, or otherwise, arising out of any default
under such sublease or any assignment thereof, and (iii) any right to
restitution from the Facility Lessee, the applicable sublessee or any guarantor
of such sublessee in respect of any determination of invalidity of any sublease
of the Facility or any assignment thereof;

     (4)   all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the extent of the Owner Lessor's interest therein) of all insurance
maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)   all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the terms
of any Assigned Document, wherever located; and

     (6)   all of Owner Lessor's right, title and interest conveyed to the
Indenture Trustee in and relating to the following :

          (i)   The real property that is described in and made subject to
     this Indenture (the "Real Property") the fee simple owner of which is
     the United States of America, in trust for the Fort Mojave Indian Tribe
     ("Owner"), as evidenced by patent of record in Mohave County, Arizona
     which is on file with the United States Department of Interior, Bureau
     of Indian Affairs, Albuquerque, New Mexico Regional Office (the "BIA");
     and

          (ii)   The leasehold estate interest in the Real Property which was
     created pursuant to the terms and conditions of that certain Amended and
     Restated Ground Lease Agreement, being BIA Lease No. B-1778-FM, approved as
     of August 19, 1999, by and between Owner and Calpine South Point, LLC, a
     Delaware limited liability company, as Lessee, and Fort Mojave Indian
     Tribe, a federally recognized Indian Tribe, as Lessor, a memorandum of
     which Ground Lease, as amended, was recorded on October 29, 1999 in Book
     3399 of Official Records, page 822, Records of Mohave County, Arizona and
     filed in the Land Titles and Records Office as document number 604-050-99
     and certificate of merger filed in the Land Titles and Records Office as
     document number 604-056-99 (collectively the "Ground Lease"). The Lessee's
     interests in and to the Ground Lease have been duly, properly and
     effectively assigned to the Owner Lessor, pursuant to that certain
     Assignment Agreement, dated as of the date

                                       5
<PAGE>
     hereof, which shall have been recorded in the records of Mohave County,
     Arizona and filed with the BIA; and

     (7)   all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner Participant
hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns, for the benefit of the Indenture Trustee and for the benefit
and security of the Noteholders from time to time;

     TO HAVE AND TO HOLD to said Indenture Trustee, as Trustee under A.R.S.
Section 33-801, et seq., its successors, heirs or assigns, the Indenture Estate
and all of the Owner Lessor's interests therein, including, without limitation,
the leasehold interest pursuant to the South Point Ground Lease;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount,
if any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does
hereby irrevocably constitute and appoint the Indenture Trustee the true and
lawful attorney of the Owner Lessor (which appointment is coupled with an
interest) with full power (in the name of the Owner Lessor or otherwise) to ask,
require, demand and receive any and all moneys and claims for moneys (in each
case, including, without limitation, insurance and requisition proceeds to the
extent of the Owner Lessor's interest therein but excluding in all cases
Excepted Payments) due and to become due under or arising out of the Assigned
Documents and all other property which now or hereafter constitutes part of the
Indenture Estate and, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings (other than in connection with the enforcement or
collection of Excepted Payments) which the Indenture Trustee may deem to be
necessary or advisable. Pursuant to the Facility Lease, the Facility Lessee is
directed to make all payments of Rent required to be paid or deposited with the
Owner Lessor (other than Excepted Payments) and all other amounts which are
required to be paid

                                       6
<PAGE>
to or deposited with the Owner Lessor pursuant to the Facility Lease (other
than Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided
in this Indenture. Further, the Owner Lessor agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Indenture Estate, whether or
not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to and does hereby constitute and create a
security agreement as required under the Uniform Commercial Codes from time to
time enacted and effective under the laws of the States of New York, Delaware
and Arizona. Pursuant to such security agreement, Owner Lessor does hereby grant
to Indenture Trustee a security interest in all that portion of the Indenture
Estate that is now or shall or may be or become personal property and/or
fixtures and in or with respect to which a security interest may be granted
(collectively the "Personal Property") pursuant to the Uniform Commercial Code
as enacted and effective from time to time in all and each of the States of New
York, Delaware and Arizona. Such security interest shall be and is a first and
prior security interest in all such Personal Property and Indenture Trustee, its
successors and assigns, shall have and enjoy all rights, remedies and benefits
available to a secured party under the said Uniform Commercial Code as enacted
and effective from time to time in the aforementioned States, with respect to
the Indenture Estate.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for the
benefit and security of (i) the holders from time to time of the Lessor Notes
from time to time outstanding, without any priority of any one Lessor Note over
any other except as herein otherwise expressly provided and (ii) the Indenture
Trustee, and for the uses and purposes and subject to the terms and provisions
set forth in this Indenture. It is expressly agreed that anything herein
contained to the contrary notwithstanding, the

                                       7
<PAGE>
Owner Lessor shall remain liable under the Assigned Documents to perform all of
the obligations assumed by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and the Indenture Trustee and the
Noteholders shall have no obligation or liability under any Assigned Document
by reason of or arising out of the assignment hereunder, nor shall the
Indenture Trustee or the Noteholders be required or obligated in any manner,
except as herein expressly provided, to perform or fulfill any obligation of
the Owner Lessor under or pursuant to any such Assigned Document or, except as
herein expressly provided, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or to present or file
any claim, or to take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged, granted or permitted a lien, mortgage or deed of trust or
security interest in, to or under, and hereby covenants that, so long as this
Indenture shall remain in effect and the Lien hereof shall not have been
released pursuant to Section 9.1 hereof, it will not assign, pledge or grant a
lien or security interest in any of its estate, right, title or interest in, to
or under, the Indenture Estate to anyone other than the Indenture Trustee for
the benefit of the Noteholders. The Owner Lessor hereby further covenants that
with respect to its estate, right, title and interest in, to or under the
Indenture Estate, it will not, except as provided in this Indenture and except
as to Excepted Payments, (i) accept any payment from the Facility Lessee or any
sublessee or enter into any agreement amending, modifying or supplementing any
of the Assigned Documents, execute any waiver or modification of, or consent
under (other than pursuant to Section 4.2 of the South Point Ground Lease or
Sections 5.20 or 13.3 of the Participation Agreement (subject to the conditions
set forth in Sections 5.20 or 13.3, as applicable, of the Participation
Agreement)), the terms of any of the Assigned Documents or revoke or terminate
any of the Assigned Documents, (ii) settle or compromise any claim arising under
any of the Assigned Documents, or (iii) submit or consent to the submission of
any dispute, difference or other matter arising under or in respect of any of
the Assigned Documents to arbitration thereunder (except with respect to any
action pursuant to Section 4.2 of the South Point Ground Lease or Sections 5.20
or 13.3 of the Participation Agreement (subject to the conditions set forth in
Sections 5.20 or 13.3, as applicable, of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and
confirms its obligations under the Assigned Documents and does hereby agree that
it will not take or omit to take any action, the taking or omission of which
might result in an alteration or impairment of any of the Assigned Documents or
of any of the rights created

                                       8
<PAGE>
by any such Assigned Document or the assignment (subject to the previous)
paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and
permitted assigns, agrees that all Lessor Notes are to be issued and delivered
and that all property subject or to become subject hereto is to be held subject
to the further covenants, conditions, uses and trusts hereinafter set forth, and
the Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security of
the holders from time to time of the Lessor Notes from time to time outstanding
and to protect the security of this Indenture; and the Indenture Trustee agrees
to accept the trusts and duties hereinafter set forth, as follows:

     THIS INDENTURE AND CONVEYANCE IS MADE IN TRUST, however, with POWER OF
SALE for the benefit of the Indenture Trustee to secure the payment of the
Secured Indebtedness.

     This Indenture and conveyance is also made in trust to further secure:

     (a)   Payment and performance of the obligations, covenants and agreements
contained in the Lessor Notes and other documents and/or instruments referred
to, defined or described in the definition of Secured Indebtedness and any and
all modifications, extensions or renewals of any such documents or instruments;

     (b)   Payment and performance of the obligations, covenants and agreements
contained in that certain Participation Agreement, the terms and conditions of
which are incorporated herein by this reference; and

     (c)   Payment of all other sums becoming due or payable under, and the
performance of all other obligations, covenants and agreements contained in (i)
the Lessor Notes; (ii) any Additional Lessor Notes; (iii) any and all Assignment
Documents and Assumption Documents; and (iv) any other instrument given as
security for the Secured Indebtedness or entered into with respect to this
Indenture, including without limitation, the Participation Agreement and all
other documents and instruments (all the foregoing documents and instruments
being collectively referred to herein as the "Collateral Documents").

                               SECTION 1.
                              DEFINITIONS

                                       9
<PAGE>
     (a)   Unless the context hereof shall otherwise require, capitalized
terms used, including those in the recitals, and not otherwise defined herein
shall have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager, the
Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)   In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 530 MW nameplate capacity gas-fired combined cycle
merchant power plant located near Bullhead, Arizona and more fully described in
Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness
     evidenced by such Lessor Notes, and principal of such Lessor Notes
     being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may
     hereafter be owing by the Owner Lessor to or for the benefit of the
     Indenture Trustee under the Operative Documents including indemnities
     and other Supplemental Rent payable by the Facility Lessee under the
     Operative Documents, whether evidenced by Additional Lessor Notes
     issued pursuant to Section 2.12 hereof or otherwise, however and
     whenever incurred or evidenced, whether direct or indirect, absolute or
     contingent, due or to become due, together with interest thereon at the
     rate provided in each Additional

                                      10
<PAGE>
Lessor Note and the Make-Whole Amount thereon (if any) and together with any
and all renewals, modifications, consolidations and extensions of the
indebtedness evidenced by such Additional Lessor Notes, and principal of such
Additional Lessor Notes being due and payable as provided in each such
Additional Lessor Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to Section
     4.13 hereof (whether or not the Owner Lessor remains the
     owner of the Indenture Estate at the time of such advances); and

          (iv)   Any and all expenses incident to the collection of the
     Secured Indebtedness and the foreclosure hereof by action in any court
     or by exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                               SECTION 2.
                            THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal amount
of the Lessor Notes which may be authenticated and delivered and outstanding at
any one time under this Indenture shall be limited to the principal amount of
the Initial Lessor Notes issued on the Closing Date to the Pass Through Trustees
plus the aggregate principal amount of Additional Lessor Notes issued pursuant
to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes"

                                      11
<PAGE>
or, individually, an "Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate form
provided for in any supplement hereto executed pursuant to Section 2.12 hereof),
executed by the Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor signed
by the Lessor Manager. The Indenture Trustee shall authenticate and deliver
Additional Lessor Notes, upon a written order of the Owner Lessor executed by
the Lessor Manager and satisfaction of the conditions specified in Section 2.12.
Such order shall specify the principal amount of the Additional Lessor Notes to
be authenticated and the date on which the original issue of Additional Lessor
Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)   Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

     (b)   Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments having
final payment dates set forth in Schedule I hereto. The principal of each
Initial Lessor Note shall be due and payable in installments on the dates and in
the amounts set forth in Schedule I hereto. Schedule I hereto to the contrary
notwithstanding, the last payment made under such Initial Lessor Note shall be
equal to the then unpaid balance of the principal of such Lessor Note plus all
accrued and unpaid interest on, and any other amounts due under, such Initial
Lessor Note. Each Initial Lessor Note shall bear interest on the principal from
time to time outstanding from and including the date of

                                      12
<PAGE>
issuance thereof (computed on the basis of a 360-day year of twelve 30-day
months) until paid in full at the rate set forth in such Initial Lessor Note
and Schedule I hereto.  Each Initial Lessor Note shall accrue additional
interest under the circumstances and at the rate per annum set forth in the
third paragraph of each Initial Lessor Note. Interest on each Initial Lessor
Note shall be due and payable in arrears semi-annually commencing on May 30,
2002, and on each May 30 and November 30 thereafter until paid in full. If any
day on which principal, Make-Whole Amount, if any, or interest on the Initial
Lessor Notes are payable is not a Business Day, payment thereof shall be made
on the next succeeding Business Day with the same effect as if made on the date
on which such payment was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)   Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the Facility
Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or (iii) the
Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have no
obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments in
accordance with the terms of Section 3 hereof; and the Owner Participant shall
not have any obligation for payments in respect of the Lessor Notes or under
this Indenture. The Indenture Trustee and each Noteholder, by its acceptance
thereof, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for distribution to the Indenture
Trustee or such Noteholder, as the case may be, as herein provided and that,
except as expressly provided in this Indenture, the Participation Agreement or
any other Operative Document, none of the Owner Participant, the Owner Lessor,
the Trust Company, the Lease Indenture Company, nor the Indenture Trustee, nor
any Affiliate of any thereof, shall be personally liable to such Noteholder or
the Indenture Trustee for any amounts payable hereunder, under such Lessor Note
or for any performance to be rendered under any Assigned Document or for any
liability under

                                      13
<PAGE>
any Assigned Document. Without prejudice to the foregoing, the Owner Lessor
will duly and punctually pay or cause to be paid the principal of, Make-Whole
Amount, if any, and interest on all Lessor Notes according to their terms and
the terms of this Indenture. Nothing contained in this Section 2.5 limiting the
liability of the Owner Lessor shall derogate from the right of the Indenture
Trustee and the Noteholders to proceed against the Indenture Estate and the
Calpine Guaranty to secure and enforce all payments and obligations due
hereunder and under the Assigned Documents and the Lessor Notes.

     (a)   In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)   Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent"). The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)   The Owner Lessor shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Lessor Notes and shall notify
the Indenture Trustee of any default by the Owner Lessor in making any such
payment.

     (b)   The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in the
Indenture Estate on the dates provided in the Lessor Notes by mailing a check
for such amount, payable in New York Clearing House funds, to each Noteholder at
the last address of each such Noteholder appearing on the Note Register, or by
whichever of the following methods shall be specified by notice from a
Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to

                                      14
<PAGE>
an account maintained by such Noteholder with the Indenture Trustee, (ii) by
making such payment to such Noteholder in immediately available funds at the
Indenture Trustee Office, or (iii) in the case of the Initial Lessor Notes and
in the case of Additional Lessor Notes, if such Noteholder is the Pass Through
Trustee, or a bank or other institutional investor, by transferring such amount
in immediately available funds for the account of such Noteholder to the
banking institution having bank wire transfer facilities as shall be specified
by such Noteholder, such transfer to be subject to telephonic confirmation of
payment. Any payment made under any of the foregoing methods shall be made free
and clear of and without reduction for or on account of all wire and like
charges and without any presentment or surrender of such Lessor Note, unless
otherwise specified by the terms of the Lessor Note, except that, in the case
of the final payment in respect of any Lessor Note, such Lessor Note shall be
surrendered to the Indenture Trustee for cancellation after such payment. All
payments in respect of the Lessor Notes shall be made (1) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon New York City time, on a
Business Day, or (2) on the next succeeding Business Day if received after such
time or on any day other than a Business Day. One or more of the foregoing
methods of payment may be specified in a Lessor Note. Prior to due presentment
for registration of transfer of any Lessor Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name any Lessor Note
is registered on the Note Register as the absolute owner and holder of such
Lessor Note for the purpose of receiving payment of all amounts payable with
respect to such Lessor Note and for all other purposes, and neither the Owner
Lessor nor the Indenture Trustee shall be affected by any notice to the
contrary. All payments made on any Lessor Note in accordance with the
provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied as required under Arizona law; and thereafter in
the following order: first, to the payment of accrued interest (including
interest on overdue principal and the Make-Whole Amount, if any, and, to the
extent permitted by Applicable Law, overdue interest) on such Lessor Note to the
date of such payment, second, to the payment of the principal amount of, and the
Make-Whole Amount, if any, on such Lessor Note then due (including any overdue
installments of principal) thereunder and third, to the extent permitted by
Section 2.10 of this Indenture, the balance, if any, remaining thereafter, to
the payment of the principal amount of, and the Make-Whole Amount, if any, on
such Lessor Note. The order of

                                      15
<PAGE>
application of payments prescribed by this Section 2.7 shall not be deemed to
supersede any provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration of
transfer and exchange of Lessor Notes (such register being referred to herein as
the "Note Register"). If any Lessor Note is surrendered at said office for
registration of transfer or exchange (accompanied by a written instrument of
transfer duly executed by or on behalf of the holder thereof, together with the
amount of any applicable transfer taxes), the Owner Lessor will execute and the
Indenture Trustee will authenticate and deliver, in the name of the designated
transferee or transferees, if any, one or more new Lessor Notes (subject to the
limitations specified in Sections 2.3 and 2.13 hereof) in any denomination or
denominations not prohibited by this Indenture, as requested by the Person
surrendering the Lessor Note, dated the same date as the Lessor Note so
surrendered and of like tenor and aggregate unpaid principal amount. Any Lessor
Note or Lessor Notes issued in a registration of transfer or exchange shall be
valid obligations of the Owner Lessor entitled to the same security and benefits
to which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or Lessor
Notes surrendered. Every Lessor Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Indenture Trustee
duly executed by the holder thereof or his attorney duly authorized in writing,
and the Indenture Trustee may require an opinion of counsel as to compliance of
any such transfer with the Securities Act. The Indenture Trustee shall make a
notation on each new Lessor Note of the amount of all payments of principal
previously made on the old Lessor Note or Lessor Notes with respect to which
such new Lessor Note is issued and the date on which such new Lessor Note is
issued and the date to which interest on such old Lessor Note or Lessor Notes
shall have been paid. The Indenture Trustee shall not be required to register
the transfer or exchange of any Lessor Note during the 10 days preceding the due
date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have

                                      16
<PAGE>
consented to, and agreed to be bound by, the terms and conditions hereof, of
such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor Note
and, in case of loss, theft or destruction, of indemnity satisfactory to each of
them, and upon reimbursement to the Owner Lessor and the Indenture Trustee of
all reasonable expenses incidental thereto and payment or reimbursement for any
transfer taxes, and upon surrender and cancellation of such Lessor Note, if
mutilated, the Owner Lessor will execute and the Indenture Trustee will
authenticate and deliver in lieu of such Lessor Note, a new Lessor Note, dated
the same date as such Lessor Note and of like tenor and principal amount. Any
indemnity provided by the holder of a Lessor Note pursuant to this Section 2.9
must be sufficient in the reasonable judgment of the Owner Lessor and the
Indenture Trustee to protect the Owner Lessor, the Indenture Trustee, the Paying
Agent, the Registrar and any co-registrar or co-paying agent from any loss which
any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.
     (a)   Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clause (v) or
     (vii)   of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1

                                      17
<PAGE>
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)   Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old Lessor Note but indicating that the Facility Lessee is the issuer
thereof. When such assumption agreement becomes effective, the Owner Lessor
shall be released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee. All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the

                                      18
<PAGE>
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental
     Approval is necessary or required in connection with any Assumption
     Document or the assumption contemplated thereby (or, if any such
     Governmental Approval is necessary or required, that the same has been
     duly obtained and is final and in full force and effect and any period
     for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor
     Note or any Certificateholder and (6) the lien of this Indenture will
     continue to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

                                      19
<PAGE>
          (iii)   Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)   The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any, so
redeemed to the date of redemption.

     (d)   The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to Section 11.2 of the Participation Agreement. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause
     (b) of Section 14.1 of the Facility Lease. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a
     Lease Indenture Event of Default or any other

                                      20
<PAGE>
     default under the Operative Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as
     a result of the occurrence of an Event of Loss described in clause (v) or
     (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be continuing,
selected by the Owner Lessor.

     (e)   If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)   At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that no notice shall be required so long as the
Pass Through Trustee and the Indenture Trustee are the same entity. Each such
notice shall state:

          (i) the date of redemption;

          (ii) the redemption price;

          (iii) the name and address of the Paying Agent;

          (iv) that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v) that, unless the Owner Lessor defaults in making such redemp-

                                      21
<PAGE>
     tion payment, interest on Lessor Notes called for redemption ceases to
     accrue on and after the redemption date; and

          (vi) the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)   With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt by
the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)   Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the Indenture Trustee and the Owner Participant of
any tax or other governmental charge in connection therewith or any charges and
expenses connected with such tax or governmental charge paid or payable by the
Owner Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)   Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing

                                      22
<PAGE>
funds in connection with Supplemental Financing pursuant to Section 11.1 of the
Participation Agreement for the payment of all or any portion of Modifications
to the Facility pursuant to Section 8 of the Facility Lease, or (ii) redeeming
any previously issued Lessor Notes pursuant to an optional refinancing pursuant
to Section 11.2 of the Participation Agreement and providing funds for the
payment of all reasonable costs and expenses in connection therewith.

     (b)   Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days prior
to the proposed date of issuance of any Additional Lessor Notes, a request and
authorization to issue such Additional Lessor Notes, which request and
authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to distinguish
such Additional Lessor Notes from the Initial Lessor Notes theretofore issued,
but otherwise shall rank pari passu with any Lessor Notes then outstanding, be
entitled to the same benefits and security of this Indenture as the other Lessor
Notes issued pursuant to the terms hereof, be dated the date of original
issuance of such Additional Lessor Notes, bear interest at such rates as shall
be agreed between the Facility Lessee and the Owner Lessor and indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the final maturity date of the Initial Lessor Notes
issued on the closing date. The Additional Lessor Notes shall not be subject to
(i) purchase except as provided in Section 4.4(e) hereof or (ii) redemption or
assumption except as provided in Section 2.10 hereof.

     (c)   The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to this
Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in

                                      23
<PAGE>
     respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of
     and interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default
     as to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of the
     Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and

                                      24
<PAGE>
     enforceability of the Additional Lessor Notes and that all conditions
     hereunder to the authentication and delivery of such Additional Lessor
     Notes have been complied with.

     (d)   When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)   This Indenture is an open-end deed of trust and mortgage which
secures existing indebtedness, "future advances", "protective advances,"
"authorized advances"and "contingent obligations" as such terms are under or
referred to under applicable Arizona law. The maximum principal indebtedness
secured by this Indenture, including future advances and contingent obligations
but excluding protective advances, shall not at any time exceed the total amount
of Two Hundred Twenty Million Five Hundred Thousand Dollars ($220,500,000);
provided, however, that nothing herein contained shall limit the amount secured
by this Indenture if the Secured Indebtedness is increased by protective
advances; and provided, further, such limitation as to such future advances and
contingent obligations shall only pertain to the record priority of the amount
thereof secured hereby pursuant to applicable law and does not otherwise limit
the amount of total indebtedness of Owner Lessor secured hereby or limit the
liability of Owner Lessor to Indenture Trustee for such total indebtedness,
including future advances and contingent obligations. The future advances
secured hereby shall be made to or for the account of Owner Lessor and may be
made under the Additional Lessor Notes, or pursuant to promissory notes or other
instruments evidencing such future advances which may be hereafter executed and
delivered by Owner Lessor to Indenture Trustee. In the event that any notice is
recorded or is received by Indenture Trustee, any commitment, agreement, or
obligation to make future advances to or for the benefit of Owner Lessor shall
immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal
Securities Laws; Legend. Each Lessor Note shall be delivered to the initial
Noteholder thereof without registration of such Lessor Note under the Securities
Act and without qualification of this Indenture under the Trust Indenture Act of
1939, as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the

                                      25
<PAGE>
Owner Lessor an opinion of counsel, which opinion and which counsel shall be
reasonably satisfactory to the Indenture Trustee, the Owner Lessor and the
Facility Lessee, to the effect that such transfer will not violate the
registration provisions of the Securities Act or require qualification of this
Indenture under the Trust Indenture Act of 1939, as amended, and all Lessor
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
     MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH
     ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture, without
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                               SECTION 3.
                  RECEIPT, DISTRIBUTION AND APPLICATION
                     OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)   Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent and
any payment of Supplemental Rent constituting interest on overdue installments
of Periodic Rent received by the Indenture Trustee shall be distributed by the
Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each

                                      26
<PAGE>
     such Lessor Note bears to the aggregate amount of the payments then due
     and payable under all such Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     (b)   Application of Other Amounts Held by the Indenture Trustee upon
Rent Default. If, as a result of any failure by the Facility Lessee to pay
Periodic Rent in full on any date when an installment of Periodic Rent is due,
there shall not have been distributed on any date (or within any applicable
period of grace) pursuant to Section 3.1(a) hereof the full amount then
distributable pursuant to clause "First" of Section 3.1(a) of this Indenture,
the Indenture Trustee shall distribute other payments of the character referred
to in Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it,
to all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal or
interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue, to
the extent provided in and subject to the provisions of Section 4.3(a) and (b)
hereof.

     (c)   Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent,

                                      27
<PAGE>
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall retain such installment of Periodic Rent or payment
of interest (to the extent not then required to be distributed pursuant to
clause "First" of Section 3.1(a)) as part of the Indenture Estate and shall not
distribute any such payment of Periodic Rent or interest pursuant to clause
"Second" of Section 3.1(a) until such time as such Lease Indenture Event of
Default shall be cured or waived or until such time as the Indenture Trustee
shall have received written instructions from a Majority in Interest of
Noteholders to make such a distribution; provided that such amounts must be
returned to the Owner Lessor within six (6) months from the receipt thereof by
the Indenture Trustee unless (i) the Indenture Trustee has declared the unpaid
principal of all Lessor Notes due and payable (or such amounts shall have
automatically become due and payable), pursuant to Section 4.2(a) and the
Indenture Trustee is diligently pursuing any dispossessary remedies available
under Section 4.3 hereof (unless such remedies are stayed or prevented by
operation of law) or (ii) any other Lease Indenture Event of Default shall have
occurred during the intervening period and be continuing, in which case, such
six-month period will be restarted from the date such other Lease Indenture
Event of Default shall have occurred. Upon the cure or waiver of such Lease
Indenture Event of Default, withheld Periodic Rent shall, subject to clause
(ii) of the immediately preceding sentence, be distributed to the Owner Lessor
(to the extent that all payments to be distributed pursuant to clause "First"
of Section 3.1(a) have been made), and no further withholding of Periodic Rent
on account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early
Termination. Any payment received by the Indenture Trustee as a result of (x)
an Event of Loss (other than a Regulatory Event of Loss in respect of which the
Facility Lessee shall, pursuant to Section 2.10(b) hereof, assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), (y) early termination
of the Facility Lease pursuant to Section 13 thereof (other than a termination
in respect of which the Facility Lessee shall, pursuant to Section 2.10(b)
hereof assume the obligations and liabilities of the Owner Lessor hereunder, in
which event only clauses "First" and "Fourth" below shall be applicable), or
(z) any early termination of the Facility Lease, in whole or in part, pursuant
to Section 14 thereof, shall be distributed on the applicable date of
redemption to the extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the

                                      28
<PAGE>
     Indenture Trustee and to the extent reimbursable and not previously
     reimbursed) shall be distributed to the Indenture Trustee for application
     to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without priority
     of any Noteholder over any other, in the proportion that the aggregate
     unpaid principal amount of all such Lessor Notes held by each such holder,
     plus the Make-Whole Amount, if any, and accrued but unpaid interest thereon
     to the scheduled date of distribution to the Noteholders bears to the
     aggregate unpaid principal amount of all such Lessor Notes held by all such
     holders, together with the Make-Whole Amount, if any, plus accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be distributed
     to the Owner Lessor for distribution in accordance with the LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee hereunder,
shall, so long as such declaration shall not have been rescinded, be distributed
forthwith by the Indenture Trustee in the following order of

                                      29
<PAGE>
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the Indenture Trustee and to the
     extent reimbursable and not previously reimbursed) shall be distributed
     to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case
     ratably, without priority of any Noteholder over any other, in the
     proportion that the aggregate unpaid principal amount of all such
     Lessor Notes held by each such holder and accrued but unpaid interest
     thereon to the scheduled date of distribution to the Noteholders bears
     to the aggregate unpaid principal amount of all such Lessor Notes held
     by all such holders and accrued but unpaid interest thereon to the date
     of scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable
     and unpaid to them as holders of the Lessor Notes which this Indenture
     by its terms secures, including the Make-Whole Amount, if any, required
     to be paid pursuant to Section 2.10(d) hereof, in respect of such
     Lessor Notes required to be paid pursuant to Section 4.3(a) hereof,
     shall be distributed to such existing or prior holders of Lessor Notes,
     ratably to each such holder, without priority of any such holder over
     any other, in the proportion that the amount of such payments or
     amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining
     shall be distributed to the Owner Lessor for distribution by it in
     accordance with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the

                                      31
<PAGE>
Indenture Trustee shall invest and reinvest any moneys held by the Indenture
Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such Permitted
Investments as may be specified in such direction. The proceeds received upon
the sale or at maturity of any Permitted Investment and any interest received
on such Permitted Investment and any payment in respect of a deficiency
contemplated by the following sentence shall be held as part of the Indenture
Estate and applied by the Indenture Trustee in the same manner as the moneys
used to buy such Permitted Investment, and any Permitted Investment may be sold
(without regard to maturity date) by the Indenture Trustee whenever necessary
to make any payment or distribution required by this Section 3. If the proceeds
received upon the sale or at maturity of any Permitted Investment (including
interest received on such Permitted Investment) shall be less than the cost
thereof (including accrued interest), the Owner Lessor will pay or cause to be
paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture Event
of Default; provided, however, that any such payment received by the Indenture
Trustee which is payable to the Facility Lessee shall not be held by the
Indenture Trustee unless a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing.

     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)   any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

                                      32
<PAGE>
     (b)   all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the Operative
Documents to the contrary, any Excepted Payments received or held by the
Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding
anything to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such payments
as constitute Excepted Payments) shall be made directly to the Indenture
Trustee's Account and the Owner Lessor shall give all notices as shall be
required under the Assigned Documents to direct payment of all such amounts to
the Indenture Trustee hereunder. The Owner Lessor agrees that if it should
receive any such payments directed to be made to the Indenture Trustee or any
proceeds for or with respect to the Indenture Estate or as the result of the
sale or other disposition thereof or otherwise constituting a part of the
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document

                                      33
<PAGE>
or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a
securities account entitled the "Indenture Trustee's Account" (the "Indenture
Trustee's Account"), which Indenture Trustee's Account shall be maintained by
the Account Bank until the date this Indenture is terminated pursuant to Section
7.1 hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)   All amounts from time to time held in the Indenture Trustee's
Account shall be maintained (i) in the name of the Owner Lessor subject to the
lien and security interest of the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders as set forth herein and (ii) in
the custody of the Account Bank for and on behalf of the Indenture Trustee for
the benefit of the Indenture Trustee and each of the Noteholders for the
purposes and on the terms set forth in this Indenture. All such amounts shall
constitute a part of the Indenture Trustee Account Collateral and shall not
constitute payment of any Indebtedness or any other obligation of the Owner
Lessor until applied as hereinafter provided.

     (c)   As collateral security for the prompt payment in full when due of
the Lessor Secured Obligations owed to the Indenture Trustee and each
Noteholder, the Owner Lessor hereby pledges, assigns, hypothecates and transfers
to the Indenture Trustee for the benefit of the Indenture Trustee and each of
the Noteholders, and hereby grants to the Indenture Trustee for the benefit of
the Indenture Trustee and each of the Noteholders, a lien on and security
interest in and to, (i) the Indenture

                                      34
<PAGE>
Trustee's Account and any successor account thereto and (ii) all cash,
investments, investment property, securities or other property at any time on
deposit in or credited to the Indenture Trustee's Account, including all income
or gain earned thereon and any proceeds thereof (the "Indenture Trustee Account
Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)   The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the Indenture
     Trustee's Account is and will be maintained as a "securities account"
     (within the meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor
     is the "entitlement holder" (within the meaning of Section 8-102(a)(7) of
     the UCC) in respect of the "financial assets" (within the meaning of
     Section 8-102(a)(9) of the UCC) credited to the Indenture Trustee's
     Account, (D) all property delivered to the Account Bank pursuant to this
     Indenture or any other Operative Document will be held by the Account Bank
     and promptly credited to the Indenture Trustee's Account by an appropriate
     entry in its records in accordance with this Indenture, (E) all "financial
     assets" (within the meaning of Section 8-102(a)(9) of the UCC) in
     registered form or payable to or to the order of and credited to the
     Indenture Trustee's Account shall be registered in the name of, payable to
     or to the order of, or indorsed to, the Account Bank or in blank, or
     credited to another securities account maintained in the name of the
     Account Bank, and in no case will any financial asset credited to the
     Indenture Trustee's Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Owner Lessor except to the extent the
     foregoing have been subsequently indorsed by the Owner Lessor to the
     Account Bank or in blank, (F) the Account Bank shall not change the name
     or account number of the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee, (G) the Account Bank is acting
     and shall at all times act as and perform all of the duties of the
     "securities intermediary," within the meaning of Article 8 of the UCC, with
     respect to the Indenture Trustee's Account and the financial assets
     credited thereto and (H) the Account Bank shall not enter into any other
     agreement governing, or with respect to, the Indenture Trustee's
     Account without the prior written consent of the Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each

                                      35
<PAGE>
     item of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated
     as a "financial asset" within the meaning of Section 8-l02(a)(9) of the
     UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this
     Indenture to the contrary, if at any time the Account Bank shall
     receive any "entitlement order" (within the meaning of Section
     8-102(a)(8) of the UCC) or any other order from the Indenture Trustee
     directing the transfer or redemption of any financial asset relating to
     the Indenture Trustee's Account or with respect to any "security
     entitlements" (within the meaning of Section 8-102(a)(17) of the UCC)
     carried or to be carried in the Indenture Trustee's Account, the
     Account Bank shall comply with such entitlement order or other order
     without further consent by the Owner Lessor or any other Person. The
     parties hereto hereby agree that the Indenture Trustee shall have
     "control" (within the meaning of Section 8-106(d) of the UCC) of (A)
     the Indenture Trustee's Account, (B) all security entitlements carried
     or to be carried in the Indenture Trustee's Account and (C) the Owner
     Lessor's security entitlements with respect to the financial assets
     credited to the Indenture Trustee's Account and the Owner Lessor hereby
     disclaims any entitlement to claim "control" of such "security
     entitlements". Unless a Lease Indenture Event of Default shall have
     occurred and is continuing, the Indenture Trustee shall not deliver any
     entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv)   Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit
     of the Indenture Trustee's Account will not be subject to deduction,
     set-off, banker's lien, or any other right in favor of any Person other
     than the Indenture Trustee for the benefit of the Indenture Trustee and
     each Noteholder (except for the face amount of any checks which have been
     credited to the Indenture Trustee's Account but are subsequently returned
     unpaid because of uncollected or insufficient funds).

          (v)   No Other Agreements. The Account Bank and the Owner

                                      36
<PAGE>
     Lessor have not entered into any agreement governing or with respect to
     the Indenture Trustee's Account or any financial assets credited to the
     Indenture Trustee's Account other than this Indenture. The Account Bank
     has not entered into any agreement with the Owner Lessor or any other
     Person purporting to limit or condition the obligation of the Account Bank
     to comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest
     of the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and
     will neither be affected by the bankruptcy of the Owner Lessor nor the
     lapse of time.

     (b)   Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank or
the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                      37
<PAGE>
                               SECTION 4.
                  COVENANTS OF OWNER LESSOR; DEFAULTS;
                      REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor. The Owner Lessor hereby
covenants and agrees as follows:

     (a)   the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)   the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any of
the Assigned Documents, except that it may forward any payment to the Indenture
Trustee in accordance with Section 3.9, (iii) give any notice or exercise any
right or take any action under any of the Assigned Documents, or (iv) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein, shall
mean any of the following events (whatever the reason for such Lease Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

     (a)   any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the

                                      38
<PAGE>
insurance required by Section 11 of the Facility Lease if, and so long as, (i)
such Lease Event of Default is waived by the Owner Lessor and the Owner
Participant and (ii) the insurance maintained by the Facility Lessee still
constitutes Prudent Industry Practice); or

     (b)   the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)   the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, the OP Guarantor shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under the OP Guaranty, in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such condition
shall be extended up to 180 days, so long as such party diligently pursues such
remedy and such condition is reasonably capable of being remedied within such
extended period;

     (d)   any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have been
incorrect in any material respect when made and continues to be material and
unremedied for a period of 30 days after receipt by such party of

                                      39
<PAGE>
written notice thereof; provided, however, that if such condition cannot be
remedied within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days, so long as such party
diligently pursues such remedy and such condition is reasonably capable of
being remedied within such extended period;

     (e)   the Owner Participant, the Owner Lessor or the OP Guarantor
(provided the OP Guaranty shall not have been terminated or released) shall (i)
commence a voluntary case or other proceeding seeking relief under Title 11 of
the Bankruptcy Code or liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in a
timely manner, any such relief or the appointment of or taking possession by any
such official in any voluntary case or other proceeding commenced against it, or
(iii) file an answer admitting the material allegations of a petition filed
against it in any such proceeding; or (iv) make a general assignment for the
benefit of creditors; or (v) become unable, admit in writing its inability or
fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)   an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11 of
the Bankruptcy Code or any bankruptcy, insolvency or other similar law now or
hereafter in effect, or (ii) the appointment of a trustee, receiver, liquidator,
custodian or other similar official with respect to it or any substantial part
of its property or (iii) the winding-up or liquidation of the Owner Lessor; and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)   In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of written instructions from a Majority in Interest of Noteholders shall
declare, by written notice to the Owner Lessor and the Owner Participant, the
unpaid principal amount of all Lessor Notes, with accrued interest thereon, to
be immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture

                                      40
<PAGE>
Event of Default under Section 4.2(e) or (f), such principal and interest shall
automatically become due and payable immediately without any such declaration
or notice) without further act or notice of any kind. If any Make-Whole amount
is due and payable pursuant to Section 2.10(c) or (d) at the time of any such
acceleration, such Make-Whole Amount shall also be due and payable in
connection with such acceleration.

     (b)   If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may thereupon or at any time thereafter, in
its own name or by or through an agent or receiver appointed by a court,
without regard to the adequacy of any security for the Secured Indebtedness,
enter into or upon the Indenture Estate and take possession of all or any part
of the Indenture Estate and may exclude therefrom the Owner Participant, the
Owner Lessor and, in the event such Lease Indenture Event of Default shall be a
Lease Event of Default, the Facility Lessee and all persons claiming under
them, and with or without any entry or taking of possession, may in its own
name or in the name of the Owner Lessor or any other Person, sue for or
otherwise collect all issues, rents, income, royalties and profits
(collectively, "Real Property Rents"), including those past due and unpaid as
well as those due, coming due or to be paid, and apply the Payments, less
costs, expenses, attorneys' fees and other expenses toward payment or partial
payment of the Secured Indebtedness in accordance with this Indenture and
Applicable Law. Further, the Indenture Trustee may exercise all remedies
available to a secured party under the Uniform Commercial Code or any other
provision of Applicable Law. The Indenture Trustee may proceed to enforce the
rights of the Indenture Trustee and of the Noteholders by directing payment to
it of all moneys payable under any agreement or undertaking constituting a part
of the Indenture Estate, by proceedings in any court of competent jurisdiction
to recover damages for the breach hereof or for the appointment of a receiver
or for sale of all or any part of the Property Interest or for foreclosure of
the Property Interest, together with the Owner Lessor's interest in the
Assigned Documents, and by any other action, suit, remedy or proceeding
authorized or permitted by this Indenture, at law or in equity, or whether for
the specific performance of any agreement contained herein, or for an
injunction against the violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law, and in addition may foreclose
upon,

                                      41
<PAGE>
sell, assign, transfer and deliver, from time to time to the extent permitted
by Applicable Law, all or any part of the Indenture Estate or any interest
therein, at any private sale or public auction with or without demand,
advertisement or notice (except as herein required or as may be required by
law) of the date, time and place of sale and any adjournment thereof, for cash
or credit or other property, for immediate or future delivery and for such
price or prices and on such terms as the Indenture Trustee, in its unfettered
discretion, may determine, or as may be required by Applicable Law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b).  The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings. The collection of such Real Property Rents, or the entering upon
and taking possession of the Indenture Estate, or the application of the Real
Property Rents as aforesaid, shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such default or
pursuant to such notice of default. The Owner Lessor also hereby authorizes the
Indenture Trustee upon such entry, at its option, to take over and assume the
management, operation and maintenance of the Indenture Estate and to perform
all acts Indenture Trustee in its sole discretion deems necessary and proper
and to expend such sums out of Real Property Rents as may be needed in
connection therewith, in the same manner and to the same extent as the Owner
Lessor theretofore could do. It is not the intention of the parties hereto that
an entry by the Indenture Trustee upon the Indenture Estate under the terms of
this instrument shall make the Indenture Trustee a party in possession in
contemplation of the law, except at the option of the Indenture Trustee.

     (c)   All rights of action and rights to assert claims under this
Indenture or under any of the Lessor Notes may be enforced by the Indenture
Trustee without the possession of the Lessor Notes at any trial or other
proceedings instituted by the Indenture Trustee, and any such trial or other
proceedings shall be brought in its own name as mortgagee of an express trust,
and any recovery or judgment shall be for the ratable benefit of the Noteholders
as herein provided. In any proceedings brought by the Indenture Trustee (and
also any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

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<PAGE>
     (d)   Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease Indenture
Event of Default as a consequence of a Lease Event of Default under Section 16
of the Facility Lease, the Indenture Trustee shall have, to the extent it is
then entitled to do so hereunder and is not then stayed or otherwise prevented
from doing so by operation of law, commenced the exercise of one or more
remedies under the Facility Lease intending to dispossess the Facility Lessee of
its leasehold interest in the Undivided Interest and is using good faith efforts
in the exercise of such remedies (and not merely asserting a right or claim to
do so); provided that, during any period that the Indenture Trustee is stayed or
otherwise prevented by operation of law from exercising such remedies, the
Indenture Trustee will not divest the Owner Lessor of title to any portion of
the Indenture Estate until the earlier of (a) the expiration of the 180-day
period following the date of commencement of a stay or other prevention or (b)
the date of repossession of the Facility under the applicable Facility Lease.

     (e)   Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a Lease
Event of Default under Section 16 of the Facility Lease solely to enforce such
obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of Default
hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)   If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received notice
from the Indenture Trustee or have Actual Knowledge of the failure of the
Facility Lessee to make such

                                      43
<PAGE>
payment of Periodic Rent, an amount equal to the principal of, Make-Whole
Amount, if any, and interest on the Lessor Notes, then due (otherwise than by
declaration of acceleration) on such Rent Payment Date, together with any
interest due thereon on account of the delayed payment thereof, and such
payment by the Owner Lessor shall be deemed (for purposes of this Indenture) to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (b)   If the Facility Lessee shall fail to make any payment of
Supplemental Rent when the same shall become due or otherwise fail to perform
any obligation under the Facility Lease or any other Operative Document, then
the Owner Lessor may (but need not) make such payment on the date such
Supplemental Rent was payable, together with any interest due thereon on account
of the delayed payment thereof, or perform such obligation at any time prior to
the expiration of ten (10) Business Days after the Owner Lessor or the Owner
Participant shall have received notice or have Actual Knowledge of the
occurrence of such failure, and such payment or performance by the Owner Lessor
shall be deemed to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (c)   The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would impair
the prior right and security interest of the Indenture Trustee in and to the
Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic Rent
payment or Supplemental Rent payment being overdue in the manner set forth in
the next two sentences. If the Indenture Trustee shall thereafter receive such
payment of Periodic Rent, Supplemental Rent or such interest, the Indenture
Trustee shall, notwithstanding the requirements of Section 3.1 hereof,
forthwith, remit such

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<PAGE>
payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)   Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall take
or commence any action it would otherwise be entitled to take or commence as a
result of such failure by the Facility Lessee, whether under this Section 4 or
Section 17 of the Facility Leases or otherwise.

     (e)   Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the

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<PAGE>
previous 30 days, (ii) no Lease Indenture Event of Default of the nature
described in any of clauses (b) through (f) of Section 4.2 hereof shall have
occurred and be continuing and (iii) the Owner Lessor shall give written notice
to the Indenture Trustee of the Owner Lessor's intention to purchase all of the
Lessor Notes in accordance with this paragraph, then, upon receipt within 10
Business Days after such notice from the Owner Lessor of an amount equal to the
sum of (x) the aggregate unpaid principal amount of any unpaid Lessor Notes
then held by the Noteholders, together with accrued but unpaid interest thereon
to the date of such receipt (as well as any interest on overdue principal and,
to the extent permitted by Applicable Law, overdue interest), plus (y) the
aggregate amount, if any, of all sums which, if Section 3.3 were then
applicable, such Noteholder would be entitled to be paid before any payments
were to be made to the Owner Lessor but excluding any Make-Whole Amount, such
Noteholder will forthwith (and upon its receipt of the payment referred to in
clause (1) below, will be deemed to) sell, assign, transfer and convey to the
Owner Lessor (without recourse or warranty of any kind other than of title to
the Lessor Notes so conveyed) all of the right, title and interest of such
Noteholder in and to the Indenture Estate, this Indenture, all Lessor Notes
held by such Noteholder and the Assigned Documents, and the Owner Lessor shall
thereupon assume all such Noteholder's rights and obligations in such
documents; provided, that no such holder shall be required to so convey unless
(1) the Owner Lessor shall have simultaneously tendered payment on all other
Lessor Notes issued by the Owner Lessor at the time outstanding pursuant to
this paragraph and (2) such conveyance is not in violation of any Applicable
Law. All charges and expenses required to be paid in connection with the
issuance of any new Lessor Note or Lessor Notes in connection with this
paragraph shall be borne by the Owner Lessor.  Notwithstanding the foregoing,
the Owner Lessor may exercise the right set forth in this clause (e) prior to
the end of the 90 day period set forth above but, in such case, the Make-Whole
Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in

                                      46
<PAGE>
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)   If at any time the Indenture Trustee has the right to take
possession of the Indenture Estate pursuant to Section 4.3 hereof, at the
request of the Indenture Trustee, the Owner Lessor promptly shall (i) execute
and deliver to the Indenture Trustee such instruments of title and other
documents and (ii) make all such demands and give all such notices as are
permitted by the terms of the Facility Lease to be made or given by the Owner
Lessor upon the occurrence and continuance of a Lease Event of Default, in each
case as the Indenture Trustee may deem necessary or advisable to enable the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Lessor hereby specifically consents, and (ii) pursue
all or any part of the Indenture Estate wherever it may be found and enter any
of the premises wherever all or part of the Indenture Estate may be or is
supposed to be and search for all or part of the Indenture Estate and take
possession of and remove all or part of the Indenture Estate.

     (b)   Upon every such taking of possession, the Indenture Trustee may,
from time to time, as a charge against proceeds of the Indenture Estate, make
all such expenditures with respect to the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee shall have the right to deal
with the Indenture Estate and to carry on the business and exercise all rights
and powers of the Owner Lessor relating to the Indenture Estate, as the
Indenture Trustee shall deem best, and, the Indenture Trustee shall be entitled
to collect and receive all rents (including Periodic Rent and Supplemental
Rent), revenues, issues, income, products and profits of the Indenture Estate
and every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required

                                      47
<PAGE>
to be deposited with, the Indenture Trustee hereunder) and to apply the same to
the management of or otherwise dealing with the Indenture Estate and of
conducting the business thereof, and of all expenditures with respect to the
Indenture Estate and the making of all payments which the Indenture Trustee may
be required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make
reports upon the properties and books and records of the Owner Lessor and the
Facility Lessee relating to the Indenture Estate and the Operative Documents),
or under any provision of, this Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee and of all Persons
properly engaged and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies.

     (a)   In addition to all other remedies provided for herein if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee shall, subject to Sections 4.3 and 4.4 and to provisions of Applicable
Law, have the right(s) to (i) sell the Indenture Estate or any part of the
Indenture Estate at one or more public sale or sales; or (ii) commence an action
or actions to foreclose the lien of this Indenture as a mortgage; and/or (iii)
specifically enforce any of the covenants and agreements hereof, in each case in
order to pay the Secured Indebtedness, and all impositions, if any, with accrued
interest thereon, and all expenses of the sale and of all proceedings in
connection therewith, including reasonable attorney's fees, if incurred, and do
any acts that it deems necessary or desirable to preserve the value,
marketability or rentability of the Indenture Estate, or any part thereof or
interest therein, increase the income therefrom or protect the security hereof.
If the Indenture Trustee elects to exercise the power of sale herein contained,
the Indenture Trustee shall cause to be recorded, published and delivered to the
Owner Lessor such notice of sale as then required by Applicable Law. The
Indenture Trustee shall, without demand on the Owner Lessor, after lapse of such
time as may then be required by law and after recordation of such notice of sale
and notice of sale having been given as required by Applicable Law, sell the
Indenture Estate at the time and place of sale fixed by it in said notice of
sale, either as a whole, or in separate lots or parcels or items as the
Indenture Trustee shall deem expedient, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. The Indenture Trustee shall deliver to such
purchaser or purchasers thereof its good and sufficient deed or deeds conveying
the property so sold, but without any covenant or warranty, express or implied.
The recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. Any person, including, without limitation, the Owner
Lessor,

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<PAGE>
may bid at and be a purchaser at any such sale. The Indenture Trustee shall
apply the proceeds of sale as required by Applicable Law and in accordance with
the terms of this Indenture. Subject to A.R.S. Section 33-810.B, the Indenture
Trustee may postpone sale of all or any portion of the Indenture Estate by
public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or subsequently
noticed sale, and without further notice make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale.
The Owner Lessor hereby requests that a copy of any notice of default and any
notice of sale hereunder be mailed to it at its address set forth in Section
9.5 of this Indenture. At any such public sale, the Indenture Trustee may
execute and deliver to the purchaser a conveyance of the Indenture Estate or
any part of the Indenture Estate, and to this end, the Owner Lessor hereby
constitutes and appoints the Indenture Trustee the agent(s) and attorney(s) in
fact of the Owner Lessor to make such sale and conveyance, and thereby to
divest the Owner Lessor of all right, title or equity that the Owner Lessor may
have in and to the Indenture Estate and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney in fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding upon the Owner Lessor. The aforesaid power of sale and agency hereby
granted are coupled with an interest and are irrevocable by death or otherwise,
are granted as cumulative of the other remedies provided hereby or by law for
collection of the Secured Indebtedness and shall not be exhausted by one
exercise thereof but may be exercised until full payment of the Secured
Indebtedness. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, either
with or without entry or taking possession as herein provided or otherwise,
proceed by a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (i) to enforce payment of the Lessor Notes or the
performance of any term, covenant, condition or agreement of this Indenture or
any other right, and (ii) to pursue any other remedy available to it, all as
the Indenture Trustee shall determine most effectual for such purposes. Upon
any foreclosure sale, the Indenture Trustee may bid for and purchase the
Indenture Estate and shall be entitled to apply all or any part of the Secured
Indebtedness as a credit to the purchase price. In the event of a foreclosure
sale of the Indenture Estate, the proceeds of said sale shall be applied as
provided in Section 3.3 hereof. In the event of any such foreclosure sale by
the Indenture Trustee, the Owner Lessor shall be deemed a tenant holding over
and shall forthwith deliver possession to the purchaser or purchasers at such
sale or be summarily dispossessed according to provisions of law applicable to
tenants holding over. The Indenture Trustee, at the Indenture Trustee's option,
is authorized to foreclose this Indenture subject to the rights of any tenants
of the

                                      49
<PAGE>
Indenture Estate, and the failure to make any such tenants parties to any such
foreclosure proceedings and to foreclose their rights will not be, nor be
asserted to be by the Owner Lessor, a defense to any proceedings instituted by
the Indenture Trustee to collect the Secured Indebtedness.

     (b)   In amplification of, and not in limitation of paragraph (a) of this
Section 4.7, the Owner Lessor represents and warrants that this Indenture is
given primarily for a business, commercial or agricultural purpose. Owner
Lessor, therefore, agrees that the Indenture Trustee, its successors and
permitted assigns, shall have THE STATUTORY POWER OF SALE pursuant to the
applicable provisions of A.R.S. Sections 12-1241, et seq., 33-702.B; and 33-807,
et seq. as said statutes have been and shall be amended, which POWER is
expressly incorporated herein by reference. Such Statutory Power of Sale and
other rights, power, remedies and authorities shall be in addition to all rights
and remedies set forth herein or available under Applicable Law. In the exercise
of the Statutory Power of Sale, the Indenture Trustee, its successors and
assigns or its agents or attorneys, may sell the Indenture Estate or such
portion thereof as may remain subject to the Indenture in case of any partial
release thereof, either as a whole or in parcels, together with all improvements
that may be thereon, by a public sale on or near any part of the Indenture
Estate then subject to this Indenture or at the Indenture Trustee's principal
place of business or at any other office of the Indenture Trustee or any
attorney or agent thereof located in the same county in which any part of the
Indenture Estate is located, and the Indenture Trustee, its successors and
permitted assigns; and such sale shall forever bar the Owner Lessor and all
persons claiming under it from all right and interest in the Indenture Estate,
whether at law or in equity. In the exercise of THE STATUTORY POWER OF SALE
herein given, if the Indenture Trustee elects to sell in parts or parcels, such
sales may be held from time to time, and the POWER shall not be fully executed
until all of the Indenture Estate not previously sold shall have been sold.

     Section 4.8.   Appointment of Receiver and Assignment of Real Property
Rents. The Owner Lessor hereby assigns and transfers to the Indenture Trustee
all of the Real Property Rents, of the Indenture Estate, and hereby gives to and
confers upon the Indenture Trustee the right, power and authority to collect the
Real Property Rents. From and after any Lease Indenture Event of Default, the
Owner Lessor appoints the Indenture Trustee its true and lawful
attorney-in-fact, at the option of the Indenture Trustee at any time and from
time to time, to demand, receive and enforce payment, to give receipts, releases
and satisfactions. From and after any Lease Indenture Event of Default, the
Owner Lessor hereby authorizes and directs the lessees, tenants and occupants to
make all payments under any leases directly to the Indenture Trustee upon
written demand by the Indenture Trustee, without further

                                      50
<PAGE>
consent of the Owner Lessor. If the outstanding principal amount of the Lessor
Notes shall have been declared due and payable pursuant to Section 4.3 hereof,
as a matter of right, the Indenture Trustee shall be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Indenture Estate, whether such
receivership be incidental to a proposed sale of the Indenture Estate or the
taking of possession thereof or otherwise, and the Owner Lessor hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Indenture Estate shall be
entitled to exercise all available rights and powers with respect to the
Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law, that
it will never seek or derive any benefit or advantage from any of the following,
whether now existing or hereafter in effect, in connection with any proceeding
under or in respect of this Lease Indenture:

     (a)   any stay, extension, moratorium or other similar law;

     (b)   any Applicable Law providing for the valuation of or appraisal of
any portion of the Indenture Estate in connection with a sale thereof; or

     (c)   any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right

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<PAGE>
or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure or a waiver
or relinquishment of any right (s) to foreclose or to have a receiver appointed
for and take possession of the Indenture Estate or any part thereof. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture Trustee at any time or times in the
future while any of the obligations secured hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings had
taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall take
or cause to be taken any action contrary to the right of the Facility Lessee,
including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner

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<PAGE>
Lessor shall fail to release any Lien affecting the Indenture Estate which it
is required to release by the terms of this Indenture or the Participation
Agreement or the LLC Agreement, the Indenture Trustee, without notice to or
demand upon the Owner Lessor and without waiving or releasing any obligation or
defaults may (but shall be under no obligation to, and, except as provided in
the last sentence hereof, shall incur no liability in connection therewith) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Indenture Estate and may take all such action with
respect thereto (including entering upon the Facility Site or any part thereof,
or the Facility for such purpose) as may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including legal fees and expenses) so
incurred, together with interest thereon from the date of payment or
incurrence, shall constitute additional indebtedness secured by this Indenture
and shall be paid from the Indenture Estate to the Indenture Trustee on demand.
The Indenture Trustee shall not be liable for any damages resulting from any
such payment or action unless such damages shall be a consequence of willful
misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                               SECTION 5.
                     DUTIES OF INDENTURE TRUSTEE;
                CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

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<PAGE>
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.
The Indenture Trustee shall give prompt written notice to the Owner Lessor and
the Owner Participant of any Lease Indenture Event of Default with respect to
which the Indenture Trustee has Actual Knowledge and will give the Facility
Lessee and the Owner Participant not less than 30 days' prior written notice of
the date on or after which the Indenture Trustee intends to exercise remedies
under Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may be specified in such instructions: (a) give
such notice, direction or consent or exercise such right, remedy or power or
take such action hereunder or under any Assigned Document, or in respect of any
part of or all the Indenture Estate, as it shall be entitled to take and as
shall be specified in such instructions; (b) take such action with respect to or
to preserve or protect the Indenture Estate (including the discharge of Liens)
as it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall, execute
and file or cause to be executed and filed any financing statement (and any
continuation statement with respect to such financing statement) or any similar
instrument or document relating to the security interest or the assignment
created by this Indenture or granted by the Owner Lessor herein as may be
necessary to protect and preserve the security interest or assignment created by
or granted pursuant to this Indenture, to the extent otherwise entitled to do so
and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in full
of the principal of and interest on all Lessor Notes then outstanding and all
other amounts then due all Noteholders hereunder, and all other sums secured
hereby or otherwise required to be paid hereunder, under the Participation
Agreement and under the Facility Lease, the Indenture Trustee shall execute and
deliver to, or as directed in writing by, the Owner Lessor and the Facility
Lessee an appropriate instrument in due form for recording, releasing the
Indenture Estate from the Lien of this Indenture.

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<PAGE>
Nothing in this Section 5.3 shall be deemed to expand the instances in which
the Owner Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)   The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

     (b)   The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)   The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read into
this Indenture against the Indenture Trustee.

     (b)   The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the

                                      55
<PAGE>
terms of the Facility Lease, to the extent applicable to the Indenture Trustee
as assignee of the Owner Lessor, (b) in accordance with the powers granted to,
or the authority conferred upon, the Indenture Trustee pursuant to this
Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)   The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy or right with respect to any such payment against the
Indenture Estate nor any right to collect any such payment by the exercise of
any of the remedies under Section 17 of the Facility Lease except as expressly
provided in this Section 5.6; (ii) retain all rights with respect to insurance
that Section 11 of the Facility Lease and Schedule 5.31 of the Participation
Agreement specifically confers upon the Owner Lessor and to waive any failure by
the Facility Lessee to maintain the insurance required by Section 11 of the
Facility Lease before or after the fact so long as the insurance maintained by
the Facility Lessee still conforms to Prudent Industry Practice; (iii) retain
all rights to adjust Periodic Rent and Termination Value as provided in Section
3.4 of the Facility Lease, Section 12 of the Participation Agreement or the Tax
Indemnity Agreement; provided, however, that after giving effect to any such
adjustment (x) the amount of Periodic Rent payable on each Rent Payment Date
shall be at least equal to the aggregate amount of all principal and accrued
interest payable on such Rent Payment Date on all Lessor Notes then outstanding
and (y) Termination Value shall in no event be less (when added to all other
amounts required to be paid by the Facility Lessee in respect of any early
termination of the Facility Lease) than an amount sufficient, as of the date of
payment, to pay in full the principal of, and interest on all Lessor Notes
outstanding on and as of such date of payment; (iv) except in connection with
the exercise of remedies pursuant to the Facility Lease, retain all rights to
exercise the Owner Lessor's rights relating to the Appraisal Procedure and to
confer and agree with the Facility Lessee on Fair Market Rental Value, or any
Renewal Lease Term; and (v) retain the right to declare the Facility Lease to be
in default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)   The Owner Lessor shall have the right, together with or
independently of the Indenture Trustee, (i) to receive from the Facility Lessee
and the Guarantor all notices, certificates, reports, filings, opinions of
counsel and other documents and all

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<PAGE>
information that the Facility Lessee is permitted or required to give or
furnish to the Owner Lessor or the Owner Participant, as the case may be,
pursuant to the Facility Lease or any other Operative Document; (ii) to inspect
the Facility and the records relating thereto pursuant to Section 12 of the
Facility Lease; (iii) to provide such insurance as may be permitted by Section
11 of the Facility Lease; (iv) to provide notices to the Facility Lessee or the
Guarantor to the extent otherwise permitted by the Operative Documents; and (v)
to perform for the Facility Lessee as provided in Section 20 of the Facility
Lease.

     (c)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall retain the right to the exclusion of the Indenture Trustee to
exercise the rights of the Owner Lessor under, and to determine compliance by
the Facility Lessee with, the provisions of Sections 10 (other than Section 10.3
thereof), 13, 14 and 15 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to retain such rights upon notice from the Indenture
Trustee stating that such rights shall no longer be retained by the Owner
Lessor;

     (d)   Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or, if
accelerated, such acceleration has theretofore been rescinded) or the Indenture
Trustee shall not have exercised any of its rights pursuant to Section 4 hereof
to take possession of, foreclose, sell or otherwise take control of all or any
part of the Indenture Estate, the Owner Lessor shall have the right, to be
exercised jointly with the Indenture Trustee, (i) to exercise the rights with
respect to the Facility Lessee's use and operation, modification or maintenance
of the Undivided Interest, (ii) to exercise the Owner Lessor's right under
Section 13.1 of the Participation Agreement to withhold or grant its consent to
an assignment by the Facility Lessee of its rights under the Facility Lease, and
(iii) to exercise the rights of the Owner Lessor under Section 10.3 of the
Facility Lease; provided, however, that if a Lease Indenture Event of Default
shall have occurred and be continuing, the Owner Lessor shall cease to exercise
such rights under this clause (iii) upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;
provided further, however, that (A) the Owner Lessor shall have no right to
receive any Periodic Rent or other payments other than Excepted Payments payable
to the Owner Lessor, or the Owner Participant and (B) no determination by the
Owner Lessor or the Indenture Trustee

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<PAGE>
that the Facility Lessee is in compliance with the provisions of any applicable
Assigned Document shall be binding upon or otherwise affect the rights
hereunder of the Indenture Trustee or any Noteholder on the one hand or the
Owner Lessor or the Owner Participant on the other hand;

     (e)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek specific
performance of the covenants of the Facility Lessee under the Operative
Documents relating to the protection, insurance, maintenance, possession, use
and return of the Property Interest, the performance by the Facility Lessee of
the Owner Lessor's obligations under the South Point Ground Lease, the exercise
of any renewal or extension rights with respect to the South Point Ground Lease
and any action pursuant to Sections 5.20 or 13.3 of the Participation Agreement
(subject to the conditions set forth in Section 5.20 or 13.3, as applicable, of
the Participation Agreement); and

     (f)   Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture Trustee
the right to, and the Indenture Trustee shall not, release the Guarantor of its
obligations under the Calpine Guaranty in respect of payment of the Equity
Portion of Termination Value, unpaid amounts of the Equity Portion of Periodic
Rent (and all amounts of overdue interest relating to such amount) and other
amounts constituting Excepted Payments, unless such release results in payment
in full to the Owner Lessor of all such unpaid amounts as certified to the
Indenture Trustee by the Owner Lessor, and all claims of the Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as

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<PAGE>
provided in the Operative Documents, but subject to the terms of this Indenture,
the Owner Lessor shall not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Facility, the Facility Site, any part of
the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Owner Lessor hereby expressly authorizes the Indenture
Trustee to prepare, file, record, obtain, execute and deliver, from time to
time, such financing statements, continuation statements, control agreements
and recognition agreements as Indenture Trustee shall deem appropriate. The
Owner Lessor hereby further authorizes any account holder or bank or financial
institution to execute and deliver from time to time such control agreements
and recognition agreements as shall be requested or required by Indenture
Trustee. The Indenture Trustee shall, at the written request and expense of the
Facility Lessee, as provided in the Participation Agreement, execute and
deliver to the Facility Lessee and the Facility Lessee will file or record, if
not already filed or recorded, such financing statements or other documents and
such continuation statements or other documents with respect to financing
statements or other documents previously filed relating to the Lien created by
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and
powers herein granted. Upon the reasonable instructions (which instructions
shall be accompanied by the form of document to be filed) at any time and from
time to time of the Facility Lessee or the Indenture Trustee, the Owner Lessor
shall authorize, execute, file or record any financing statement (and any
continuation statement with respect to any such financing statement), and any
other document relating to the security interest and assignment created by this
Indenture as may be specified in such instructions. In addition, the Indenture
Trustee and the Owner Lessor will authorize or execute such continuation
statements with respect to financing statements and other documents relating to
the Lien created by this Indenture in the Indenture Estate as may be specified
from time to time in written instructions of any Noteholder (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the form of such continuation statement or other document to be
filed). Neither the Indenture Trustee nor, except as

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<PAGE>
otherwise herein expressly provided, the Owner Lessor shall have responsibility
for the protection, perfection or preservation of the Lien created by this
Indenture.

                               SECTION 6.
                   INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall not
be liable under any circumstances, except (a) for its own negligence or willful
misconduct, (b) in the case of any inaccuracy of any representation or warranty
of the Indenture Trustee or the Lease Indenture Company contained in Section 3.5
of the Participation Agreement, in the certificate delivered by the Indenture
Trustee at the Closing pursuant to Section 4.6 of the Participation Agreement,
or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the Indenture
Trustee shall not be liable for any action or inaction of the Owner Trust;
provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other

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<PAGE>
     officers of the Indenture Trustee, unless it shall be proven that the
     Indenture Trustee was negligent in ascertaining the pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
     its own funds or otherwise incur financial liability for the performance
     of any of its duties hereunder or the exercise of any of its rights or
     powers if there is reasonable ground for believing that the repayment of
     such funds or adequate indemnity against such risk or liability is not
     reasonably assured to it, and none of the provisions contained in this
     Indenture shall in any event require the Indenture Trustee to perform, or
     be responsible for the manner of performance of, any of the obligations of
     the Owner Lessor, under this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty
(a) to see to any registration, recording or filing of any Operative Document
(or any financing or continuation statements in respect thereto) or to see to
the maintenance of any such

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<PAGE>
registration, recording or filing, (b) to see to any insurance on the
Facilities or the Facilities or to effect or maintain any such insurance, (c)
except as otherwise provided in Section 5.5 hereof or in Section 10 of the
Participation Agreement, to see to the payment or discharge of any Tax or any
Lien of any kind owing with respect to, or assessed or levied against, any part
of the Indenture Estate, (d) to confirm or verify the contents of any report,
notice, request, demand, certificate, financial statement or other instrument
of the Facility Lessee, (e) to inspect the Facility at any time or ascertain or
inquire as to the performance or observance of any of the Facility Lessee's
covenants with respect to the Facility or (f) to exercise any of the trusts or
powers vested in it by this Indenture or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction
of any of the Noteholders, pursuant to the provisions of this Indenture, unless
such Noteholders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby (which in the case of the Majority in Interest of
Noteholders will be deemed to be satisfied by a letter agreement with respect
to such costs from such Majority in Interest of Noteholders).  Notwithstanding
the foregoing, the Indenture Trustee shall furnish to each Noteholder and to
the Owner Lessor and the Owner Participant promptly upon receipt thereof
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Indenture Trustee
hereunder or under any of the Operative Documents unless the Indenture Trustee
shall reasonably believe that each such Noteholder, the Owner Lessor and the
Owner Participant shall have received copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)   The Owner Lessor represents and warrants that it has not assigned
or pledged any of its estate, right, title or interest subject to this
Indenture, to anyone other than the Indenture Trustee.

     (b)   NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE ESTATE, except
that the Owner Lessor represents and warrants that on

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the Closing Date it shall have received whatever title or interest to the
Undivided Interests and the Facility Site as were conveyed to it by the
Facility Lessee and that on the Closing Date the Undivided Interests shall be
free of Owner Lessor's Liens and the Owner Participant's Liens; or (ii) any
representation or warranty as to the validity, legality or enforceability of
this Indenture, the Lessor Notes or any of the other Operative Documents, or as
to the correctness of any statement contained in any thereof, except that each
of the Owner Lessor and the Indenture Trustee represents and warrants that this
Indenture and the Participation Agreement have been, and, in the case of the
Owner Lessor, the other Operative Documents to which it is or is to become a
party have been or will be, executed and delivered by one of its officers who
is and will be duly authorized to execute and deliver such document on its
behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this Indenture
for the purpose of paying, or securing the payment of, the principal of or
Make-Whole Amount or interest on the Lessor Notes shall be held in trust. Except
as specifically provided herein or in the Facility Lease, any moneys received by
the Indenture Trustee hereunder need not be segregated in any manner except to
the extent required by Applicable Law and may be deposited under such general
conditions as may be prescribed by Applicable Law, and neither the Owner Lessor
nor the Indenture Trustee shall be liable for any interest thereon; provided,
however, subject to Section 6.5 hereof, that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof to the extent known to the Indenture
Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which any
other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such

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Noteholder or other Person, as the case may be. As to any fact or matter
the manner of ascertainment of which is not specifically described herein, the
Indenture Trustee for all purposes hereof may rely on an Officer's Certificate
of the Owner Lessor or the Facility Lessee or a Noteholder as to such fact or
matter, and such certificate shall constitute full protection to the Indenture
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. The Indenture Trustee shall have the right to request
instructions from the Owner Lessor or the Majority in Interest of Noteholders
with respect to taking or refraining from taking any action in connection with
the Lease Indenture or any other Operative Document to which it is a party, and
shall be entitled to act or refrain from taking such action unless and until the
Indenture Trustee shall have received written instructions from the Owner Lessor
or the Majority in Interest of Noteholders, and the Indenture Trustee shall not
incur liability by reason of so acting (except as provided in Section 6.1) or
refraining from acting. In the administration of the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Indenture Estate (but subject to the priorities of payment
set forth in Section 3 hereof), consult with independent skilled Persons to be
selected and retained by it (other than Persons regularly in its employ) as to
matters within their particular competence, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion, within such Person's area of competence,
of any such Person, so long as the Indenture Trustee shall have exercised
reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee;
Appointment of Successor.

     (a)   Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the

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<PAGE>
Owner Lessor shall give prompt written notification thereof to each Noteholder
and the Facility Lessee. Such removal will be effective on the acceptance of
appointment by the successor Indenture Trustee or Account Bank pursuant to the
provisions of subsection (b) below. In the case of the resignation or removal
of the Indenture Trustee or Account Bank, a Majority in Interest of Noteholders
may appoint a successor Indenture Trustee or Account Bank by an instrument
signed by such holders. If a successor Indenture Trustee or Account Bank shall
not have been appointed within thirty (30) days after such resignation or
removal, the Indenture Trustee, Account Bank or any Noteholder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee or
Account Bank to act until such time, if any, as a successor shall have been
appointed by a Majority in Interest of Noteholders as above provided. The
successor Indenture Trustee or Account Bank so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee or Account Bank appointed by a Majority in Interest of Noteholders as
above provided.

     (b)   Acceptance of Appointment. Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee or Account Bank hereunder in the trusts hereunder applicable to it with
like effect as if originally named the Indenture Trustee or Account Bank
herein; but nevertheless, upon the written request of such successor Indenture
Trustee or Account Bank or a Majority in Interest of Noteholders, such
predecessor Indenture Trustee or Account Bank shall execute and deliver an
instrument transferring to such successor Indenture Trustee or Account Bank,
upon the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee or Account Bank, and
such predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)   Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or

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<PAGE>
indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)   Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities
intermediary" (within the meaning of Section 8-102(a)(14) of the UCC) with
respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)   Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)   Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the

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<PAGE>
Indenture Estate, this Indenture, the Facility Lease, the Lessor Notes or any
of the transactions contemplated by the Operative Documents, (ii) the Indenture
Trustee shall be advised by counsel, satisfactory to it, that it is so
necessary or prudent in the interest of the Noteholders or (iii) a Majority in
Interest of Noteholders deems it so necessary or prudent and shall have
requested in writing the Indenture Trustee to do so, then in any such case the
Indenture Trustee shall execute and deliver from time to time all instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more Persons approved by the Indenture Trustee either to act as
additional trustee or trustees of all or any part of the Indenture Estate,
jointly with the Indenture Trustee, or to act as separate trustee or trustees
of all or any part of the Indenture Estate, in any such case with such powers
as may be provided in such instruments or agreements, and to vest in such bank,
trust company or Person as such additional trustee or separate trustee, as the
case may be, any property, title, right or power of the Indenture Trustee
deemed necessary or advisable by the Indenture Trustee, subject to the
remaining provisions of this Section 7.2. The Owner Lessor hereby consents to
all actions taken by the Indenture Trustee under the provisions of this Section
7.2 and agrees, upon the Indenture Trustee's request, to join in and execute,
acknowledge and deliver any or all such instruments or agreements; and the
Owner Lessor hereby makes, constitutes and appoints the Indenture Trustee its
agent and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such instrument or agreement in the event that the
Owner Lessor shall not itself execute and deliver the same within fifteen (15)
days after receipt by it of such request so to do; provided, however, that the
Indenture Trustee shall exercise due care in selecting any additional or
separate trustee if such additional or separate trustee shall not be a Person
possessing trust powers under Applicable Law. If at any time the Indenture
Trustee shall deem it no longer necessary or prudent in order to conform to any
such law or take any such action or shall be advised by such counsel that it is
no longer so necessary or prudent in the interest of the Noteholders or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Noteholders, the Indenture Trustee shall execute
and deliver all instruments and agreements necessary or proper to remove any
additional trustee or separate trustee. In such connection, the Indenture
Trustee may act on behalf of the Owner Lessor to the same extent as is provided
above. Notwithstanding anything contained to the contrary in this Section
7.2(a), to the extent the laws of any jurisdiction preclude the Indenture
Trustee from taking any action hereunder either alone, jointly or through a
separate trustee under the direction and control of the Indenture Trustee, the
Owner Lessor, at the instruction of the Indenture Trustee, shall appoint a
separate trustee for such jurisdiction, which separate trustee shall have full
power and authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but not subject to
the same limitations in

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<PAGE>
any exercise of his power and authority as those to which the Indenture
Trustee is subject.

     (b)   The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)   Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)   Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections

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8.2 and 8.3 hereof, but only upon the written direction of a Majority in
Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and

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<PAGE>
with the consent of the Owner Lessor, the Indenture Trustee shall enter into
any indenture or indentures supplemental hereto or execute any amendment,
modification, supplement, waiver or consent with respect to any other Operative
Document (a) to evidence the succession of another Person as a Lessor Manager
or the appointment of a co-manager in accordance with the terms of the LLC
Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant
to the provisions of Section 7 hereof and to define the rights, powers, duties
and obligations conferred upon any such separate trustee or trustees or
co-trustee or co-trustees, (b) to correct, confirm or amplify the description
of any property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may be lawfully granted or
conferred and which are not contrary or inconsistent with this Indenture, (f)
to add to the covenants or agreements to be observed by the Facility Lessee or
the Owner Lessor and which are not contrary to this Indenture, to add Indenture
Events of Defaults for the benefit of Noteholders or surrender any right or
power of the Owner Lessor, provided it has consented thereto, (g) to effect the
assumption of all or, to the extent otherwise provided hereunder, part of the
Lessor Notes by the Facility Lessee, provided that the supplemental indenture
will contain all of the covenants applicable to the Facility Lessee contained
in the Facility Lease and the Participation Agreement for the benefit of the
Indenture Trustees or the holders of such Lessor Notes, such that the Facility
Lessee's obligations contained therein, if applicable in the event that the
Facility Lease are terminated, will continue to be in full force and effect,
(h) to comply with requirements of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body, (i) to modify, eliminate or add to the
provisions of any Operative Documents to such extent as shall be necessary to
qualify or continue the qualification of this Lease Indenture or the Pass
Through Trust Agreements (including any supplements thereto) under the Trust
Indenture Act, or similar federal statute enacted after the Closing Date, and
to add to this Indenture such other provisions as may be expressly required or
permitted by the Trust Indenture Act of 1939 (if such qualification is
required), and (j) to effect

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<PAGE>
any indenture or indentures supplemental hereto or any amendment, modification,
supplement, waiver or consent with respect to any other Operative Document,
provided such supplemental indenture, amendment, modification, supplement,
waiver or consent shall not reasonably be expected to materially and adversely
affect the interest of the Noteholders; provided, however, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of each then outstanding
Lessor Note, cause any of the events specified in clauses (i) through (v) of
the first sentence of Section 8.1 hereof to occur; and provided, further, that
no such amendment, modification, supplement, waiver or consent contemplated by
this Section 8.2 shall, without the consent of the holder of a Majority in
Interest of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14,
5.31, 6, or 13.1 of the Participation Agreement or Section 19 of the Lease, or
modify in any material respect the provisions of the Calpine Guaranty (other
than, in each case, any amendment, modification, supplement, waiver or consent
having no adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                 MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

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<PAGE>
     (a)   Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)   Release.

          (i)   Whenever a Component is replaced pursuant to the Facility
     Lease, such component shall automatically and without further act of
     any Person be released from the Lien of this Lease Indenture and the
     Indenture Trustee shall, upon the written request of the Owner Lessor
     or the Facility Lessee, execute and deliver to, and as directed in
     writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the replaced Component
     from the Lien of this Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and
     deliver to, or as directed in writing by, the Facility Lessee or the
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the Indenture Estate from the Lien of this Indenture;
     provided that all sums secured by this Indenture have been paid to the
     Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further

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<PAGE>
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties hereto, the Owner Participant,
the Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       73
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor

                                       74
<PAGE>
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          South Point Energy, LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly

                                       75
<PAGE>
waived by the parties hereto or by any Person claiming by, through or under
the parties hereto and (d) under no circumstances shall Wells Fargo, be
personally liable for the payment of any indebtedness or expenses of the Owner
Lessor or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Owner Lessor
under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts.  This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. Except for those provisions relating to the
creation, perfection, enforcement, interpretation and foreclosure of the deed
of trust lien and security agreement covering the real property described on
Exhibit A hereto (the "Real Property") and fixtures thereon, the appointment
and actions of a receiver and related provisions regarding enforcement of liens
and security agreements relating to the Real Property and fixtures thereon,
which provisions of this Indenture shall be governed by, enforced in accordance
with and interpreted according to Arizona law (excluding its choice of law
provisions), and except to the extent that the laws of the United States of
America (hereinafter "Federal Law") require the application of Federal Law (in
which limited case(s) Federal Law shall apply to those issues or matters as to
which Federal Law is required to apply), this Indenture and the Lessor Notes
shall be in all other respects governed by and construed in accordance with the
laws of the State of New York, including all matters of construction, validity
and

                                       76
<PAGE>
performance (without giving effect to the conflicts of laws provisions
thereof, other than New York General Obligation Law Section 5-1401), except to
the extent mandatory choice of law rules require the application of laws of
another jurisdiction. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness

                                       77
<PAGE>
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder

                                       78
<PAGE>
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.   Fixture Financing Statement. This Indenture also is
intended to serve as a fixture filing financing statement and as a financing
statement with respect to goods or items, or other personal property that is or
will be attached to the Real Property, as permitted under the Arizona Uniform
Commercial Code and the Owner Lessor hereby authorizes this Indenture to so
serve and to be filed and/or recorded as such. In addition, a photographic,
electronic or other copy of this Indenture and/or any financing statement
related hereto shall be sufficient for filing and/or recording as a financing
statement. In connection therewith, the following information is provided:

     (a)   Name and address of Debtor:

           South Point OL-1, LLC
           c/o Wells Fargo Bank Northwest, National Association
           MAC U1254-031
           79 South Main Street
           Salt Lake City, UT 84111
           Telephone: (801) 246-5630
           Facsimile: (801) 246-5053
           Attention:  Corporate Trust Services

     (b)   Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

           State Street Bank and Trust Company of Connecticut,
           National Association,
           as Indenture Trustee

                                       79
<PAGE>
           225 Asylum Street, Goodwin Square
           Hartford, CT 06103
           Telephone: (860) 244-1822
           Facsimile:  (860) 244-1889
           Attention:  Corporate Trust Department

     (c)   The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)   Recording: This Indenture is to be recorded and/or filed in the
official real estate or other records of the County of Mohave, State of
Arizona, and in the records of the Bureau of Indian Affairs in Albuquerque, New
Mexico.

                                       80
<PAGE>
     (e)   Type of Filing: This is a commercial filing and NOT a consumer
filing under the UCC as enacted and in effect in the State of Arizona.

              (Remainder of Page Intentionally Left Blank)

                                       81
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                    SOUTH POINT OL-1, LLC, as Owner Lessor/Trustor

                    By:   Wells Fargo Bank Northwest, National Association,
                          not in its individual capacity but solely as the
                          Lessor Manager

                    By: ________________________________________________________
                            Name:
                            Title:

                    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                    NATIONAL ASSOCIATION, as Indenture Trustee and Account Bank

                    By: ________________________________________________________
                            Name:
                            Title:
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by _________________________, the _______________________of Wells
Fargo Bank Northwest, National Association, not in its individual capacity but
solely as the Lessor Manager of South Point OL-1, LLC, a Delaware limited
liability company, as the Owner Lessor/Trustor (the "Owner Lessor"), to be the
free act and deed on behalf of the national banking association as the Lessor
Manager of the Owner Lessor under the LLC Agreement dated as of __________,
2001.

                                Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by _________________________, the _______________________of State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, to be the free act and deed on behalf of the corporation.

                                Notary Public

My Commission Expires
<PAGE>
                                                                      EXHIBIT A
                                                             TO LEASE INDENTURE

                             DESCRIPTION OF FACILITY SITE

The East half (E1/2) of Section 8, Township 17 North, Range 21 West of the Gila
and Salt River Base and Meridian, Mohave County, Arizona.

Reserving therefrom, all mineral rights on, under or within said land, as
reserved by the Fort Mojave Indian Tribe.
<PAGE>
                                                                      EXHIBIT B
                                                             TO LEASE INDENTURE

                  FORM OF SOUTH POINT LESSOR NOTE SERIES [A][B]

                              SOUTH POINT OL-1, LLC
                NONRECOURSE PROMISSORY NOTE (SOUTH POINT) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012][2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                 Issued at: New York, New York
                                                  Issue Date: October __, 2001

$[             ]

     SOUTH POINT OL-1, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019], as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set forth on Schedule I multiplied by the percentage
set forth on Schedule I under the column

                                       B-1-1
<PAGE>
headed "Percentage of Principal Amount Payable" for such date unless the
Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                       B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.
     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                       B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be

                                       B-1-4
<PAGE>
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                       B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    SOUTH POINT OL-1, LLC
                                    a Delaware limited liability company,

                                    By:  Wells Fargo Bank Northwest, National
                                         Association, not in its individual
                                         capacity but solely as the Lessor
                                         Manager

                                    By:  _______________________________________
                                         Name:
                                         Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                       STATE STREET BANK AND TRUST
                                       COMPANY OF CONNECTICUT,
                                       NATIONAL ASSOCIATION,
                                       not in its individual capacity, but
                                       solely as the Indenture Trustee

                                       _________________________________________
                                       Name:
                                       Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________   ____________________________________________
                         (Signature of Transferor)

                         NOTE: The signature to this assignment must
                         correspond with the name as written upon the
                         face of the within-mentioned instrument in
                         every particular, without alteration or any
                         change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         PRINCIPAL PORTION: $43,000,000

<TABLE>
<CAPTION>
                                                                 Percentage of Principal
                                                                 -----------------------
Regular Distribution Date                                                 Amount Payable
-------------------------                                                 --------------
<S>                                                              <C>
May 30, 2002..................................................              22.79069767%
November 30, 2002.............................................               5.40697674%
May 30, 2003..................................................               9.36046512%
November 30, 2003.............................................               9.76744186%
May 30, 2004..................................................               9.06976744%
November 30, 2004.............................................               0.00000000%
May 30, 2005..................................................               0.00000000%
November 30, 2005.............................................               0.00000000%
May 30, 2006..................................................               0.00000000%
November 30, 2006.............................................               0.00000000%
May 30, 2007..................................................               0.00000000%
November 30, 2007.............................................               0.00000000%
May 30, 2008..................................................               0.00000000%
November 30, 2008.............................................               0.00000000%
May 30, 2009..................................................               0.00000000%
November 30, 2009.............................................               0.00000000%
May 30, 2010..................................................               0.00000000%
November 30, 2010.............................................               0.00000000%
May 30, 2011..................................................               0.00000000%
November 30, 2011.............................................              33.60465117%
                                                                            ------------

Total.........................................................             100.00000000%
                                                                           =============
</TABLE>
<PAGE>
                           Series B Lessor Notes.

                      PRINCIPAL PORTION:  $12,125,000

<TABLE>
<CAPTION>
                                                                         Percentage of Initial
                                                                         ---------------------
Regular Distribution Date                                                     Principal Amount
-------------------------                                                     ----------------
<S>                                                                      <C>
May 30, 2002..................................................                     0.00000000%
November 30, 2002.............................................                     0.00000000%
May 30, 2003..................................................                     0.00000000%
November 30, 2003.............................................                     0.00000000%
May 30, 2004..................................................                     0.00000000%
November 30, 2004.............................................                     0.00000000%
May 30, 2005..................................................                     0.00000000%
November 30, 2005.............................................                     0.00000000%
May 30, 2006..................................................                     0.00000000%
November 30, 2006.............................................                     0.00000000%
May 30, 2007..................................................                     0.00000000%
November 30, 2007.............................................                     0.00000000%
May 30, 2008..................................................                     0.00000000%
November 30, 2008.............................................                     0.00000000%
May 30, 2009..................................................                     0.00000000%
November 30, 2009.............................................                     0.00000000%
May 30, 2010..................................................                     0.00000000%
November 30, 2010.............................................                     0.00000000%
May 30, 2011..................................................                     0.00000000%
November 30, 2011.............................................                     0.00000000%
May 30, 2012..................................................                     0.00000000%
November 30, 2012.............................................                     0.00000000%
May 30, 2013..................................................                     0.00000000%
November 30, 2013.............................................                     0.00000000%
May 30, 2014..................................................                     0.00000000%
November 30, 2014.............................................                     0.00000000%
May 30, 2015..................................................                     0.00000000%
November 30, 2015.............................................                     0.00000000%
May 30, 2016..................................................                     0.00000000%
November 30, 2016.............................................                     0.00000000%
May 30, 2017..................................................                     0.00000000%
November 30, 2017.............................................                     0.00000000%
May 30, 2018..................................................                     0.00000000%
November 30, 2018.............................................                     0.00000000%
May 30, 2019..................................................                   100.00000000%
                                                                                 -------------

Total.........................................................                   100.00000000%
                                                                                 =============
</TABLE>

                                                                      EXHIBIT C

                                      B-1-10
<PAGE>
                                                             TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                        ______________________________,
                                        not in its individual capacity but
                                        solely as the Indenture Trustee

                                        By:  _________________________
                                             Name:
                                             Title:

                                       C-2
<PAGE>
                                                                      EXHIBIT D
                                                             TO LEASE INDENTURE

                         DESCRIPTION OF THE FACILITY

     That certain approximately 530 megawatt net nameplate capacity gas-fired
combined cycle electric generating facility (known also as the "South Point
Facility") together with all structures or improvements, all alterations
thereto or replacements thereof, and all other fixtures, attachments,
appliances, equipment, machinery and other articles (including, but not limited
to, the property set forth below (the "Included Property")), in each case
located on the land, or on the easements appurtenant to the land, consisting of
320 acres of land leased from the Fort Mojave Indian Tribe near Mojave Valley,
Arizona approximately 15 miles south of Bullhead City, Arizona and 5 miles east
of Needles, California, described more particularly on Exhibit A.

     Included Property

     1.   Two Combustion Turbines & Generators - Siemens Westinghouse Turbines
          (Serial Nos. 37A8063, 37A8065), Generators (Serial Nos. 94P3215,
          94P0060).

     2.   Two Heat Recovery Steam Generators - Vogt-Nem Boiler (Serial Nos.
          17382 1A-1D and 17382 2A-2D).

     3.   One Steam Turbine & Generator- Siemens Westinghouse Steam Turbine
          (Serial No. 24A3191 ) / Generator (Serial Nos. 1S94P0086 ).

     4.   One Condenser - Alstrom Condenser (Order No. 99-5080).

     5.   Water Treatment Facility - Reverse Osmosis, Brine Concentrator, Mixed
          Bed Exchangers, Multi-media Filters and associated tanks.

     6.   Eleven cell Marley Cooling Tower- including Circulating Water Pumps.

     7.   Three Generator Step Up Transformers, all electrical switchyard
          equipment and other interconnection equipment associated with the
          South Point Facility.

                                       D-1
<PAGE>
                                                                     SCHEDULE I
                                                             TO LEASE INDENTURE

                             SERIES A LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $43,000,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                   Percentage of Principal
                                                                   -----------------------
Regular Distribution Date                                                   Amount Payable
-------------------------                                                   --------------
<S>                                                                <C>
May 30, 2002..................................................                22.79069767%
November 30, 2002.............................................                15.40697674%
May 30, 2003..................................................                 9.36046512%
November 30, 2003.............................................                 9.76744186%
May 30, 2004..................................................                 9.06976744%
November 30, 2004.............................................                 0.00000000%
May 30, 2005..................................................                 0.00000000%
November 30, 2005.............................................                 0.00000000%
May 30, 2006..................................................                 0.00000000%
November 30, 2006.............................................                 0.00000000%
May 30, 2007..................................................                 0.00000000%
November 30, 2007.............................................                 0.00000000%
May 30, 2008..................................................                 0.00000000%
November 30, 2008.............................................                 0.00000000%
May 30, 2009..................................................                 0.00000000%
November 30, 2009.............................................                 0.00000000%
May 30, 2010..................................................                 0.00000000%
November 30, 2010.............................................                 0.00000000%
May 30, 2011..................................................                 0.00000000%
November 30, 2011.............................................                33.60465117%
                                                                              ------------

Total.........................................................               100.00000000%
                                                                             =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                             SERIES B LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $12,125,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                       Percentage of Initial
                                                                       ---------------------
Regular Distribution Date                                                   Principal Amount
-------------------------                                                   ----------------
<S>                                                                    <C>
May 30, 2002..................................................                   0.00000000%
November 30, 2002.............................................                   0.00000000%
May 30, 2003..................................................                   0.00000000%
November 30, 2003.............................................                   0.00000000%
May 30, 2004..................................................                   0.00000000%
November 30, 2004.............................................                   0.00000000%
May 30, 2005..................................................                   0.00000000%
November 30, 2005.............................................                   0.00000000%
May 30, 2006..................................................                   0.00000000%
November 30, 2006.............................................                   0.00000000%
May 30, 2007..................................................                   0.00000000%
November 30, 2007.............................................                   0.00000000%
May 30, 2008..................................................                   0.00000000%
November 30, 2008.............................................                   0.00000000%
May 30, 2009..................................................                   0.00000000%
November 30, 2009.............................................                   0.00000000%
May 30, 2010..................................................                   0.00000000%
November 30, 2010.............................................                   0.00000000%
May 30, 2011..................................................                   0.00000000%
November 30, 2011.............................................                   0.00000000%
May 30, 2012..................................................                   0.00000000%
November 30, 2012.............................................                   0.00000000%
May 30, 2013..................................................                   0.00000000%
November 30, 2013.............................................                   0.00000000%
May 30, 2014..................................................                   0.00000000%
November 30, 2014.............................................                   0.00000000%
May 30, 2015..................................................                   0.00000000%
November 30, 2015.............................................                   0.00000000%
May 30, 2016..................................................                   0.00000000%
November 30, 2016.............................................                   0.00000000%
May 30, 2017..................................................                   0.00000000%
November 30, 2017.............................................                   0.00000000%
May 30, 2018..................................................                   0.00000000%
November 30, 2018.............................................                   0.00000000%
May 30, 2019..................................................                 100.00000000%
                                                                               -------------

Total.........................................................                 100.00000000%
                                                                               =============
</TABLE>

                                  SCHEDULE 1-2


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.16
<SEQUENCE>19
<FILENAME>f80168ex4-22_16.txt
<DESCRIPTION>EXHIBIT 4.22.16
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.16


RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

================================================================================

                      INDENTURE OF TRUST, DEED OF TRUST,
                       ASSIGNMENT OF RENTS AND LEASES,
                 SECURITY AGREEMENT AND FINANCING STATEMENT

                         Dated as of October 18, 2001

                                  between

                             SOUTH POINT OL-2, LLC

                                    and

                          STATE STREET BANK AND TRUST
                   COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                       as Indenture Trustee and Account Bank

                       ______________________________________

                               SOUTH POINT FACILITY

================================================================================
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
<S>                                                                                         <C>
SECTION 1.  DEFINITIONS..........................................................             10

SECTION 2.  THE LESSOR NOTES.....................................................             11
    Section 2.1.   Limitation on Lessor Notes....................................             11
    Section 2.2.   Initial Lessor Notes..........................................             11
    Section 2.3.   Execution and Authentication of Lessor Notes..................             12
    Section 2.4.   Issuance and Terms of the Initial Lessor Notes................             12
    Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
                   of the Owner Lessor, the Owner Participant or the Indenture
                   Trustee.......................................................             13
    Section 2.6.   Method of Payment.............................................             14
    Section 2.7.   Application of Payments.......................................             15
    Section 2.8.   Registration, Transfer and Exchange of Lessor Notes...........             16
    Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.............             17
    Section 2.10.  Redemptions; Assumption.......................................             17
    Section 2.11.  Payment of Expenses on Transfer...............................             22
    Section 2.12.  Additional Lessor Notes.......................................             23
    Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                   Laws; Legend..................................................             26
    Section 2.14.  Security for and Parity of Lessor Notes.......................             26
    Section 2.15.  Acceptance of the Indenture Trustee...........................             26

SECTION 3.  RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
                INDENTURE ESTATE.................................................             27
    Section 3.1.   Distribution of Periodic Rent.................................             27
    Section 3.2.   Payments Following Event of Loss or Other Early Termination...             29
    Section 3.3.   Payments After Lease Indenture Event of Default...............             30
    Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..             31
    Section 3.5.   Application of Certain Other Payments.........................             31
    Section 3.6.   Other Payments................................................             32
    Section 3.7.   Excepted Payments.............................................             32
    Section 3.8.   Distributions to the Owner Lessor.............................             33
    Section 3.9.   Payments Under Assigned Documents.............................             33
    Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee.....             33
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                         <C>
SECTION 4.  COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE
            TRUSTEE..............................................................             37
    Section 4.1.   Covenants of Owner Lessor.....................................             37
    Section 4.2.   Lease Indenture Events of Default.............................             38
    Section 4.3.   Remedies of the Indenture Trustee.............................             40
    Section 4.4.   Right to Cure Certain Lease Events of Default.................             43
    Section 4.5.   Rescission of Acceleration....................................             46
    Section 4.6.   Return of Indenture Estate, Etc...............................             47
    Section 4.7.   Power of Sale and Other Remedies..............................             48
    Section 4.8.   Appointment of Receiver.......................................             50
    Section 4.9.   Remedies Cumulative...........................................             51
    Section 4.10.  Waiver of Various Rights by the Owner Lessor..................             51
    Section 4.11.  Discontinuance of Proceedings.................................             52
    Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
                   the Facility Lease............................................             52
    Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc......             53
    Section 4.14.  Further Assurances............................................             53
    Section 4.15.  Waiver of Past Defaults.......................................             53

SECTION 5.  DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF
            OWNER LESSOR.........................................................             54
    Section 5.1.   Notice of Action Upon Lease Indenture Event of Default........             54
    Section 5.2.   Actions Upon Instructions Generally...........................             54
    Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                   Facility Lease................................................             55
    Section 5.4.   Compensation of the Indenture Trustee; Indemnification........             55
    Section 5.5.   No Duties Except as Specified; No Action Except Under
                   Facility Lease, Indenture or Instructions.....................             55
    Section 5.6.   Certain Rights of the Owner Lessor............................             56
    Section 5.7.   Restrictions on Dealing with Indenture Estate.................             59
    Section 5.8.   Filing of Financing Statements and Continuation Statements....             59

SECTION 6.  INDENTURE TRUSTEE AND OWNER LESSOR...................................             60
    Section 6.1.   Acceptance of Trusts and Duties...............................             60
    Section 6.2.   Absence of Certain Duties.....................................             62
    Section 6.3.   Representations and Warranties................................             63
    Section 6.4.   No Segregation of Moneys; No Interest.........................             63
    Section 6.5.   Reliance; Agents; Advice of Experts...........................             64
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                         <C>
SECTION 7. SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES....................             65
    Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
                   of Successor..................................................             65
    Section 7.2.   Appointment of Additional and Separate Trustees...............             67

SECTION 8.  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS.....             69
    Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                   Conditions and Limitations....................................             69
    Section 8.2.   Supplemental Indentures and other Amendments Without Consent..             70
    Section 8.3.   Conditions to Action by the Indenture Trustee.................             72

SECTION 9.  MISCELLANEOUS........................................................             72
    Section 9.1.   Surrender, Defeasance and Release.............................             72
    Section 9.2.   Conveyances Pursuant to the Site Lease........................             73
    Section 9.3.   Appointment of the Indenture Trustee as Attorney;
                   Further Assurances............................................             73
    Section 9.4.   Indenture for Benefit of Certain Persons Only.................             73
    Section 9.5.   Notices; Furnishing Documents, etc............................             74
    Section 9.6.   Severability..................................................             76
    Section 9.7.   Limitation of Liability.......................................             76
    Section 9.8.   Written Changes Only..........................................             76
    Section 9.9.   Counterparts..................................................             76
    Section 9.10.  Successors and Permitted Assigns..............................             77
    Section 9.11.  Headings and Table of Contents................................             77
    Section 9.12.  Governing Law.................................................             77
    Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..             77
    Section 9.14.  Withholding Taxes: Information Reporting......................             78
    Section 9.15.  Fixture Financing Statement...................................             80
</TABLE>

                                      iii
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS

<S>                       <C>
Exhibit A                 Description of Facility Site
Exhibit B                 Form of Lessor Note
Exhibit C                 Form of Certificate of Authentication
Exhibit D                 Description of the Facility
</TABLE>

APPENDIX A    Definitions

                                       iv
<PAGE>
INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY
AGREEMENT AND FINANCING STATEMENT

     This INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FINANCING STATEMENT (as amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof,
this "Indenture"), dated as of October 18, 2001, between SOUTH POINT OL-2, LLC,
a Delaware limited liability company created for the benefit of the Owner
Participant referred to below, as trustor (as such term is defined in Arizona
Revised Statutes, Section 33-801, et seq.) (the "Owner Lessor"), having an
address as set forth in Section 9.5 of this Indenture, STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as beneficiary and trustee
(as such term is defined in Arizona Revised Statutes, Section 33-801, et seq.)
on behalf of the Noteholders (the "Indenture Trustee") and as the Account Bank,
having an address as set forth in Section 9.5 of this Indenture.

                                WITNESSETH:

     WHEREAS, Calpine Construction Finance Company ("CCFC") has assigned the
Undivided Interest and the Ground Interest to the Owner Lessor pursuant to the
certain Assignment Agreement, a memorandum of which shall be recorded with this
Indenture in the appropriate registry of land records described in Exhibit A
attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with
South Point Energy Center, LLC (the "Facility Lessee") pursuant to which the
Facility Lessee has subleased from the Owner Lessor for a term of years the
Owner Lessor's Undivided Interest in the Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Facility Site Lease"),
with the Facility Lessee pursuant to which the Facility Lessee has subleased
the Ground Interest from the Owner Lessor for a term of years;

                                       1
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assumed from CCFC and (ii) grant to the Indenture Trustee the security
interests herein provided;

     WHEREAS, this Indenture is regarded as and shall constitute a deed of
trust under the laws of the State of Arizona, as an absolute and current
assignment of rents, leases, income, issues, royalties and profits pursuant to
the laws of the State of Arizona including, among other provisions, Arizona
Revised Statutes ("A.R.S.") Section(s) ("[sec]") 33-702.B, 33-807(C) and
12-241, et seq. as a security agreement and grant by the Owner Lessor, as
debtor, to and in favor of the Indenture Trustee, as the Secured Party, of a
security interest in the Indenture Estate (as such term is hereinafter defined)
under the Uniform Commercial Code as enacted and in effect from time to time in
the State of Arizona and under the Uniform Commercial Code as enacted and in
effect from time to time in the States of New York and Delaware, and as a
fixture filing and a financing statement under the laws of the Uniform
Commercial Code as enacted and in effect in the State of Arizona from time to
time;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time, (b) the conveyance and assignment to
the Indenture Trustee on the Closing Date of the Undivided Interests conveyed
to the Owner Lessor and the Owner Lessor's right, title and interest in and
under the Operative Documents executed in connection therewith and all payments
and other amounts received hereunder or thereunder in accordance herewith
(excluding Excepted Payments) and (c) security for the payment and performance
of the obligations described or referred to in this Indenture;

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

                                       2
<PAGE>
     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and interest on the Lessor Notes and of all other
amounts owing with respect to all Lessor Notes from time to time outstanding
hereunder, and the prompt payment when and as due of any and all other amounts
from time to time owing in respect of the Secured Indebtedness and (ii) the
performance and observance by the Owner Lessor for the benefit of the holders
of the Lessor Notes and the Indenture Trustee of all other obligations,
agreements, and covenants of the Owner Lessor set forth hereinafter and in the
Lessor Notes, the Operative Documents and the other documents, certificates and
agreements delivered in connection therewith:

                              GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns, transfers,
pledges, bargains, sells and confirms unto the Indenture Trustee as trustee
under ARS [sec] 33-801, et seq., in trust, with power of sale, for the benefit
of the holders of the Lessor Notes from time to time, a first priority security
interest in and deed of trust lien on all estate, right, title and interest of
the Owner Lessor in, to and under the following described real and personal
property, rights, interests and privileges, whether now held or hereafter
acquired and all easements, rights of way, access agreements, leasehold
interests, leasehold and other estates, ground leases, hereditaments and other
rights now or hereafter existing, covering all or part thereof, or appurtenant
or attaching thereto, together with all structures, buildings and other
improvements now or hereafter upon, constructed upon or located in whole or in
part upon the same; together with all fixtures, machinery, and all articles and
items of property now or hereafter attached to, or used or adapted for use in
the operation, maintenance or use thereof; together with all rents, issues,
royalties, income and profits thereof under present and future leases,
occupancy and use agreements (which collectively, including all property
hereafter specifically subjected to the security interest created by this
Indenture by any supplement hereto, exclusive of Excepted Payments) are
included within, and are hereafter referred to as, the "Indenture Estate"):

     (1)  the Undivided Interest, the Owner Lessor's interest in any Components;
the Owner Lessor's interest in any Improvements; the Ground Interest; the
Facility Lease and all payments of any kind by the Facility Lessee thereunder
(including Rent); any rights of the Owner Lessor as assignee of the Facility
Lessee under the Facility Lease; the Facility Site Lease and all payments of
any kind by the Facility Lessee thereunder; the Assignment Agreement (and all
rights with respect to the Ground Lease conveyed

                                       3
<PAGE>
thereby); the Owner Lessor's interest in all tangible property located on or at
or attached to the Facility Site as to which an interest in such tangible
property arises under applicable real estate law ("fixtures"); the Calpine
Guaranty, the South Point Ground Lease, the Ownership and Operation Agreement
and all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or at law or in equity or
otherwise, arising out of any Lease Default or Lease Event of Default and (y)
any right to restitution from the Facility Lessee, any sublessee or any other
person in respect of any determination of invalidity of any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof

                                       4
<PAGE>
or to accept surrender or redelivery of the Facility or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner Lessor,
whether acting under any sublease of the Facility or any assignment thereof or
by statute or at law or in equity, or otherwise, arising out of any default
under such sublease or any assignment thereof, and (iii) any right to
restitution from the Facility Lessee, the applicable sublessee or any guarantor
of such sublessee in respect of any determination of invalidity of any sublease
of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or any
part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the extent of the Owner Lessor's interest therein) of all
insurance maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests therein
now held or hereafter acquired by the Owner Lessor pursuant to the terms of any
Assigned Document, wherever located; and

     (6)  all of Owner Lessor's right, title and interest conveyed to the
Indenture Trustee in and relating to the following:

          (i)  The real property that is described in and made subject to this
     Indenture (the"Real Property") the fee simple owner of which is the
     United States of America, in trust for the Fort Mojave Indian Tribe
     ("Owner")  , as evidenced by patent of record in Mohave County, Arizona
     which is on file with the United States Department of Interior, Bureau of
     Indian Affairs, Albuquerque, New Mexico Regional Office (the "BIA"); and

          (ii)  The leasehold estate interest in the Real Property which was
     created pursuant to the terms and conditions of that certain Amended and
     Restated Ground Lease Agreement, being BIA Lease No. B-1778-FM, approved
     as of August 19, 1999, by and between Owner and Calpine South Point, LLC,
     a Delaware limited liability company, as Lessee, and Fort Mojave Indian
     Tribe, a federally recognized Indian Tribe, as Lessor, a memorandum of
     which Ground Lease, as amended, was recorded on October 29, 1999 in Book
     3399 of Official Records, page 822, Records of Mohave County, Arizona and
     filed in the Land Titles and Records Office as document number 604-050-99
     and certificate of merger filed in the Land Titles and Records Office as
     document number 604-056-99 (collectively the "Ground Lease").  The
     Lessee=s interests in and to the Ground Lease have been duly, properly and
     effectively assigned to the Owner Lessor, pursuant to that certain
     Assignment Agreement, dated as of the date

                                       5
<PAGE>
     hereof, which shall have been recorded in the records of Mohave County,
     Arizona and filed with the BIA; and

     (7)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns, for the benefit of the Indenture Trustee and for the benefit
and security of the Noteholders from time to time;

     TO HAVE AND TO HOLD to said Indenture Trustee, as Trustee under A.R.S.
Section 33-801, et seq., its successors, heirs or assigns, the Indenture Estate
and all of the Owner Lessor's interests therein, including, without limitation,
the leasehold interest pursuant to the South Point Ground Lease;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys and claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid

                                       6
<PAGE>
to or deposited with the Owner Lessor pursuant to the Facility Lease (other
than Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided
in this Indenture. Further, the Owner Lessor agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Indenture Estate, whether or
not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and
all properties referred to in this Granting Clause which are hereafter acquired
by the Owner Lessor, shall, without further conveyance, assignment or act by
the Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to and does hereby constitute and create a
security agreement as required under the Uniform Commercial Codes from time to
time enacted and effective under the laws of the States of New York, Delaware
and Arizona. Pursuant to such security agreement, Owner Lessor does hereby
grant to Indenture Trustee a security interest in all that portion of the
Indenture Estate that is now or shall or may be or become personal property
and/or fixtures and in or with respect to which a security interest may be
granted (collectively the "Personal Property") pursuant to the Uniform
Commercial Code as enacted and effective from time to time in all and each of
the States of New York, Delaware and Arizona. Such security interest shall be
and is a first and prior security interest in all such Personal Property and
Indenture Trustee, its successors and assigns, shall have and enjoy all rights,
remedies and benefits available to a secured party under the said Uniform
Commercial Code as enacted and effective from time to time in the
aforementioned States, with respect to the Indenture Estate.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the

                                       7
<PAGE>
Owner Lessor shall remain liable under the Assigned Documents to perform all of
the obligations assumed by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and the Indenture Trustee and the
Noteholders shall have no obligation or liability under any Assigned Document
by reason of or arising out of the assignment hereunder, nor shall the
Indenture Trustee or the Noteholders be required or obligated in any manner,
except as herein expressly provided, to perform or fulfill any obligation of
the Owner Lessor under or pursuant to any such Assigned Document or, except as
herein expressly provided, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or to present or file
any claim, or to take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged, granted or permitted a lien, mortgage or deed of trust or
security interest in, to or under, and hereby covenants that, so long as this
Indenture shall remain in effect and the Lien hereof shall not have been
released pursuant to Section 9.1 hereof, it will not assign, pledge or grant a
lien or security interest in any of its estate, right, title or interest in, to
or under, the Indenture Estate to anyone other than the Indenture Trustee for
the benefit of the Noteholders. The Owner Lessor hereby further covenants that
with respect to its estate, right, title and interest in, to or under the
Indenture Estate, it will not, except as provided in this Indenture and except
as to Excepted Payments, (i) accept any payment from the Facility Lessee or any
sublessee or enter into any agreement amending, modifying or supplementing any
of the Assigned Documents, execute any waiver or modification of, or consent
under (other than pursuant to Section 4.2 of the South Point Ground Lease or
Sections 5.20 or 13.3 of the Participation Agreement (subject to the conditions
set forth in Sections 5.20 or 13.3, as applicable, of the Participation
Agreement)), the terms of any of the Assigned Documents or revoke or terminate
any of the Assigned Documents, (ii) settle or compromise any claim arising
under any of the Assigned Documents, or (iii) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any of the Assigned Documents to arbitration thereunder (except with
respect to any action pursuant to Section 4.2 of the South Point Ground Lease
or Sections 5.20 or 13.3 of the Participation Agreement (subject to the
conditions set forth in Sections 5.20 or 13.3, as applicable, of the
Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created

                                       8
<PAGE>
by any such Assigned Document or the assignment (subject to the previous)
paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes from time to time
outstanding and to protect the security of this Indenture; and the Indenture
Trustee agrees to accept the trusts and duties hereinafter set forth, as
follows:

     THIS INDENTURE AND CONVEYANCE IS MADE IN TRUST, however, with POWER OF
SALE for the benefit of the Indenture Trustee to secure the payment of the
Secured Indebtedness.

     This Indenture and conveyance is also made in trust to further secure:

     (a)  Payment and performance of the obligations, covenants and agreements
contained in the Lessor Notes and other documents and/or instruments referred
to, defined or described in the definition of Secured Indebtedness and any and
all modifications, extensions or renewals of any such documents or instruments;

     (b)  Payment and performance of the obligations, covenants and agreements
contained in that certain Participation Agreement, the terms and conditions of
which are incorporated herein by this reference; and

     (c)  Payment of all other sums becoming due or payable under, and the
performance of all other obligations, covenants and agreements contained in (i)
the Lessor Notes; (ii) any Additional Lessor Notes; (iii) any and all
Assignment Documents and Assumption Documents; and (iv) any other instrument
given as security for the Secured Indebtedness or entered into with respect to
this Indenture, including without limitation, the Participation Agreement and
all other documents and instruments (all the foregoing documents and
instruments being collectively referred to herein as the "Collateral
Documents").

                               SECTION 1.
                              DEFINITIONS

                                       9
<PAGE>
     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement").  The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 530 MW nameplate capacity gas-fired combined cycle
merchant power plant located near Bullhead, Arizona and more fully described in
Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i)  The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Lessor Notes, and principal of such Lessor Notes being due and
     payable as provided in such Lessor Notes;

          (ii)  Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with interest thereon at the rate provided in each
     Additional

                                       10
<PAGE>
     Lessor Note and the Make-Whole Amount thereon (if any) and together with
     any and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Additional Lessor Notes, and principal of
     such Additional Lessor Notes being due and payable as provided in each
     such Additional Lessor Note.

          (iii)  Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to Section
     4.13 hereof (whether or not the Owner Lessor remains the owner of the
     Indenture Estate at the time of such advances); and

          (iv)  Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

      "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                               SECTION 2.
                            THE LESSOR NOTES

     Section 2.1.  Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2.  The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

     Section 2.2.  Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes"

                                       11
<PAGE>
or, individually, an "Initial Lessor Note".

     Section 2.3.  Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000.  Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor
signed by the Lessor Manager. The Indenture Trustee shall authenticate and
deliver Additional Lessor Notes, upon a written order of the Owner Lessor
executed by the Lessor Manager and satisfaction of the conditions specified in
Section 2.12.  Such order shall specify the principal amount of the Additional
Lessor Notes to be authenticated and the date on which the original issue of
Additional Lessor Notes is to be authenticated.

     Section 2.4.  Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of

                                       12
<PAGE>
issuance thereof (computed on the basis of a 360-day year of twelve 30-day
months) until paid in full at the rate set forth in such Initial Lessor Note
and Schedule I hereto. Each Initial Lessor Note shall accrue additional
interest under the circumstances and at the rate per annum set forth in the
third paragraph of each Initial Lessor Note. Interest on each Initial Lessor
Note shall be due and payable in arrears semi-annually commencing on May 30,
2002, and on each May 30 and November 30 thereafter until paid in full. If any
day on which principal, Make-Whole Amount, if any, or interest on the Initial
Lessor Notes are payable is not a Business Day, payment thereof shall be made
on the next succeeding Business Day with the same effect as if made on the date
on which such payment was due.

     (c)  Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.  Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor Notes or
under this Indenture. The Indenture Trustee and each Noteholder, by its
acceptance thereof, agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the
Indenture Trustee or such Noteholder, as the case may be, as herein provided
and that, except as expressly provided in this Indenture, the Participation
Agreement or any other Operative Document, none of the Owner Participant, the
Owner Lessor, the Trust Company, the Lease Indenture Company, nor the Indenture
Trustee, nor any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Indenture Trustee for any amounts payable hereunder, under
such Lessor Note or for any performance to be rendered under any Assigned
Document or for any liability under

                                       13
<PAGE>
any Assigned Document. Without prejudice to the foregoing, the Owner Lessor
will duly and punctually pay or cause to be paid the principal of, Make-Whole
Amount, if any, and interest on all Lessor Notes according to their terms and
the terms of this Indenture. Nothing contained in this Section 2.5 limiting
the liability of the Owner Lessor shall derogate from the right of the
Indenture Trustee and the Noteholders to proceed against the Indenture Estate
and the Calpine Guaranty to secure and enforce all payments and obligations due
hereunder and under the Assigned Documents and the Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.  Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent").  The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor
shall require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Lessor Notes and shall notify the
Indenture Trustee of any default by the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to

                                       14
<PAGE>
an account maintained by such Noteholder with the Indenture Trustee, (ii) by
making such payment to such Noteholder in immediately available funds at the
Indenture Trustee Office, or (iii) in the case of the Initial Lessor Notes and
in the case of Additional Lessor Notes, if such Noteholder is the Pass Through
Trustee, or a bank or other institutional investor, by transferring such amount
in immediately available funds for the account of such Noteholder to the
banking institution having bank wire transfer facilities as shall be specified
by such Noteholder, such transfer to be subject to telephonic confirmation of
payment. Any payment made under any of the foregoing methods shall be made
free and clear of and without reduction for or on account of all wire and like
charges and without any presentment or surrender of such Lessor Note, unless
otherwise specified by the terms of the Lessor Note, except that, in the case
of the final payment in respect of any Lessor Note, such Lessor Note shall be
surrendered to the Indenture Trustee for cancellation after such payment. All
payments in respect of the Lessor Notes shall be made (1) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon New York City time, on a
Business Day, or (2) on the next succeeding Business Day if received after such
time or on any day other than a Business Day. One or more of the foregoing
methods of payment may be specified in a Lessor Note. Prior to due presentment
for registration of transfer of any Lessor Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name any Lessor Note
is registered on the Note Register as the absolute owner and holder of such
Lessor Note for the purpose of receiving payment of all amounts payable with
respect to such Lessor Note and for all other purposes, and neither the Owner
Lessor nor the Indenture Trustee shall be affected by any notice to the
contrary. All payments made on any Lessor Note in accordance with the
provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     Section 2.7.  Application of Payments. Each payment on any outstanding
Lessor Note shall be applied as required under Arizona law; and thereafter in
the following order: first, to the payment of accrued interest (including
interest on overdue principal and the Make-Whole Amount, if any, and, to the
extent permitted by Applicable Law, overdue interest) on such Lessor Note to
the date of such payment, second, to the payment of the principal amount of,
and the Make-Whole Amount, if any, on such Lessor Note then due (including any
overdue installments of principal) thereunder and third, to the extent
permitted by Section 2.10 of this Indenture, the balance, if any, remaining
thereafter, to the payment of the principal amount of, and the Make-Whole
Amount, if any, on such Lessor Note. The order of

                                       15
<PAGE>
application of payments prescribed by this Section 2.7 shall not be deemed to
supersede any provision of Section 3 hereof regarding application of funds.

     Section 2.8.  Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar").  The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner
Lessor initially appoints the Indenture Trustee as Registrar in connection with
the Lessor Notes. The Indenture Trustee shall maintain at the Indenture
Trustee Office a register in which it will provide for the registration,
registration of transfer and exchange of Lessor Notes (such register being
referred to herein as the "Note Register").  If any Lessor Note is surrendered
at said office for registration of transfer or exchange (accompanied by a
written instrument of transfer duly executed by or on behalf of the holder
thereof, together with the amount of any applicable transfer taxes), the Owner
Lessor will execute and the Indenture Trustee will authenticate and deliver, in
the name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer
or exchange shall be valid obligations of the Owner Lessor entitled to the same
security and benefits to which the Lessor Note or Lessor Notes so transferred
or exchanged were entitled, including rights as to interest accrued but unpaid
and to accrue so that there will not be any loss or gain of interest on the
Lessor Note or Lessor Notes surrendered. Every Lessor Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Indenture Trustee duly executed by the holder thereof or
his attorney duly authorized in writing, and the Indenture Trustee may require
an opinion of counsel as to compliance of any such transfer with the Securities
Act. The Indenture Trustee shall make a notation on each new Lessor Note of
the amount of all payments of principal previously made on the old Lessor Note
or Lessor Notes with respect to which such new Lessor Note is issued and the
date on which such new Lessor Note is issued and the date to which interest on
such old Lessor Note or Lessor Notes shall have been paid. The Indenture
Trustee shall not be required to register the transfer or exchange of any
Lessor Note during the 10 days preceding the due date of any payment on such
Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have

                                       16
<PAGE>
consented to, and agreed to be bound by, the terms and conditions hereof, of
such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.  Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.  Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i)  if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clause (v) or
     (vii)  of the definition of "Event of Loss"), on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (ii)  if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (iii)  if the Facility Lease is terminated pursuant to Section 13.1

                                       17
<PAGE>
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b)  of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv)  if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old Lessor Note but indicating that the Facility Lessee is the issuer
thereof. When such assumption agreement becomes effective, the Owner Lessor
shall be released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee. All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the

                                       18
<PAGE>
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)  the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to
     the effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption
     Document and the assumptions contemplated thereby do not contravene (x)
     the Organic Documents of the Facility Lessee, (y) any provision of any
     security issued by the Facility Lessee or of any agreement, instrument or
     other undertaking to which the Facility Lessee is a party or by which it
     or any of its property is bound or (z) any Applicable Law, (3) no
     Governmental Approval is necessary or required in connection with any
     Assumption Document or the assumption contemplated thereby (or, if any
     such Governmental Approval is necessary or required, that the same has
     been duly obtained and is final and in full force and effect and any
     period for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired without
     any such notice or application having been made), (4) each Assumption
     Document is a legal, valid and binding obligation of the Facility Lessee,
     enforceable in accordance with its terms, (5) such assumption agreement
     and the assumption of the Lessor Notes thereunder shall not cause a Tax
     Event to occur as to any holder of any Lessor Note or any
     Certificateholder and (6) the lien of this Indenture will continue to be a
     first priority perfected lien on the Indenture Estate;

          (ii)  the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

                                       19
<PAGE>
          (iii)  Moody's and S&P shall have confirmed that such assumption will
     not result in a downgrading of the rating on the Certificates;

          (iv)  the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)  the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)  All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price upon an optional refinancing pursuant to
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)  All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other

                                       20
<PAGE>
     default under the Operative Documents.

          (iii)  The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clause (v) or
     (vii)  of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes are
otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall
be accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that no notice shall be required so long as the
Pass Through Trustee and the Indenture Trustee are the same entity. Each such
notice shall state:

          (i)  the date of redemption;

          (ii)  the redemption price;

          (iii)  the name and address of the Paying Agent;

          (iv)  that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v)  that, unless the Owner Lessor defaults in making such redemption

                                       21
<PAGE>
     payment, interest on Lessor Notes called for redemption ceases to accrue
     on and after the redemption date; and

          (vi)  the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid at
the redemption price stated in the notice, plus accrued interest to the date of
redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.  Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the
Owner Lessor or the Indenture Trustee may require from the party requesting
such new Lessor Note or Lessor Notes payment of a sum to reimburse the Owner
Lessor and the Indenture Trustee for, or to provide funds for, the payment on
an After-Tax Basis to the Owner Lessor, the Indenture Trustee and the Owner
Participant of any tax or other governmental charge in connection therewith or
any charges and expenses connected with such tax or governmental charge paid or
payable by the Owner Lessor or the Indenture Trustee.

     Section 2.12.  Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing

                                       22
<PAGE>
funds in connection with Supplemental Financing pursuant to Section 11.1 of the
Participation Agreement for the payment of all or any portion of Modifications
to the Facility pursuant to Section 8 of the Facility Lease, or (ii) redeeming
any previously issued Lessor Notes pursuant to an optional refinancing pursuant
to Section 11.2 of the Participation Agreement and providing funds for the
payment of all reasonable costs and expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

     (c)  The terms, conditions and designations of such Additional Lessor Notes
(which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)  a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in

                                       23
<PAGE>
     respect thereof);

          (ii)  an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the
     conditions in respect of the issuance of such Additional Lessor Notes
     contained in this Section 2.12 have been satisfied, (3) specifying the
     amount of the costs and expenses relating to the issuance and sale of such
     Additional Lessor Notes, (4) stating that payments pursuant to the
     Facility Lease and all supplements thereto of Periodic Rent and
     Termination Value, together with all other amounts payable pursuant to the
     terms of the Facility Lease, are calculated to be sufficient to pay when
     due all of the principal of and interest on the outstanding Lessor Notes,
     after taking into account the issuance of such Additional Lessor Notes and
     any related redemption of Lessor Notes theretofore outstanding and (5) all
     conditions to the Supplemental Financing or refinancing contained in
     Section 11.1 or ll.2 of the Participation Agreement or in any other
     provision of the Operative Documents have been satisfied;

          (iii)  with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f)  of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and
     is continuing;

          (iv)  such additional documents, certificates and opinions as shall be
     reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v)  a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address
     set forth therein, and in such principal amounts as are stated therein,
     upon payment to the Indenture Trustee, but for the account of the Owner
     Lessor, of the sum or sums specified in such request and authorization;

          (vi)  the consent of the Facility Lessee to such request and
     authorization; and

          (vii)  an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and

                                       24
<PAGE>
     enforceability of the Additional Lessor Notes and that all conditions
     hereunder to the authentication and delivery of such Additional Lessor
     Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)  This Indenture is an open-end deed of trust and mortgage which secures
existing indebtedness, "future advances", "protective advances," "authorized
advances"and "contingent obligations" as such terms are under or referred to
under applicable Arizona law. The maximum principal indebtedness secured by
this Indenture, including future advances and contingent obligations but
excluding protective advances, shall not at any time exceed the total amount of
Two Hundred Twenty Million Five Hundred Thousand Dollars ($220,500,000);
provided, however, that nothing herein contained shall limit the amount secured
by this Indenture if the Secured Indebtedness is increased by protective
advances; and provided, further, such limitation as to such future advances and
contingent obligations shall only pertain to the record priority of the amount
thereof secured hereby pursuant to applicable law and does not otherwise limit
the amount of total indebtedness of Owner Lessor secured hereby or limit the
liability of Owner Lessor to Indenture Trustee for such total indebtedness,
including future advances and contingent obligations. The future advances
secured hereby shall be made to or for the account of Owner Lessor and may be
made under the Additional Lessor Notes, or pursuant to promissory notes or
other instruments evidencing such future advances which may be hereafter
executed and delivered by Owner Lessor to Indenture Trustee. In the event that
any notice is recorded or is received by Indenture Trustee, any commitment,
agreement, or obligation to make future advances to or for the benefit of Owner
Lessor shall immediately terminate.

     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the

                                       25
<PAGE>
Owner Lessor an opinion of counsel, which opinion and which counsel shall be
reasonably satisfactory to the Indenture Trustee, the Owner Lessor and the
Facility Lessee, to the effect that such transfer will not violate the
registration provisions of the Securities Act or require qualification of this
Indenture under the Trust Indenture Act of 1939, as amended, and all Lessor
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
     NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.  Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.  Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                 SECTION 3.
                   RECEIPT, DISTRIBUTION AND APPLICATION
                      OF INCOME FROM INDENTURE ESTATE

     Section 3.1.  Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic Rent received by the Indenture Trustee shall be
distributed by the Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any Noteholder
     over any other Noteholder, in the proportion that the amount of such
     payment then due and payable under each

                                       26
<PAGE>
     such Lessor Note bears to the aggregate amount of the payments then due
     and payable under all such Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First."  To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion
of each such payment made to the Indenture Trustee which is to be distributed
by the Indenture Trustee in payment of Lessor Notes shall be applied in
accordance with Section 2.7 hereof. Any payment received by the Indenture
Trustee pursuant to Section 4.3 hereof as a result of payment by the Owner
Lessor of principal or interest or both (as well as any interest on overdue
principal and, to the extent permitted by Applicable Law, on overdue interest)
then due on all Lessor Notes shall be distributed to the Noteholders, ratably,
without priority of one over the other, in the proportion that the amount of
such payment or payments then due and unpaid on all Lessor Notes held by each
such Noteholder bears to the aggregate amount of the payments then due and
unpaid on all Lessor Notes outstanding; and the Owner Lessor shall (to the
extent of such payment made by it) be subrogated to the rights of the
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent,

                                       27
<PAGE>
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall retain such installment of Periodic Rent or payment
of interest (to the extent not then required to be distributed pursuant to
clause "First" of Section 3.1(a)) as part of the Indenture Estate and shall not
distribute any such payment of Periodic Rent or interest pursuant to clause
"Second" of Section 3.1(a) until such time as such Lease Indenture Event of
Default shall be cured or waived or until such time as the Indenture Trustee
shall have received written instructions from a Majority in Interest of
Noteholders to make such a distribution; provided that such amounts must be
returned to the Owner Lessor within six (6) months from the receipt thereof by
the Indenture Trustee unless (i) the Indenture Trustee has declared the unpaid
principal of all Lessor Notes due and payable (or such amounts shall have
automatically become due and payable), pursuant to Section 4.2(a) and the
Indenture Trustee is diligently pursuing any dispossessary remedies available
under Section 4.3 hereof (unless such remedies are stayed or prevented by
operation of law) or (ii) any other Lease Indenture Event of Default shall have
occurred during the intervening period and be continuing, in which case, such
six-month period will be restarted from the date such other Lease Indenture
Event of Default shall have occurred. Upon the cure or waiver of such Lease
Indenture Event of Default, withheld Periodic Rent shall, subject to clause
(ii) of the immediately preceding sentence, be distributed to the Owner Lessor
(to the extent that all payments to be distributed pursuant to clause "First"
of Section 3.1(a) have been made), and no further withholding of Periodic Rent
on account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.  Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any cost, fee and expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the

                                       28
<PAGE>
     Indenture Trustee and to the extent reimbursable and not previously
     reimbursed) shall be distributed to the Indenture Trustee for application
     to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder, plus the Make-Whole Amount, if any, and accrued but unpaid
     interest thereon to the scheduled date of distribution to the Noteholders
     bears to the aggregate unpaid principal amount of all such Lessor Notes
     held by all such holders, together with the Make-Whole Amount, if any,
     plus accrued but unpaid interest thereon to the date of scheduled
     distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.  Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee hereunder,
shall, so long as such declaration shall not have been rescinded, be
distributed forthwith by the Indenture Trustee in the following order of

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<PAGE>
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any cost, fee and expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then outstanding
     and all accrued but unpaid interest on such Lessor Notes to the date of
     such distribution (including interest on overdue principal and, to the
     extent permitted by Applicable Law, overdue interest) shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder and accrued but unpaid interest thereon to the scheduled date
     of distribution to the Noteholders bears to the aggregate unpaid principal
     amount of all such Lessor Notes held by all such holders and accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     Section 3.4.  Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the

                                       31
<PAGE>
Indenture Trustee shall invest and reinvest any moneys held by the Indenture
Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such Permitted
Investments as may be specified in such direction. The proceeds received upon
the sale or at maturity of any Permitted Investment and any interest received
on such Permitted Investment and any payment in respect of a deficiency
contemplated by the following sentence shall be held as part of the Indenture
Estate and applied by the Indenture Trustee in the same manner as the moneys
used to buy such Permitted Investment, and any Permitted Investment may be sold
(without regard to maturity date) by the Indenture Trustee whenever necessary
to make any payment or distribution required by this Section 3.  If the
proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.  Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by
the Indenture Trustee of any payment referred to in the preceding sentence
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall hold such payment as part of the Indenture Estate,
but the Indenture Trustee shall, except as otherwise provided in Section 3.1(b)
or 3.1(c) hereof, cease to hold such payment and shall apply such payment to
the purpose for which it was made in accordance with the terms of such
Operative Document if and whenever there is no longer continuing any Lease
Indenture Event of Default; provided, however, that any such payment received
by the Indenture Trustee which is payable to the Facility Lessee shall not be
held by the Indenture Trustee unless a Significant Lease Default or Lease Event
of Default shall have occurred and be continuing.

     Section 3.6.  Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

                                       32
<PAGE>
     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.  Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.  Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.  Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other disposition thereof or otherwise constituting a part of the
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document

                                       33
<PAGE>
or the Facility in the manner provided in Section 2.7 hereof, and this Section
3.

     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11Establishment of the Indenture Trustee's Account; and Lien and
Security Interest; Etc.

     (a)  The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture
governs and shall be the only agreement governing the Indenture Trustee's
Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a
part of the Indenture Trustee Account Collateral and shall not constitute
payment of any Indebtedness or any other obligation of the Owner Lessor until
applied as hereinafter provided.

     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture

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<PAGE>
Trustee's Account and any successor account thereto and (ii) all cash,
investments, investment property, securities or other property at any time on
deposit in or credited to the Indenture Trustee's Account, including all income
or gain earned thereon and any proceeds thereof (the "Indenture Trustee Account
Collateral").

     Section 3.12  The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i)  Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the
     Indenture Trustee's Account is and will be maintained as a "securities
     account" (within the meaning of Section 8-501(a) of the UCC), (C) the
     Owner Lessor is the "entitlement holder" (within the meaning of Section
     8-102(a)(7) of the UCC) in respect of the "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) credited to the Indenture
     Trustee's Account, (D) all property delivered to the Account Bank pursuant
     to this Indenture or any other Operative Document will be held by the
     Account Bank and promptly credited to the Indenture Trustee's Account by
     an appropriate entry in its records in accordance with this Indenture, (E)
     all "financial assets" (within the meaning of Section 8-102(a)(9) of the
     UCC) in registered form or payable to or to the order of and credited to
     the Indenture Trustee's Account shall be registered in the name of,
     payable to or to the order of, or indorsed to, the Account Bank or in
     blank, or credited to another securities account maintained in the name of
     the Account Bank, and in no case will any financial asset credited to the
     Indenture Trustee's Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Owner Lessor except to the extent the
     foregoing have been subsequently indorsed by the Owner Lessor to the
     Account Bank or in blank, (F) the Account Bank shall not change the name
     or account number of the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee, (G) the Account Bank is acting
     and shall at all times act as and perform all of the duties of the
     "securities intermediary," within the meaning of Article 8 of the UCC,
     with respect to the Indenture Trustee's Account and the financial assets
     credited thereto and (H) the Account Bank shall not enter into any other
     agreement governing, or with respect to, the Indenture Trustee's Account
     without the prior written consent of the Indenture Trustee.

          (ii)  Financial Assets Election. The Account Bank agrees that each

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<PAGE>
     item of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated
     as a "financial asset" within the meaning of Section 8-102(a)(9) of the
     UCC.

          (iii)  Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC)
     or any other order from the Indenture Trustee directing the transfer or
     redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements with respect to
     the financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements".  Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any
     financial asset relating to the Indenture Trustee's Account.

          (iv)  Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account
     or any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder. The financial assets standing to
     the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient funds).

     (v)  No Other Agreements. The Account Bank and the Owner

                                       36
<PAGE>
     Lessor have not entered into any agreement governing or with respect to
     the Indenture Trustee's Account or any financial assets credited to the
     Indenture Trustee's Account other than this Indenture. The Account Bank
     has not entered into any agreement with the Owner Lessor or any other
     Person purporting to limit or condition the obligation of the Account Bank
     to comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi)  Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any
     Person asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar
     process) against the Indenture Trustee's Account or in any financial asset
     credited thereto, the Account Bank will promptly notify the Indenture
     Trustee and the Owner Lessor in writing thereof.

          (vii)  Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                       37
<PAGE>
                                   SECTION 4.
                        COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.  Covenants of Owner Lessor. The Owner Lessor hereby
covenants and agrees as follows:

     (a)  the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.  Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the

                                       38
<PAGE>
insurance required by Section 11 of the Facility Lease if, and so long as, (i)
such Lease Event of Default is waived by the Owner Lessor and the Owner
Participant and (ii) the insurance maintained by the Facility Lessee still
constitutes Prudent Industry Practice); or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, the OP Guarantor shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under the OP Guaranty, in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have
been incorrect in any material respect when made and continues to be material
and unremedied for a period of 30 days after receipt by such party of

                                       39
<PAGE>
written notice thereof; provided, however, that if such condition cannot be
remedied within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days, so long as such party
diligently pursues such remedy and such condition is reasonably capable of
being remedied within such extended period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.  Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written instructions from a Majority in Interest of Noteholders
shall declare, by written notice to the Owner Lessor and the Owner Participant,
the unpaid principal amount of all Lessor Notes, with accrued interest thereon,
to be immediately due and payable, upon which declaration such principal amount
and such accrued interest shall immediately become due and payable (except in
the case of a Lease Indenture

                                       40
<PAGE>
Event of Default under Section 4.2(e) or (f), such principal and interest shall
automatically become due and payable immediately without any such declaration
or notice) without further act or notice of any kind. If any Make-Whole amount
is due and payable pursuant to Section 2.10(c) or (d) at the time of any such
acceleration, such Make-Whole Amount shall also be due and payable in
connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may thereupon or at any time thereafter, in
its own name or by or through an agent or receiver appointed by a court,
without regard to the adequacy of any security for the Secured Indebtedness,
enter into or upon the Indenture Estate and take possession of all or any part
of the Indenture Estate and may exclude therefrom the Owner Participant, the
Owner Lessor and, in the event such Lease Indenture Event of Default shall be a
Lease Event of Default, the Facility Lessee and all persons claiming under
them, and with or without any entry or taking of possession, may in its own
name or in the name of the Owner Lessor or any other Person, sue for or
otherwise collect all issues, rents, income, royalties and profits
(collectively, "Real Property Rents"), including those past due and unpaid as
well as those due, coming due or to be paid, and apply the Payments, less
costs, expenses, attorneys' fees and other expenses toward payment or partial
payment of the Secured Indebtedness in accordance with this Indenture and
Applicable Law. Further, the Indenture Trustee may exercise all remedies
available to a secured party under the Uniform Commercial Code or any other
provision of Applicable Law. The Indenture Trustee may proceed to enforce the
rights of the Indenture Trustee and of the Noteholders by directing payment to
it of all moneys payable under any agreement or undertaking constituting a part
of the Indenture Estate, by proceedings in any court of competent jurisdiction
to recover damages for the breach hereof or for the appointment of a receiver
or for sale of all or any part of the Property Interest or for foreclosure of
the Property Interest, together with the Owner Lessor's interest in the
Assigned Documents, and by any other action, suit, remedy or proceeding
authorized or permitted by this Indenture, at law or in equity, or whether for
the specific performance of any agreement contained herein, or for an
injunction against the violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law, and in addition may foreclose
upon,

                                       41
<PAGE>
sell, assign, transfer and deliver, from time to time to the extent permitted
by Applicable Law, all or any part of the Indenture Estate or any interest
therein, at any private sale or public auction with or without demand,
advertisement or notice (except as herein required or as may be required by
law) of the date, time and place of sale and any adjournment thereof, for cash
or credit or other property, for immediate or future delivery and for such
price or prices and on such terms as the Indenture Trustee, in its unfettered
discretion, may determine, or as may be required by Applicable Law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b). The Indenture Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings. The collection of such Real Property Rents, or the entering upon
and taking possession of the Indenture Estate, or the application of the Real
Property Rents as aforesaid, shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such default or
pursuant to such notice of default. The Owner Lessor also hereby authorizes
the Indenture Trustee upon such entry, at its option, to take over and assume
the management, operation and maintenance of the Indenture Estate and to
perform all acts Indenture Trustee in its sole discretion deems necessary and
proper and to expend such sums out of Real Property Rents as may be needed in
connection therewith, in the same manner and to the same extent as the Owner
Lessor theretofore could do. It is not the intention of the parties hereto
that an entry by the Indenture Trustee upon the Indenture Estate under the
terms of this instrument shall make the Indenture Trustee a party in possession
in contemplation of the law, except at the option of the Indenture Trustee.

     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

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<PAGE>
     (d)  Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that, during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-day period following the date of commencement of a
stay or other prevention or (b) the date of repossession of the Facility under
the applicable Facility Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

     Section 4.4.  Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such

                                       43
<PAGE>
payment of Periodic Rent, an amount equal to the principal of, Make-Whole
Amount, if any, and interest on the Lessor Notes, then due (otherwise than by
declaration of acceleration) on such Rent Payment Date, together with any
interest due thereon on account of the delayed payment thereof, and such
payment by the Owner Lessor shall be deemed (for purposes of this Indenture) to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the Owner Lessor shall be deemed to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor,
the Owner Lessor shall (to the extent of such payment made by it and the costs
and expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic
Rent payment or Supplemental Rent payment being overdue in the manner set forth
in the next two sentences. If the Indenture Trustee shall thereafter receive
such payment of Periodic Rent, Supplemental Rent or such interest, the
Indenture Trustee shall, notwithstanding the requirements of Section 3.1
hereof, forthwith, remit such

                                       44
<PAGE>
payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the

                                       45
<PAGE>
previous 30 days, (ii) no Lease Indenture Event of Default of the nature
described in any of clauses (b) through (f) of Section 4.2 hereof shall have
occurred and be continuing and (iii) the Owner Lessor shall give written notice
to the Indenture Trustee of the Owner Lessor's intention to purchase all of the
Lessor Notes in accordance with this paragraph, then, upon receipt within 10
Business Days after such notice from the Owner Lessor of an amount equal to the
sum of (x) the aggregate unpaid principal amount of any unpaid Lessor Notes
then held by the Noteholders, together with accrued but unpaid interest thereon
to the date of such receipt (as well as any interest on overdue principal and,
to the extent permitted by Applicable Law, overdue interest), plus (y) the
aggregate amount, if any, of all sums which, if Section 3.3 were then
applicable, such Noteholder would be entitled to be paid before any payments
were to be made to the Owner Lessor but excluding any Make-Whole Amount, such
Noteholder will forthwith (and upon its receipt of the payment referred to in
clause (1) below, will be deemed to) sell, assign, transfer and convey to the
Owner Lessor (without recourse or warranty of any kind other than of title to
the Lessor Notes so conveyed) all of the right, title and interest of such
Noteholder in and to the Indenture Estate, this Indenture, all Lessor Notes
held by such Noteholder and the Assigned Documents, and the Owner Lessor shall
thereupon assume all such Noteholder's rights and obligations in such
documents; provided, that no such holder shall be required to so convey unless
(1) the Owner Lessor shall have simultaneously tendered payment on all other
Lessor Notes issued by the Owner Lessor at the time outstanding pursuant to
this paragraph and (2) such conveyance is not in violation of any Applicable
Law. All charges and expenses required to be paid in connection with the
issuance of any new Lessor Note or Lessor Notes in connection with this
paragraph shall be borne by the Owner Lessor. Notwithstanding the foregoing,
the Owner Lessor may exercise the right set forth in this clause (e) prior to
the end of the 90 day period set forth above but, in such case, the Make-Whole
Amount, if any, shall also be payable.

     Section 4.5.  Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in

                                       46
<PAGE>
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.  Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate the possession of
which the Indenture Trustee shall at the time be entitled to hereunder. If the
Owner Lessor shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture
Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right
to immediate possession and requiring the Owner Lessor to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Lessor hereby specifically consents, and (ii) pursue all or
any part of the Indenture Estate wherever it may be found and enter any of the
premises wherever all or part of the Indenture Estate may be or is supposed to
be and search for all or part of the Indenture Estate and take possession of
and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee shall be entitled to
collect and receive all rents (including Periodic Rent and Supplemental Rent),
revenues, issues, income, products and profits of the Indenture Estate and
every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required

                                       47
<PAGE>
to be deposited with, the Indenture Trustee hereunder) and to apply the same to
the management of or otherwise dealing with the Indenture Estate and of
conducting the business thereof, and of all expenditures with respect to the
Indenture Estate and the making of all payments which the Indenture Trustee may
be required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make
reports upon the properties and books and records of the Owner Lessor and the
Facility Lessee relating to the Indenture Estate and the Operative Documents),
or under any provision of, this Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee and of all Persons
properly engaged and employed by the Indenture Trustee.

     Section 4.7.  Power of Sale and Other Remedies.

     (a)  In addition to all other remedies provided for herein if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee shall, subject to Sections 4.3 and 4.4 and to provisions of Applicable
Law, have the right(s) to (i) sell the Indenture Estate or any part of the
Indenture Estate at one or more public sale or sales; or (ii) commence an
action or actions to foreclose the lien of this Indenture as a mortgage; and/or
(iii) specifically enforce any of the covenants and agreements hereof, in each
case in order to pay the Secured Indebtedness, and all impositions, if any,
with accrued interest thereon, and all expenses of the sale and of all
proceedings in connection therewith, including reasonable attorney's fees, if
incurred, and do any acts that it deems necessary or desirable to preserve the
value, marketability or rentability of the Indenture Estate, or any part
thereof or interest therein, increase the income therefrom or protect the
security hereof. If the Indenture Trustee elects to exercise the power of sale
herein contained, the Indenture Trustee shall cause to be recorded, published
and delivered to the Owner Lessor such notice of sale as then required by
Applicable Law. The Indenture Trustee shall, without demand on the Owner
Lessor, after lapse of such time as may then be required by law and after
recordation of such notice of sale and notice of sale having been given as
required by Applicable Law, sell the Indenture Estate at the time and place of
sale fixed by it in said notice of sale, either as a whole, or in separate lots
or parcels or items as the Indenture Trustee shall deem expedient, and in such
order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United States payable at the time of sale. The Indenture
Trustee shall deliver to such purchaser or purchasers thereof its good and
sufficient deed or deeds conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including, without limitation, the Owner Lessor,

                                       48
<PAGE>
may bid at and be a purchaser at any such sale.  The Indenture Trustee shall
apply the proceeds of sale as required by Applicable Law and in accordance with
the terms of this Indenture. Subject to A.R.S. Section 33-810.B, the Indenture
Trustee may postpone sale of all or any portion of the Indenture Estate by
public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or subsequently
noticed sale, and without further notice make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale.
The Owner Lessor hereby requests that a copy of any notice of default and any
notice of sale hereunder be mailed to it at its address set forth in Section
9.5 of this Indenture. At any such public sale, the Indenture Trustee may
execute and deliver to the purchaser a conveyance of the Indenture Estate or
any part of the Indenture Estate, and to this end, the Owner Lessor hereby
constitutes and appoints the Indenture Trustee the agent(s) and attorney(s) in
fact of the Owner Lessor to make such sale and conveyance, and thereby to
divest the Owner Lessor of all right, title or equity that the Owner Lessor may
have in and to the Indenture Estate and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney in fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding upon the Owner Lessor. The aforesaid power of sale and agency hereby
granted are coupled with an interest and are irrevocable by death or otherwise,
are granted as cumulative of the other remedies provided hereby or by law for
collection of the Secured Indebtedness and shall not be exhausted by one
exercise thereof but may be exercised until full payment of the Secured
Indebtedness. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, either
with or without entry or taking possession as herein provided or otherwise,
proceed by a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (i) to enforce payment of the Lessor Notes or the
performance of any term, covenant, condition or agreement of this Indenture or
any other right, and (ii) to pursue any other remedy available to it, all as
the Indenture Trustee shall determine most effectual for such purposes. Upon
any foreclosure sale, the Indenture Trustee may bid for and purchase the
Indenture Estate and shall be entitled to apply all or any part of the Secured
Indebtedness as a credit to the purchase price. In the event of a foreclosure
sale of the Indenture Estate, the proceeds of said sale shall be applied as
provided in Section 3.3 hereof. In the event of any such foreclosure sale by
the Indenture Trustee, the Owner Lessor shall be deemed a tenant holding over
and shall forthwith deliver possession to the purchaser or purchasers at such
sale or be summarily dispossessed according to provisions of law applicable to
tenants holding over. The Indenture Trustee, at the Indenture Trustee's option,
is authorized to foreclose this Indenture subject to the rights of any tenants
of the

                                       49
<PAGE>
Indenture Estate, and the failure to make any such tenants parties to any such
foreclosure proceedings and to foreclose their rights will not be, nor be
asserted to be by the Owner Lessor, a defense to any proceedings instituted by
the Indenture Trustee to collect the Secured Indebtedness.

     (b)  In amplification of, and not in limitation of paragraph (a) of this
Section 4.7, the Owner Lessor represents and warrants that this Indenture is
given primarily for a business, commercial or agricultural purpose. Owner
Lessor, therefore, agrees that the Indenture Trustee, its successors and
permitted assigns, shall have THE STATUTORY POWER OF SALE pursuant to the
applicable provisions of A.R.S. Sections 12-1241, et seq., 33-702.B; and
33-807, et seq. as said statutes have been and shall be amended, which POWER is
expressly incorporated herein by reference. Such Statutory Power of Sale and
other rights, power, remedies and authorities shall be in addition to all
rights and remedies set forth herein or available under Applicable Law. In the
exercise of the Statutory Power of Sale, the Indenture Trustee, its successors
and assigns or its agents or attorneys, may sell the Indenture Estate or such
portion thereof as may remain subject to the Indenture in case of any partial
release thereof, either as a whole or in parcels, together with all
improvements that may be thereon, by a public sale on or near any part of the
Indenture Estate then subject to this Indenture or at the Indenture Trustee's
principal place of business or at any other office of the Indenture Trustee or
any attorney or agent thereof located in the same county in which any part of
the Indenture Estate is located, and the Indenture Trustee, its successors and
permitted assigns; and such sale shall forever bar the Owner Lessor and all
persons claiming under it from all right and interest in the Indenture Estate,
whether at law or in equity. In the exercise of THE STATUTORY POWER OF SALE
herein given, if the Indenture Trustee elects to sell in parts or parcels, such
sales may be held from time to time, and the POWER shall not be fully executed
until all of the Indenture Estate not previously sold shall have been sold.

     Section 4.8.  Appointment of Receiver and Assignment of Real Property
Rents. The Owner Lessor hereby assigns and transfers to the Indenture Trustee
all of the Real Property Rents, of the Indenture Estate, and hereby gives to
and confers upon the Indenture Trustee the right, power and authority to
collect the Real Property Rents. From and after any Lease Indenture Event of
Default, the Owner Lessor appoints the Indenture Trustee its true and lawful
attorney-in-fact, at the option of the Indenture Trustee at any time and from
time to time, to demand, receive and enforce payment, to give receipts,
releases and satisfactions. From and after any Lease Indenture Event of
Default, the Owner Lessor hereby authorizes and directs the lessees, tenants
and occupants to make all payments under any leases directly to the Indenture
Trustee upon written demand by the Indenture Trustee, without further

                                       50
<PAGE>
consent of the Owner Lessor. If the outstanding principal amount of the Lessor
Notes shall have been declared due and payable pursuant to Section 4.3 hereof,
as a matter of right, the Indenture Trustee shall be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Indenture Estate, whether such
receivership be incidental to a proposed sale of the Indenture Estate or the
taking of possession thereof or otherwise, and the Owner Lessor hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Indenture Estate shall be
entitled to exercise all available rights and powers with respect to the
Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.  Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.  Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law,
that it will never seek or derive any benefit or advantage from any of the
following, whether now existing or hereafter in effect, in connection with any
proceeding under or in respect of this Lease Indenture:

     (a)  any stay, extension, moratorium or other similar law;

     (b)  any Applicable Law providing for the valuation of or appraisal of any
portion of the Indenture Estate in connection with a sale thereof; or

     (c)  any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

     The Owner Lessor covenants not to hinder, delay or impede the exercise of
any right

                                       51
<PAGE>
or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure or a waiver
or relinquishment of any right (s) to foreclose or to have a receiver appointed
for and take possession of the Indenture Estate or any part thereof. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture Trustee at any time or times in the
future while any of the obligations secured hereby shall remain outstanding.

     Section 4.11.  Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the
Operative Documents, so long as no Lease Event of Default under the Facility
Lease shall have been declared (or deemed to have been declared), the Indenture
Trustee and the Noteholders shall be subject to the Facility Lessee's rights
under the Facility Lease, and neither the Indenture Trustee nor any Noteholders
shall take or cause to be taken any action contrary to the right of the
Facility Lessee, including its rights to quiet use and possession of the
Facility.

     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner

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<PAGE>
Lessor shall fail to release any Lien affecting the Indenture Estate which it
is required to release by the terms of this Indenture or the Participation
Agreement or the LLC Agreement, the Indenture Trustee, without notice to or
demand upon the Owner Lessor and without waiving or releasing any obligation or
defaults may (but shall be under no obligation to, and, except as provided in
the last sentence hereof, shall incur no liability in connection therewith) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Indenture Estate and may take all such action with
respect thereto (including entering upon the Facility Site or any part thereof,
or the Facility for such purpose) as may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including legal fees and expenses) so
incurred, together with interest thereon from the date of payment or
incurrence, shall constitute additional indebtedness secured by this Indenture
and shall be paid from the Indenture Estate to the Indenture Trustee on demand.
The Indenture Trustee shall not be liable for any damages resulting from any
such payment or action unless such damages shall be a consequence of willful
misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.  Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.  Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                  SECTION 5.
                        DUTIES OF INDENTURE TRUSTEE;
                 CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

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     Section 5.1.  Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b).
The Indenture Trustee shall take such action, or refrain from taking such
action, as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.  Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may be specified in such instructions: (a) give
such notice, direction or consent or exercise such right, remedy or power or
take such action hereunder or under any Assigned Document, or in respect of any
part of or all the Indenture Estate, as it shall be entitled to take and as
shall be specified in such instructions; (b) take such action with respect to
or to preserve or protect the Indenture Estate (including the discharge of
Liens) as it shall be entitled to take and as shall be specified in such
instructions; and (c) waive, consent to, approve (as satisfactory to it) or
disapprove all matters required by the terms of any Operative Document to be
satisfactory to the Indenture Trustee. The Indenture Trustee may, and upon
written instructions from a Majority in Interest of Noteholders, the Indenture
Trustee shall, execute and file or cause to be executed and filed any financing
statement (and any continuation statement with respect to such financing
statement) or any similar instrument or document relating to the security
interest or the assignment created by this Indenture or granted by the Owner
Lessor herein as may be necessary to protect and preserve the security interest
or assignment created by or granted pursuant to this Indenture, to the extent
otherwise entitled to do so and as shall be specified in such instructions.

     Section 5.3.  Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture.

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<PAGE>
Nothing in this Section 5.3 shall be deemed to expand the instances in which
the Owner Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.  Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture
Trustee shall not be required to take any action under Section 4 or Section
5.2, 5.3 or 9.1 hereof, nor shall any other provision of this Indenture be
deemed to impose a duty on the Indenture Trustee to take any action, if it
shall have been advised by counsel (who shall not be an employee of the
Indenture Trustee) that such action is contrary to the terms hereof or is
otherwise contrary to Applicable Law or (unless it shall have been indemnified
in manner and form satisfactory to the Indenture Trustee) may result in
personal liability to the Indenture Trustee.

     Section 5.5.  No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with any part of the Indenture
Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the
                                       55
<PAGE>
terms of the Facility Lease, to the extent applicable to the Indenture Trustee
as assignee of the Owner Lessor, (b) in accordance with the powers granted to,
or the authority conferred upon, the Indenture Trustee pursuant to this
Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.  Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the Indenture
Trustee, (i) retain all rights to demand and receive payment of, and to
commence an action for payment of, Excepted Payments but the Owner Lessor shall
have no remedy or right with respect to any such payment against the Indenture
Estate nor any right to collect any such payment by the exercise of any of the
remedies under Section 17 of the Facility Lease except as expressly provided in
this Section 5.6; (ii) retain all rights with respect to insurance that Section
11 of the Facility Lease and Schedule 5.31 of the Participation Agreement
specifically confers upon the Owner Lessor and to waive any failure by the
Facility Lessee to maintain the insurance required by Section 11 of the
Facility Lease before or after the fact so long as the insurance maintained by
the Facility Lessee still conforms to Prudent Industry Practice; (iii) retain
all rights to adjust Periodic Rent and Termination Value as provided in Section
3.4 of the Facility Lease, Section 12 of the Participation Agreement or the Tax
Indemnity Agreement; provided, however, that after giving effect to any such
adjustment (x) the amount of Periodic Rent payable on each Rent Payment Date
shall be at least equal to the aggregate amount of all principal and accrued
interest payable on such Rent Payment Date on all Lessor Notes then outstanding
and (y) Termination Value shall in no event be less (when added to all other
amounts required to be paid by the Facility Lessee in respect of any early
termination of the Facility Lease) than an amount sufficient, as of the date of
payment, to pay in full the principal of, and interest on all Lessor Notes
outstanding on and as of such date of payment; (iv) except in connection with
the exercise of remedies pursuant to the Facility Lease, retain all rights to
exercise the Owner Lessor's rights relating to the Appraisal Procedure and to
confer and agree with the Facility Lessee on Fair Market Rental Value, or any
Renewal Lease Term; and (v) retain the right to declare the Facility Lease to
be in default with respect to any Excepted Payment pursuant to Section 17 of
the Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all

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<PAGE>
information that the Facility Lessee is permitted or required to give or
furnish to the Owner Lessor or the Owner Participant, as the case may be,
pursuant to the Facility Lease or any other Operative Document; (ii) to inspect
the Facility and the records relating thereto pursuant to Section 12 of the
Facility Lease; (iii) to provide such insurance as may be permitted by Section
11 of the Facility Lease; (iv) to provide notices to the Facility Lessee or the
Guarantor to the extent otherwise permitted by the Operative Documents; and (v)
to perform for the Facility Lessee as provided in Section 20 of the Facility
Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall retain the right to the exclusion of the Indenture Trustee to
exercise the rights of the Owner Lessor under, and to determine compliance by
the Facility Lessee with, the provisions of Sections 10 (other than Section
10.3 thereof), 13, 14 and 15 of the Facility Lease; provided, however, that if
a Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to retain such rights upon notice from the Indenture
Trustee stating that such rights shall no longer be retained by the Owner
Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee

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<PAGE>
that the Facility Lessee is in compliance with the provisions of any applicable
Assigned Document shall be binding upon or otherwise affect the rights
hereunder of the Indenture Trustee or any Noteholder on the one hand or the
Owner Lessor or the Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the Facility Lessee under the
Operative Documents relating to the protection, insurance, maintenance,
possession, use and return of the Property Interest, the performance by the
Facility Lessee of the Owner Lessor's obligations under the South Point Ground
Lease, the exercise of any renewal or extension rights with respect to the
South Point Ground Lease and any action pursuant to Sections 5.20 or 13.3 of
the Participation Agreement (subject to the conditions set forth in Section
5.20 or 13.3, as applicable, of the Participation Agreement); and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture
Trustee of the exclusive right, so long as this Indenture shall be in effect,
to declare the Facility Lease to be in default under Section 16 thereof and
thereafter to exercise the remedies pursuant to Section 17 of the Facility
Lease (except as expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.  Restrictions on Dealing with Indenture Estate. Except as

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<PAGE>
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.  Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Owner Lessor hereby expressly authorizes the Indenture
Trustee to prepare, file, record, obtain, execute and deliver, from time to
time, such financing statements, continuation statements, control agreements
and recognition agreements as Indenture Trustee shall deem appropriate. The
Owner Lessor hereby further authorizes any account holder or bank or financial
institution to execute and deliver from time to time such control agreements
and recognition agreements as shall be requested or required by Indenture
Trustee. The Indenture Trustee shall, at the written request and expense of
the Facility Lessee, as provided in the Participation Agreement, execute and
deliver to the Facility Lessee and the Facility Lessee will file or record, if
not already filed or recorded, such financing statements or other documents and
such continuation statements or other documents with respect to financing
statements or other documents previously filed relating to the Lien created by
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and
powers herein granted. Upon the reasonable instructions (which instructions
shall be accompanied by the form of document to be filed) at any time and from
time to time of the Facility Lessee or the Indenture Trustee, the Owner Lessor
shall authorize, execute, file or record any financing statement (and any
continuation statement with respect to any such financing statement), and any
other document relating to the security interest and assignment created by this
Indenture as may be specified in such instructions. In addition, the Indenture
Trustee and the Owner Lessor will authorize or execute such continuation
statements with respect to financing statements and other documents relating to
the Lien created by this Indenture in the Indenture Estate as may be specified
from time to time in written instructions of any Noteholder (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the form of such continuation statement or other document to be
filed). Neither the Indenture Trustee nor, except as

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<PAGE>
otherwise herein expressly provided, the Owner Lessor shall have responsibility
for the protection, perfection or preservation of the Lien created by this
Indenture.

                               SECTION 6.
                  INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.  Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the Indenture
Trustee shall not be liable for any action or inaction of the Owner Trust;
provided, however, that:

          (i)  Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall
     not be liable except for the performance of such duties and obligations as
     are specifically set forth in the Operative Documents, no implied
     covenants or obligations shall be read into the Operative Documents
     against the Indenture Trustee and, in the absence of bad faith on the part
     of the Indenture Trustee, the Indenture Trustee may conclusively rely, as
     to the truth of the statements and the correctness of the opinions
     expressed therein, upon any notes or opinions furnished to the Indenture
     Trustee and conforming to the requirements of this Indenture;

          (ii)  The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other

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<PAGE>
     officers of the Indenture Trustee, unless it shall be proven that the
     Indenture Trustee was negligent in ascertaining the pertinent facts;

          (iii)  The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the
     Indenture Trustee, or exercising or omitting to exercise any trust or
     power conferred upon the Indenture Trustee, under this Indenture;

          (iv)  The Indenture Trustee shall not be required to take notice or be
     deemed to have notice or knowledge of any default, Lease Event of Default,
     Significant Lease Default or Lease Indenture Event of Default (except for
     a Lease Indenture Event of Default resulting from an event of nonpayment)
     unless a Responsible Officer of the Indenture Trustee shall have received
     written notice thereof. In the absence of receipt of such notice, the
     Indenture Trustee may conclusively assume that there is no default or
     Lease Indenture Event of Default;

          (v)  The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of
     any of its duties hereunder or the exercise of any of its rights or powers
     if there is reasonable ground for believing that the repayment of such
     funds or adequate indemnity against such risk or liability is not
     reasonably assured to it, and none of the provisions contained in this
     Indenture shall in any event require the Indenture Trustee to perform, or
     be responsible for the manner of performance of, any of the obligations of
     the Owner Lessor, under this Indenture; and

          (vi)  The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.  Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no
duty (a) to see to any registration, recording or filing of any Operative
Document (or any financing or continuation statements in respect thereto) or to
see to the maintenance of any such

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<PAGE>
registration, recording or filing, (b) to see to any insurance on the
Facilities or the Facilities or to effect or maintain any such insurance, (c)
except as otherwise provided in Section 5.5 hereof or in Section 10 of the
Participation Agreement, to see to the payment or discharge of any Tax or any
Lien of any kind owing with respect to, or assessed or levied against, any part
of the Indenture Estate, (d) to confirm or verify the contents of any report,
notice, request, demand, certificate, financial statement or other instrument
of the Facility Lessee, (e) to inspect the Facility at any time or ascertain or
inquire as to the performance or observance of any of the Facility Lessee's
covenants with respect to the Facility or (f) to exercise any of the trusts or
powers vested in it by this Indenture or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction
of any of the Noteholders, pursuant to the provisions of this Indenture, unless
such Noteholders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby (which in the case of the Majority in Interest of
Noteholders will be deemed to be satisfied by a letter agreement with respect
to such costs from such Majority in Interest of Noteholders).  Notwithstanding
the foregoing, the Indenture Trustee shall furnish to each Noteholder and to
the Owner Lessor and the Owner Participant promptly upon receipt thereof
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Indenture Trustee
hereunder or under any of the Operative Documents unless the Indenture Trustee
shall reasonably believe that each such Noteholder, the Owner Lessor and the
Owner Participant shall have received copies thereof.

     Section 6.3.  Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL BE
DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on

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the Closing Date it shall have received whatever title or interest to the
Undivided Interests and the Facility Site as were conveyed to it by the
Facility Lessee and that on the Closing Date the Undivided Interests shall be
free of Owner Lessor's Liens and the Owner Participant's Liens; or (ii) any
representation or warranty as to the validity, legality or enforceability of
this Indenture, the Lessor Notes or any of the other Operative Documents, or as
to the correctness of any statement contained in any thereof, except that each
of the Owner Lessor and the Indenture Trustee represents and warrants that this
Indenture and the Participation Agreement have been, and, in the case of the
Owner Lessor, the other Operative Documents to which it is or is to become a
party have been or will be, executed and delivered by one of its officers who
is and will be duly authorized to execute and deliver such document on its
behalf.

     Section 6.4.  No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

     Section 6.5.  Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The
Indenture Trustee may accept in good faith a certified copy of a resolution of
the managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such

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<PAGE>
Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of competence, of any such Person, so long
as the Indenture Trustee shall have exercised reasonable care in selecting such
Person.

                               SECTION 7.
                     SUCCESSOR INDENTURE TRUSTEES
                         AND SEPARATE TRUSTEES

     Section 7.1.  Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)  Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the

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<PAGE>
Owner Lessor shall give prompt written notification thereof to each Noteholder
and the Facility Lessee. Such removal will be effective on the acceptance of
appointment by the successor Indenture Trustee or Account Bank pursuant to the
provisions of subsection (b) below. In the case of the resignation or removal
of the Indenture Trustee or Account Bank, a Majority in Interest of Noteholders
may appoint a successor Indenture Trustee or Account Bank by an instrument
signed by such holders. If a successor Indenture Trustee or Account Bank shall
not have been appointed within thirty (30) days after such resignation or
removal, the Indenture Trustee, Account Bank or any Noteholder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee or
Account Bank to act until such time, if any, as a successor shall have been
appointed by a Majority in Interest of Noteholders as above provided. The
successor Indenture Trustee or Account Bank so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee or Account Bank appointed by a Majority in Interest of Noteholders as
above provided.

     (b)  Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee or
Account Bank hereunder in the trusts hereunder applicable to it with like
effect as if originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)  Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or

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<PAGE>
indirect subsidiary of a corporation which has a combined capital and surplus
of at least $150,000,000 provided such corporation guarantees the performance
of the obligations of such trust company or bank as Indenture Trustee or
Account Bank, or (C) is a member of a bank holding company group having a
combined capital and surplus of at least $150,000,000 provided the parent of
such bank holding company group or a member which itself has a combined capital
and surplus of at least $150,000,000 guarantees the performance of the
obligations of such trust company or bank, and (ii) is willing, able and
legally qualified to perform the duties of Indenture Trustee or Account Bank
hereunder upon reasonable or customary terms. No successor Indenture Trustee
or Account Bank, however appointed, shall become such if such appointment would
result in the violation of any Applicable Law or create a conflict or
relationship involving a conflict of interest under the Trust Indenture Act of
1939, as amended.

     (d)  Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank").  The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)  Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.  Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture

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<PAGE>
Estate, this Indenture, the Facility Lease, the Lessor Notes or any of the
transactions contemplated by the Operative Documents, (ii) the Indenture
Trustee shall be advised by counsel, satisfactory to it, that it is so
necessary or prudent in the interest of the Noteholders or (iii) a Majority in
Interest of Noteholders deems it so necessary or prudent and shall have
requested in writing the Indenture Trustee to do so, then in any such case the
Indenture Trustee shall execute and deliver from time to time all instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more Persons approved by the Indenture Trustee either to act as
additional trustee or trustees of all or any part of the Indenture Estate,
jointly with the Indenture Trustee, or to act as separate trustee or trustees
of all or any part of the Indenture Estate, in any such case with such powers
as may be provided in such instruments or agreements, and to vest in such bank,
trust company or Person as such additional trustee or separate trustee, as the
case may be, any property, title, right or power of the Indenture Trustee
deemed necessary or advisable by the Indenture Trustee, subject to the
remaining provisions of this Section 7.2.  The Owner Lessor hereby consents to
all actions taken by the Indenture Trustee under the provisions of this Section
7.2 and agrees, upon the Indenture Trustee's request, to join in and execute,
acknowledge and deliver any or all such instruments or agreements; and the
Owner Lessor hereby makes, constitutes and appoints the Indenture Trustee its
agent and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such instrument or agreement in the event that the
Owner Lessor shall not itself execute and deliver the same within fifteen (15)
days after receipt by it of such request so to do; provided, however, that the
Indenture Trustee shall exercise due care in selecting any additional or
separate trustee if such additional or separate trustee shall not be a Person
possessing trust powers under Applicable Law. If at any time the Indenture
Trustee shall deem it no longer necessary or prudent in order to conform to any
such law or take any such action or shall be advised by such counsel that it is
no longer so necessary or prudent in the interest of the Noteholders or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Noteholders, the Indenture Trustee shall execute
and deliver all instruments and agreements necessary or proper to remove any
additional trustee or separate trustee. In such connection, the Indenture
Trustee may act on behalf of the Owner Lessor to the same extent as is provided
above. Notwithstanding anything contained to the contrary in this Section
7.2(a), to the extent the laws of any jurisdiction preclude the Indenture
Trustee from taking any action hereunder either alone, jointly or through a
separate trustee under the direction and control of the Indenture Trustee, the
Owner Lessor, at the instruction of the Indenture Trustee, shall appoint a
separate trustee for such jurisdiction, which separate trustee shall have full
power and authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but not subject to
the same limitations in

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<PAGE>
any exercise of his power and authority as those to which the Indenture Trustee
is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)  Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2,
(i) the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                               SECTION 8.
               SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                           AND OTHER DOCUMENTS

     Section 8.1.  Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections
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<PAGE>
8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

     Section 8.2.  Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and

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<PAGE>
with the consent of the Owner Lessor, the Indenture Trustee shall enter into
any indenture or indentures supplemental hereto or execute any amendment,
modification, supplement, waiver or consent with respect to any other Operative
Document (a) to evidence the succession of another Person as a Lessor Manager
or the appointment of a co-manager in accordance with the terms of the LLC
Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant
to the provisions of Section 7 hereof and to define the rights, powers, duties
and obligations conferred upon any such separate trustee or trustees or
co-trustee or co-trustees, (b) to correct, confirm or amplify the description
of any property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may be lawfully granted or
conferred and which are not contrary or inconsistent with this Indenture, (f)
to add to the covenants or agreements to be observed by the Facility Lessee or
the Owner Lessor and which are not contrary to this Indenture, to add Indenture
Events of Defaults for the benefit of Noteholders or surrender any right or
power of the Owner Lessor, provided it has consented thereto, (g) to effect the
assumption of all or, to the extent otherwise provided hereunder, part of the
Lessor Notes by the Facility Lessee, provided that the supplemental indenture
will contain all of the covenants applicable to the Facility Lessee contained
in the Facility Lease and the Participation Agreement for the benefit of the
Indenture Trustees or the holders of such Lessor Notes, such that the Facility
Lessee's obligations contained therein, if applicable in the event that the
Facility Lease are terminated, will continue to be in full force and effect,
(h) to comply with requirements of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body, (i) to modify, eliminate or add to the
provisions of any Operative Documents to such extent as shall be necessary to
qualify or continue the qualification of this Lease Indenture or the Pass
Through Trust Agreements (including any supplements thereto) under the Trust
Indenture Act, or similar federal statute enacted after the Closing Date, and
to add to this Indenture such other provisions as may be expressly required or
permitted by the Trust Indenture Act of 1939 (if such qualification is
required), and (j) to effect

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<PAGE>
any indenture or indentures supplemental hereto or any amendment, modification,
supplement, waiver or consent with respect to any other Operative Document,
provided such supplemental indenture, amendment, modification, supplement,
waiver or consent shall not reasonably be expected to materially and adversely
affect the interest of the Noteholders; provided, however, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of each then outstanding
Lessor Note, cause any of the events specified in clauses (i) through (v) of
the first sentence of Section 8.1 hereof to occur; and provided, further, that
no such amendment, modification, supplement, waiver or consent contemplated by
this Section 8.2 shall, without the consent of the holder of a Majority in
Interest of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14,
5.31, 6, or 13.1 of the Participation Agreement or Section 19 of the Lease, or
modify in any material respect the provisions of the Calpine Guaranty (other
than, in each case, any amendment, modification, supplement, waiver or consent
having no adverse affect on the interest of the Noteholders).

     Section 8.3.  Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall
be furnished with evidence that all necessary consents have been obtained and
with an opinion of counsel that such document complies with the provisions of
this Indenture, does not deprive the Indenture Trustee or the holders of the
Lessor Notes of the benefits of the Lien hereby created on any property subject
hereto or of the assignments contained herein (except as otherwise consented to
in accordance with Section 8.1 hereof) and that all consents required by the
terms hereof in connection with the execution of such document or the making of
such election have been obtained. The Indenture Trustee shall be fully
authorized and protected in relying on such opinion.

                               SECTION 9.
                             MISCELLANEOUS

     Section 9.1.  Surrender, Defeasance and Release.

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<PAGE>
     (a)  Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i)  Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person
     be released from the Lien of this Lease Indenture and the Indenture
     Trustee shall, upon the written request of the Owner Lessor or the
     Facility Lessee, execute and deliver to, and as directed in writing by,
     the Facility Lessee or the Owner Lessor an appropriate instrument (in due
     form for recording) releasing the replaced Component from the Lien of this
     Indenture.

          (ii)  Whenever the Facility Lessee is entitled to acquire the Facility
     or have the Facility transferred to it pursuant to the express terms of
     the Facility Lease, the Indenture Trustee shall release the Indenture
     Estate from the Lien of this Indenture and execute and deliver to, or as
     directed in writing by, the Facility Lessee or the Owner Lessor an
     appropriate instrument (in due form for recording) releasing the Indenture
     Estate from the Lien of this Indenture; provided that all sums secured by
     this Indenture have been paid to the Persons entitled to such sums.

     Section 9.2.  Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.  Appointment of the Indenture Trustee as Attorney; Further

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<PAGE>
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.  Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties hereto, the Owner Participant,
the Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.  Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

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<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor

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<PAGE>
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          South Point Energy, LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.  Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.  Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly

                                       75
<PAGE>
waived by the parties hereto or by any Person claiming by, through or under the
parties hereto and (d) under no circumstances shall Wells Fargo, be personally
liable for the payment of any indebtedness or expenses of the Owner Lessor or
be liable for the breach or failure of any obligation, representation, warranty
or covenant made or undertaken by the Owner Lessor under this Indenture.

     Section 9.8.  Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.  Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.  Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.  Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.  Governing Law. Except for those provisions relating to the
creation, perfection, enforcement, interpretation and foreclosure of the deed
of trust lien and security agreement covering the real property described on
Exhibit A hereto (the "Real Property") and fixtures thereon, the appointment
and actions of a receiver and related provisions regarding enforcement of liens
and security agreements relating to the Real Property and fixtures thereon,
which provisions of this Indenture shall be governed by, enforced in accordance
with and interpreted according to Arizona law (excluding its choice of law
provisions), and except to the extent that the laws of the United States of
America (hereinafter "Federal Law") require the application of Federal Law (in
which limited case(s) Federal Law shall apply to those issues or matters as to
which Federal Law is required to apply), this Indenture and the Lessor Notes
shall be in all other respects governed by and construed in accordance with the
laws of the State of New York, including all matters of construction, validity
and

                                       76
<PAGE>
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction. Regardless of any provision in any other agreement, for purposes
of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

     Section 9.13.  Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the
reorganization provisions of Title 11 of the United States Code, or any
successor provisions, (b) pursuant to such reorganization provisions the Owner
Participant is required by reason of the Owner Participant's being held to have
recourse liability that it would not otherwise have had under Section 2.5
hereof to the debtor or the trustee of the debtor, directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Notes and (c) any Noteholder or the Indenture Trustee actually receives
any Excess Amount (as hereinafter defined) which reflects any payment by the
Owner Participant on account of clause (b) above, then such Noteholder or the
Indenture Trustee, as the case may be, shall promptly refund such Excess
Amount, without interest, to the Owner Participant after receipt by such
Noteholder or the Indenture Trustee, as the case may be, of a written request
for such refund by the Owner Participant (which request shall specify the
amount of such Excess Amount and shall set forth in detail the calculation
thereof).  For purposes of this Section 9.13, "Excess Amount" means the amount
by which such payment exceeds the amount which would have been received by such
holder and the Indenture Trustee in respect of such principal or interest if
the Owner Participant had not become subject to the recourse liability referred
to in clause (b) above. Nothing contained in this Section 9.13 shall prevent
the Indenture Trustee or any Noteholder from enforcing any personal recourse
obligations (and retaining the proceeds thereof) of the Owner Participant under
the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness

                                       77
<PAGE>
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.  Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder

                                       78
<PAGE>
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture
Trustee has not withheld taxes on any payment made to any Noteholder, and the
Indenture Trustee is subsequently required to remit to any taxing authority any
such amount not withheld, such Noteholder shall return such amount to the
Indenture Trustee upon written demand by the Indenture Trustee. The Indenture
Trustee shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.  Fixture Financing Statement. This Indenture also is
intended to serve as a fixture filing financing statement and as a financing
statement with respect to goods or items, or other personal property that is or
will be attached to the Real Property, as permitted under the Arizona Uniform
Commercial Code and the Owner Lessor hereby authorizes this Indenture to so
serve and to be filed and/or recorded as such. In addition, a photographic,
electronic or other copy of this Indenture and/or any financing statement
related hereto shall be sufficient for filing and/or recording as a financing
statement. In connection therewith, the following information is provided:

     (a)  Name and address of Debtor:

          South Point OL-2, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     (b)  Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

          State Street Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee

                                       79
<PAGE>
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded and/or filed in the
official real estate or other records of the County of Mohave, State of
Arizona, and in the records of the Bureau of Indian Affairs in Albuquerque, New
Mexico.

                                       80
<PAGE>
     (e)  Type of Filing: This is a commercial filing and NOT a consumer filing
under the UCC as enacted and in effect in the State of Arizona.




                 (Remainder of Page Intentionally Left Blank)

                                       81
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                              SOUTH POINT OL-2, LLC, as Owner Lessor/Trustor

                              By:   Wells Fargo Bank Northwest, National
                                    Association, not in its individual capacity
                                    but solely as the Lessor Manager

                              By: ______________________________________________
                                    Name:
                                    Title:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                              as Indenture Trustee and Account Bank

                              By: ______________________________________________
                                    Name:
                                    Title:
<PAGE>
STATE OF NEW YORK      )
                       )      SS.:
COUNTY OF NEW YORK     )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by ___________________, the ___________________ of Wells Fargo
Bank Northwest, National Association, not in its individual capacity but solely
as the Lessor Manager of South Point OL-2, LLC, a Delaware limited liability
company, as the Owner Lessor/Trustor (the "Owner Lessor"), to be the free act
and deed on behalf of the national banking association as the Lessor Manager of
the Owner Lessor under the LLC Agreement dated as of ___________________, 2001.

                                        Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK      )
                       )      SS.:
COUNTY OF NEW YORK     )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by __________________ , the __________________ of State Street
Bank and Trust Company of Connecticut, National Association, a national banking
association, to be the free act and deed on behalf of the corporation.

                                        Notary Public

My Commission Expires
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

The East half (E1/2) of Section 8, Township 17 North, Range 21 West of the Gila
and Salt River Base and Meridian, Mohave County, Arizona.

Reserving therefrom, all mineral rights on, under or within said land, as
reserved by the Fort Mojave Indian Tribe.
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                    FORM OF SOUTH POINT LESSOR NOTE SERIES [A][B]

                              SOUTH POINT OL-2, LLC
                NONRECOURSE PROMISSORY NOTE (SOUTH POINT) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012][2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                   Issued at: New York, New York
                                                    Issue Date: October __, 2001

$[           ]

     SOUTH POINT OL-2, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in its
capacity as pass through trustee of [the South Point, Broad River and RockGen
Series A Trust] [the South Point, Broad River and RockGen Series B Trust], (the
"Pass Through Trustee") or its registered assigns, the principal sum of
$[_____], which is due and payable in a series of installments of principal with
a final payment date of May 30, [2012][2019], as provided below, together with
interest at the rate of [___]% per annum on the principal remaining unpaid from
time to time from and including the Issue Date until paid in full. Interest on
the outstanding principal amount under this Note shall be due and payable in
arrears semiannually at the rate specified above, commencing on May 30, 2002,
and on each May 30 and November 30 thereafter until the principal of this Note
is paid in full or made available for payment. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on each
of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product of
the Principal Portion set forth on Schedule I multiplied by the percentage set
forth on Schedule I under the column

                                       B-1-1
<PAGE>
headed "Percentage of Principal Amount Payable" for such date unless the
Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage and
Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due date
thereof at the Overdue Rate for the period during which any such principal,
premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding Business
Day with the same force and effect as if made on the date on which such payment
was due.

     Except as otherwise specifically provided in the Collateral Trust Indenture
and in the Participation Agreement, all payments of principal, premium, if any,
and interest on this Note, and all payments of any other amounts due hereunder
or under the Collateral Trust Indenture shall be made only from the Indenture
Estate, and the Indenture Trustee shall have no obligation for the payment
thereof except to the extent that the Indenture Trustee shall have sufficient
income or proceeds from the Indenture Estate to make such payments in accordance
with the terms of Section 3 of the Collateral Trust Indenture. The holder
hereof, by its acceptance of this Note, agrees that it will look solely to the
income and proceeds from the Indenture Estate to the extent available for
distribution to the holder hereof, as herein provided, and that, none of the
Owner Participant, the Owner Lessor or the Indenture Trustee is or shall be
personally liable to the holder hereof for any amounts payable under this Note
or under the Collateral Trust Indenture, or, except as expressly provided in the
Collateral Trust Indenture or, in the case of the Owner Participant and the
Owner Lessor, the Participation Agreement for any performance to be rendered
under the Collateral Trust Indenture or any Assigned Document or for any
liability under the Collateral Trust Indenture or any Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                       B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then due
and payable, in New York Clearing House funds, to the Noteholder, at the last
address of the Noteholder appearing on the Note Register, or by whichever of the
following methods specified by notice from the Noteholder to the Indenture
Trustee: (a) by crediting the amount to be distributed to the Noteholder to an
account maintained by the Noteholder with the Indenture Trustee, (b) by making
such payment to the Noteholder in immediately available funds at the Indenture
Trustee Office, or (c) by transferring such amount in immediately available
funds for the account of the Noteholder to the banking institution having bank
wire transfer facilities as shall be specified by the Noteholder, such transfer
to be subject to telephonic confirmation of payment. All payments due with
respect to this Note shall be made (i) as soon as practicable prior to the close
of business on the date the amounts to be distributed by the Indenture Trustee
are actually received by the Indenture Trustee if such amounts are received by
12:00 noon, New York City time, on a Business Day or (ii) on the next succeeding
Business Day if received after such time or if received on any day other than a
Business Day. Prior to due presentment for registration of transfer of this
Note, the Owner Lessor and the Indenture Trustee may deem and treat the Person
in whose name this Note is registered on the Note Register as the absolute owner
and holder of this Note for the purpose of receiving payment of all amounts
payable with respect to this Note and for all other purposes, and neither the
Owner Lessor nor the Indenture Trustee shall be affected by any notice to the
contrary. All payments made on this Note in accordance with the provisions of
this paragraph shall be valid and effective to satisfy and discharge the
liability on this Note to the extent of the sums so paid and neither the
Indenture Trustee nor the Owner Lessor shall have any liability in respect of
such payment.

     The holder hereof, by its acceptance of this Note, agrees that each payment
received by it hereunder shall be applied in the manner set forth in Section 2.7
of the Collateral Trust Indenture, which provides that each payment on the Note
shall be applied as follows: first, to the payment of accrued interest
(including interest on overdue principal and the Make Whole Amount, if any, and,
to the extent permitted by Applicable Law, overdue interest) on this Note to the
date of such payment; second, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note then due (including any overdue
installments of principal) thereunder; and third, to the extent permitted by
Section 2.10 of the Collateral Trust Indenture, the balance, if any, remaining
thereafter, to the payment of the principal amount of, and the Make Whole
Amount, if any, on this Note. This Note is the Note referred to in the
Collateral Trust Indenture as the "Lessor Note". The Collateral Trust Indenture
permits the issuance of additional notes ("Additional Lessor Notes"), as
provided in Section 2.12 of the Collateral Trust

                                       B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the extent
provided in the Collateral Trust Indenture as security for the payment of the
principal of and premium, if any, and interest on this Note and all other Notes
issued and outstanding from time to time under the Collateral Trust Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and the
Owner Participant, as well as for a statement of the terms and conditions of the
trust created by the Collateral Trust Indenture, to all of which terms and
conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided in
the Collateral Trust Indenture, as follows: (x) in the case of redemptions under
the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in Sections
2.10(d) of the Collateral Trust Indenture, at a price equal to the principal
amount of this Note then outstanding together with accrued interest on such
principal amount to the Redemption Date, plus the Make-Whole Amount, if any;
provided, however, that no such redemption shall be made until notice thereof is
given by the Indenture Trustee to the holder hereof as provided in the
Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be

                                       B-1-4
<PAGE>
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor is
made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such liability,
if any, being expressly waived by the holder of this Note or by any Person
claiming by, through or under such holder, and (d) under no circumstances shall
the Lessor Manager, be personally liable for the payment of any indebtedness or
expenses of the Owner Lessor or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Owner
Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                       B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                               SOUTH POINT OL-2, LLC
                               a Delaware limited liability company,

                               By:  Wells Fargo Bank Northwest,
                                    National Association, not in its
                                    individual capacity but solely as
                                    the Lessor Manager

                               By:  ____________________________________________
                                    Name:
                                    Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned
Collateral Trust Indenture duly executed as of the date hereof.

                               STATE STREET BANK AND TRUST
                               COMPANY OF CONNECTICUT,
                               NATIONAL ASSOCIATION,
                               not in its individual capacity, but solely as
                               the Indenture Trustee

                               _________________________________________________
                               Name:
                               Title:
<PAGE>
                           FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s) assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full
power of substitution in the premises.

Date: _____________________    _______________________________________
                               (Signature of Transferor)

                               NOTE: The signature to this assignment
                               must correspond with the name as
                               written upon the face of the
                               within-mentioned instrument in every
                               particular, without alteration or any
                               change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                        PRINCIPAL PORTION:  $43,000,000

<TABLE>
<CAPTION>
                                                                   Percentage of Principal
                                                                   -----------------------
Regular Distribution Date                                                   Amount Payable
-------------------------                                                   --------------
<S>                                                                <C>
May 30, 2002..............................................                     2.79069767%
November 30, 2002.........................................                     5.40697674%
May 30, 2003..............................................                     9.36046512%
November 30, 2003.........................................                     9.76744186%
May 30, 2004..............................................                     9.06976744%
November 30, 2004.........................................                     0.00000000%
May 30, 2005..............................................                     0.00000000%
November 30, 2005.........................................                     0.00000000%
May 30, 2006..............................................                     0.00000000%
November 30, 2006.........................................                     0.00000000%
May 30, 2007..............................................                     0.00000000%
November 30, 2007.........................................                     0.00000000%
May 30, 2008..............................................                     0.00000000%
November 30, 2008.........................................                     0.00000000%
May 30, 2009..............................................                     0.00000000%
November 30, 2009.........................................                     0.00000000%
May 30, 2010..............................................                     0.00000000%
November 30, 2010.........................................                     0.00000000%
May 30, 2011..............................................                     0.00000000%
November 30, 2011.........................................                    33.60465117%
                                                                             -------------

Total.....................................................                   100.00000000%
                                                                             -------------
</TABLE>
<PAGE>
                             Series B Lessor Notes.

                        PRINCIPAL PORTION:  $12,125,000

<TABLE>
<CAPTION>
                                                                            Percentage of Initial
                                                                            ---------------------
Regular Distribution Date                                                        Principal Amount
-------------------------                                                        ----------------
<S>                                                                         <C>
May 30, 2002.......................................................                   0.00000000%
November 30, 2002..................................................                   0.00000000%
May 30, 2003.......................................................                   0.00000000%
November 30, 2003..................................................                   0.00000000%
May 30, 2004.......................................................                   0.00000000%
November 30, 2004..................................................                   0.00000000%
May 30, 2005.......................................................                   0.00000000%
November 30, 2005..................................................                   0.00000000%
May 30, 2006.......................................................                   0.00000000%
November 30, 2006..................................................                   0.00000000%
May 30, 2007.......................................................                   0.00000000%
November 30, 2007..................................................                   0.00000000%
May 30, 2008.......................................................                   0.00000000%
November 30, 2008..................................................                   0.00000000%
May 30, 2009.......................................................                   0.00000000%
November 30, 2009..................................................                   0.00000000%
May 30, 2010.......................................................                   0.00000000%
November 30, 2010..................................................                   0.00000000%
May 30, 2011.......................................................                   0.00000000%
November 30, 2011..................................................                   0.00000000%
May 30, 2012.......................................................                   0.00000000%
November 30, 2012..................................................                   0.00000000%
May 30, 2013.......................................................                   0.00000000%
November 30, 2013..................................................                   0.00000000%
May 30, 2014.......................................................                   0.00000000%
November 30, 2014..................................................                   0.00000000%
May 30, 2015.......................................................                   0.00000000%
November 30, 2015..................................................                   0.00000000%
May 30, 2016.......................................................                   0.00000000%
November 30, 2016..................................................                   0.00000000%
May 30, 2017.......................................................                   0.00000000%
November 30, 2017..................................................                   0.00000000%
May 30, 2018.......................................................                   0.00000000%
November 30, 2018..................................................                   0.00000000%
May 30, 2019.......................................................                 100.00000000%
                                                                                    -------------
Total..............................................................                 100.00000000%
                                                                                    ============

</TABLE>

                                                                       EXHIBIT C

                                       B-1-10
<PAGE>
                                                              TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION

This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                       ______________________________,
                                       not in its individual capacity
                                       but solely as the Indenture Trustee

                                       By:_________________________
                                          Name:
                                          Title:

                                       C-2
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE

                         DESCRIPTION OF THE FACILITY

     That certain approximately 530 megawatt net nameplate capacity gas-fired
combined cycle electric generating facility (known also as the "South Point
Facility") together with all structures or improvements, all alterations
thereto or replacements thereof, and all other fixtures, attachments,
appliances, equipment, machinery and other articles (including, but not limited
to, the property set forth below (the "Included Property")), in each case
located on the land, or on the easements appurtenant to the land, consisting of
320 acres of land leased from the Fort Mojave Indian Tribe near Mojave Valley,
Arizona approximately 15 miles south of Bullhead City, Arizona and 5 miles east
of Needles, California, described more particularly on Exhibit A.

     Included Property

     1.  Two Combustion Turbines & Generators - Siemens Westinghouse Turbines
         (Serial Nos. 37A8063, 37A8065), Generators (Serial Nos.  94P3215,
         94P0060).

     2.  Two Heat Recovery Steam Generators - Vogt-Nem Boiler (Serial Nos.
         17382 1A-1D and 17382 2A-2D).

     3.  One Steam Turbine & Generator- Siemens Westinghouse Steam Turbine
         (Serial No. 24A3191 ) / Generator (Serial Nos. 1S94P0086 ).

     4.  One Condenser - Alstrom Condenser (Order No. 99-5080).
     5.  Water Treatment Facility - Reverse Osmosis, Brine Concentrator, Mixed
         Bed Exchangers, Multi-media Filters and associated tanks.
     6.  Eleven cell Marley Cooling Tower- including Circulating Water
         Pumps.
     7.  Three Generator Step Up Transformers, all electrical switchyard
         equipment and other interconnection equipment associated with the
         South Point Facility.

                                       D-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

<TABLE>
<S>                                      <C>
Initial Aggregate Principal Amount:      $43,000,000
Final Maturity Date:                     May 30, 2012
Interest Rate:                           8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                             Percentage of Principal
                                                             -----------------------
Regular Distribution Date                                             Amount Payable
-------------------------                                             --------------
<S>                                                          <C>
May 30, 2002.............................................               22.79069767%
November 30, 2002........................................               15.40697674%
May 30, 2003.............................................                9.36046512%
November 30, 2003........................................                9.76744186%
May 30, 2004.............................................                9.06976744%
November 30, 2004........................................                0.00000000%
May 30, 2005.............................................                0.00000000%
November 30, 2005........................................                0.00000000%
May 30, 2006.............................................                0.00000000%
November 30, 2006........................................                0.00000000%
May 30, 2007.............................................                0.00000000%
November 30, 2007........................................                0.00000000%
May 30, 2008.............................................                0.00000000%
November 30, 2008........................................                0.00000000%
May 30, 2009.............................................                0.00000000%
November 30, 2009........................................                0.00000000%
May 30, 2010.............................................                0.00000000%
November 30, 2010........................................                0.00000000%
May 30, 2011.............................................                0.00000000%
November 30, 2011........................................               33.60465117%
                                                                        ============

Total....................................................              100.00000000%
                                                                       =============
</TABLE>

                                       SCEDULE 1-1
<PAGE>
                                 SERIES B LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                       <C>
Initial Aggregate Principal Amount:       $12,125,000
Final Maturity Date:                      May 30, 2019
Interest Rate:                            9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                      Percentage of Initial
                                                                      ---------------------
Regular Distribution Date                                                  Principal Amount
-------------------------                                                  ----------------
<S>                                                                   <C>
May 30, 2002........................................................            0.00000000%
November 30, 2002...................................................            0.00000000%
May 30, 2003........................................................            0.00000000%
November 30, 2003...................................................            0.00000000%
May 30, 2004........................................................            0.00000000%
November 30, 2004...................................................            0.00000000%
May 30, 2005........................................................            0.00000000%
November 30, 2005...................................................            0.00000000%
May 30, 2006........................................................            0.00000000%
November 30, 2006...................................................            0.00000000%
May 30, 2007........................................................            0.00000000%
November 30, 2007...................................................            0.00000000%
May 30, 2008........................................................            0.00000000%
November 30, 2008...................................................            0.00000000%
May 30, 2009........................................................            0.00000000%
November 30, 2009...................................................            0.00000000%
May 30, 2010........................................................            0.00000000%
November 30, 2010...................................................            0.00000000%
May 30, 2011........................................................            0.00000000%
November 30, 2011...................................................            0.00000000%
May 30, 2012........................................................            0.00000000%
November 30, 2012...................................................            0.00000000%
May 30, 2013........................................................            0.00000000%
November 30, 2013...................................................            0.00000000%
May 30, 2014........................................................            0.00000000%
November 30, 2014...................................................            0.00000000%
May 30, 2015........................................................            0.00000000%
November 30, 2015...................................................            0.00000000%
May 30, 2016........................................................            0.00000000%
November 30, 2016...................................................            0.00000000%
May 30, 2017........................................................            0.00000000%
November 30, 2017...................................................            0.00000000%
May 30, 2018........................................................            0.00000000%
November 30, 2018...................................................            0.00000000%
May 30, 2019........................................................           100.00000000%
                                                                               =============
Total...............................................................           100.00000000%
                                                                               =============
</TABLE>

                                       SCHEDULE 1-2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.17
<SEQUENCE>20
<FILENAME>f80168ex4-22_17.txt
<DESCRIPTION>EXHIBIT 4.22.17
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.17


RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

===============================================================================

                       INDENTURE OF TRUST, DEED OF TRUST,
                        ASSIGNMENT OF RENTS AND LEASES,
                   SECURITY AGREEMENT AND FINANCING STATEMENT

                          Dated as of October 18, 2001

                                    between

                              SOUTH POINT OL-3, LLC

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank

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

                              SOUTH POINT FACILITY

===============================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                      Page

<S>                                                                                   <C>
SECTION 1.   DEFINITIONS............................................................. 10

SECTION 2.   THE LESSOR NOTES........................................................ 11
     Section 2.1.   Limitation on Lessor Notes....................................... 11
     Section 2.2.   Initial Lessor Notes............................................. 11
     Section 2.3.   Execution and Authentication of Lessor Notes..................... 12
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes................... 12
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee.......................................................... 13
     Section 2.6.   Method of Payment................................................ 14
     Section 2.7.   Application of Payments.......................................... 15
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.............. 16
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes................ 17
     Section 2.10.  Redemptions; Assumption.......................................... 17
     Section 2.11.  Payment of Expenses on Transfer.................................. 22
     Section 2.12.  Additional Lessor Notes.......................................... 23
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend..................................................... 26
     Section 2.14.  Security for and Parity of Lessor Notes.......................... 26
     Section 2.15.  Acceptance of the Indenture Trustee.............................. 26

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE... 27
     Section 3.1.   Distribution of Periodic Rent.................................... 27
     Section 3.2.   Payments Following Event of Loss or Other Early Termination...... 29
     Section 3.3.   Payments After Lease Indenture Event of Default.................. 30
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..... 31
     Section 3.5.   Application of Certain Other Payments............................ 31
     Section 3.6.   Other Payments................................................... 32
     Section 3.7.   Excepted Payments................................................ 32
     Section 3.8.   Distributions to the Owner Lessor................................ 33
     Section 3.9.   Payments Under Assigned Documents................................ 33
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee........ 33
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF
             INDENTURE TRUSTEE....................................................... 37
     Section 4.1.   Covenants of Owner Lessor........................................ 37
     Section 4.2.   Lease Indenture Events of Default................................ 38
     Section 4.3.   Remedies of the Indenture Trustee................................ 40
     Section 4.4.   Right to Cure Certain Lease Events of Default.................... 43
     Section 4.5.   Rescission of Acceleration....................................... 46
     Section 4.6.   Return of Indenture Estate, Etc.................................. 47
     Section 4.7.   Power of Sale and Other Remedies................................. 48
     Section 4.8.   Appointment of Receiver.......................................... 50
     Section 4.9.   Remedies Cumulative.............................................. 51
     Section 4.10.  Waiver of Various Rights by the Owner Lessor..................... 51
     Section 4.11.  Discontinuance of Proceedings.................................... 52
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the
                    Facility Lease................................................... 52
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc......... 53
     Section 4.14.  Further Assurances............................................... 53
     Section 4.15.  Waiver of Past Defaults.......................................... 53

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND
             DUTIES OF OWNER LESSOR.................................................. 54
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default........... 54
     Section 5.2.   Actions Upon Instructions Generally.............................. 54
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease................................................... 55
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification........... 55
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions........................ 55
     Section 5.6.   Certain Rights of the Owner Lessor............................... 56
     Section 5.7.   Restrictions on Dealing with Indenture Estate.................... 59
     Section 5.8.   Filing of Financing Statements and Continuation Statements....... 59

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR...................................... 60
     Section 6.1.   Acceptance of Trusts and Duties.................................. 60
     Section 6.2.   Absence of Certain Duties........................................ 62
     Section 6.3.   Representations and Warranties................................... 63
     Section 6.4.   No Segregation of Moneys; No Interest............................ 63
     Section 6.5.   Reliance; Agents; Advice of Experts.............................. 64
</TABLE>

                                      ii
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>

SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE
             TRUSTEES................................................................ 65
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appoin-
                    tment of Successor............................................... 65
     Section 7.2.   Appointment of Additional and Separate Trustees.................. 67

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
             AND OTHER DOCUMENTS..................................................... 69
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations....................................... 69
     Section 8.2.   Supplemental Indentures and other Amendments Without
                    Consent.......................................................... 70
     Section 8.3.   Conditions to Action by the Indenture Trustee.................... 72

SECTION 9.   MISCELLANEOUS........................................................... 72
     Section 9.1.   Surrender, Defeasance and Release................................ 72
     Section 9.2.   Conveyances Pursuant to the Site Lease........................... 73
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances....................................................... 73
     Section 9.4.   Indenture for Benefit of Certain Persons Only.................... 73
     Section 9.5.   Notices; Furnishing Documents, etc............................... 74
     Section 9.6.   Severability..................................................... 76
     Section 9.7.   Limitation of Liability.......................................... 76
     Section 9.8.   Written Changes Only............................................. 76
     Section 9.9.   Counterparts..................................................... 76
     Section 9.10.  Successors and Permitted Assigns................................. 77
     Section 9.11.  Headings and Table of Contents................................... 77
     Section 9.12.  Governing Law.................................................... 77
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..... 77
     Section 9.14.  Withholding Taxes: Information Reporting......................... 78
     Section 9.15.  Fixture Financing Statement...................................... 80
</TABLE>

                                      iii
<PAGE>
EXHIBITS

Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility

APPENDIX A Definitions

                                       iv
<PAGE>
INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY
AGREEMENT AND FINANCING STATEMENT

     This INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FINANCING STATEMENT (as amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof,
this "Indenture"), dated as of October 18, 2001, between SOUTH POINT OL-3, LLC,
a Delaware limited liability company created for the benefit of the Owner
Participant referred to below, as trustor (as such term is defined in Arizona
Revised Statutes, Section 33-801, et seq.) (the "Owner Lessor"), having an
address as set forth in Section 9.5 of this Indenture, STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as beneficiary and trustee
(as such term is defined in Arizona Revised Statutes, Section 33-801, et seq.)
on behalf of the Noteholders (the "Indenture Trustee") and as the Account Bank,
having an address as set forth in Section 9.5 of this Indenture.

                                  WITNESSETH:

     WHEREAS, Calpine Construction Finance Company ("CCFC") has assigned the
Undivided Interest and the Ground Interest to the Owner Lessor pursuant to the
certain Assignment Agreement, a memorandum of which shall be recorded with this
Indenture in the appropriate registry of land records described in Exhibit A
attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with
South Point Energy Center, LLC (the "Facility Lessee") pursuant to which the
Facility Lessee has subleased from the Owner Lessor for a term of years the
Owner Lessor's Undivided Interest in the Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time in accordance with the provisions thereof, the "Facility Site
Lease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

                                       1
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D
hereto and made a part hereof and the Facility Site is more particularly
described on Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assumed from CCFC and (ii) grant to the Indenture Trustee the security
interests herein provided;

     WHEREAS, this Indenture is regarded as and shall constitute a deed of
trust under the laws of the State of Arizona, as an absolute and current
assignment of rents, leases, income, issues, royalties and profits pursuant to
the laws of the State of Arizona including, among other provisions, Arizona
Revised Statutes ("A.R.S.") Section(s) ("ss.") 33-702.B, 33-807(C) and 12-241,
et seq. as a security agreement and grant by the Owner Lessor, as debtor, to and
in favor of the Indenture Trustee, as the Secured Party, of a security interest
in the Indenture Estate (as such term is hereinafter defined) under the Uniform
Commercial Code as enacted and in effect from time to time in the State of
Arizona and under the Uniform Commercial Code as enacted and in effect from time
to time in the States of New York and Delaware, and as a fixture filing and a
financing statement under the laws of the Uniform Commercial Code as enacted and
in effect in the State of Arizona from time to time;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter
into this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time, (b) the conveyance and assignment to
the Indenture Trustee on the Closing Date of the Undivided Interests conveyed to
the Owner Lessor and the Owner Lessor's right, title and interest in and under
the Operative Documents executed in connection therewith and all payments and
other amounts received hereunder or thereunder in accordance herewith (excluding
Excepted Payments) and (c) security for the payment and performance of the
obligations described or referred to in this Indenture;

     WHEREAS, all things have been done to make the Lessor Notes, when
executed by the Owner Lessor, authenticated and delivered hereunder and issued,
the valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

                                       2
<PAGE>
     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to secure
(i) the prompt payment when and as due of the principal of and the Make-Whole
Amount, if any, and interest on the Lessor Notes and of all other amounts owing
with respect to all Lessor Notes from time to time outstanding hereunder, and
the prompt payment when and as due of any and all other amounts from time to
time owing in respect of the Secured Indebtedness and (ii) the performance and
observance by the Owner Lessor for the benefit of the holders of the Lessor
Notes and the Indenture Trustee of all other obligations, agreements, and
covenants of the Owner Lessor set forth hereinafter and in the Lessor Notes, the
Operative Documents and the other documents, certificates and agreements
delivered in connection therewith:

                            GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee as
trustee under ARS ss. 33-801, et seq., in trust, with power of sale, for the
benefit of the holders of the Lessor Notes from time to time, a first priority
security interest in and deed of trust lien on all estate, right, title and
interest of the Owner Lessor in, to and under the following described real and
personal property, rights, interests and privileges, whether now held or
hereafter acquired and all easements, rights of way, access agreements,
leasehold interests, leasehold and other estates, ground leases, hereditaments
and other rights now or hereafter existing, covering all or part thereof, or
appurtenant or attaching thereto, together with all structures, buildings and
other improvements now or hereafter upon, constructed upon or located in whole
or in part upon the same; together with all fixtures, machinery, and all
articles and items of property now or hereafter attached to, or used or adapted
for use in the operation, maintenance or use thereof; together with all rents,
issues, royalties, income and profits thereof under present and future leases,
occupancy and use agreements (which collectively, including all property
hereafter specifically subjected to the security interest created by this
Indenture by any supplement hereto, exclusive of Excepted Payments) are included
within, and are hereafter referred to as, the "Indenture Estate"):

     (1)   the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility Lessee
thereunder (including Rent); any rights of the Owner Lessor as assignee of the
Facility Lessee under the Facility Lease; the Facility Site Lease and all
payments of any kind by the Facility Lessee thereunder; the Assignment Agreement
(and all rights with respect to the Ground Lease conveyed

                                       3
<PAGE>
thereby); the Owner Lessor's interest in all tangible property located on or at
or attached to the Facility Site as to which an interest in such tangible
property arises under applicable real estate law ("fixtures"); the Calpine
Guaranty, the South Point Ground Lease, the Ownership and Operation Agreement
and all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or at law or in equity or
otherwise, arising out of any Lease Default or Lease Event of Default and (y)
any right to restitution from the Facility Lessee, any sublessee or any other
person in respect of any determination of invalidity of any such document;

     (2)   all rents (including Periodic Rent and Supplemental Rent),
royalties, issues, profits, revenues, proceeds, damages, claims, warranties and
other income from the property described in this Granting Clause, including,
without limitation, all payments or proceeds payable to the Owner Lessor as the
result of the sale of the Property Interest or the lease or other disposition of
the Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)   any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof

                                       4
<PAGE>
or to accept surrender or redelivery of the Facility or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner Lessor,
whether acting under any sublease of the Facility or any assignment thereof or
by statute or at law or in equity, or otherwise, arising out of any default
under such sublease or any assignment thereof, and (iii) any right to
restitution from the Facility Lessee, the applicable sublessee or any guarantor
of such sublessee in respect of any determination of invalidity of any sublease
of the Facility or any assignment thereof;

     (4)   all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the extent of the Owner Lessor's interest therein) of all insurance
maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)   all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the terms
of any Assigned Document, wherever located; and

     (6)   all of Owner Lessor's right, title and interest conveyed to the
Indenture Trustee in and relating to the following :

          (i)   The real property that is described in and made subject to
     this Indenture (the "Real Property") the fee simple owner of which is
     the United States of America, in trust for the Fort Mojave Indian Tribe
     ("Owner"), as evidenced by patent of record in Mohave County, Arizona
     which is on file with the United States Department of Interior, Bureau
     of Indian Affairs, Albuquerque, New Mexico Regional Office (the "BIA");
     and

          (ii)   The leasehold estate interest in the Real Property which was
     created pursuant to the terms and conditions of that certain Amended and
     Restated Ground Lease Agreement, being BIA Lease No. B-1778-FM, approved as
     of August 19, 1999, by and between Owner and Calpine South Point, LLC, a
     Delaware limited liability company, as Lessee, and Fort Mojave Indian
     Tribe, a federally recognized Indian Tribe, as Lessor, a memorandum of
     which Ground Lease, as amended, was recorded on October 29, 1999 in Book
     3399 of Official Records, page 822, Records of Mohave County, Arizona and
     filed in the Land Titles and Records Office as document number 604-050-99
     and certificate of merger filed in the Land Titles and Records Office as
     document number 604-056-99 (collectively the "Ground Lease"). The Lessee's
     interests in and to the Ground Lease have been duly, properly and
     effectively assigned to the Owner Lessor, pursuant to that certain
     Assignment Agreement, dated as of the date

                                       5
<PAGE>
     hereof, which shall have been recorded in the records of Mohave County,
     Arizona and filed with the BIA; and

     (7)   all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner Participant
hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns, for the benefit of the Indenture Trustee and for the benefit
and security of the Noteholders from time to time;

     TO HAVE AND TO HOLD to said Indenture Trustee, as Trustee under A.R.S.
Section 33-801, et seq., its successors, heirs or assigns, the Indenture Estate
and all of the Owner Lessor's interests therein, including, without limitation,
the leasehold interest pursuant to the South Point Ground Lease;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount,
if any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does
hereby irrevocably constitute and appoint the Indenture Trustee the true and
lawful attorney of the Owner Lessor (which appointment is coupled with an
interest) with full power (in the name of the Owner Lessor or otherwise) to ask,
require, demand and receive any and all moneys and claims for moneys (in each
case, including, without limitation, insurance and requisition proceeds to the
extent of the Owner Lessor's interest therein but excluding in all cases
Excepted Payments) due and to become due under or arising out of the Assigned
Documents and all other property which now or hereafter constitutes part of the
Indenture Estate and, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings (other than in connection with the enforcement or
collection of Excepted Payments) which the Indenture Trustee may deem to be
necessary or advisable. Pursuant to the Facility Lease, the Facility Lessee is
directed to make all payments of Rent required to be paid or deposited with the
Owner Lessor (other than Excepted Payments) and all other amounts which are
required to be paid

                                       6
<PAGE>
to or deposited with the Owner Lessor pursuant to the Facility Lease (other
than Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided
in this Indenture. Further, the Owner Lessor agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Indenture Estate, whether or
not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to and does hereby constitute and create a
security agreement as required under the Uniform Commercial Codes from time to
time enacted and effective under the laws of the States of New York, Delaware
and Arizona. Pursuant to such security agreement, Owner Lessor does hereby grant
to Indenture Trustee a security interest in all that portion of the Indenture
Estate that is now or shall or may be or become personal property and/or
fixtures and in or with respect to which a security interest may be granted
(collectively the "Personal Property") pursuant to the Uniform Commercial Code
as enacted and effective from time to time in all and each of the States of New
York, Delaware and Arizona. Such security interest shall be and is a first and
prior security interest in all such Personal Property and Indenture Trustee, its
successors and assigns, shall have and enjoy all rights, remedies and benefits
available to a secured party under the said Uniform Commercial Code as enacted
and effective from time to time in the aforementioned States, with respect to
the Indenture Estate.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for the
benefit and security of (i) the holders from time to time of the Lessor Notes
from time to time outstanding, without any priority of any one Lessor Note over
any other except as herein otherwise expressly provided and (ii) the Indenture
Trustee, and for the uses and purposes and subject to the terms and provisions
set forth in this Indenture. It is expressly agreed that anything herein
contained to the contrary notwithstanding, the

                                       7
<PAGE>
Owner Lessor shall remain liable under the Assigned Documents to perform all of
the obligations assumed by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and the Indenture Trustee and the
Noteholders shall have no obligation or liability under any Assigned Document
by reason of or arising out of the assignment hereunder, nor shall the
Indenture Trustee or the Noteholders be required or obligated in any manner,
except as herein expressly provided, to perform or fulfill any obligation of
the Owner Lessor under or pursuant to any such Assigned Document or, except as
herein expressly provided, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or to present or file
any claim, or to take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged, granted or permitted a lien, mortgage or deed of trust or
security interest in, to or under, and hereby covenants that, so long as this
Indenture shall remain in effect and the Lien hereof shall not have been
released pursuant to Section 9.1 hereof, it will not assign, pledge or grant a
lien or security interest in any of its estate, right, title or interest in, to
or under, the Indenture Estate to anyone other than the Indenture Trustee for
the benefit of the Noteholders. The Owner Lessor hereby further covenants that
with respect to its estate, right, title and interest in, to or under the
Indenture Estate, it will not, except as provided in this Indenture and except
as to Excepted Payments, (i) accept any payment from the Facility Lessee or any
sublessee or enter into any agreement amending, modifying or supplementing any
of the Assigned Documents, execute any waiver or modification of, or consent
under (other than pursuant to Section 4.2 of the South Point Ground Lease or
Sections 5.20 or 13.3 of the Participation Agreement (subject to the conditions
set forth in Sections 5.20 or 13.3, as applicable, of the Participation
Agreement)), the terms of any of the Assigned Documents or revoke or terminate
any of the Assigned Documents, (ii) settle or compromise any claim arising under
any of the Assigned Documents, or (iii) submit or consent to the submission of
any dispute, difference or other matter arising under or in respect of any of
the Assigned Documents to arbitration thereunder (except with respect to any
action pursuant to Section 4.2 of the South Point Ground Lease or Sections 5.20
or 13.3 of the Participation Agreement (subject to the conditions set forth in
Sections 5.20 or 13.3, as applicable, of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and
confirms its obligations under the Assigned Documents and does hereby agree that
it will not take or omit to take any action, the taking or omission of which
might result in an alteration or impairment of any of the Assigned Documents or
of any of the rights created

                                       8
<PAGE>
by any such Assigned Document or the assignment (subject to the previous)
paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and
permitted assigns, agrees that all Lessor Notes are to be issued and delivered
and that all property subject or to become subject hereto is to be held subject
to the further covenants, conditions, uses and trusts hereinafter set forth, and
the Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security of
the holders from time to time of the Lessor Notes from time to time outstanding
and to protect the security of this Indenture; and the Indenture Trustee agrees
to accept the trusts and duties hereinafter set forth, as follows:

     THIS INDENTURE AND CONVEYANCE IS MADE IN TRUST, however, with POWER OF
SALE for the benefit of the Indenture Trustee to secure the payment of the
Secured Indebtedness.

     This Indenture and conveyance is also made in trust to further secure:

     (a)   Payment and performance of the obligations, covenants and agreements
contained in the Lessor Notes and other documents and/or instruments referred
to, defined or described in the definition of Secured Indebtedness and any and
all modifications, extensions or renewals of any such documents or instruments;

     (b)   Payment and performance of the obligations, covenants and agreements
contained in that certain Participation Agreement, the terms and conditions of
which are incorporated herein by this reference; and

     (c)   Payment of all other sums becoming due or payable under, and the
performance of all other obligations, covenants and agreements contained in (i)
the Lessor Notes; (ii) any Additional Lessor Notes; (iii) any and all Assignment
Documents and Assumption Documents; and (iv) any other instrument given as
security for the Secured Indebtedness or entered into with respect to this
Indenture, including without limitation, the Participation Agreement and all
other documents and instruments (all the foregoing documents and instruments
being collectively referred to herein as the "Collateral Documents").

                               SECTION 1.
                              DEFINITIONS

                                       9
<PAGE>
     (a)   Unless the context hereof shall otherwise require, capitalized
terms used, including those in the recitals, and not otherwise defined herein
shall have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager, the
Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)   In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 530 MW nameplate capacity gas-fired combined cycle
merchant power plant located near Bullhead, Arizona and more fully described in
Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness
     evidenced by such Lessor Notes, and principal of such Lessor Notes
     being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may
     hereafter be owing by the Owner Lessor to or for the benefit of the
     Indenture Trustee under the Operative Documents including indemnities
     and other Supplemental Rent payable by the Facility Lessee under the
     Operative Documents, whether evidenced by Additional Lessor Notes
     issued pursuant to Section 2.12 hereof or otherwise, however and
     whenever incurred or evidenced, whether direct or indirect, absolute or
     contingent, due or to become due, together with interest thereon at the
     rate provided in each Additional

                                      10
<PAGE>
Lessor Note and the Make-Whole Amount thereon (if any) and together with any
and all renewals, modifications, consolidations and extensions of the
indebtedness evidenced by such Additional Lessor Notes, and principal of such
Additional Lessor Notes being due and payable as provided in each such
Additional Lessor Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to Section
     4.13 hereof (whether or not the Owner Lessor remains the owner of the
     Indenture Estate at the time of such advances); and

          (iv)   Any and all expenses incident to the collection of the
     Secured Indebtedness and the foreclosure hereof by action in any court
     or by exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                               SECTION 2.
                            THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal amount
of the Lessor Notes which may be authenticated and delivered and outstanding at
any one time under this Indenture shall be limited to the principal amount of
the Initial Lessor Notes issued on the Closing Date to the Pass Through Trustees
plus the aggregate principal amount of Additional Lessor Notes issued pursuant
to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes"

                                      11
<PAGE>
or, individually, an "Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate form
provided for in any supplement hereto executed pursuant to Section 2.12 hereof),
executed by the Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor signed
by the Lessor Manager. The Indenture Trustee shall authenticate and deliver
Additional Lessor Notes, upon a written order of the Owner Lessor executed by
the Lessor Manager and satisfaction of the conditions specified in Section 2.12.
Such order shall specify the principal amount of the Additional Lessor Notes to
be authenticated and the date on which the original issue of Additional Lessor
Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)   Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

     (b)   Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments having
final payment dates set forth in Schedule I hereto. The principal of each
Initial Lessor Note shall be due and payable in installments on the dates and in
the amounts set forth in Schedule I hereto. Schedule I hereto to the contrary
notwithstanding, the last payment made under such Initial Lessor Note shall be
equal to the then unpaid balance of the principal of such Lessor Note plus all
accrued and unpaid interest on, and any other amounts due under, such Initial
Lessor Note. Each Initial Lessor Note shall bear interest on the principal from
time to time outstanding from and including the date of

                                      12
<PAGE>
issuance thereof (computed on the basis of a 360-day year of twelve 30-day
months) until paid in full at the rate set forth in such Initial Lessor Note
and Schedule I hereto.  Each Initial Lessor Note shall accrue additional
interest under the circumstances and at the rate per annum set forth in the
third paragraph of each Initial Lessor Note. Interest on each Initial Lessor
Note shall be due and payable in arrears semi-annually commencing on May 30,
2002, and on each May 30 and November 30 thereafter until paid in full. If any
day on which principal, Make-Whole Amount, if any, or interest on the Initial
Lessor Notes are payable is not a Business Day, payment thereof shall be made
on the next succeeding Business Day with the same effect as if made on the date
on which such payment was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)   Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the Facility
Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or (iii) the
Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have no
obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments in
accordance with the terms of Section 3 hereof; and the Owner Participant shall
not have any obligation for payments in respect of the Lessor Notes or under
this Indenture. The Indenture Trustee and each Noteholder, by its acceptance
thereof, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for distribution to the Indenture
Trustee or such Noteholder, as the case may be, as herein provided and that,
except as expressly provided in this Indenture, the Participation Agreement or
any other Operative Document, none of the Owner Participant, the Owner Lessor,
the Trust Company, the Lease Indenture Company, nor the Indenture Trustee, nor
any Affiliate of any thereof, shall be personally liable to such Noteholder or
the Indenture Trustee for any amounts payable hereunder, under such Lessor Note
or for any performance to be rendered under any Assigned Document or for any
liability under

                                      13
<PAGE>
any Assigned Document. Without prejudice to the foregoing, the Owner Lessor
will duly and punctually pay or cause to be paid the principal of, Make-Whole
Amount, if any, and interest on all Lessor Notes according to their terms and
the terms of this Indenture. Nothing contained in this Section 2.5 limiting the
liability of the Owner Lessor shall derogate from the right of the Indenture
Trustee and the Noteholders to proceed against the Indenture Estate and the
Calpine Guaranty to secure and enforce all payments and obligations due
hereunder and under the Assigned Documents and the Lessor Notes.

     (a)   In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)   Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent"). The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)   The Owner Lessor shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Lessor Notes and shall notify
the Indenture Trustee of any default by the Owner Lessor in making any such
payment.

     (b)   The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in the
Indenture Estate on the dates provided in the Lessor Notes by mailing a check
for such amount, payable in New York Clearing House funds, to each Noteholder at
the last address of each such Noteholder appearing on the Note Register, or by
whichever of the following methods shall be specified by notice from a
Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to

                                      14
<PAGE>
an account maintained by such Noteholder with the Indenture Trustee, (ii) by
making such payment to such Noteholder in immediately available funds at the
Indenture Trustee Office, or (iii) in the case of the Initial Lessor Notes and
in the case of Additional Lessor Notes, if such Noteholder is the Pass Through
Trustee, or a bank or other institutional investor, by transferring such amount
in immediately available funds for the account of such Noteholder to the
banking institution having bank wire transfer facilities as shall be specified
by such Noteholder, such transfer to be subject to telephonic confirmation of
payment. Any payment made under any of the foregoing methods shall be made free
and clear of and without reduction for or on account of all wire and like
charges and without any presentment or surrender of such Lessor Note, unless
otherwise specified by the terms of the Lessor Note, except that, in the case
of the final payment in respect of any Lessor Note, such Lessor Note shall be
surrendered to the Indenture Trustee for cancellation after such payment. All
payments in respect of the Lessor Notes shall be made (1) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon New York City time, on a
Business Day, or (2) on the next succeeding Business Day if received after such
time or on any day other than a Business Day. One or more of the foregoing
methods of payment may be specified in a Lessor Note. Prior to due presentment
for registration of transfer of any Lessor Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name any Lessor Note
is registered on the Note Register as the absolute owner and holder of such
Lessor Note for the purpose of receiving payment of all amounts payable with
respect to such Lessor Note and for all other purposes, and neither the Owner
Lessor nor the Indenture Trustee shall be affected by any notice to the
contrary. All payments made on any Lessor Note in accordance with the
provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied as required under Arizona law; and thereafter in
the following order: first, to the payment of accrued interest (including
interest on overdue principal and the Make-Whole Amount, if any, and, to the
extent permitted by Applicable Law, overdue interest) on such Lessor Note to the
date of such payment, second, to the payment of the principal amount of, and the
Make-Whole Amount, if any, on such Lessor Note then due (including any overdue
installments of principal) thereunder and third, to the extent permitted by
Section 2.10 of this Indenture, the balance, if any, remaining thereafter, to
the payment of the principal amount of, and the Make-Whole Amount, if any, on
such Lessor Note. The order of

                                      15
<PAGE>
application of payments prescribed by this Section 2.7 shall not be deemed to
supersede any provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration of
transfer and exchange of Lessor Notes (such register being referred to herein as
the "Note Register"). If any Lessor Note is surrendered at said office for
registration of transfer or exchange (accompanied by a written instrument of
transfer duly executed by or on behalf of the holder thereof, together with the
amount of any applicable transfer taxes), the Owner Lessor will execute and the
Indenture Trustee will authenticate and deliver, in the name of the designated
transferee or transferees, if any, one or more new Lessor Notes (subject to the
limitations specified in Sections 2.3 and 2.13 hereof) in any denomination or
denominations not prohibited by this Indenture, as requested by the Person
surrendering the Lessor Note, dated the same date as the Lessor Note so
surrendered and of like tenor and aggregate unpaid principal amount. Any Lessor
Note or Lessor Notes issued in a registration of transfer or exchange shall be
valid obligations of the Owner Lessor entitled to the same security and benefits
to which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or Lessor
Notes surrendered. Every Lessor Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Indenture Trustee
duly executed by the holder thereof or his attorney duly authorized in writing,
and the Indenture Trustee may require an opinion of counsel as to compliance of
any such transfer with the Securities Act. The Indenture Trustee shall make a
notation on each new Lessor Note of the amount of all payments of principal
previously made on the old Lessor Note or Lessor Notes with respect to which
such new Lessor Note is issued and the date on which such new Lessor Note is
issued and the date to which interest on such old Lessor Note or Lessor Notes
shall have been paid. The Indenture Trustee shall not be required to register
the transfer or exchange of any Lessor Note during the 10 days preceding the due
date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have

                                      16
<PAGE>
consented to, and agreed to be bound by, the terms and conditions hereof, of
such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor Note
and, in case of loss, theft or destruction, of indemnity satisfactory to each of
them, and upon reimbursement to the Owner Lessor and the Indenture Trustee of
all reasonable expenses incidental thereto and payment or reimbursement for any
transfer taxes, and upon surrender and cancellation of such Lessor Note, if
mutilated, the Owner Lessor will execute and the Indenture Trustee will
authenticate and deliver in lieu of such Lessor Note, a new Lessor Note, dated
the same date as such Lessor Note and of like tenor and principal amount. Any
indemnity provided by the holder of a Lessor Note pursuant to this Section 2.9
must be sufficient in the reasonable judgment of the Owner Lessor and the
Indenture Trustee to protect the Owner Lessor, the Indenture Trustee, the Paying
Agent, the Registrar and any co-registrar or co-paying agent from any loss which
any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.
     (a)   Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clause (v) or
     (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii) if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1

                                      17
<PAGE>
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)   Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old Lessor Note but indicating that the Facility Lessee is the issuer
thereof. When such assumption agreement becomes effective, the Owner Lessor
shall be released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee. All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the

                                      18
<PAGE>
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental
     Approval is necessary or required in connection with any Assumption
     Document or the assumption contemplated thereby (or, if any such
     Governmental Approval is necessary or required, that the same has been
     duly obtained and is final and in full force and effect and any period
     for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor
     Note or any Certificateholder and (6) the lien of this Indenture will
     continue to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

                                      19
<PAGE>
          (iii)   Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)   The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any, so
redeemed to the date of redemption.

     (d)   The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to Section 11.2 of the Participation Agreement. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause
     (b) of Section 14.1 of the Facility Lease. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a
     Lease Indenture Event of Default or any other

                                      20
<PAGE>
     default under the Operative Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as
     a result of the occurrence of an Event of Loss described in clause (v) or
     (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be continuing,
selected by the Owner Lessor.

     (e)   If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)   At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that no notice shall be required so long as the
Pass Through Trustee and the Indenture Trustee are the same entity. Each such
notice shall state:

          (i)   the date of redemption;

          (ii)   the redemption price;

          (iii)   the name and address of the Paying Agent;

          (iv)   that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v)   that, unless the Owner Lessor defaults in making such redemp-

                                      21
<PAGE>
     tion payment, interest on Lessor Notes called for redemption ceases to
     accrue on and after the redemption date; and

          (vi)   the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)   With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt by
the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)   Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the Indenture Trustee and the Owner Participant of
any tax or other governmental charge in connection therewith or any charges and
expenses connected with such tax or governmental charge paid or payable by the
Owner Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)   Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing

                                      22
<PAGE>
funds in connection with Supplemental Financing pursuant to Section 11.1 of the
Participation Agreement for the payment of all or any portion of Modifications
to the Facility pursuant to Section 8 of the Facility Lease, or (ii) redeeming
any previously issued Lessor Notes pursuant to an optional refinancing pursuant
to Section 11.2 of the Participation Agreement and providing funds for the
payment of all reasonable costs and expenses in connection therewith.

     (b)   Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days prior
to the proposed date of issuance of any Additional Lessor Notes, a request and
authorization to issue such Additional Lessor Notes, which request and
authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to distinguish
such Additional Lessor Notes from the Initial Lessor Notes theretofore issued,
but otherwise shall rank pari passu with any Lessor Notes then outstanding, be
entitled to the same benefits and security of this Indenture as the other Lessor
Notes issued pursuant to the terms hereof, be dated the date of original
issuance of such Additional Lessor Notes, bear interest at such rates as shall
be agreed between the Facility Lessee and the Owner Lessor and indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the final maturity date of the Initial Lessor Notes
issued on the closing date. The Additional Lessor Notes shall not be subject to
(i) purchase except as provided in Section 4.4(e) hereof or (ii) redemption or
assumption except as provided in Section 2.10 hereof.

     (c)   The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to this
Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in

                                      23
<PAGE>
     respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of
     and interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default
     as to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of the
     Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and

                                      24
<PAGE>
     enforceability of the Additional Lessor Notes and that all conditions
     hereunder to the authentication and delivery of such Additional Lessor
     Notes have been complied with.

     (d)   When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)   This Indenture is an open-end deed of trust and mortgage which
secures existing indebtedness, "future advances", "protective advances,"
"authorized advances"and "contingent obligations" as such terms are under or
referred to under applicable Arizona law. The maximum principal indebtedness
secured by this Indenture, including future advances and contingent obligations
but excluding protective advances, shall not at any time exceed the total amount
of Two Hundred Twenty Million Five Hundred Thousand Dollars ($220,500,000);
provided, however, that nothing herein contained shall limit the amount secured
by this Indenture if the Secured Indebtedness is increased by protective
advances; and provided, further, such limitation as to such future advances and
contingent obligations shall only pertain to the record priority of the amount
thereof secured hereby pursuant to applicable law and does not otherwise limit
the amount of total indebtedness of Owner Lessor secured hereby or limit the
liability of Owner Lessor to Indenture Trustee for such total indebtedness,
including future advances and contingent obligations. The future advances
secured hereby shall be made to or for the account of Owner Lessor and may be
made under the Additional Lessor Notes, or pursuant to promissory notes or other
instruments evidencing such future advances which may be hereafter executed and
delivered by Owner Lessor to Indenture Trustee. In the event that any notice is
recorded or is received by Indenture Trustee, any commitment, agreement, or
obligation to make future advances to or for the benefit of Owner Lessor shall
immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal
Securities Laws; Legend. Each Lessor Note shall be delivered to the initial
Noteholder thereof without registration of such Lessor Note under the Securities
Act and without qualification of this Indenture under the Trust Indenture Act of
1939, as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the

                                      25
<PAGE>
Owner Lessor an opinion of counsel, which opinion and which counsel shall be
reasonably satisfactory to the Indenture Trustee, the Owner Lessor and the
Facility Lessee, to the effect that such transfer will not violate the
registration provisions of the Securities Act or require qualification of this
Indenture under the Trust Indenture Act of 1939, as amended, and all Lessor
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
     MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH
     ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture, without
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                               SECTION 3.
                  RECEIPT, DISTRIBUTION AND APPLICATION
                     OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)   Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent and
any payment of Supplemental Rent constituting interest on overdue installments
of Periodic Rent received by the Indenture Trustee shall be distributed by the
Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each

                                      26
<PAGE>
     such Lessor Note bears to the aggregate amount of the payments then due
     and payable under all such Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     (b)   Application of Other Amounts Held by the Indenture Trustee upon
Rent Default. If, as a result of any failure by the Facility Lessee to pay
Periodic Rent in full on any date when an installment of Periodic Rent is due,
there shall not have been distributed on any date (or within any applicable
period of grace) pursuant to Section 3.1(a) hereof the full amount then
distributable pursuant to clause "First" of Section 3.1(a) of this Indenture,
the Indenture Trustee shall distribute other payments of the character referred
to in Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it,
to all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal or
interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue, to
the extent provided in and subject to the provisions of Section 4.3(a) and (b)
hereof.

     (c)   Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent,

                                      27
<PAGE>
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall retain such installment of Periodic Rent or payment
of interest (to the extent not then required to be distributed pursuant to
clause "First" of Section 3.1(a)) as part of the Indenture Estate and shall not
distribute any such payment of Periodic Rent or interest pursuant to clause
"Second" of Section 3.1(a) until such time as such Lease Indenture Event of
Default shall be cured or waived or until such time as the Indenture Trustee
shall have received written instructions from a Majority in Interest of
Noteholders to make such a distribution; provided that such amounts must be
returned to the Owner Lessor within six (6) months from the receipt thereof by
the Indenture Trustee unless (i) the Indenture Trustee has declared the unpaid
principal of all Lessor Notes due and payable (or such amounts shall have
automatically become due and payable), pursuant to Section 4.2(a) and the
Indenture Trustee is diligently pursuing any dispossessary remedies available
under Section 4.3 hereof (unless such remedies are stayed or prevented by
operation of law) or (ii) any other Lease Indenture Event of Default shall have
occurred during the intervening period and be continuing, in which case, such
six-month period will be restarted from the date such other Lease Indenture
Event of Default shall have occurred. Upon the cure or waiver of such Lease
Indenture Event of Default, withheld Periodic Rent shall, subject to clause
(ii) of the immediately preceding sentence, be distributed to the Owner Lessor
(to the extent that all payments to be distributed pursuant to clause "First"
of Section 3.1(a) have been made), and no further withholding of Periodic Rent
on account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early
Termination. Any payment received by the Indenture Trustee as a result of (x)
an Event of Loss (other than a Regulatory Event of Loss in respect of which the
Facility Lessee shall, pursuant to Section 2.10(b) hereof, assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), (y) early termination
of the Facility Lease pursuant to Section 13 thereof (other than a termination
in respect of which the Facility Lessee shall, pursuant to Section 2.10(b)
hereof assume the obligations and liabilities of the Owner Lessor hereunder, in
which event only clauses "First" and "Fourth" below shall be applicable), or
(z) any early termination of the Facility Lease, in whole or in part, pursuant
to Section 14 thereof, shall be distributed on the applicable date of
redemption to the extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the

                                      28
<PAGE>
     Indenture Trustee and to the extent reimbursable and not previously
     reimbursed) shall be distributed to the Indenture Trustee for application
     to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without priority
     of any Noteholder over any other, in the proportion that the aggregate
     unpaid principal amount of all such Lessor Notes held by each such holder,
     plus the Make-Whole Amount, if any, and accrued but unpaid interest thereon
     to the scheduled date of distribution to the Noteholders bears to the
     aggregate unpaid principal amount of all such Lessor Notes held by all such
     holders, together with the Make-Whole Amount, if any, plus accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be distributed
     to the Owner Lessor for distribution in accordance with the LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee hereunder,
shall, so long as such declaration shall not have been rescinded, be distributed
forthwith by the Indenture Trustee in the following order of

                                      29
<PAGE>
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the Indenture Trustee and to the
     extent reimbursable and not previously reimbursed) shall be distributed
     to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case
     ratably, without priority of any Noteholder over any other, in the
     proportion that the aggregate unpaid principal amount of all such
     Lessor Notes held by each such holder and accrued but unpaid interest
     thereon to the scheduled date of distribution to the Noteholders bears
     to the aggregate unpaid principal amount of all such Lessor Notes held
     by all such holders and accrued but unpaid interest thereon to the date
     of scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable
     and unpaid to them as holders of the Lessor Notes which this Indenture
     by its terms secures, including the Make-Whole Amount, if any, required
     to be paid pursuant to Section 2.10(d) hereof, in respect of such
     Lessor Notes required to be paid pursuant to Section 4.3(a) hereof,
     shall be distributed to such existing or prior holders of Lessor Notes,
     ratably to each such holder, without priority of any such holder over
     any other, in the proportion that the amount of such payments or
     amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining
     shall be distributed to the Owner Lessor for distribution by it in
     accordance with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the

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<PAGE>
Indenture Trustee shall invest and reinvest any moneys held by the Indenture
Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such Permitted
Investments as may be specified in such direction. The proceeds received upon
the sale or at maturity of any Permitted Investment and any interest received
on such Permitted Investment and any payment in respect of a deficiency
contemplated by the following sentence shall be held as part of the Indenture
Estate and applied by the Indenture Trustee in the same manner as the moneys
used to buy such Permitted Investment, and any Permitted Investment may be sold
(without regard to maturity date) by the Indenture Trustee whenever necessary
to make any payment or distribution required by this Section 3. If the proceeds
received upon the sale or at maturity of any Permitted Investment (including
interest received on such Permitted Investment) shall be less than the cost
thereof (including accrued interest), the Owner Lessor will pay or cause to be
paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture Event
of Default; provided, however, that any such payment received by the Indenture
Trustee which is payable to the Facility Lessee shall not be held by the
Indenture Trustee unless a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing.

     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)   any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

                                      32
<PAGE>
     (b)   all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the Operative
Documents to the contrary, any Excepted Payments received or held by the
Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding
anything to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such payments
as constitute Excepted Payments) shall be made directly to the Indenture
Trustee's Account and the Owner Lessor shall give all notices as shall be
required under the Assigned Documents to direct payment of all such amounts to
the Indenture Trustee hereunder. The Owner Lessor agrees that if it should
receive any such payments directed to be made to the Indenture Trustee or any
proceeds for or with respect to the Indenture Estate or as the result of the
sale or other disposition thereof or otherwise constituting a part of the
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document

                                      33
<PAGE>
or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a
securities account entitled the "Indenture Trustee's Account" (the "Indenture
Trustee's Account"), which Indenture Trustee's Account shall be maintained by
the Account Bank until the date this Indenture is terminated pursuant to Section
7.1 hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)   All amounts from time to time held in the Indenture Trustee's
Account shall be maintained (i) in the name of the Owner Lessor subject to the
lien and security interest of the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders as set forth herein and (ii) in
the custody of the Account Bank for and on behalf of the Indenture Trustee for
the benefit of the Indenture Trustee and each of the Noteholders for the
purposes and on the terms set forth in this Indenture. All such amounts shall
constitute a part of the Indenture Trustee Account Collateral and shall not
constitute payment of any Indebtedness or any other obligation of the Owner
Lessor until applied as hereinafter provided.

     (c)   As collateral security for the prompt payment in full when due of
the Lessor Secured Obligations owed to the Indenture Trustee and each
Noteholder, the Owner Lessor hereby pledges, assigns, hypothecates and transfers
to the Indenture Trustee for the benefit of the Indenture Trustee and each of
the Noteholders, and hereby grants to the Indenture Trustee for the benefit of
the Indenture Trustee and each of the Noteholders, a lien on and security
interest in and to, (i) the Indenture

                                      34
<PAGE>
Trustee's Account and any successor account thereto and (ii) all cash,
investments, investment property, securities or other property at any time on
deposit in or credited to the Indenture Trustee's Account, including all income
or gain earned thereon and any proceeds thereof (the "Indenture Trustee Account
Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)   The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the Indenture
     Trustee's Account is and will be maintained as a "securities account"
     (within the meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor
     is the "entitlement holder" (within the meaning of Section 8-102(a)(7) of
     the UCC) in respect of the "financial assets" (within the meaning of
     Section 8-102(a)(9) of the UCC) credited to the Indenture Trustee's
     Account, (D) all property delivered to the Account Bank pursuant to this
     Indenture or any other Operative Document will be held by the Account Bank
     and promptly credited to the Indenture Trustee's Account by an appropriate
     entry in its records in accordance with this Indenture, (E) all "financial
     assets" (within the meaning of Section 8-102(a)(9) of the UCC) in
     registered form or payable to or to the order of and credited to the
     Indenture Trustee's Account shall be registered in the name of, payable to
     or to the order of, or indorsed to, the Account Bank or in blank, or
     credited to another securities account maintained in the name of the
     Account Bank, and in no case will any financial asset credited to the
     Indenture Trustee's Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Owner Lessor except to the extent the
     foregoing have been subsequently indorsed by the Owner Lessor to the
     Account Bank or in blank, (F) the Account Bank shall not change the name
     or account number of the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee, (G) the Account Bank is acting
     and shall at all times act as and perform all of the duties of the
     "securities intermediary," within the meaning of Article 8 of the UCC, with
     respect to the Indenture Trustee's Account and the financial assets
     credited thereto and (H) the Account Bank shall not enter into any other
     agreement governing, or with respect to, the Indenture Trustee's
     Account without the prior written consent of the Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each

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<PAGE>
     item of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated
     as a "financial asset" within the meaning of Section 8-l02(a)(9) of the
     UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this
     Indenture to the contrary, if at any time the Account Bank shall
     receive any "entitlement order" (within the meaning of Section
     8-102(a)(8) of the UCC) or any other order from the Indenture Trustee
     directing the transfer or redemption of any financial asset relating to
     the Indenture Trustee's Account or with respect to any "security
     entitlements" (within the meaning of Section 8-102(a)(17) of the UCC)
     carried or to be carried in the Indenture Trustee's Account, the
     Account Bank shall comply with such entitlement order or other order
     without further consent by the Owner Lessor or any other Person. The
     parties hereto hereby agree that the Indenture Trustee shall have
     "control" (within the meaning of Section 8-106(d) of the UCC) of (A)
     the Indenture Trustee's Account, (B) all security entitlements carried
     or to be carried in the Indenture Trustee's Account and (C) the Owner
     Lessor's security entitlements with respect to the financial assets
     credited to the Indenture Trustee's Account and the Owner Lessor hereby
     disclaims any entitlement to claim "control" of such "security
     entitlements". Unless a Lease Indenture Event of Default shall have
     occurred and is continuing, the Indenture Trustee shall not deliver any
     entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv)   Subordination of Lien; Waiver of Set-Off. In the event that
     the Account Bank has or subsequently obtains by agreement, operation of
     law or otherwise a lien or security interest in the Indenture Trustee's
     Account or any security entitlement credited thereto, the Account Bank
     agrees that such lien or security interest shall be subordinate to the
     lien and security interest of the Indenture Trustee for the benefit of
     the Indenture Trustee and each Noteholder. The financial assets standing
     to the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient
     funds).

          (v)   No Other Agreements. The Account Bank and the Owner

                                      36
<PAGE>
     Lessor have not entered into any agreement governing or with respect to
     the Indenture Trustee's Account or any financial assets credited to the
     Indenture Trustee's Account other than this Indenture. The Account Bank
     has not entered into any agreement with the Owner Lessor or any other
     Person purporting to limit or condition the obligation of the Account Bank
     to comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest
     of the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and
     will neither be affected by the bankruptcy of the Owner Lessor nor the
     lapse of time.

     (b)   Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank or
the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                      37
<PAGE>
                               SECTION 4.
                  COVENANTS OF OWNER LESSOR; DEFAULTS;
                      REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor. The Owner Lessor hereby
covenants and agrees as follows:

     (a)   the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)   the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any of
the Assigned Documents, except that it may forward any payment to the Indenture
Trustee in accordance with Section 3.9, (iii) give any notice or exercise any
right or take any action under any of the Assigned Documents, or (iv) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein, shall
mean any of the following events (whatever the reason for such Lease Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

     (a)   any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the

                                      38
<PAGE>
insurance required by Section 11 of the Facility Lease if, and so long as, (i)
such Lease Event of Default is waived by the Owner Lessor and the Owner
Participant and (ii) the insurance maintained by the Facility Lessee still
constitutes Prudent Industry Practice); or

     (b)   the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)   the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, the OP Guarantor shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under the OP Guaranty, in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such condition
shall be extended up to 180 days, so long as such party diligently pursues such
remedy and such condition is reasonably capable of being remedied within such
extended period;

     (d)   any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have been
incorrect in any material respect when made and continues to be material and
unremedied for a period of 30 days after receipt by such party of

                                      39
<PAGE>
written notice thereof; provided, however, that if such condition cannot be
remedied within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days, so long as such party
diligently pursues such remedy and such condition is reasonably capable of
being remedied within such extended period;

     (e)   the Owner Participant, the Owner Lessor or the OP Guarantor
(provided the OP Guaranty shall not have been terminated or released) shall (i)
commence a voluntary case or other proceeding seeking relief under Title 11 of
the Bankruptcy Code or liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in a
timely manner, any such relief or the appointment of or taking possession by any
such official in any voluntary case or other proceeding commenced against it, or
(iii) file an answer admitting the material allegations of a petition filed
against it in any such proceeding; or (iv) make a general assignment for the
benefit of creditors; or (v) become unable, admit in writing its inability or
fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)   an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11 of
the Bankruptcy Code or any bankruptcy, insolvency or other similar law now or
hereafter in effect, or (ii) the appointment of a trustee, receiver, liquidator,
custodian or other similar official with respect to it or any substantial part
of its property or (iii) the winding-up or liquidation of the Owner Lessor; and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)   In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of written instructions from a Majority in Interest of Noteholders shall
declare, by written notice to the Owner Lessor and the Owner Participant, the
unpaid principal amount of all Lessor Notes, with accrued interest thereon, to
be immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture

                                      40
<PAGE>
Event of Default under Section 4.2(e) or (f), such principal and interest shall
automatically become due and payable immediately without any such declaration
or notice) without further act or notice of any kind. If any Make-Whole amount
is due and payable pursuant to Section 2.10(c) or (d) at the time of any such
acceleration, such Make-Whole Amount shall also be due and payable in
connection with such acceleration.

     (b)   If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may thereupon or at any time thereafter, in
its own name or by or through an agent or receiver appointed by a court,
without regard to the adequacy of any security for the Secured Indebtedness,
enter into or upon the Indenture Estate and take possession of all or any part
of the Indenture Estate and may exclude therefrom the Owner Participant, the
Owner Lessor and, in the event such Lease Indenture Event of Default shall be a
Lease Event of Default, the Facility Lessee and all persons claiming under
them, and with or without any entry or taking of possession, may in its own
name or in the name of the Owner Lessor or any other Person, sue for or
otherwise collect all issues, rents, income, royalties and profits
(collectively, "Real Property Rents"), including those past due and unpaid as
well as those due, coming due or to be paid, and apply the Payments, less
costs, expenses, attorneys' fees and other expenses toward payment or partial
payment of the Secured Indebtedness in accordance with this Indenture and
Applicable Law. Further, the Indenture Trustee may exercise all remedies
available to a secured party under the Uniform Commercial Code or any other
provision of Applicable Law. The Indenture Trustee may proceed to enforce the
rights of the Indenture Trustee and of the Noteholders by directing payment to
it of all moneys payable under any agreement or undertaking constituting a part
of the Indenture Estate, by proceedings in any court of competent jurisdiction
to recover damages for the breach hereof or for the appointment of a receiver
or for sale of all or any part of the Property Interest or for foreclosure of
the Property Interest, together with the Owner Lessor's interest in the
Assigned Documents, and by any other action, suit, remedy or proceeding
authorized or permitted by this Indenture, at law or in equity, or whether for
the specific performance of any agreement contained herein, or for an
injunction against the violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law, and in addition may foreclose
upon,

                                      41
<PAGE>
sell, assign, transfer and deliver, from time to time to the extent permitted
by Applicable Law, all or any part of the Indenture Estate or any interest
therein, at any private sale or public auction with or without demand,
advertisement or notice (except as herein required or as may be required by
law) of the date, time and place of sale and any adjournment thereof, for cash
or credit or other property, for immediate or future delivery and for such
price or prices and on such terms as the Indenture Trustee, in its unfettered
discretion, may determine, or as may be required by Applicable Law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b).  The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings. The collection of such Real Property Rents, or the entering upon
and taking possession of the Indenture Estate, or the application of the Real
Property Rents as aforesaid, shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such default or
pursuant to such notice of default. The Owner Lessor also hereby authorizes the
Indenture Trustee upon such entry, at its option, to take over and assume the
management, operation and maintenance of the Indenture Estate and to perform
all acts Indenture Trustee in its sole discretion deems necessary and proper
and to expend such sums out of Real Property Rents as may be needed in
connection therewith, in the same manner and to the same extent as the Owner
Lessor theretofore could do. It is not the intention of the parties hereto that
an entry by the Indenture Trustee upon the Indenture Estate under the terms of
this instrument shall make the Indenture Trustee a party in possession in
contemplation of the law, except at the option of the Indenture Trustee.

     (c)   All rights of action and rights to assert claims under this
Indenture or under any of the Lessor Notes may be enforced by the Indenture
Trustee without the possession of the Lessor Notes at any trial or other
proceedings instituted by the Indenture Trustee, and any such trial or other
proceedings shall be brought in its own name as mortgagee of an express trust,
and any recovery or judgment shall be for the ratable benefit of the Noteholders
as herein provided. In any proceedings brought by the Indenture Trustee (and
also any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

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<PAGE>
     (d)   Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease Indenture
Event of Default as a consequence of a Lease Event of Default under Section 16
of the Facility Lease, the Indenture Trustee shall have, to the extent it is
then entitled to do so hereunder and is not then stayed or otherwise prevented
from doing so by operation of law, commenced the exercise of one or more
remedies under the Facility Lease intending to dispossess the Facility Lessee of
its leasehold interest in the Undivided Interest and is using good faith efforts
in the exercise of such remedies (and not merely asserting a right or claim to
do so); provided that, during any period that the Indenture Trustee is stayed or
otherwise prevented by operation of law from exercising such remedies, the
Indenture Trustee will not divest the Owner Lessor of title to any portion of
the Indenture Estate until the earlier of (a) the expiration of the 180-day
period following the date of commencement of a stay or other prevention or (b)
the date of repossession of the Facility under the applicable Facility Lease.

     (e)   Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a Lease
Event of Default under Section 16 of the Facility Lease solely to enforce such
obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of Default
hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)   If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received notice
from the Indenture Trustee or have Actual Knowledge of the failure of the
Facility Lessee to make such

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<PAGE>
payment of Periodic Rent, an amount equal to the principal of, Make-Whole
Amount, if any, and interest on the Lessor Notes, then due (otherwise than by
declaration of acceleration) on such Rent Payment Date, together with any
interest due thereon on account of the delayed payment thereof, and such
payment by the Owner Lessor shall be deemed (for purposes of this Indenture) to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (b)   If the Facility Lessee shall fail to make any payment of
Supplemental Rent when the same shall become due or otherwise fail to perform
any obligation under the Facility Lease or any other Operative Document, then
the Owner Lessor may (but need not) make such payment on the date such
Supplemental Rent was payable, together with any interest due thereon on account
of the delayed payment thereof, or perform such obligation at any time prior to
the expiration of ten (10) Business Days after the Owner Lessor or the Owner
Participant shall have received notice or have Actual Knowledge of the
occurrence of such failure, and such payment or performance by the Owner Lessor
shall be deemed to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (c)   The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would impair
the prior right and security interest of the Indenture Trustee in and to the
Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic Rent
payment or Supplemental Rent payment being overdue in the manner set forth in
the next two sentences. If the Indenture Trustee shall thereafter receive such
payment of Periodic Rent, Supplemental Rent or such interest, the Indenture
Trustee shall, notwithstanding the requirements of Section 3.1 hereof,
forthwith, remit such

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<PAGE>
payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)   Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall take
or commence any action it would otherwise be entitled to take or commence as a
result of such failure by the Facility Lessee, whether under this Section 4 or
Section 17 of the Facility Leases or otherwise.

     (e)   Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the

                                      45
<PAGE>
previous 30 days, (ii) no Lease Indenture Event of Default of the nature
described in any of clauses (b) through (f) of Section 4.2 hereof shall have
occurred and be continuing and (iii) the Owner Lessor shall give written notice
to the Indenture Trustee of the Owner Lessor's intention to purchase all of the
Lessor Notes in accordance with this paragraph, then, upon receipt within 10
Business Days after such notice from the Owner Lessor of an amount equal to the
sum of (x) the aggregate unpaid principal amount of any unpaid Lessor Notes
then held by the Noteholders, together with accrued but unpaid interest thereon
to the date of such receipt (as well as any interest on overdue principal and,
to the extent permitted by Applicable Law, overdue interest), plus (y) the
aggregate amount, if any, of all sums which, if Section 3.3 were then
applicable, such Noteholder would be entitled to be paid before any payments
were to be made to the Owner Lessor but excluding any Make-Whole Amount, such
Noteholder will forthwith (and upon its receipt of the payment referred to in
clause (1) below, will be deemed to) sell, assign, transfer and convey to the
Owner Lessor (without recourse or warranty of any kind other than of title to
the Lessor Notes so conveyed) all of the right, title and interest of such
Noteholder in and to the Indenture Estate, this Indenture, all Lessor Notes
held by such Noteholder and the Assigned Documents, and the Owner Lessor shall
thereupon assume all such Noteholder's rights and obligations in such
documents; provided, that no such holder shall be required to so convey unless
(1) the Owner Lessor shall have simultaneously tendered payment on all other
Lessor Notes issued by the Owner Lessor at the time outstanding pursuant to
this paragraph and (2) such conveyance is not in violation of any Applicable
Law. All charges and expenses required to be paid in connection with the
issuance of any new Lessor Note or Lessor Notes in connection with this
paragraph shall be borne by the Owner Lessor.  Notwithstanding the foregoing,
the Owner Lessor may exercise the right set forth in this clause (e) prior to
the end of the 90 day period set forth above but, in such case, the Make-Whole
Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in

                                      46
<PAGE>
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)   If at any time the Indenture Trustee has the right to take
possession of the Indenture Estate pursuant to Section 4.3 hereof, at the
request of the Indenture Trustee, the Owner Lessor promptly shall (i) execute
and deliver to the Indenture Trustee such instruments of title and other
documents and (ii) make all such demands and give all such notices as are
permitted by the terms of the Facility Lease to be made or given by the Owner
Lessor upon the occurrence and continuance of a Lease Event of Default, in each
case as the Indenture Trustee may deem necessary or advisable to enable the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Lessor hereby specifically consents, and (ii) pursue
all or any part of the Indenture Estate wherever it may be found and enter any
of the premises wherever all or part of the Indenture Estate may be or is
supposed to be and search for all or part of the Indenture Estate and take
possession of and remove all or part of the Indenture Estate.

     (b)   Upon every such taking of possession, the Indenture Trustee may,
from time to time, as a charge against proceeds of the Indenture Estate, make
all such expenditures with respect to the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee shall have the right to deal
with the Indenture Estate and to carry on the business and exercise all rights
and powers of the Owner Lessor relating to the Indenture Estate, as the
Indenture Trustee shall deem best, and, the Indenture Trustee shall be entitled
to collect and receive all rents (including Periodic Rent and Supplemental
Rent), revenues, issues, income, products and profits of the Indenture Estate
and every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required

                                      47
<PAGE>
to be deposited with, the Indenture Trustee hereunder) and to apply the same to
the management of or otherwise dealing with the Indenture Estate and of
conducting the business thereof, and of all expenditures with respect to the
Indenture Estate and the making of all payments which the Indenture Trustee may
be required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make
reports upon the properties and books and records of the Owner Lessor and the
Facility Lessee relating to the Indenture Estate and the Operative Documents),
or under any provision of, this Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee and of all Persons
properly engaged and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies.

     (a)   In addition to all other remedies provided for herein if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee shall, subject to Sections 4.3 and 4.4 and to provisions of Applicable
Law, have the right(s) to (i) sell the Indenture Estate or any part of the
Indenture Estate at one or more public sale or sales; or (ii) commence an action
or actions to foreclose the lien of this Indenture as a mortgage; and/or (iii)
specifically enforce any of the covenants and agreements hereof, in each case in
order to pay the Secured Indebtedness, and all impositions, if any, with accrued
interest thereon, and all expenses of the sale and of all proceedings in
connection therewith, including reasonable attorney's fees, if incurred, and do
any acts that it deems necessary or desirable to preserve the value,
marketability or rentability of the Indenture Estate, or any part thereof or
interest therein, increase the income therefrom or protect the security hereof.
If the Indenture Trustee elects to exercise the power of sale herein contained,
the Indenture Trustee shall cause to be recorded, published and delivered to the
Owner Lessor such notice of sale as then required by Applicable Law. The
Indenture Trustee shall, without demand on the Owner Lessor, after lapse of such
time as may then be required by law and after recordation of such notice of sale
and notice of sale having been given as required by Applicable Law, sell the
Indenture Estate at the time and place of sale fixed by it in said notice of
sale, either as a whole, or in separate lots or parcels or items as the
Indenture Trustee shall deem expedient, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. The Indenture Trustee shall deliver to such
purchaser or purchasers thereof its good and sufficient deed or deeds conveying
the property so sold, but without any covenant or warranty, express or implied.
The recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. Any person, including, without limitation, the Owner
Lessor,

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<PAGE>
may bid at and be a purchaser at any such sale. The Indenture Trustee shall
apply the proceeds of sale as required by Applicable Law and in accordance with
the terms of this Indenture. Subject to A.R.S. Section 33-810.B, the Indenture
Trustee may postpone sale of all or any portion of the Indenture Estate by
public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or subsequently
noticed sale, and without further notice make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale.
The Owner Lessor hereby requests that a copy of any notice of default and any
notice of sale hereunder be mailed to it at its address set forth in Section
9.5 of this Indenture. At any such public sale, the Indenture Trustee may
execute and deliver to the purchaser a conveyance of the Indenture Estate or
any part of the Indenture Estate, and to this end, the Owner Lessor hereby
constitutes and appoints the Indenture Trustee the agent(s) and attorney(s) in
fact of the Owner Lessor to make such sale and conveyance, and thereby to
divest the Owner Lessor of all right, title or equity that the Owner Lessor may
have in and to the Indenture Estate and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney in fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding upon the Owner Lessor. The aforesaid power of sale and agency hereby
granted are coupled with an interest and are irrevocable by death or otherwise,
are granted as cumulative of the other remedies provided hereby or by law for
collection of the Secured Indebtedness and shall not be exhausted by one
exercise thereof but may be exercised until full payment of the Secured
Indebtedness. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, either
with or without entry or taking possession as herein provided or otherwise,
proceed by a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (i) to enforce payment of the Lessor Notes or the
performance of any term, covenant, condition or agreement of this Indenture or
any other right, and (ii) to pursue any other remedy available to it, all as
the Indenture Trustee shall determine most effectual for such purposes. Upon
any foreclosure sale, the Indenture Trustee may bid for and purchase the
Indenture Estate and shall be entitled to apply all or any part of the Secured
Indebtedness as a credit to the purchase price. In the event of a foreclosure
sale of the Indenture Estate, the proceeds of said sale shall be applied as
provided in Section 3.3 hereof. In the event of any such foreclosure sale by
the Indenture Trustee, the Owner Lessor shall be deemed a tenant holding over
and shall forthwith deliver possession to the purchaser or purchasers at such
sale or be summarily dispossessed according to provisions of law applicable to
tenants holding over. The Indenture Trustee, at the Indenture Trustee's option,
is authorized to foreclose this Indenture subject to the rights of any tenants
of the

                                      49
<PAGE>
Indenture Estate, and the failure to make any such tenants parties to any such
foreclosure proceedings and to foreclose their rights will not be, nor be
asserted to be by the Owner Lessor, a defense to any proceedings instituted by
the Indenture Trustee to collect the Secured Indebtedness.

     (b)   In amplification of, and not in limitation of paragraph (a) of this
Section 4.7, the Owner Lessor represents and warrants that this Indenture is
given primarily for a business, commercial or agricultural purpose. Owner
Lessor, therefore, agrees that the Indenture Trustee, its successors and
permitted assigns, shall have THE STATUTORY POWER OF SALE pursuant to the
applicable provisions of A.R.S. Sections 12-1241, et seq., 33-702.B; and 33-807,
et seq. as said statutes have been and shall be amended, which POWER is
expressly incorporated herein by reference. Such Statutory Power of Sale and
other rights, power, remedies and authorities shall be in addition to all rights
and remedies set forth herein or available under Applicable Law. In the exercise
of the Statutory Power of Sale, the Indenture Trustee, its successors and
assigns or its agents or attorneys, may sell the Indenture Estate or such
portion thereof as may remain subject to the Indenture in case of any partial
release thereof, either as a whole or in parcels, together with all improvements
that may be thereon, by a public sale on or near any part of the Indenture
Estate then subject to this Indenture or at the Indenture Trustee's principal
place of business or at any other office of the Indenture Trustee or any
attorney or agent thereof located in the same county in which any part of the
Indenture Estate is located, and the Indenture Trustee, its successors and
permitted assigns; and such sale shall forever bar the Owner Lessor and all
persons claiming under it from all right and interest in the Indenture Estate,
whether at law or in equity. In the exercise of THE STATUTORY POWER OF SALE
herein given, if the Indenture Trustee elects to sell in parts or parcels, such
sales may be held from time to time, and the POWER shall not be fully executed
until all of the Indenture Estate not previously sold shall have been sold.

     Section 4.8.   Appointment of Receiver and Assignment of Real Property
Rents. The Owner Lessor hereby assigns and transfers to the Indenture Trustee
all of the Real Property Rents, of the Indenture Estate, and hereby gives to and
confers upon the Indenture Trustee the right, power and authority to collect the
Real Property Rents. From and after any Lease Indenture Event of Default, the
Owner Lessor appoints the Indenture Trustee its true and lawful
attorney-in-fact, at the option of the Indenture Trustee at any time and from
time to time, to demand, receive and enforce payment, to give receipts, releases
and satisfactions. From and after any Lease Indenture Event of Default, the
Owner Lessor hereby authorizes and directs the lessees, tenants and occupants to
make all payments under any leases directly to the Indenture Trustee upon
written demand by the Indenture Trustee, without further

                                      50
<PAGE>
consent of the Owner Lessor. If the outstanding principal amount of the Lessor
Notes shall have been declared due and payable pursuant to Section 4.3 hereof,
as a matter of right, the Indenture Trustee shall be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Indenture Estate, whether such
receivership be incidental to a proposed sale of the Indenture Estate or the
taking of possession thereof or otherwise, and the Owner Lessor hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Indenture Estate shall be
entitled to exercise all available rights and powers with respect to the
Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law, that
it will never seek or derive any benefit or advantage from any of the following,
whether now existing or hereafter in effect, in connection with any proceeding
under or in respect of this Lease Indenture:

     (a)   any stay, extension, moratorium or other similar law;

     (b)   any Applicable Law providing for the valuation of or appraisal of
any portion of the Indenture Estate in connection with a sale thereof; or

     (c)   any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right

                                      51
<PAGE>
or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure or a waiver
or relinquishment of any right (s) to foreclose or to have a receiver appointed
for and take possession of the Indenture Estate or any part thereof. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture Trustee at any time or times in the
future while any of the obligations secured hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings had
taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall take
or cause to be taken any action contrary to the right of the Facility Lessee,
including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner

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<PAGE>
Lessor shall fail to release any Lien affecting the Indenture Estate which it
is required to release by the terms of this Indenture or the Participation
Agreement or the LLC Agreement, the Indenture Trustee, without notice to or
demand upon the Owner Lessor and without waiving or releasing any obligation or
defaults may (but shall be under no obligation to, and, except as provided in
the last sentence hereof, shall incur no liability in connection therewith) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Indenture Estate and may take all such action with
respect thereto (including entering upon the Facility Site or any part thereof,
or the Facility for such purpose) as may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including legal fees and expenses) so
incurred, together with interest thereon from the date of payment or
incurrence, shall constitute additional indebtedness secured by this Indenture
and shall be paid from the Indenture Estate to the Indenture Trustee on demand.
The Indenture Trustee shall not be liable for any damages resulting from any
such payment or action unless such damages shall be a consequence of willful
misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                               SECTION 5.
                     DUTIES OF INDENTURE TRUSTEE;
                CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

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     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.
The Indenture Trustee shall give prompt written notice to the Owner Lessor and
the Owner Participant of any Lease Indenture Event of Default with respect to
which the Indenture Trustee has Actual Knowledge and will give the Facility
Lessee and the Owner Participant not less than 30 days' prior written notice of
the date on or after which the Indenture Trustee intends to exercise remedies
under Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may be specified in such instructions: (a) give
such notice, direction or consent or exercise such right, remedy or power or
take such action hereunder or under any Assigned Document, or in respect of any
part of or all the Indenture Estate, as it shall be entitled to take and as
shall be specified in such instructions; (b) take such action with respect to or
to preserve or protect the Indenture Estate (including the discharge of Liens)
as it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall, execute
and file or cause to be executed and filed any financing statement (and any
continuation statement with respect to such financing statement) or any similar
instrument or document relating to the security interest or the assignment
created by this Indenture or granted by the Owner Lessor herein as may be
necessary to protect and preserve the security interest or assignment created by
or granted pursuant to this Indenture, to the extent otherwise entitled to do so
and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in full
of the principal of and interest on all Lessor Notes then outstanding and all
other amounts then due all Noteholders hereunder, and all other sums secured
hereby or otherwise required to be paid hereunder, under the Participation
Agreement and under the Facility Lease, the Indenture Trustee shall execute and
deliver to, or as directed in writing by, the Owner Lessor and the Facility
Lessee an appropriate instrument in due form for recording, releasing the
Indenture Estate from the Lien of this Indenture.

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<PAGE>
Nothing in this Section 5.3 shall be deemed to expand the instances in which
the Owner Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)   The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

     (b)   The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)   The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read into
this Indenture against the Indenture Trustee.

     (b)   The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the

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<PAGE>
terms of the Facility Lease, to the extent applicable to the Indenture Trustee
as assignee of the Owner Lessor, (b) in accordance with the powers granted to,
or the authority conferred upon, the Indenture Trustee pursuant to this
Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)   The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy or right with respect to any such payment against the
Indenture Estate nor any right to collect any such payment by the exercise of
any of the remedies under Section 17 of the Facility Lease except as expressly
provided in this Section 5.6; (ii) retain all rights with respect to insurance
that Section 11 of the Facility Lease and Schedule 5.31 of the Participation
Agreement specifically confers upon the Owner Lessor and to waive any failure by
the Facility Lessee to maintain the insurance required by Section 11 of the
Facility Lease before or after the fact so long as the insurance maintained by
the Facility Lessee still conforms to Prudent Industry Practice; (iii) retain
all rights to adjust Periodic Rent and Termination Value as provided in Section
3.4 of the Facility Lease, Section 12 of the Participation Agreement or the Tax
Indemnity Agreement; provided, however, that after giving effect to any such
adjustment (x) the amount of Periodic Rent payable on each Rent Payment Date
shall be at least equal to the aggregate amount of all principal and accrued
interest payable on such Rent Payment Date on all Lessor Notes then outstanding
and (y) Termination Value shall in no event be less (when added to all other
amounts required to be paid by the Facility Lessee in respect of any early
termination of the Facility Lease) than an amount sufficient, as of the date of
payment, to pay in full the principal of, and interest on all Lessor Notes
outstanding on and as of such date of payment; (iv) except in connection with
the exercise of remedies pursuant to the Facility Lease, retain all rights to
exercise the Owner Lessor's rights relating to the Appraisal Procedure and to
confer and agree with the Facility Lessee on Fair Market Rental Value, or any
Renewal Lease Term; and (v) retain the right to declare the Facility Lease to be
in default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)   The Owner Lessor shall have the right, together with or
independently of the Indenture Trustee, (i) to receive from the Facility Lessee
and the Guarantor all notices, certificates, reports, filings, opinions of
counsel and other documents and all

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<PAGE>
information that the Facility Lessee is permitted or required to give or
furnish to the Owner Lessor or the Owner Participant, as the case may be,
pursuant to the Facility Lease or any other Operative Document; (ii) to inspect
the Facility and the records relating thereto pursuant to Section 12 of the
Facility Lease; (iii) to provide such insurance as may be permitted by Section
11 of the Facility Lease; (iv) to provide notices to the Facility Lessee or the
Guarantor to the extent otherwise permitted by the Operative Documents; and (v)
to perform for the Facility Lessee as provided in Section 20 of the Facility
Lease.

     (c)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall retain the right to the exclusion of the Indenture Trustee to
exercise the rights of the Owner Lessor under, and to determine compliance by
the Facility Lessee with, the provisions of Sections 10 (other than Section 10.3
thereof), 13, 14 and 15 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to retain such rights upon notice from the Indenture
Trustee stating that such rights shall no longer be retained by the Owner
Lessor;

     (d)   Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or, if
accelerated, such acceleration has theretofore been rescinded) or the Indenture
Trustee shall not have exercised any of its rights pursuant to Section 4 hereof
to take possession of, foreclose, sell or otherwise take control of all or any
part of the Indenture Estate, the Owner Lessor shall have the right, to be
exercised jointly with the Indenture Trustee, (i) to exercise the rights with
respect to the Facility Lessee's use and operation, modification or maintenance
of the Undivided Interest, (ii) to exercise the Owner Lessor's right under
Section 13.1 of the Participation Agreement to withhold or grant its consent to
an assignment by the Facility Lessee of its rights under the Facility Lease, and
(iii) to exercise the rights of the Owner Lessor under Section 10.3 of the
Facility Lease; provided, however, that if a Lease Indenture Event of Default
shall have occurred and be continuing, the Owner Lessor shall cease to exercise
such rights under this clause (iii) upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;
provided further, however, that (A) the Owner Lessor shall have no right to
receive any Periodic Rent or other payments other than Excepted Payments payable
to the Owner Lessor, or the Owner Participant and (B) no determination by the
Owner Lessor or the Indenture Trustee

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<PAGE>
that the Facility Lessee is in compliance with the provisions of any applicable
Assigned Document shall be binding upon or otherwise affect the rights
hereunder of the Indenture Trustee or any Noteholder on the one hand or the
Owner Lessor or the Owner Participant on the other hand;

     (e)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek specific
performance of the covenants of the Facility Lessee under the Operative
Documents relating to the protection, insurance, maintenance, possession, use
and return of the Property Interest, the performance by the Facility Lessee of
the Owner Lessor's obligations under the South Point Ground Lease, the exercise
of any renewal or extension rights with respect to the South Point Ground Lease
and any action pursuant to Sections 5.20 or 13.3 of the Participation Agreement
(subject to the conditions set forth in Section 5.20 or 13.3, as applicable, of
the Participation Agreement); and

     (f)   Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture Trustee
the right to, and the Indenture Trustee shall not, release the Guarantor of its
obligations under the Calpine Guaranty in respect of payment of the Equity
Portion of Termination Value, unpaid amounts of the Equity Portion of Periodic
Rent (and all amounts of overdue interest relating to such amount) and other
amounts constituting Excepted Payments, unless such release results in payment
in full to the Owner Lessor of all such unpaid amounts as certified to the
Indenture Trustee by the Owner Lessor, and all claims of the Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as

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provided in the Operative Documents, but subject to the terms of this Indenture,
the Owner Lessor shall not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Facility, the Facility Site, any part of
the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Owner Lessor hereby expressly authorizes the Indenture
Trustee to prepare, file, record, obtain, execute and deliver, from time to
time, such financing statements, continuation statements, control agreements
and recognition agreements as Indenture Trustee shall deem appropriate. The
Owner Lessor hereby further authorizes any account holder or bank or financial
institution to execute and deliver from time to time such control agreements
and recognition agreements as shall be requested or required by Indenture
Trustee. The Indenture Trustee shall, at the written request and expense of the
Facility Lessee, as provided in the Participation Agreement, execute and
deliver to the Facility Lessee and the Facility Lessee will file or record, if
not already filed or recorded, such financing statements or other documents and
such continuation statements or other documents with respect to financing
statements or other documents previously filed relating to the Lien created by
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and
powers herein granted. Upon the reasonable instructions (which instructions
shall be accompanied by the form of document to be filed) at any time and from
time to time of the Facility Lessee or the Indenture Trustee, the Owner Lessor
shall authorize, execute, file or record any financing statement (and any
continuation statement with respect to any such financing statement), and any
other document relating to the security interest and assignment created by this
Indenture as may be specified in such instructions. In addition, the Indenture
Trustee and the Owner Lessor will authorize or execute such continuation
statements with respect to financing statements and other documents relating to
the Lien created by this Indenture in the Indenture Estate as may be specified
from time to time in written instructions of any Noteholder (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the form of such continuation statement or other document to be
filed). Neither the Indenture Trustee nor, except as

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<PAGE>
otherwise herein expressly provided, the Owner Lessor shall have responsibility
for the protection, perfection or preservation of the Lien created by this
Indenture.

                               SECTION 6.
                   INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall not
be liable under any circumstances, except (a) for its own negligence or willful
misconduct, (b) in the case of any inaccuracy of any representation or warranty
of the Indenture Trustee or the Lease Indenture Company contained in Section 3.5
of the Participation Agreement, in the certificate delivered by the Indenture
Trustee at the Closing pursuant to Section 4.6 of the Participation Agreement,
or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the Indenture
Trustee shall not be liable for any action or inaction of the Owner Trust;
provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other

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<PAGE>
     officers of the Indenture Trustee, unless it shall be proven that the
     Indenture Trustee was negligent in ascertaining the pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
     its own funds or otherwise incur financial liability for the performance
     of any of its duties hereunder or the exercise of any of its rights or
     powers if there is reasonable ground for believing that the repayment of
     such funds or adequate indemnity against such risk or liability is not
     reasonably assured to it, and none of the provisions contained in this
     Indenture shall in any event require the Indenture Trustee to perform, or
     be responsible for the manner of performance of, any of the obligations of
     the Owner Lessor, under this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty
(a) to see to any registration, recording or filing of any Operative Document
(or any financing or continuation statements in respect thereto) or to see to
the maintenance of any such

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<PAGE>
registration, recording or filing, (b) to see to any insurance on the
Facilities or the Facilities or to effect or maintain any such insurance, (c)
except as otherwise provided in Section 5.5 hereof or in Section 10 of the
Participation Agreement, to see to the payment or discharge of any Tax or any
Lien of any kind owing with respect to, or assessed or levied against, any part
of the Indenture Estate, (d) to confirm or verify the contents of any report,
notice, request, demand, certificate, financial statement or other instrument
of the Facility Lessee, (e) to inspect the Facility at any time or ascertain or
inquire as to the performance or observance of any of the Facility Lessee's
covenants with respect to the Facility or (f) to exercise any of the trusts or
powers vested in it by this Indenture or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction
of any of the Noteholders, pursuant to the provisions of this Indenture, unless
such Noteholders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby (which in the case of the Majority in Interest of
Noteholders will be deemed to be satisfied by a letter agreement with respect
to such costs from such Majority in Interest of Noteholders).  Notwithstanding
the foregoing, the Indenture Trustee shall furnish to each Noteholder and to
the Owner Lessor and the Owner Participant promptly upon receipt thereof
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Indenture Trustee
hereunder or under any of the Operative Documents unless the Indenture Trustee
shall reasonably believe that each such Noteholder, the Owner Lessor and the
Owner Participant shall have received copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)   The Owner Lessor represents and warrants that it has not assigned
or pledged any of its estate, right, title or interest subject to this
Indenture, to anyone other than the Indenture Trustee.

     (b)   NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE ESTATE, except
that the Owner Lessor represents and warrants that on

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<PAGE>
the Closing Date it shall have received whatever title or interest to the
Undivided Interests and the Facility Site as were conveyed to it by the
Facility Lessee and that on the Closing Date the Undivided Interests shall be
free of Owner Lessor's Liens and the Owner Participant's Liens; or (ii) any
representation or warranty as to the validity, legality or enforceability of
this Indenture, the Lessor Notes or any of the other Operative Documents, or as
to the correctness of any statement contained in any thereof, except that each
of the Owner Lessor and the Indenture Trustee represents and warrants that this
Indenture and the Participation Agreement have been, and, in the case of the
Owner Lessor, the other Operative Documents to which it is or is to become a
party have been or will be, executed and delivered by one of its officers who
is and will be duly authorized to execute and deliver such document on its
behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this Indenture
for the purpose of paying, or securing the payment of, the principal of or
Make-Whole Amount or interest on the Lessor Notes shall be held in trust. Except
as specifically provided herein or in the Facility Lease, any moneys received by
the Indenture Trustee hereunder need not be segregated in any manner except to
the extent required by Applicable Law and may be deposited under such general
conditions as may be prescribed by Applicable Law, and neither the Owner Lessor
nor the Indenture Trustee shall be liable for any interest thereon; provided,
however, subject to Section 6.5 hereof, that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof to the extent known to the Indenture
Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which any
other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such

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Noteholder or other Person, as the case may be. As to any fact or matter
the manner of ascertainment of which is not specifically described herein, the
Indenture Trustee for all purposes hereof may rely on an Officer's Certificate
of the Owner Lessor or the Facility Lessee or a Noteholder as to such fact or
matter, and such certificate shall constitute full protection to the Indenture
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. The Indenture Trustee shall have the right to request
instructions from the Owner Lessor or the Majority in Interest of Noteholders
with respect to taking or refraining from taking any action in connection with
the Lease Indenture or any other Operative Document to which it is a party, and
shall be entitled to act or refrain from taking such action unless and until the
Indenture Trustee shall have received written instructions from the Owner Lessor
or the Majority in Interest of Noteholders, and the Indenture Trustee shall not
incur liability by reason of so acting (except as provided in Section 6.1) or
refraining from acting. In the administration of the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Indenture Estate (but subject to the priorities of payment
set forth in Section 3 hereof), consult with independent skilled Persons to be
selected and retained by it (other than Persons regularly in its employ) as to
matters within their particular competence, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion, within such Person's area of competence,
of any such Person, so long as the Indenture Trustee shall have exercised
reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee;
Appointment of Successor.

     (a)   Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the

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<PAGE>
Owner Lessor shall give prompt written notification thereof to each Noteholder
and the Facility Lessee. Such removal will be effective on the acceptance of
appointment by the successor Indenture Trustee or Account Bank pursuant to the
provisions of subsection (b) below. In the case of the resignation or removal
of the Indenture Trustee or Account Bank, a Majority in Interest of Noteholders
may appoint a successor Indenture Trustee or Account Bank by an instrument
signed by such holders. If a successor Indenture Trustee or Account Bank shall
not have been appointed within thirty (30) days after such resignation or
removal, the Indenture Trustee, Account Bank or any Noteholder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee or
Account Bank to act until such time, if any, as a successor shall have been
appointed by a Majority in Interest of Noteholders as above provided. The
successor Indenture Trustee or Account Bank so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee or Account Bank appointed by a Majority in Interest of Noteholders as
above provided.

     (b)   Acceptance of Appointment. Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee or Account Bank hereunder in the trusts hereunder applicable to it with
like effect as if originally named the Indenture Trustee or Account Bank
herein; but nevertheless, upon the written request of such successor Indenture
Trustee or Account Bank or a Majority in Interest of Noteholders, such
predecessor Indenture Trustee or Account Bank shall execute and deliver an
instrument transferring to such successor Indenture Trustee or Account Bank,
upon the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee or Account Bank, and
such predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)   Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct

                                       65
<PAGE>
or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)   Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities
intermediary" (within the meaning of Section 8-102(a)(14) of the UCC) with
respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)   Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)   Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Inden-

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<PAGE>
ture Estate, this Indenture, the Facility Lease, the Lessor Notes or any of the
transactions contemplated by the Operative Documents, (ii) the Indenture
Trustee shall be advised by counsel, satisfactory to it, that it is so
necessary or prudent in the interest of the Noteholders or (iii) a Majority in
Interest of Noteholders deems it so necessary or prudent and shall have
requested in writing the Indenture Trustee to do so, then in any such case the
Indenture Trustee shall execute and deliver from time to time all instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more Persons approved by the Indenture Trustee either to act as
additional trustee or trustees of all or any part of the Indenture Estate,
jointly with the Indenture Trustee, or to act as separate trustee or trustees
of all or any part of the Indenture Estate, in any such case with such powers
as may be provided in such instruments or agreements, and to vest in such bank,
trust company or Person as such additional trustee or separate trustee, as the
case may be, any property, title, right or power of the Indenture Trustee
deemed necessary or advisable by the Indenture Trustee, subject to the
remaining provisions of this Section 7.2. The Owner Lessor hereby consents to
all actions taken by the Indenture Trustee under the provisions of this Section
7.2 and agrees, upon the Indenture Trustee's request, to join in and execute,
acknowledge and deliver any or all such instruments or agreements; and the
Owner Lessor hereby makes, constitutes and appoints the Indenture Trustee its
agent and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such instrument or agreement in the event that the
Owner Lessor shall not itself execute and deliver the same within fifteen (15)
days after receipt by it of such request so to do; provided, however, that the
Indenture Trustee shall exercise due care in selecting any additional or
separate trustee if such additional or separate trustee shall not be a Person
possessing trust powers under Applicable Law. If at any time the Indenture
Trustee shall deem it no longer necessary or prudent in order to conform to any
such law or take any such action or shall be advised by such counsel that it is
no longer so necessary or prudent in the interest of the Noteholders or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Noteholders, the Indenture Trustee shall execute
and deliver all instruments and agreements necessary or proper to remove any
additional trustee or separate trustee. In such connection, the Indenture
Trustee may act on behalf of the Owner Lessor to the same extent as is provided
above. Notwithstanding anything contained to the contrary in this Section
7.2(a), to the extent the laws of any jurisdiction preclude the Indenture
Trustee from taking any action hereunder either alone, jointly or through a
separate trustee under the direction and control of the Indenture Trustee, the
Owner Lessor, at the instruction of the Indenture Trustee, shall appoint a
separate trustee for such jurisdiction, which separate trustee shall have full
power and authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but not subject to
the same limitations in

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<PAGE>
any exercise of his power and authority as those to which the Indenture
Trustee is subject.

     (b)   The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)   Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)   Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections

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<PAGE>
8.2 and 8.3 hereof, but only upon the written direction of a Majority in
Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and

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<PAGE>
with the consent of the Owner Lessor, the Indenture Trustee shall enter into
any indenture or indentures supplemental hereto or execute any amendment,
modification, supplement, waiver or consent with respect to any other Operative
Document (a) to evidence the succession of another Person as a Lessor Manager
or the appointment of a co-manager in accordance with the terms of the LLC
Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant
to the provisions of Section 7 hereof and to define the rights, powers, duties
and obligations conferred upon any such separate trustee or trustees or
co-trustee or co-trustees, (b) to correct, confirm or amplify the description
of any property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may be lawfully granted or
conferred and which are not contrary or inconsistent with this Indenture, (f)
to add to the covenants or agreements to be observed by the Facility Lessee or
the Owner Lessor and which are not contrary to this Indenture, to add Indenture
Events of Defaults for the benefit of Noteholders or surrender any right or
power of the Owner Lessor, provided it has consented thereto, (g) to effect the
assumption of all or, to the extent otherwise provided hereunder, part of the
Lessor Notes by the Facility Lessee, provided that the supplemental indenture
will contain all of the covenants applicable to the Facility Lessee contained
in the Facility Lease and the Participation Agreement for the benefit of the
Indenture Trustees or the holders of such Lessor Notes, such that the Facility
Lessee's obligations contained therein, if applicable in the event that the
Facility Lease are terminated, will continue to be in full force and effect,
(h) to comply with requirements of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body, (i) to modify, eliminate or add to the
provisions of any Operative Documents to such extent as shall be necessary to
qualify or continue the qualification of this Lease Indenture or the Pass
Through Trust Agreements (including any supplements thereto) under the Trust
Indenture Act, or similar federal statute enacted after the Closing Date, and
to add to this Indenture such other provisions as may be expressly required or
permitted by the Trust Indenture Act of 1939 (if such qualification is
required), and (j) to effect

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<PAGE>
any indenture or indentures supplemental hereto or any amendment, modification,
supplement, waiver or consent with respect to any other Operative Document,
provided such supplemental indenture, amendment, modification, supplement,
waiver or consent shall not reasonably be expected to materially and adversely
affect the interest of the Noteholders; provided, however, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of each then outstanding
Lessor Note, cause any of the events specified in clauses (i) through (v) of
the first sentence of Section 8.1 hereof to occur; and provided, further, that
no such amendment, modification, supplement, waiver or consent contemplated by
this Section 8.2 shall, without the consent of the holder of a Majority in
Interest of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14,
5.31, 6, or 13.1 of the Participation Agreement or Section 19 of the Lease, or
modify in any material respect the provisions of the Calpine Guaranty (other
than, in each case, any amendment, modification, supplement, waiver or consent
having no adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                 MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

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<PAGE>
     (a)   Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)   Release.

          (i)   Whenever a Component is replaced pursuant to the Facility
     Lease, such component shall automatically and without further act of
     any Person be released from the Lien of this Lease Indenture and the
     Indenture Trustee shall, upon the written request of the Owner Lessor
     or the Facility Lessee, execute and deliver to, and as directed in
     writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the replaced Component
     from the Lien of this Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and
     deliver to, or as directed in writing by, the Facility Lessee or the
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the Indenture Estate from the Lien of this Indenture;
     provided that all sums secured by this Indenture have been paid to the
     Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further

                                       72
<PAGE>
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties hereto, the Owner Participant,
the Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

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<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630

          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor

                                       74
<PAGE>
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          South Point Energy, LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly

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<PAGE>
waived by the parties hereto or by any Person claiming by, through or under
the parties hereto and (d) under no circumstances shall Wells Fargo, be
personally liable for the payment of any indebtedness or expenses of the Owner
Lessor or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Owner Lessor
under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts.  This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. Except for those provisions relating to the
creation, perfection, enforcement, interpretation and foreclosure of the deed
of trust lien and security agreement covering the real property described on
Exhibit A hereto (the "Real Property") and fixtures thereon, the appointment
and actions of a receiver and related provisions regarding enforcement of liens
and security agreements relating to the Real Property and fixtures thereon,
which provisions of this Indenture shall be governed by, enforced in accordance
with and interpreted according to Arizona law (excluding its choice of law
provisions), and except to the extent that the laws of the United States of
America (hereinafter "Federal Law") require the application of Federal Law (in
which limited case(s) Federal Law shall apply to those issues or matters as to
which Federal Law is required to apply), this Indenture and the Lessor Notes
shall be in all other respects governed by and construed in accordance with the
laws of the State of New York, including all matters of construction, validity
and

                                       76
<PAGE>
performance (without giving effect to the conflicts of laws provisions
thereof, other than New York General Obligation Law Section 5-1401), except to
the extent mandatory choice of law rules require the application of laws of
another jurisdiction. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness

                                       77
<PAGE>
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder

                                       78
<PAGE>
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.   Fixture Financing Statement. This Indenture also is
intended to serve as a fixture filing financing statement and as a financing
statement with respect to goods or items, or other personal property that is or
will be attached to the Real Property, as permitted under the Arizona Uniform
Commercial Code and the Owner Lessor hereby authorizes this Indenture to so
serve and to be filed and/or recorded as such. In addition, a photographic,
electronic or other copy of this Indenture and/or any financing statement
related hereto shall be sufficient for filing and/or recording as a financing
statement. In connection therewith, the following information is provided:

     (a)   Name and address of Debtor:

           South Point OL-3, LLC
           c/o Wells Fargo Bank Northwest, National Association
           MAC U1254-031
           79 South Main Street
           Salt Lake City, UT 84111
           Telephone: (801) 246-5630
           Facsimile: (801) 246-5053
           Attention:  Corporate Trust Services

     (b)   Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

           State Street Bank and Trust Company of Connecticut,
           National Association,
           as Indenture Trustee

                                       79
<PAGE>
           225 Asylum Street, Goodwin Square
           Hartford, CT 06103
           Telephone: (860) 244-1822
           Facsimile:  (860) 244-1889
           Attention:  Corporate Trust Department

     (c)   The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)   Recording: This Indenture is to be recorded and/or filed in the
official real estate or other records of the County of Mohave, State of
Arizona, and in the records of the Bureau of Indian Affairs in Albuquerque, New
Mexico.

                                       80
<PAGE>
     (e)   Type of Filing: This is a commercial filing and NOT a consumer
filing under the UCC as enacted and in effect in the State of Arizona.





              (Remainder of Page Intentionally Left Blank)

                                       81
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                    SOUTH POINT OL-3, LLC, as Owner Lessor/Trustor

                    By:   Wells Fargo Bank Northwest, National Association,
                          not in its individual capacity but solely as the
                          Lessor Manager

                    By:  _______________________________________________________
                            Name:
                            Title:

                    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                    NATIONAL ASSOCIATION, as Indenture Trustee and Account Bank

                    By:  _______________________________________________________
                            Name:
                            Title:
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by _________________________, the _______________________of Wells
Fargo Bank Northwest, National Association, not in its individual capacity but
solely as the Lessor Manager of South Point OL-3, LLC, a Delaware limited
liability company, as the Owner Lessor/Trustor (the "Owner Lessor"), to be the
free act and deed on behalf of the national banking association as the Lessor
Manager of the Owner Lessor under the LLC Agreement dated as of __________,
2001.


                                Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by _________________________, the _______________________of State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, to be the free act and deed on behalf of the corporation.


                                Notary Public

My Commission Expires
<PAGE>
                                                                      EXHIBIT A
                                                             to Lease Indenture

                             DESCRIPTION OF FACILITY SITE

The East half (E1/2) of Section 8, Township 17 North, Range 21 West of the Gila
and Salt River Base and Meridian, Mohave County, Arizona.

Reserving therefrom, all mineral rights on, under or within said land, as
reserved by the Fort Mojave Indian Tribe.
<PAGE>
                                                                      EXHIBIT B
                                                             to Lease Indenture

                  FORM OF SOUTH POINT LESSOR NOTE SERIES [A][B]

                              SOUTH POINT OL-3, LLC
                NONRECOURSE PROMISSORY NOTE (SOUTH POINT) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012][2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                 Issued at: New York, New York
                                                  Issue Date: October __, 2001

$[             ]

     SOUTH POINT OL-3, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019], as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set forth on Schedule I multiplied by the percentage
set forth on Schedule I under the column

                                       B-1-1
<PAGE>
headed "Percentage of Principal Amount Payable" for such date unless the
Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                      B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.
     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                      B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be

                                       B-1-4
<PAGE>
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                       B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    SOUTH POINT OL-3, LLC
                                    a Delaware limited liability company,

                                    By:  Wells Fargo Bank Northwest, National
                                         Association, not in its individual
                                         capacity but solely as the Lessor
                                         Manager

                                    By:  _______________________________________
                                         Name:
                                         Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                       STATE STREET BANK AND TRUST
                                       COMPANY OF CONNECTICUT,
                                       NATIONAL ASSOCIATION,
                                       not in its individual capacity, but
                                       solely as the Indenture Trustee

                                       _________________________________________
                                       Name:
                                       Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________   ____________________________________________
                         (Signature of Transferor)

                         NOTE: The signature to this assignment must
                         correspond with the name as written upon the
                         face of the within-mentioned instrument in
                         every particular, without alteration or any
                         change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         PRINCIPAL PORTION: $43,000,000

<TABLE>
<CAPTION>
                                                                      Percentage of Principal
                                                                      -----------------------
Regular Distribution Date                                                      Amount Payable
-------------------------                                                      --------------
<S>                                                                   <C>
May 30, 2002..................................................                    22.79069767%
November 30, 2002.............................................                     5.40697674%
May 30, 2003..................................................                     9.36046512%
November 30, 2003.............................................                     9.76744186%
May 30, 2004..................................................                     9.06976744%
November 30, 2004.............................................                     0.00000000%
May 30, 2005..................................................                     0.00000000%
November 30, 2005.............................................                     0.00000000%
May 30, 2006..................................................                     0.00000000%
November 30, 2006.............................................                     0.00000000%
May 30, 2007..................................................                     0.00000000%
November 30, 2007.............................................                     0.00000000%
May 30, 2008..................................................                     0.00000000%
November 30, 2008.............................................                     0.00000000%
May 30, 2009..................................................                     0.00000000%
November 30, 2009.............................................                     0.00000000%
May 30, 2010..................................................                     0.00000000%
November 30, 2010.............................................                     0.00000000%
May 30, 2011..................................................                     0.00000000%
November 30, 2011.............................................                    33.60465117%
                                                                                  ------------

Total.........................................................                   100.00000000%
                                                                                 =============
</TABLE>
<PAGE>
                                        Series B Lessor Notes.

                                    Principal Portion:  $12,125,000

<TABLE>
<CAPTION>
                                                                  Percentage of Initial
                                                                  ---------------------
Regular Distribution Date                                              Principal Amount
-------------------------                                              ----------------
<S>                                                               <C>
May 30, 2002..................................................              0.00000000%
November 30, 2002.............................................              0.00000000%
May 30, 2003..................................................              0.00000000%
November 30, 2003.............................................              0.00000000%
May 30, 2004..................................................              0.00000000%
November 30, 2004.............................................              0.00000000%
May 30, 2005..................................................              0.00000000%
November 30, 2005.............................................              0.00000000%
May 30, 2006..................................................              0.00000000%
November 30, 2006.............................................              0.00000000%
May 30, 2007..................................................              0.00000000%
November 30, 2007.............................................              0.00000000%
May 30, 2008..................................................              0.00000000%
November 30, 2008.............................................              0.00000000%
May 30, 2009..................................................              0.00000000%
November 30, 2009.............................................              0.00000000%
May 30, 2010..................................................              0.00000000%
November 30, 2010.............................................              0.00000000%
May 30, 2011..................................................              0.00000000%
November 30, 2011.............................................              0.00000000%
May 30, 2012..................................................              0.00000000%
November 30, 2012.............................................              0.00000000%
May 30, 2013..................................................              0.00000000%
November 30, 2013.............................................              0.00000000%
May 30, 2014..................................................              0.00000000%
November 30, 2014.............................................              0.00000000%
May 30, 2015..................................................              0.00000000%
November 30, 2015.............................................              0.00000000%
May 30, 2016..................................................              0.00000000%
November 30, 2016.............................................              0.00000000%
May 30, 2017..................................................              0.00000000%
November 30, 2017.............................................              0.00000000%
May 30, 2018..................................................              0.00000000%
November 30, 2018.............................................              0.00000000%
May 30, 2019..................................................            100.00000000%
                                                                          -------------

Total.........................................................            100.00000000%
                                                                          =============
</TABLE>

                                      B-1-10
<PAGE>
                                                                      EXHIBIT C
                                                             to Lease Indenture

                      FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                        _______________________________________,
                                        not in its individual capacity but
                                        solely as the Indenture Trustee

                                        By:  __________________________________
                                             Name:
                                             Title:

                                       C-2
<PAGE>
                                                                      EXHIBIT D
                                                             to Lease Indenture

                         DESCRIPTION OF THE FACILITY

     That certain approximately 530 megawatt net nameplate capacity gas-fired
combined cycle electric generating facility (known also as the "South Point
Facility") together with all structures or improvements, all alterations
thereto or replacements thereof, and all other fixtures, attachments,
appliances, equipment, machinery and other articles (including, but not limited
to, the property set forth below (the "Included Property")), in each case
located on the land, or on the easements appurtenant to the land, consisting of
320 acres of land leased from the Fort Mojave Indian Tribe near Mojave Valley,
Arizona approximately 15 miles south of Bullhead City, Arizona and 5 miles east
of Needles, California, described more particularly on Exhibit A.

     Included Property

     1.   Two Combustion Turbines & Generators - Siemens Westinghouse Turbines
          (Serial Nos. 37A8063, 37A8065), Generators (Serial Nos. 94P3215,
          94P0060).

     2.   Two Heat Recovery Steam Generators - Vogt-Nem Boiler (Serial Nos.
          17382 1A-1D and 17382 2A-2D).

     3.   One Steam Turbine & Generator- Siemens Westinghouse Steam Turbine
          (Serial No. 24A3191 ) / Generator (Serial Nos. 1S94P0086 ).

     4.   One Condenser - Alstrom Condenser (Order No. 99-5080).

     5.   Water Treatment Facility - Reverse Osmosis, Brine Concentrator, Mixed
          Bed Exchangers, Multi-media Filters and associated tanks.

     6.   Eleven cell Marley Cooling Tower- including Circulating Water Pumps.

     7.   Three Generator Step Up Transformers, all electrical switchyard
          equipment and other interconnection equipment associated with the
          South Point Facility.

                                       D-1
<PAGE>
                                                                     SCHEDULE I
                                                             to Lease Indenture

                             SERIES A LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $43,000,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                  Percentage of Principal
                                                                  -----------------------
Regular Distribution Date                                                  Amount Payable
-------------------------                                                  --------------
<S>                                                               <C>
May 30, 2002..................................................              22.79069767%
November 30, 2002.............................................              15.40697674%
May 30, 2003..................................................               9.36046512%
November 30, 2003.............................................               9.76744186%
May 30, 2004..................................................               9.06976744%
November 30, 2004.............................................               0.00000000%
May 30, 2005..................................................               0.00000000%
November 30, 2005.............................................               0.00000000%
May 30, 2006..................................................               0.00000000%
November 30, 2006.............................................               0.00000000%
May 30, 2007..................................................               0.00000000%
November 30, 2007.............................................               0.00000000%
May 30, 2008..................................................               0.00000000%
November 30, 2008.............................................               0.00000000%
May 30, 2009..................................................               0.00000000%
November 30, 2009.............................................               0.00000000%
May 30, 2010..................................................               0.00000000%
November 30, 2010.............................................               0.00000000%
May 30, 2011..................................................               0.00000000%
November 30, 2011.............................................              33.60465117%
                                                                            ------------

Total.........................................................             100.00000000%
                                                                           =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                             SERIES B LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $12,125,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                    Percentage of Initial
                                                                    ---------------------
Regular Distribution Date                                                Principal Amount
-------------------------                                                ----------------
<S>                                                                 <C>
May 30, 2002..................................................                0.00000000%
November 30, 2002.............................................                0.00000000%
May 30, 2003..................................................                0.00000000%
November 30, 2003.............................................                0.00000000%
May 30, 2004..................................................                0.00000000%
November 30, 2004.............................................                0.00000000%
May 30, 2005..................................................                0.00000000%
November 30, 2005.............................................                0.00000000%
May 30, 2006..................................................                0.00000000%
November 30, 2006.............................................                0.00000000%
May 30, 2007..................................................                0.00000000%
November 30, 2007.............................................                0.00000000%
May 30, 2008..................................................                0.00000000%
November 30, 2008.............................................                0.00000000%
May 30, 2009..................................................                0.00000000%
November 30, 2009.............................................                0.00000000%
May 30, 2010..................................................                0.00000000%
November 30, 2010.............................................                0.00000000%
May 30, 2011..................................................                0.00000000%
November 30, 2011.............................................                0.00000000%
May 30, 2012..................................................                0.00000000%
November 30, 2012.............................................                0.00000000%
May 30, 2013..................................................                0.00000000%
November 30, 2013.............................................                0.00000000%
May 30, 2014..................................................                0.00000000%
November 30, 2014.............................................                0.00000000%
May 30, 2015..................................................                0.00000000%
November 30, 2015.............................................                0.00000000%
May 30, 2016..................................................                0.00000000%
November 30, 2016.............................................                0.00000000%
May 30, 2017..................................................                0.00000000%
November 30, 2017.............................................                0.00000000%
May 30, 2018..................................................                0.00000000%
November 30, 2018.............................................                0.00000000%
May 30, 2019..................................................              100.00000000%
                                                                            -------------

Total.........................................................              100.00000000%
                                                                            =============
</TABLE>

                                  SCHEDULE 1-2


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.18
<SEQUENCE>21
<FILENAME>f80168ex4-22_18.txt
<DESCRIPTION>EXHIBIT 4.22.18
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.18


RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

================================================================================

                       INDENTURE OF TRUST, DEED OF TRUST,
                        ASSIGNMENT OF RENTS AND LEASES,
                   SECURITY AGREEMENT AND FINANCING STATEMENT


                          Dated as of October 18, 2001


                                     between


                             SOUTH POINT OL-4, LLC

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank


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

                              SOUTH POINT FACILITY

===============================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                      Page

<S>                                                                                   <C>
SECTION 1.   DEFINITIONS............................................................. 10

SECTION 2.   THE LESSOR NOTES........................................................ 11
     Section 2.1.   Limitation on Lessor Notes....................................... 11
     Section 2.2.   Initial Lessor Notes............................................. 11
     Section 2.3.   Execution and Authentication of Lessor Notes..................... 12
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes................... 12
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee.......................................................... 13
     Section 2.6.   Method of Payment................................................ 14
     Section 2.7.   Application of Payments.......................................... 15
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.............. 16
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes................ 17
     Section 2.10.  Redemptions; Assumption.......................................... 17
     Section 2.11.  Payment of Expenses on Transfer.................................. 22
     Section 2.12.  Additional Lessor Notes.......................................... 23
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend..................................................... 26
     Section 2.14.  Security for and Parity of Lessor Notes.......................... 26
     Section 2.15.  Acceptance of the Indenture Trustee.............................. 26

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE... 27
     Section 3.1.   Distribution of Periodic Rent.................................... 27
     Section 3.2.   Payments Following Event of Loss or Other Early Termination...... 29
     Section 3.3.   Payments After Lease Indenture Event of Default.................. 30
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..... 31
     Section 3.5.   Application of Certain Other Payments............................ 31
     Section 3.6.   Other Payments................................................... 32
     Section 3.7.   Excepted Payments................................................ 32
     Section 3.8.   Distributions to the Owner Lessor................................ 33
     Section 3.9.   Payments Under Assigned Documents................................ 33
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee........ 33
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF
             INDENTURE TRUSTEE....................................................... 37
     Section 4.1.   Covenants of Owner Lessor........................................ 37
     Section 4.2.   Lease Indenture Events of Default................................ 38
     Section 4.3.   Remedies of the Indenture Trustee................................ 40
     Section 4.4.   Right to Cure Certain Lease Events of Default.................... 43
     Section 4.5.   Rescission of Acceleration....................................... 46
     Section 4.6.   Return of Indenture Estate, Etc.................................. 47
     Section 4.7.   Power of Sale and Other Remedies................................. 48
     Section 4.8.   Appointment of Receiver.......................................... 50
     Section 4.9.   Remedies Cumulative.............................................. 51
     Section 4.10.  Waiver of Various Rights by the Owner Lessor..................... 51
     Section 4.11.  Discontinuance of Proceedings.................................... 52
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the
                    Facility Lease................................................... 52
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc......... 53
     Section 4.14.  Further Assurances............................................... 53
     Section 4.15.  Waiver of Past Defaults.......................................... 53

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND
             DUTIES OF OWNER LESSOR.................................................. 54
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default........... 54
     Section 5.2.   Actions Upon Instructions Generally.............................. 54
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease................................................... 55
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification........... 55
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions........................ 55
     Section 5.6.   Certain Rights of the Owner Lessor............................... 56
     Section 5.7.   Restrictions on Dealing with Indenture Estate.................... 59
     Section 5.8.   Filing of Financing Statements and Continuation Statements....... 59

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR...................................... 60
     Section 6.1.   Acceptance of Trusts and Duties.................................. 60
     Section 6.2.   Absence of Certain Duties........................................ 62
     Section 6.3.   Representations and Warranties................................... 63
     Section 6.4.   No Segregation of Moneys; No Interest............................ 63
     Section 6.5.   Reliance; Agents; Advice of Experts.............................. 64
</TABLE>

                                      ii
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                   <C>

SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE
             TRUSTEES................................................................ 65
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appoin-
                    tment of Successor............................................... 65
     Section 7.2.   Appointment of Additional and Separate Trustees.................. 67

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
             AND OTHER DOCUMENTS..................................................... 69
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations....................................... 69
     Section 8.2.   Supplemental Indentures and other Amendments Without
                    Consent.......................................................... 70
     Section 8.3.   Conditions to Action by the Indenture Trustee.................... 72

SECTION 9.   MISCELLANEOUS........................................................... 72
     Section 9.1.   Surrender, Defeasance and Release................................ 72
     Section 9.2.   Conveyances Pursuant to the Site Lease........................... 73
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances....................................................... 73
     Section 9.4.   Indenture for Benefit of Certain Persons Only.................... 73
     Section 9.5.   Notices; Furnishing Documents, etc............................... 74
     Section 9.6.   Severability..................................................... 76
     Section 9.7.   Limitation of Liability.......................................... 76
     Section 9.8.   Written Changes Only............................................. 76
     Section 9.9.   Counterparts..................................................... 76
     Section 9.10.  Successors and Permitted Assigns................................. 77
     Section 9.11.  Headings and Table of Contents................................... 77
     Section 9.12.  Governing Law.................................................... 77
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..... 77
     Section 9.14.  Withholding Taxes: Information Reporting......................... 78
     Section 9.15.  Fixture Financing Statement...................................... 80
</TABLE>

                                       iii
<PAGE>
<TABLE>
<CAPTION>
<S>                  <C>
EXHIBITS

Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility
</TABLE>

APPENDIX A Definitions

                                       iv
<PAGE>
INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY
AGREEMENT AND FINANCING STATEMENT

     This INDENTURE OF TRUST, DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FINANCING STATEMENT (as amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof,
this "Indenture"), dated as of October 18, 2001, between SOUTH POINT OL-4, LLC,
a Delaware limited liability company created for the benefit of the Owner
Participant referred to below, as trustor (as such term is defined in Arizona
Revised Statutes, Section 33-801, et seq.) (the "Owner Lessor"), having an
address as set forth in Section 9.5 of this Indenture, STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as beneficiary and trustee
(as such term is defined in Arizona Revised Statutes, Section 33-801, et seq.)
on behalf of the Noteholders (the "Indenture Trustee") and as the Account Bank,
having an address as set forth in Section 9.5 of this Indenture.

                                  WITNESSETH:

     WHEREAS, Calpine Construction Finance Company ("CCFC") has assigned the
Undivided Interest and the Ground Interest to the Owner Lessor pursuant to the
certain Assignment Agreement, a memorandum of which shall be recorded with this
Indenture in the appropriate registry of land records described in Exhibit A
attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with
South Point Energy Center, LLC (the "Facility Lessee") pursuant to which the
Facility Lessee has subleased from the Owner Lessor for a term of years the
Owner Lessor's Undivided Interest in the Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time in accordance with the provisions thereof, the "Facility Site
Lease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

                                       1
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assumed from CCFC and (ii) grant to the Indenture Trustee the security
interests herein provided;

     WHEREAS, this Indenture is regarded as and shall constitute a deed of
trust under the laws of the State of Arizona, as an absolute and current
assignment of rents, leases, income, issues, royalties and profits pursuant to
the laws of the State of Arizona including, among other provisions, Arizona
Revised Statutes ("A.R.S.") Section(s) ("[sec]") 33-702.B, 33-807(C) and 12-241,
et seq. as a security agreement and grant by the Owner Lessor, as debtor, to and
in favor of the Indenture Trustee, as the Secured Party, of a security interest
in the Indenture Estate (as such term is hereinafter defined) under the Uniform
Commercial Code as enacted and in effect from time to time in the State of
Arizona and under the Uniform Commercial Code as enacted and in effect from time
to time in the States of New York and Delaware, and as a fixture filing and a
financing statement under the laws of the Uniform Commercial Code as enacted and
in effect in the State of Arizona from time to time;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter
into this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time, (b) the conveyance and assignment to
the Indenture Trustee on the Closing Date of the Undivided Interests conveyed to
the Owner Lessor and the Owner Lessor's right, title and interest in and under
the Operative Documents executed in connection therewith and all payments and
other amounts received hereunder or thereunder in accordance herewith (excluding
Excepted Payments) and (c) security for the payment and performance of the
obligations described or referred to in this Indenture;

     WHEREAS, all things have been done to make the Lessor Notes, when
executed by the Owner Lessor, authenticated and delivered hereunder and issued,
the valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

                                       2
<PAGE>
     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to secure
(i) the prompt payment when and as due of the principal of and the Make-Whole
Amount, if any, and interest on the Lessor Notes and of all other amounts owing
with respect to all Lessor Notes from time to time outstanding hereunder, and
the prompt payment when and as due of any and all other amounts from time to
time owing in respect of the Secured Indebtedness and (ii) the performance and
observance by the Owner Lessor for the benefit of the holders of the Lessor
Notes and the Indenture Trustee of all other obligations, agreements, and
covenants of the Owner Lessor set forth hereinafter and in the Lessor Notes, the
Operative Documents and the other documents, certificates and agreements
delivered in connection therewith:

                            GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee as
trustee under ARS [sec] 33-801, et seq., in trust, with power of sale, for the
benefit of the holders of the Lessor Notes from time to time, a first priority
security interest in and deed of trust lien on all estate, right, title and
interest of the Owner Lessor in, to and under the following described real and
personal property, rights, interests and privileges, whether now held or
hereafter acquired and all easements, rights of way, access agreements,
leasehold interests, leasehold and other estates, ground leases, hereditaments
and other rights now or hereafter existing, covering all or part thereof, or
appurtenant or attaching thereto, together with all structures, buildings and
other improvements now or hereafter upon, constructed upon or located in whole
or in part upon the same; together with all fixtures, machinery, and all
articles and items of property now or hereafter attached to, or used or adapted
for use in the operation, maintenance or use thereof; together with all rents,
issues, royalties, income and profits thereof under present and future leases,
occupancy and use agreements (which collectively, including all property
hereafter specifically subjected to the security interest created by this
Indenture by any supplement hereto, exclusive of Excepted Payments) are included
within, and are hereafter referred to as, the "Indenture Estate"):

     (1)   the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility Lessee
thereunder (including Rent); any rights of the Owner Lessor as assignee of the
Facility Lessee under the Facility Lease; the Facility Site Lease and all
payments of any kind by the Facility Lessee thereunder; the Assignment Agreement
(and all rights with respect to the Ground Lease conveyed

                                       3
<PAGE>
thereby); the Owner Lessor's interest in all tangible property located on or at
or attached to the Facility Site as to which an interest in such tangible
property arises under applicable real estate law ("fixtures"); the Calpine
Guaranty, the South Point Ground Lease, the Ownership and Operation Agreement
and all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or at law or in equity or
otherwise, arising out of any Lease Default or Lease Event of Default and (y)
any right to restitution from the Facility Lessee, any sublessee or any other
person in respect of any determination of invalidity of any such document;

     (2)   all rents (including Periodic Rent and Supplemental Rent),
royalties, issues, profits, revenues, proceeds, damages, claims, warranties and
other income from the property described in this Granting Clause, including,
without limitation, all payments or proceeds payable to the Owner Lessor as the
result of the sale of the Property Interest or the lease or other disposition of
the Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)   any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof

                                       4
<PAGE>
or to accept surrender or redelivery of the Facility or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner Lessor,
whether acting under any sublease of the Facility or any assignment thereof or
by statute or at law or in equity, or otherwise, arising out of any default
under such sublease or any assignment thereof, and (iii) any right to
restitution from the Facility Lessee, the applicable sublessee or any guarantor
of such sublessee in respect of any determination of invalidity of any sublease
of the Facility or any assignment thereof;

     (4)   all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the extent of the Owner Lessor's interest therein) of all insurance
maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)   all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the terms
of any Assigned Document, wherever located; and

     (6)   all of Owner Lessor's right, title and interest conveyed to the
Indenture Trustee in and relating to the following :

          (i)   The real property that is described in and made subject to
     this Indenture (the "Real Property") the fee simple owner of which is
     the United States of America, in trust for the Fort Mojave Indian Tribe
     ("Owner"), as evidenced by patent of record in Mohave County, Arizona
     which is on file with the United States Department of Interior, Bureau
     of Indian Affairs, Albuquerque, New Mexico Regional Office (the "BIA");
     and

          (ii)   The leasehold estate interest in the Real Property which was
     created pursuant to the terms and conditions of that certain Amended and
     Restated Ground Lease Agreement, being BIA Lease No. B-1778-FM, approved as
     of August 19, 1999, by and between Owner and Calpine South Point, LLC, a
     Delaware limited liability company, as Lessee, and Fort Mojave Indian
     Tribe, a federally recognized Indian Tribe, as Lessor, a memorandum of
     which Ground Lease, as amended, was recorded on October 29, 1999 in Book
     3399 of Official Records, page 822, Records of Mohave County, Arizona and
     filed in the Land Titles and Records Office as document number 604-050-99
     and certificate of merger filed in the Land Titles and Records Office as
     document number 604-056-99 (collectively the "Ground Lease"). The Lessee's
     interests in and to the Ground Lease have been duly, properly and
     effectively assigned to the Owner Lessor, pursuant to that certain
     Assignment Agreement, dated as of the date

                                       5
<PAGE>
     hereof, which shall have been recorded in the records of Mohave County,
     Arizona and filed with the BIA; and

     (7)   all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner Participant
hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns, for the benefit of the Indenture Trustee and for the benefit
and security of the Noteholders from time to time;

     TO HAVE AND TO HOLD to said Indenture Trustee, as Trustee under A.R.S.
Section 33-801, et seq., its successors, heirs or assigns, the Indenture Estate
and all of the Owner Lessor's interests therein, including, without limitation,
the leasehold interest pursuant to the South Point Ground Lease;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount,
if any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does
hereby irrevocably constitute and appoint the Indenture Trustee the true and
lawful attorney of the Owner Lessor (which appointment is coupled with an
interest) with full power (in the name of the Owner Lessor or otherwise) to ask,
require, demand and receive any and all moneys and claims for moneys (in each
case, including, without limitation, insurance and requisition proceeds to the
extent of the Owner Lessor's interest therein but excluding in all cases
Excepted Payments) due and to become due under or arising out of the Assigned
Documents and all other property which now or hereafter constitutes part of the
Indenture Estate and, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings (other than in connection with the enforcement or
collection of Excepted Payments) which the Indenture Trustee may deem to be
necessary or advisable. Pursuant to the Facility Lease, the Facility Lessee is
directed to make all payments of Rent required to be paid or deposited with the
Owner Lessor (other than Excepted Payments) and all other amounts which are
required to be paid

                                       6
<PAGE>
to or deposited with the Owner Lessor pursuant to the Facility Lease (other
than Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided
in this Indenture. Further, the Owner Lessor agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Indenture Estate, whether or
not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to and does hereby constitute and create a
security agreement as required under the Uniform Commercial Codes from time to
time enacted and effective under the laws of the States of New York, Delaware
and Arizona. Pursuant to such security agreement, Owner Lessor does hereby grant
to Indenture Trustee a security interest in all that portion of the Indenture
Estate that is now or shall or may be or become personal property and/or
fixtures and in or with respect to which a security interest may be granted
(collectively the "Personal Property") pursuant to the Uniform Commercial Code
as enacted and effective from time to time in all and each of the States of New
York, Delaware and Arizona. Such security interest shall be and is a first and
prior security interest in all such Personal Property and Indenture Trustee, its
successors and assigns, shall have and enjoy all rights, remedies and benefits
available to a secured party under the said Uniform Commercial Code as enacted
and effective from time to time in the aforementioned States, with respect to
the Indenture Estate.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for the
benefit and security of (i) the holders from time to time of the Lessor Notes
from time to time outstanding, without any priority of any one Lessor Note over
any other except as herein otherwise expressly provided and (ii) the Indenture
Trustee, and for the uses and purposes and subject to the terms and provisions
set forth in this Indenture. It is expressly agreed that anything herein
contained to the contrary notwithstanding, the

                                       7
<PAGE>
Owner Lessor shall remain liable under the Assigned Documents to perform all of
the obligations assumed by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and the Indenture Trustee and the
Noteholders shall have no obligation or liability under any Assigned Document
by reason of or arising out of the assignment hereunder, nor shall the
Indenture Trustee or the Noteholders be required or obligated in any manner,
except as herein expressly provided, to perform or fulfill any obligation of
the Owner Lessor under or pursuant to any such Assigned Document or, except as
herein expressly provided, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or to present or file
any claim, or to take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged, granted or permitted a lien, mortgage or deed of trust or
security interest in, to or under, and hereby covenants that, so long as this
Indenture shall remain in effect and the Lien hereof shall not have been
released pursuant to Section 9.1 hereof, it will not assign, pledge or grant a
lien or security interest in any of its estate, right, title or interest in, to
or under, the Indenture Estate to anyone other than the Indenture Trustee for
the benefit of the Noteholders. The Owner Lessor hereby further covenants that
with respect to its estate, right, title and interest in, to or under the
Indenture Estate, it will not, except as provided in this Indenture and except
as to Excepted Payments, (i) accept any payment from the Facility Lessee or any
sublessee or enter into any agreement amending, modifying or supplementing any
of the Assigned Documents, execute any waiver or modification of, or consent
under (other than pursuant to Section 4.2 of the South Point Ground Lease or
Sections 5.20 or 13.3 of the Participation Agreement (subject to the conditions
set forth in Sections 5.20 or 13.3, as applicable, of the Participation
Agreement)), the terms of any of the Assigned Documents or revoke or terminate
any of the Assigned Documents, (ii) settle or compromise any claim arising under
any of the Assigned Documents, or (iii) submit or consent to the submission of
any dispute, difference or other matter arising under or in respect of any of
the Assigned Documents to arbitration thereunder (except with respect to any
action pursuant to Section 4.2 of the South Point Ground Lease or Sections 5.20
or 13.3 of the Participation Agreement (subject to the conditions set forth in
Sections 5.20 or 13.3, as applicable, of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and
confirms its obligations under the Assigned Documents and does hereby agree that
it will not take or omit to take any action, the taking or omission of which
might result in an alteration or impairment of any of the Assigned Documents or
of any of the rights created

                                       8
<PAGE>
by any such Assigned Document or the assignment (subject to the previous)
paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and
permitted assigns, agrees that all Lessor Notes are to be issued and delivered
and that all property subject or to become subject hereto is to be held subject
to the further covenants, conditions, uses and trusts hereinafter set forth, and
the Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security of
the holders from time to time of the Lessor Notes from time to time outstanding
and to protect the security of this Indenture; and the Indenture Trustee agrees
to accept the trusts and duties hereinafter set forth, as follows:

     THIS INDENTURE AND CONVEYANCE IS MADE IN TRUST, however, with POWER OF
SALE for the benefit of the Indenture Trustee to secure the payment of the
Secured Indebtedness.

     This Indenture and conveyance is also made in trust to further secure:

     (a)   Payment and performance of the obligations, covenants and agreements
contained in the Lessor Notes and other documents and/or instruments referred
to, defined or described in the definition of Secured Indebtedness and any and
all modifications, extensions or renewals of any such documents or instruments;

     (b)   Payment and performance of the obligations, covenants and agreements
contained in that certain Participation Agreement, the terms and conditions of
which are incorporated herein by this reference; and

     (c)   Payment of all other sums becoming due or payable under, and the
performance of all other obligations, covenants and agreements contained in (i)
the Lessor Notes; (ii) any Additional Lessor Notes; (iii) any and all Assignment
Documents and Assumption Documents; and (iv) any other instrument given as
security for the Secured Indebtedness or entered into with respect to this
Indenture, including without limitation, the Participation Agreement and all
other documents and instruments (all the foregoing documents and instruments
being collectively referred to herein as the "Collateral Documents").

                                   SECTION 1.
                                  DEFINITIONS

                                       9
<PAGE>
     (a)   Unless the context hereof shall otherwise require, capitalized
terms used, including those in the recitals, and not otherwise defined herein
shall have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager, the
Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)   In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 530 MW nameplate capacity gas-fired combined cycle
merchant power plant located near Bullhead, Arizona and more fully described in
Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness
     evidenced by such Lessor Notes, and principal of such Lessor Notes
     being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may
     hereafter be owing by the Owner Lessor to or for the benefit of the
     Indenture Trustee under the Operative Documents including indemnities
     and other Supplemental Rent payable by the Facility Lessee under the
     Operative Documents, whether evidenced by Additional Lessor Notes
     issued pursuant to Section 2.12 hereof or otherwise, however and
     whenever incurred or evidenced, whether direct or indirect, absolute or
     contingent, due or to become due, together with interest thereon at the
     rate provided in each Additional

                                      10
<PAGE>
     Lessor Note and the Make-Whole Amount thereon (if any) and together with
     any and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Additional Lessor Notes, and principal of
     such Additional Lessor Notes being due and payable as provided in each
     such Additional Lessor Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to Section
     4.13 hereof (whether or not the Owner Lessor remains the
     owner of the Indenture Estate at the time of such advances); and

          (iv)   Any and all expenses incident to the collection of the
     Secured Indebtedness and the foreclosure hereof by action in any court
     or by exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal amount
of the Lessor Notes which may be authenticated and delivered and outstanding at
any one time under this Indenture shall be limited to the principal amount of
the Initial Lessor Notes issued on the Closing Date to the Pass Through Trustees
plus the aggregate principal amount of Additional Lessor Notes issued pursuant
to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes"

                                      11
<PAGE>
or, individually, an "Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate form
provided for in any supplement hereto executed pursuant to Section 2.12 hereof),
executed by the Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor signed
by the Lessor Manager. The Indenture Trustee shall authenticate and deliver
Additional Lessor Notes, upon a written order of the Owner Lessor executed by
the Lessor Manager and satisfaction of the conditions specified in Section 2.12.
Such order shall specify the principal amount of the Additional Lessor Notes to
be authenticated and the date on which the original issue of Additional Lessor
Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)   Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

     (b)   Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments having
final payment dates set forth in Schedule I hereto. The principal of each
Initial Lessor Note shall be due and payable in installments on the dates and in
the amounts set forth in Schedule I hereto. Schedule I hereto to the contrary
notwithstanding, the last payment made under such Initial Lessor Note shall be
equal to the then unpaid balance of the principal of such Lessor Note plus all
accrued and unpaid interest on, and any other amounts due under, such Initial
Lessor Note. Each Initial Lessor Note shall bear interest on the principal from
time to time outstanding from and including the date of

                                      12
<PAGE>
issuance thereof (computed on the basis of a 360-day year of twelve 30-day
months) until paid in full at the rate set forth in such Initial Lessor Note
and Schedule I hereto.  Each Initial Lessor Note shall accrue additional
interest under the circumstances and at the rate per annum set forth in the
third paragraph of each Initial Lessor Note. Interest on each Initial Lessor
Note shall be due and payable in arrears semi-annually commencing on May 30,
2002, and on each May 30 and November 30 thereafter until paid in full. If any
day on which principal, Make-Whole Amount, if any, or interest on the Initial
Lessor Notes are payable is not a Business Day, payment thereof shall be made
on the next succeeding Business Day with the same effect as if made on the date
on which such payment was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)   Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the Facility
Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or (iii) the
Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have no
obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments in
accordance with the terms of Section 3 hereof; and the Owner Participant shall
not have any obligation for payments in respect of the Lessor Notes or under
this Indenture. The Indenture Trustee and each Noteholder, by its acceptance
thereof, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for distribution to the Indenture
Trustee or such Noteholder, as the case may be, as herein provided and that,
except as expressly provided in this Indenture, the Participation Agreement or
any other Operative Document, none of the Owner Participant, the Owner Lessor,
the Trust Company, the Lease Indenture Company, nor the Indenture Trustee, nor
any Affiliate of any thereof, shall be personally liable to such Noteholder or
the Indenture Trustee for any amounts payable hereunder, under such Lessor Note
or for any performance to be rendered under any Assigned Document or for any
liability under

                                      13
<PAGE>
any Assigned Document. Without prejudice to the foregoing, the Owner Lessor
will duly and punctually pay or cause to be paid the principal of, Make-Whole
Amount, if any, and interest on all Lessor Notes according to their terms and
the terms of this Indenture. Nothing contained in this Section 2.5 limiting the
liability of the Owner Lessor shall derogate from the right of the Indenture
Trustee and the Noteholders to proceed against the Indenture Estate and the
Calpine Guaranty to secure and enforce all payments and obligations due
hereunder and under the Assigned Documents and the Lessor Notes.

     (a)   In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)   Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent"). The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)   The Owner Lessor shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Lessor Notes and shall notify
the Indenture Trustee of any default by the Owner Lessor in making any such
payment.

     (b)   The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in the
Indenture Estate on the dates provided in the Lessor Notes by mailing a check
for such amount, payable in New York Clearing House funds, to each Noteholder at
the last address of each such Noteholder appearing on the Note Register, or by
whichever of the following methods shall be specified by notice from a
Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to

                                      14
<PAGE>
an account maintained by such Noteholder with the Indenture Trustee, (ii) by
making such payment to such Noteholder in immediately available funds at the
Indenture Trustee Office, or (iii) in the case of the Initial Lessor Notes and
in the case of Additional Lessor Notes, if such Noteholder is the Pass Through
Trustee, or a bank or other institutional investor, by transferring such amount
in immediately available funds for the account of such Noteholder to the
banking institution having bank wire transfer facilities as shall be specified
by such Noteholder, such transfer to be subject to telephonic confirmation of
payment. Any payment made under any of the foregoing methods shall be made free
and clear of and without reduction for or on account of all wire and like
charges and without any presentment or surrender of such Lessor Note, unless
otherwise specified by the terms of the Lessor Note, except that, in the case
of the final payment in respect of any Lessor Note, such Lessor Note shall be
surrendered to the Indenture Trustee for cancellation after such payment. All
payments in respect of the Lessor Notes shall be made (1) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon New York City time, on a
Business Day, or (2) on the next succeeding Business Day if received after such
time or on any day other than a Business Day. One or more of the foregoing
methods of payment may be specified in a Lessor Note. Prior to due presentment
for registration of transfer of any Lessor Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name any Lessor Note
is registered on the Note Register as the absolute owner and holder of such
Lessor Note for the purpose of receiving payment of all amounts payable with
respect to such Lessor Note and for all other purposes, and neither the Owner
Lessor nor the Indenture Trustee shall be affected by any notice to the
contrary. All payments made on any Lessor Note in accordance with the
provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied as required under Arizona law; and thereafter in
the following order: first, to the payment of accrued interest (including
interest on overdue principal and the Make-Whole Amount, if any, and, to the
extent permitted by Applicable Law, overdue interest) on such Lessor Note to the
date of such payment, second, to the payment of the principal amount of, and the
Make-Whole Amount, if any, on such Lessor Note then due (including any overdue
installments of principal) thereunder and third, to the extent permitted by
Section 2.10 of this Indenture, the balance, if any, remaining thereafter, to
the payment of the principal amount of, and the Make-Whole Amount, if any, on
such Lessor Note. The order of

                                      15
<PAGE>
application of payments prescribed by this Section 2.7 shall not be deemed to
supersede any provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration of
transfer and exchange of Lessor Notes (such register being referred to herein as
the "Note Register"). If any Lessor Note is surrendered at said office for
registration of transfer or exchange (accompanied by a written instrument of
transfer duly executed by or on behalf of the holder thereof, together with the
amount of any applicable transfer taxes), the Owner Lessor will execute and the
Indenture Trustee will authenticate and deliver, in the name of the designated
transferee or transferees, if any, one or more new Lessor Notes (subject to the
limitations specified in Sections 2.3 and 2.13 hereof) in any denomination or
denominations not prohibited by this Indenture, as requested by the Person
surrendering the Lessor Note, dated the same date as the Lessor Note so
surrendered and of like tenor and aggregate unpaid principal amount. Any Lessor
Note or Lessor Notes issued in a registration of transfer or exchange shall be
valid obligations of the Owner Lessor entitled to the same security and benefits
to which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or Lessor
Notes surrendered. Every Lessor Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Indenture Trustee
duly executed by the holder thereof or his attorney duly authorized in writing,
and the Indenture Trustee may require an opinion of counsel as to compliance of
any such transfer with the Securities Act. The Indenture Trustee shall make a
notation on each new Lessor Note of the amount of all payments of principal
previously made on the old Lessor Note or Lessor Notes with respect to which
such new Lessor Note is issued and the date on which such new Lessor Note is
issued and the date to which interest on such old Lessor Note or Lessor Notes
shall have been paid. The Indenture Trustee shall not be required to register
the transfer or exchange of any Lessor Note during the 10 days preceding the due
date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have

                                      16
<PAGE>
consented to, and agreed to be bound by, the terms and conditions hereof, of
such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor Note
and, in case of loss, theft or destruction, of indemnity satisfactory to each of
them, and upon reimbursement to the Owner Lessor and the Indenture Trustee of
all reasonable expenses incidental thereto and payment or reimbursement for any
transfer taxes, and upon surrender and cancellation of such Lessor Note, if
mutilated, the Owner Lessor will execute and the Indenture Trustee will
authenticate and deliver in lieu of such Lessor Note, a new Lessor Note, dated
the same date as such Lessor Note and of like tenor and principal amount. Any
indemnity provided by the holder of a Lessor Note pursuant to this Section 2.9
must be sufficient in the reasonable judgment of the Owner Lessor and the
Indenture Trustee to protect the Owner Lessor, the Indenture Trustee, the Paying
Agent, the Registrar and any co-registrar or co-paying agent from any loss which
any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.
     (a)   Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clause (v) or
     (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1

                                      17
<PAGE>
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)   Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old Lessor Note but indicating that the Facility Lessee is the issuer
thereof. When such assumption agreement becomes effective, the Owner Lessor
shall be released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee. All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the

                                      18
<PAGE>
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental
     Approval is necessary or required in connection with any Assumption
     Document or the assumption contemplated thereby (or, if any such
     Governmental Approval is necessary or required, that the same has been
     duly obtained and is final and in full force and effect and any period
     for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor
     Note or any Certificateholder and (6) the lien of this Indenture will
     continue to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

                                      19
<PAGE>
          (iii)   Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)   The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any, so
redeemed to the date of redemption.

     (d)   The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to Section 11.2 of the Participation Agreement. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause
     (b) of Section 14.1 of the Facility Lease. The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a
     Lease Indenture Event of Default or any other

                                      20
<PAGE>
     default under the Operative Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as
     a result of the occurrence of an Event of Loss described in clause (v) or
     (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be continuing,
selected by the Owner Lessor.

     (e)   If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)   At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that no notice shall be required so long as the
Pass Through Trustee and the Indenture Trustee are the same entity. Each such
notice shall state:

          (i)   the date of redemption;

          (ii)   the redemption price;

          (iii)   the name and address of the Paying Agent;

          (iv)   that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v)   that, unless the Owner Lessor defaults in making such redemp-

                                      21
<PAGE>
     tion payment, interest on Lessor Notes called for redemption ceases to
     accrue on and after the redemption date; and

          (vi)   the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)   With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt by
the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)   Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the Indenture Trustee and the Owner Participant of
any tax or other governmental charge in connection therewith or any charges and
expenses connected with such tax or governmental charge paid or payable by the
Owner Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)   Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing

                                      22
<PAGE>
funds in connection with Supplemental Financing pursuant to Section 11.1 of the
Participation Agreement for the payment of all or any portion of Modifications
to the Facility pursuant to Section 8 of the Facility Lease, or (ii) redeeming
any previously issued Lessor Notes pursuant to an optional refinancing pursuant
to Section 11.2 of the Participation Agreement and providing funds for the
payment of all reasonable costs and expenses in connection therewith.

     (b)   Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days prior
to the proposed date of issuance of any Additional Lessor Notes, a request and
authorization to issue such Additional Lessor Notes, which request and
authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to distinguish
such Additional Lessor Notes from the Initial Lessor Notes theretofore issued,
but otherwise shall rank pari passu with any Lessor Notes then outstanding, be
entitled to the same benefits and security of this Indenture as the other Lessor
Notes issued pursuant to the terms hereof, be dated the date of original
issuance of such Additional Lessor Notes, bear interest at such rates as shall
be agreed between the Facility Lessee and the Owner Lessor and indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the final maturity date of the Initial Lessor Notes
issued on the closing date. The Additional Lessor Notes shall not be subject to
(i) purchase except as provided in Section 4.4(e) hereof or (ii) redemption or
assumption except as provided in Section 2.10 hereof.

     (c)   The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to this
Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in

                                      23
<PAGE>
     respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of
     and interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default
     as to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of the
     Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and

                                      24
<PAGE>
     enforceability of the Additional Lessor Notes and that all conditions
     hereunder to the authentication and delivery of such Additional Lessor
     Notes have been complied with.

     (d)   When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)   This Indenture is an open-end deed of trust and mortgage which
secures existing indebtedness, "future advances", "protective advances,"
"authorized advances"and "contingent obligations" as such terms are under or
referred to under applicable Arizona law. The maximum principal indebtedness
secured by this Indenture, including future advances and contingent obligations
but excluding protective advances, shall not at any time exceed the total amount
of Two Hundred Twenty Million Five Hundred Thousand Dollars ($220,500,000);
provided, however, that nothing herein contained shall limit the amount secured
by this Indenture if the Secured Indebtedness is increased by protective
advances; and provided, further, such limitation as to such future advances and
contingent obligations shall only pertain to the record priority of the amount
thereof secured hereby pursuant to applicable law and does not otherwise limit
the amount of total indebtedness of Owner Lessor secured hereby or limit the
liability of Owner Lessor to Indenture Trustee for such total indebtedness,
including future advances and contingent obligations. The future advances
secured hereby shall be made to or for the account of Owner Lessor and may be
made under the Additional Lessor Notes, or pursuant to promissory notes or other
instruments evidencing such future advances which may be hereafter executed and
delivered by Owner Lessor to Indenture Trustee. In the event that any notice is
recorded or is received by Indenture Trustee, any commitment, agreement, or
obligation to make future advances to or for the benefit of Owner Lessor shall
immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal
Securities Laws; Legend. Each Lessor Note shall be delivered to the initial
Noteholder thereof without registration of such Lessor Note under the Securities
Act and without qualification of this Indenture under the Trust Indenture Act of
1939, as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the

                                      25
<PAGE>
Owner Lessor an opinion of counsel, which opinion and which counsel shall be
reasonably satisfactory to the Indenture Trustee, the Owner Lessor and the
Facility Lessee, to the effect that such transfer will not violate the
registration provisions of the Securities Act or require qualification of this
Indenture under the Trust Indenture Act of 1939, as amended, and all Lessor
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
     MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH
     ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture, without
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                               SECTION 3.
                  RECEIPT, DISTRIBUTION AND APPLICATION
                     OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)   Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent and
any payment of Supplemental Rent constituting interest on overdue installments
of Periodic Rent received by the Indenture Trustee shall be distributed by the
Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each

                                      26
<PAGE>
     such Lessor Note bears to the aggregate amount of the payments then due
     and payable under all such Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     (b)   Application of Other Amounts Held by the Indenture Trustee upon
Rent Default. If, as a result of any failure by the Facility Lessee to pay
Periodic Rent in full on any date when an installment of Periodic Rent is due,
there shall not have been distributed on any date (or within any applicable
period of grace) pursuant to Section 3.1(a) hereof the full amount then
distributable pursuant to clause "First" of Section 3.1(a) of this Indenture,
the Indenture Trustee shall distribute other payments of the character referred
to in Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it,
to all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal or
interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue, to
the extent provided in and subject to the provisions of Section 4.3(a) and (b)
hereof.

     (c)   Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent,

                                      27
<PAGE>
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall retain such installment of Periodic Rent or payment
of interest (to the extent not then required to be distributed pursuant to
clause "First" of Section 3.1(a)) as part of the Indenture Estate and shall not
distribute any such payment of Periodic Rent or interest pursuant to clause
"Second" of Section 3.1(a) until such time as such Lease Indenture Event of
Default shall be cured or waived or until such time as the Indenture Trustee
shall have received written instructions from a Majority in Interest of
Noteholders to make such a distribution; provided that such amounts must be
returned to the Owner Lessor within six (6) months from the receipt thereof by
the Indenture Trustee unless (i) the Indenture Trustee has declared the unpaid
principal of all Lessor Notes due and payable (or such amounts shall have
automatically become due and payable), pursuant to Section 4.2(a) and the
Indenture Trustee is diligently pursuing any dispossessary remedies available
under Section 4.3 hereof (unless such remedies are stayed or prevented by
operation of law) or (ii) any other Lease Indenture Event of Default shall have
occurred during the intervening period and be continuing, in which case, such
six-month period will be restarted from the date such other Lease Indenture
Event of Default shall have occurred. Upon the cure or waiver of such Lease
Indenture Event of Default, withheld Periodic Rent shall, subject to clause
(ii) of the immediately preceding sentence, be distributed to the Owner Lessor
(to the extent that all payments to be distributed pursuant to clause "First"
of Section 3.1(a) have been made), and no further withholding of Periodic Rent
on account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early
Termination. Any payment received by the Indenture Trustee as a result of (x)
an Event of Loss (other than a Regulatory Event of Loss in respect of which the
Facility Lessee shall, pursuant to Section 2.10(b) hereof, assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), (y) early termination
of the Facility Lease pursuant to Section 13 thereof (other than a termination
in respect of which the Facility Lessee shall, pursuant to Section 2.10(b)
hereof assume the obligations and liabilities of the Owner Lessor hereunder, in
which event only clauses "First" and "Fourth" below shall be applicable), or
(z) any early termination of the Facility Lease, in whole or in part, pursuant
to Section 14 thereof, shall be distributed on the applicable date of
redemption to the extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the

                                      28
<PAGE>
     Indenture Trustee and to the extent reimbursable and not previously
     reimbursed) shall be distributed to the Indenture Trustee for application
     to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without priority
     of any Noteholder over any other, in the proportion that the aggregate
     unpaid principal amount of all such Lessor Notes held by each such holder,
     plus the Make-Whole Amount, if any, and accrued but unpaid interest thereon
     to the scheduled date of distribution to the Noteholders bears to the
     aggregate unpaid principal amount of all such Lessor Notes held by all such
     holders, together with the Make-Whole Amount, if any, plus accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be distributed
     to the Owner Lessor for distribution in accordance with the LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee hereunder,
shall, so long as such declaration shall not have been rescinded, be distributed
forthwith by the Indenture Trustee in the following order of

                                      29
<PAGE>
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any cost, fee and expense (including any legal
     fees and disbursements) or loss incurred by it (to the extent incurred
     in connection with its duties as the Indenture Trustee and to the
     extent reimbursable and not previously reimbursed) shall be distributed
     to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case
     ratably, without priority of any Noteholder over any other, in the
     proportion that the aggregate unpaid principal amount of all such
     Lessor Notes held by each such holder and accrued but unpaid interest
     thereon to the scheduled date of distribution to the Noteholders bears
     to the aggregate unpaid principal amount of all such Lessor Notes held
     by all such holders and accrued but unpaid interest thereon to the date
     of scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable
     and unpaid to them as holders of the Lessor Notes which this Indenture
     by its terms secures, including the Make-Whole Amount, if any, required
     to be paid pursuant to Section 2.10(d) hereof, in respect of such
     Lessor Notes required to be paid pursuant to Section 4.3(a) hereof,
     shall be distributed to such existing or prior holders of Lessor Notes,
     ratably to each such holder, without priority of any such holder over
     any other, in the proportion that the amount of such payments or
     amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining
     shall be distributed to the Owner Lessor for distribution by it in
     accordance with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the

                                      31
<PAGE>
Indenture Trustee shall invest and reinvest any moneys held by the Indenture
Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such Permitted
Investments as may be specified in such direction. The proceeds received upon
the sale or at maturity of any Permitted Investment and any interest received
on such Permitted Investment and any payment in respect of a deficiency
contemplated by the following sentence shall be held as part of the Indenture
Estate and applied by the Indenture Trustee in the same manner as the moneys
used to buy such Permitted Investment, and any Permitted Investment may be sold
(without regard to maturity date) by the Indenture Trustee whenever necessary
to make any payment or distribution required by this Section 3. If the proceeds
received upon the sale or at maturity of any Permitted Investment (including
interest received on such Permitted Investment) shall be less than the cost
thereof (including accrued interest), the Owner Lessor will pay or cause to be
paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture Event
of Default; provided, however, that any such payment received by the Indenture
Trustee which is payable to the Facility Lessee shall not be held by the
Indenture Trustee unless a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing.

     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)   any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

                                      32
<PAGE>
     (b)   all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the Operative
Documents to the contrary, any Excepted Payments received or held by the
Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding
anything to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such payments
as constitute Excepted Payments) shall be made directly to the Indenture
Trustee's Account and the Owner Lessor shall give all notices as shall be
required under the Assigned Documents to direct payment of all such amounts to
the Indenture Trustee hereunder. The Owner Lessor agrees that if it should
receive any such payments directed to be made to the Indenture Trustee or any
proceeds for or with respect to the Indenture Estate or as the result of the
sale or other disposition thereof or otherwise constituting a part of the
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document

                                      33
<PAGE>
or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a
securities account entitled the "Indenture Trustee's Account" (the "Indenture
Trustee's Account"), which Indenture Trustee's Account shall be maintained by
the Account Bank until the date this Indenture is terminated pursuant to Section
7.1 hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)   All amounts from time to time held in the Indenture Trustee's
Account shall be maintained (i) in the name of the Owner Lessor subject to the
lien and security interest of the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders as set forth herein and (ii) in
the custody of the Account Bank for and on behalf of the Indenture Trustee for
the benefit of the Indenture Trustee and each of the Noteholders for the
purposes and on the terms set forth in this Indenture. All such amounts shall
constitute a part of the Indenture Trustee Account Collateral and shall not
constitute payment of any Indebtedness or any other obligation of the Owner
Lessor until applied as hereinafter provided.

     (c)   As collateral security for the prompt payment in full when due of
the Lessor Secured Obligations owed to the Indenture Trustee and each
Noteholder, the Owner Lessor hereby pledges, assigns, hypothecates and transfers
to the Indenture Trustee for the benefit of the Indenture Trustee and each of
the Noteholders, and hereby grants to the Indenture Trustee for the benefit of
the Indenture Trustee and each of the Noteholders, a lien on and security
interest in and to, (i) the Indenture

                                      34
<PAGE>
Trustee's Account and any successor account thereto and (ii) all cash,
investments, investment property, securities or other property at any time on
deposit in or credited to the Indenture Trustee's Account, including all income
or gain earned thereon and any proceeds thereof (the "Indenture Trustee Account
Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)   The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the Indenture
     Trustee's Account is and will be maintained as a "securities account"
     (within the meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor
     is the "entitlement holder" (within the meaning of Section 8-102(a)(7) of
     the UCC) in respect of the "financial assets" (within the meaning of
     Section 8-102(a)(9) of the UCC) credited to the Indenture Trustee's
     Account, (D) all property delivered to the Account Bank pursuant to this
     Indenture or any other Operative Document will be held by the Account Bank
     and promptly credited to the Indenture Trustee's Account by an appropriate
     entry in its records in accordance with this Indenture, (E) all "financial
     assets" (within the meaning of Section 8-102(a)(9) of the UCC) in
     registered form or payable to or to the order of and credited to the
     Indenture Trustee's Account shall be registered in the name of, payable to
     or to the order of, or indorsed to, the Account Bank or in blank, or
     credited to another securities account maintained in the name of the
     Account Bank, and in no case will any financial asset credited to the
     Indenture Trustee's Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Owner Lessor except to the extent the
     foregoing have been subsequently indorsed by the Owner Lessor to the
     Account Bank or in blank, (F) the Account Bank shall not change the name
     or account number of the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee, (G) the Account Bank is acting
     and shall at all times act as and perform all of the duties of the
     "securities intermediary," within the meaning of Article 8 of the UCC, with
     respect to the Indenture Trustee's Account and the financial assets
     credited thereto and (H) the Account Bank shall not enter into any other
     agreement governing, or with respect to, the Indenture Trustee's
     Account without the prior written consent of the Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each

                                      35
<PAGE>
     item of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated
     as a "financial asset" within the meaning of Section 8-l02(a)(9) of the
     UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this
     Indenture to the contrary, if at any time the Account Bank shall
     receive any "entitlement order" (within the meaning of Section
     8-102(a)(8) of the UCC) or any other order from the Indenture Trustee
     directing the transfer or redemption of any financial asset relating to
     the Indenture Trustee's Account or with respect to any "security
     entitlements" (within the meaning of Section 8-102(a)(17) of the UCC)
     carried or to be carried in the Indenture Trustee's Account, the
     Account Bank shall comply with such entitlement order or other order
     without further consent by the Owner Lessor or any other Person. The
     parties hereto hereby agree that the Indenture Trustee shall have
     "control" (within the meaning of Section 8-106(d) of the UCC) of (A)
     the Indenture Trustee's Account, (B) all security entitlements carried
     or to be carried in the Indenture Trustee's Account and (C) the Owner
     Lessor's security entitlements with respect to the financial assets
     credited to the Indenture Trustee's Account and the Owner Lessor hereby
     disclaims any entitlement to claim "control" of such "security
     entitlements". Unless a Lease Indenture Event of Default shall have
     occurred and is continuing, the Indenture Trustee shall not deliver any
     entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv) Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit
     of the Indenture Trustee's Account will not be subject to deduction,
     set-off, banker's lien, or any other right in favor of any Person other
     than the Indenture Trustee for the benefit of the Indenture Trustee and
     each Noteholder (except for the face amount of any checks which have been
     credited to the Indenture Trustee's Account but are subsequently returned
     unpaid because of uncollected or insufficient funds).

          (v)   No Other Agreements. The Account Bank and the Owner

                                      36
<PAGE>
     Lessor have not entered into any agreement governing or with respect to
     the Indenture Trustee's Account or any financial assets credited to the
     Indenture Trustee's Account other than this Indenture. The Account Bank
     has not entered into any agreement with the Owner Lessor or any other
     Person purporting to limit or condition the obligation of the Account Bank
     to comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest
     of the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and
     will neither be affected by the bankruptcy of the Owner Lessor nor the
     lapse of time.

     (b)   Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank or
the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                      37
<PAGE>
                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                         REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor. The Owner Lessor hereby
covenants and agrees as follows:

     (a)   the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)   the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any of
the Assigned Documents, except that it may forward any payment to the Indenture
Trustee in accordance with Section 3.9, (iii) give any notice or exercise any
right or take any action under any of the Assigned Documents, or (iv) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein, shall
mean any of the following events (whatever the reason for such Lease Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

     (a)   any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the

                                      38
<PAGE>
insurance required by Section 11 of the Facility Lease if, and so long as, (i)
such Lease Event of Default is waived by the Owner Lessor and the Owner
Participant and (ii) the insurance maintained by the Facility Lessee still
constitutes Prudent Industry Practice); or

     (b)   the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)   the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, the OP Guarantor shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under the OP Guaranty, in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such condition
shall be extended up to 180 days, so long as such party diligently pursues such
remedy and such condition is reasonably capable of being remedied within such
extended period;

     (d)   any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have been
incorrect in any material respect when made and continues to be material and
unremedied for a period of 30 days after receipt by such party of

                                      39
<PAGE>
written notice thereof; provided, however, that if such condition cannot be
remedied within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days, so long as such party
diligently pursues such remedy and such condition is reasonably capable of
being remedied within such extended period;

     (e)   the Owner Participant, the Owner Lessor or the OP Guarantor
(provided the OP Guaranty shall not have been terminated or released) shall (i)
commence a voluntary case or other proceeding seeking relief under Title 11 of
the Bankruptcy Code or liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in a
timely manner, any such relief or the appointment of or taking possession by any
such official in any voluntary case or other proceeding commenced against it, or
(iii) file an answer admitting the material allegations of a petition filed
against it in any such proceeding; or (iv) make a general assignment for the
benefit of creditors; or (v) become unable, admit in writing its inability or
fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)   an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11 of
the Bankruptcy Code or any bankruptcy, insolvency or other similar law now or
hereafter in effect, or (ii) the appointment of a trustee, receiver, liquidator,
custodian or other similar official with respect to it or any substantial part
of its property or (iii) the winding-up or liquidation of the Owner Lessor; and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)   In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of written instructions from a Majority in Interest of Noteholders shall
declare, by written notice to the Owner Lessor and the Owner Participant, the
unpaid principal amount of all Lessor Notes, with accrued interest thereon, to
be immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture

                                      40
<PAGE>
Event of Default under Section 4.2(e) or (f), such principal and interest shall
automatically become due and payable immediately without any such declaration
or notice) without further act or notice of any kind. If any Make-Whole amount
is due and payable pursuant to Section 2.10(c) or (d) at the time of any such
acceleration, such Make-Whole Amount shall also be due and payable in
connection with such acceleration.

     (b)   If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may thereupon or at any time thereafter, in
its own name or by or through an agent or receiver appointed by a court,
without regard to the adequacy of any security for the Secured Indebtedness,
enter into or upon the Indenture Estate and take possession of all or any part
of the Indenture Estate and may exclude therefrom the Owner Participant, the
Owner Lessor and, in the event such Lease Indenture Event of Default shall be a
Lease Event of Default, the Facility Lessee and all persons claiming under
them, and with or without any entry or taking of possession, may in its own
name or in the name of the Owner Lessor or any other Person, sue for or
otherwise collect all issues, rents, income, royalties and profits
(collectively, "Real Property Rents"), including those past due and unpaid as
well as those due, coming due or to be paid, and apply the Payments, less
costs, expenses, attorneys' fees and other expenses toward payment or partial
payment of the Secured Indebtedness in accordance with this Indenture and
Applicable Law. Further, the Indenture Trustee may exercise all remedies
available to a secured party under the Uniform Commercial Code or any other
provision of Applicable Law. The Indenture Trustee may proceed to enforce the
rights of the Indenture Trustee and of the Noteholders by directing payment to
it of all moneys payable under any agreement or undertaking constituting a part
of the Indenture Estate, by proceedings in any court of competent jurisdiction
to recover damages for the breach hereof or for the appointment of a receiver
or for sale of all or any part of the Property Interest or for foreclosure of
the Property Interest, together with the Owner Lessor's interest in the
Assigned Documents, and by any other action, suit, remedy or proceeding
authorized or permitted by this Indenture, at law or in equity, or whether for
the specific performance of any agreement contained herein, or for an
injunction against the violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law, and in addition may foreclose
upon,

                                      41
<PAGE>
sell, assign, transfer and deliver, from time to time to the extent permitted
by Applicable Law, all or any part of the Indenture Estate or any interest
therein, at any private sale or public auction with or without demand,
advertisement or notice (except as herein required or as may be required by
law) of the date, time and place of sale and any adjournment thereof, for cash
or credit or other property, for immediate or future delivery and for such
price or prices and on such terms as the Indenture Trustee, in its unfettered
discretion, may determine, or as may be required by Applicable Law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b).  The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings. The collection of such Real Property Rents, or the entering upon
and taking possession of the Indenture Estate, or the application of the Real
Property Rents as aforesaid, shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such default or
pursuant to such notice of default. The Owner Lessor also hereby authorizes the
Indenture Trustee upon such entry, at its option, to take over and assume the
management, operation and maintenance of the Indenture Estate and to perform
all acts Indenture Trustee in its sole discretion deems necessary and proper
and to expend such sums out of Real Property Rents as may be needed in
connection therewith, in the same manner and to the same extent as the Owner
Lessor theretofore could do. It is not the intention of the parties hereto that
an entry by the Indenture Trustee upon the Indenture Estate under the terms of
this instrument shall make the Indenture Trustee a party in possession in
contemplation of the law, except at the option of the Indenture Trustee.

     (c)   All rights of action and rights to assert claims under this
Indenture or under any of the Lessor Notes may be enforced by the Indenture
Trustee without the possession of the Lessor Notes at any trial or other
proceedings instituted by the Indenture Trustee, and any such trial or other
proceedings shall be brought in its own name as mortgagee of an express trust,
and any recovery or judgment shall be for the ratable benefit of the Noteholders
as herein provided. In any proceedings brought by the Indenture Trustee (and
also any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

                                      42
<PAGE>
     (d)   Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease Indenture
Event of Default as a consequence of a Lease Event of Default under Section 16
of the Facility Lease, the Indenture Trustee shall have, to the extent it is
then entitled to do so hereunder and is not then stayed or otherwise prevented
from doing so by operation of law, commenced the exercise of one or more
remedies under the Facility Lease intending to dispossess the Facility Lessee of
its leasehold interest in the Undivided Interest and is using good faith efforts
in the exercise of such remedies (and not merely asserting a right or claim to
do so); provided that, during any period that the Indenture Trustee is stayed or
otherwise prevented by operation of law from exercising such remedies, the
Indenture Trustee will not divest the Owner Lessor of title to any portion of
the Indenture Estate until the earlier of (a) the expiration of the 180-day
period following the date of commencement of a stay or other prevention or (b)
the date of repossession of the Facility under the applicable Facility Lease.

     (e)   Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a Lease
Event of Default under Section 16 of the Facility Lease solely to enforce such
obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of Default
hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)   If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received notice
from the Indenture Trustee or have Actual Knowledge of the failure of the
Facility Lessee to make such

                                      43
<PAGE>
payment of Periodic Rent, an amount equal to the principal of, Make-Whole
Amount, if any, and interest on the Lessor Notes, then due (otherwise than by
declaration of acceleration) on such Rent Payment Date, together with any
interest due thereon on account of the delayed payment thereof, and such
payment by the Owner Lessor shall be deemed (for purposes of this Indenture) to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (b)   If the Facility Lessee shall fail to make any payment of
Supplemental Rent when the same shall become due or otherwise fail to perform
any obligation under the Facility Lease or any other Operative Document, then
the Owner Lessor may (but need not) make such payment on the date such
Supplemental Rent was payable, together with any interest due thereon on account
of the delayed payment thereof, or perform such obligation at any time prior to
the expiration of ten (10) Business Days after the Owner Lessor or the Owner
Participant shall have received notice or have Actual Knowledge of the
occurrence of such failure, and such payment or performance by the Owner Lessor
shall be deemed to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (c)   The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would impair
the prior right and security interest of the Indenture Trustee in and to the
Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic Rent
payment or Supplemental Rent payment being overdue in the manner set forth in
the next two sentences. If the Indenture Trustee shall thereafter receive such
payment of Periodic Rent, Supplemental Rent or such interest, the Indenture
Trustee shall, notwithstanding the requirements of Section 3.1 hereof,
forthwith, remit such

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<PAGE>
payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)   Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall take
or commence any action it would otherwise be entitled to take or commence as a
result of such failure by the Facility Lessee, whether under this Section 4 or
Section 17 of the Facility Leases or otherwise.

     (e)   Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the

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<PAGE>
previous 30 days, (ii) no Lease Indenture Event of Default of the nature
described in any of clauses (b) through (f) of Section 4.2 hereof shall have
occurred and be continuing and (iii) the Owner Lessor shall give written notice
to the Indenture Trustee of the Owner Lessor's intention to purchase all of the
Lessor Notes in accordance with this paragraph, then, upon receipt within 10
Business Days after such notice from the Owner Lessor of an amount equal to the
sum of (x) the aggregate unpaid principal amount of any unpaid Lessor Notes
then held by the Noteholders, together with accrued but unpaid interest thereon
to the date of such receipt (as well as any interest on overdue principal and,
to the extent permitted by Applicable Law, overdue interest), plus (y) the
aggregate amount, if any, of all sums which, if Section 3.3 were then
applicable, such Noteholder would be entitled to be paid before any payments
were to be made to the Owner Lessor but excluding any Make-Whole Amount, such
Noteholder will forthwith (and upon its receipt of the payment referred to in
clause (1) below, will be deemed to) sell, assign, transfer and convey to the
Owner Lessor (without recourse or warranty of any kind other than of title to
the Lessor Notes so conveyed) all of the right, title and interest of such
Noteholder in and to the Indenture Estate, this Indenture, all Lessor Notes
held by such Noteholder and the Assigned Documents, and the Owner Lessor shall
thereupon assume all such Noteholder's rights and obligations in such
documents; provided, that no such holder shall be required to so convey unless
(1) the Owner Lessor shall have simultaneously tendered payment on all other
Lessor Notes issued by the Owner Lessor at the time outstanding pursuant to
this paragraph and (2) such conveyance is not in violation of any Applicable
Law. All charges and expenses required to be paid in connection with the
issuance of any new Lessor Note or Lessor Notes in connection with this
paragraph shall be borne by the Owner Lessor.  Notwithstanding the foregoing,
the Owner Lessor may exercise the right set forth in this clause (e) prior to
the end of the 90 day period set forth above but, in such case, the Make-Whole
Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in

                                      46
<PAGE>
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)   If at any time the Indenture Trustee has the right to take
possession of the Indenture Estate pursuant to Section 4.3 hereof, at the
request of the Indenture Trustee, the Owner Lessor promptly shall (i) execute
and deliver to the Indenture Trustee such instruments of title and other
documents and (ii) make all such demands and give all such notices as are
permitted by the terms of the Facility Lease to be made or given by the Owner
Lessor upon the occurrence and continuance of a Lease Event of Default, in each
case as the Indenture Trustee may deem necessary or advisable to enable the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Lessor hereby specifically consents, and (ii) pursue
all or any part of the Indenture Estate wherever it may be found and enter any
of the premises wherever all or part of the Indenture Estate may be or is
supposed to be and search for all or part of the Indenture Estate and take
possession of and remove all or part of the Indenture Estate.

     (b)   Upon every such taking of possession, the Indenture Trustee may,
from time to time, as a charge against proceeds of the Indenture Estate, make
all such expenditures with respect to the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee shall have the right to deal
with the Indenture Estate and to carry on the business and exercise all rights
and powers of the Owner Lessor relating to the Indenture Estate, as the
Indenture Trustee shall deem best, and, the Indenture Trustee shall be entitled
to collect and receive all rents (including Periodic Rent and Supplemental
Rent), revenues, issues, income, products and profits of the Indenture Estate
and every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required

                                      47
<PAGE>
to be deposited with, the Indenture Trustee hereunder) and to apply the same to
the management of or otherwise dealing with the Indenture Estate and of
conducting the business thereof, and of all expenditures with respect to the
Indenture Estate and the making of all payments which the Indenture Trustee may
be required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make
reports upon the properties and books and records of the Owner Lessor and the
Facility Lessee relating to the Indenture Estate and the Operative Documents),
or under any provision of, this Indenture, as well as just and reasonable
compensation for the services of the Indenture Trustee and of all Persons
properly engaged and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies.

     (a)   In addition to all other remedies provided for herein if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee shall, subject to Sections 4.3 and 4.4 and to provisions of Applicable
Law, have the right(s) to (i) sell the Indenture Estate or any part of the
Indenture Estate at one or more public sale or sales; or (ii) commence an action
or actions to foreclose the lien of this Indenture as a mortgage; and/or (iii)
specifically enforce any of the covenants and agreements hereof, in each case in
order to pay the Secured Indebtedness, and all impositions, if any, with accrued
interest thereon, and all expenses of the sale and of all proceedings in
connection therewith, including reasonable attorney's fees, if incurred, and do
any acts that it deems necessary or desirable to preserve the value,
marketability or rentability of the Indenture Estate, or any part thereof or
interest therein, increase the income therefrom or protect the security hereof.
If the Indenture Trustee elects to exercise the power of sale herein contained,
the Indenture Trustee shall cause to be recorded, published and delivered to the
Owner Lessor such notice of sale as then required by Applicable Law. The
Indenture Trustee shall, without demand on the Owner Lessor, after lapse of such
time as may then be required by law and after recordation of such notice of sale
and notice of sale having been given as required by Applicable Law, sell the
Indenture Estate at the time and place of sale fixed by it in said notice of
sale, either as a whole, or in separate lots or parcels or items as the
Indenture Trustee shall deem expedient, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. The Indenture Trustee shall deliver to such
purchaser or purchasers thereof its good and sufficient deed or deeds conveying
the property so sold, but without any covenant or warranty, express or implied.
The recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. Any person, including, without limitation, the Owner
Lessor,

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<PAGE>
may bid at and be a purchaser at any such sale. The Indenture Trustee shall
apply the proceeds of sale as required by Applicable Law and in accordance with
the terms of this Indenture. Subject to A.R.S. Section 33-810.B, the Indenture
Trustee may postpone sale of all or any portion of the Indenture Estate by
public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or subsequently
noticed sale, and without further notice make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale.
The Owner Lessor hereby requests that a copy of any notice of default and any
notice of sale hereunder be mailed to it at its address set forth in Section
9.5 of this Indenture. At any such public sale, the Indenture Trustee may
execute and deliver to the purchaser a conveyance of the Indenture Estate or
any part of the Indenture Estate, and to this end, the Owner Lessor hereby
constitutes and appoints the Indenture Trustee the agent(s) and attorney(s) in
fact of the Owner Lessor to make such sale and conveyance, and thereby to
divest the Owner Lessor of all right, title or equity that the Owner Lessor may
have in and to the Indenture Estate and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney in fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding upon the Owner Lessor. The aforesaid power of sale and agency hereby
granted are coupled with an interest and are irrevocable by death or otherwise,
are granted as cumulative of the other remedies provided hereby or by law for
collection of the Secured Indebtedness and shall not be exhausted by one
exercise thereof but may be exercised until full payment of the Secured
Indebtedness. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, either
with or without entry or taking possession as herein provided or otherwise,
proceed by a suit or suits in law or in equity or by any other appropriate
proceeding or remedy (i) to enforce payment of the Lessor Notes or the
performance of any term, covenant, condition or agreement of this Indenture or
any other right, and (ii) to pursue any other remedy available to it, all as
the Indenture Trustee shall determine most effectual for such purposes. Upon
any foreclosure sale, the Indenture Trustee may bid for and purchase the
Indenture Estate and shall be entitled to apply all or any part of the Secured
Indebtedness as a credit to the purchase price. In the event of a foreclosure
sale of the Indenture Estate, the proceeds of said sale shall be applied as
provided in Section 3.3 hereof. In the event of any such foreclosure sale by
the Indenture Trustee, the Owner Lessor shall be deemed a tenant holding over
and shall forthwith deliver possession to the purchaser or purchasers at such
sale or be summarily dispossessed according to provisions of law applicable to
tenants holding over. The Indenture Trustee, at the Indenture Trustee's option,
is authorized to foreclose this Indenture subject to the rights of any tenants
of the

                                      49
<PAGE>
Indenture Estate, and the failure to make any such tenants parties to any such
foreclosure proceedings and to foreclose their rights will not be, nor be
asserted to be by the Owner Lessor, a defense to any proceedings instituted by
the Indenture Trustee to collect the Secured Indebtedness.

     (b)   In amplification of, and not in limitation of paragraph (a) of this
Section 4.7, the Owner Lessor represents and warrants that this Indenture is
given primarily for a business, commercial or agricultural purpose. Owner
Lessor, therefore, agrees that the Indenture Trustee, its successors and
permitted assigns, shall have THE STATUTORY POWER OF SALE pursuant to the
applicable provisions of A.R.S. Sections 12-1241, et seq., 33-702.B; and 33-807,
et seq. as said statutes have been and shall be amended, which POWER is
expressly incorporated herein by reference. Such Statutory Power of Sale and
other rights, power, remedies and authorities shall be in addition to all rights
and remedies set forth herein or available under Applicable Law. In the exercise
of the Statutory Power of Sale, the Indenture Trustee, its successors and
assigns or its agents or attorneys, may sell the Indenture Estate or such
portion thereof as may remain subject to the Indenture in case of any partial
release thereof, either as a whole or in parcels, together with all improvements
that may be thereon, by a public sale on or near any part of the Indenture
Estate then subject to this Indenture or at the Indenture Trustee's principal
place of business or at any other office of the Indenture Trustee or any
attorney or agent thereof located in the same county in which any part of the
Indenture Estate is located, and the Indenture Trustee, its successors and
permitted assigns; and such sale shall forever bar the Owner Lessor and all
persons claiming under it from all right and interest in the Indenture Estate,
whether at law or in equity. In the exercise of THE STATUTORY POWER OF SALE
herein given, if the Indenture Trustee elects to sell in parts or parcels, such
sales may be held from time to time, and the POWER shall not be fully executed
until all of the Indenture Estate not previously sold shall have been sold.

     Section 4.8.   Appointment of Receiver and Assignment of Real Property
Rents. The Owner Lessor hereby assigns and transfers to the Indenture Trustee
all of the Real Property Rents, of the Indenture Estate, and hereby gives to and
confers upon the Indenture Trustee the right, power and authority to collect the
Real Property Rents. From and after any Lease Indenture Event of Default, the
Owner Lessor appoints the Indenture Trustee its true and lawful
attorney-in-fact, at the option of the Indenture Trustee at any time and from
time to time, to demand, receive and enforce payment, to give receipts, releases
and satisfactions. From and after any Lease Indenture Event of Default, the
Owner Lessor hereby authorizes and directs the lessees, tenants and occupants to
make all payments under any leases directly to the Indenture Trustee upon
written demand by the Indenture Trustee, without further

                                      50
<PAGE>
consent of the Owner Lessor. If the outstanding principal amount of the Lessor
Notes shall have been declared due and payable pursuant to Section 4.3 hereof,
as a matter of right, the Indenture Trustee shall be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee thereof) for all or any part of the Indenture Estate, whether such
receivership be incidental to a proposed sale of the Indenture Estate or the
taking of possession thereof or otherwise, and the Owner Lessor hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Indenture Estate shall be
entitled to exercise all available rights and powers with respect to the
Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law, that
it will never seek or derive any benefit or advantage from any of the following,
whether now existing or hereafter in effect, in connection with any proceeding
under or in respect of this Lease Indenture:

     (a)   any stay, extension, moratorium or other similar law;

     (b)   any Applicable Law providing for the valuation of or appraisal of
any portion of the Indenture Estate in connection with a sale thereof; or

     (c)   any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right

                                      51
<PAGE>
or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure or a waiver
or relinquishment of any right (s) to foreclose or to have a receiver appointed
for and take possession of the Indenture Estate or any part thereof. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture Trustee at any time or times in the
future while any of the obligations secured hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings had
taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall take
or cause to be taken any action contrary to the right of the Facility Lessee,
including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner

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<PAGE>
Lessor shall fail to release any Lien affecting the Indenture Estate which it
is required to release by the terms of this Indenture or the Participation
Agreement or the LLC Agreement, the Indenture Trustee, without notice to or
demand upon the Owner Lessor and without waiving or releasing any obligation or
defaults may (but shall be under no obligation to, and, except as provided in
the last sentence hereof, shall incur no liability in connection therewith) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Indenture Estate and may take all such action with
respect thereto (including entering upon the Facility Site or any part thereof,
or the Facility for such purpose) as may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including legal fees and expenses) so
incurred, together with interest thereon from the date of payment or
incurrence, shall constitute additional indebtedness secured by this Indenture
and shall be paid from the Indenture Estate to the Indenture Trustee on demand.
The Indenture Trustee shall not be liable for any damages resulting from any
such payment or action unless such damages shall be a consequence of willful
misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                               SECTION 5.
                     DUTIES OF INDENTURE TRUSTEE;
                CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

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<PAGE>
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.
The Indenture Trustee shall give prompt written notice to the Owner Lessor and
the Owner Participant of any Lease Indenture Event of Default with respect to
which the Indenture Trustee has Actual Knowledge and will give the Facility
Lessee and the Owner Participant not less than 30 days' prior written notice of
the date on or after which the Indenture Trustee intends to exercise remedies
under Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may be specified in such instructions: (a) give
such notice, direction or consent or exercise such right, remedy or power or
take such action hereunder or under any Assigned Document, or in respect of any
part of or all the Indenture Estate, as it shall be entitled to take and as
shall be specified in such instructions; (b) take such action with respect to or
to preserve or protect the Indenture Estate (including the discharge of Liens)
as it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall, execute
and file or cause to be executed and filed any financing statement (and any
continuation statement with respect to such financing statement) or any similar
instrument or document relating to the security interest or the assignment
created by this Indenture or granted by the Owner Lessor herein as may be
necessary to protect and preserve the security interest or assignment created by
or granted pursuant to this Indenture, to the extent otherwise entitled to do so
and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in full
of the principal of and interest on all Lessor Notes then outstanding and all
other amounts then due all Noteholders hereunder, and all other sums secured
hereby or otherwise required to be paid hereunder, under the Participation
Agreement and under the Facility Lease, the Indenture Trustee shall execute and
deliver to, or as directed in writing by, the Owner Lessor and the Facility
Lessee an appropriate instrument in due form for recording, releasing the
Indenture Estate from the Lien of this Indenture.

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<PAGE>
Nothing in this Section 5.3 shall be deemed to expand the instances in which
the Owner Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)   The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

     (b)   The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)   The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read into
this Indenture against the Indenture Trustee.

     (b)   The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the

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<PAGE>
terms of the Facility Lease, to the extent applicable to the Indenture Trustee
as assignee of the Owner Lessor, (b) in accordance with the powers granted to,
or the authority conferred upon, the Indenture Trustee pursuant to this
Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)   The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy or right with respect to any such payment against the
Indenture Estate nor any right to collect any such payment by the exercise of
any of the remedies under Section 17 of the Facility Lease except as expressly
provided in this Section 5.6; (ii) retain all rights with respect to insurance
that Section 11 of the Facility Lease and Schedule 5.31 of the Participation
Agreement specifically confers upon the Owner Lessor and to waive any failure by
the Facility Lessee to maintain the insurance required by Section 11 of the
Facility Lease before or after the fact so long as the insurance maintained by
the Facility Lessee still conforms to Prudent Industry Practice; (iii) retain
all rights to adjust Periodic Rent and Termination Value as provided in Section
3.4 of the Facility Lease, Section 12 of the Participation Agreement or the Tax
Indemnity Agreement; provided, however, that after giving effect to any such
adjustment (x) the amount of Periodic Rent payable on each Rent Payment Date
shall be at least equal to the aggregate amount of all principal and accrued
interest payable on such Rent Payment Date on all Lessor Notes then outstanding
and (y) Termination Value shall in no event be less (when added to all other
amounts required to be paid by the Facility Lessee in respect of any early
termination of the Facility Lease) than an amount sufficient, as of the date of
payment, to pay in full the principal of, and interest on all Lessor Notes
outstanding on and as of such date of payment; (iv) except in connection with
the exercise of remedies pursuant to the Facility Lease, retain all rights to
exercise the Owner Lessor's rights relating to the Appraisal Procedure and to
confer and agree with the Facility Lessee on Fair Market Rental Value, or any
Renewal Lease Term; and (v) retain the right to declare the Facility Lease to be
in default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)   The Owner Lessor shall have the right, together with or
independently of the Indenture Trustee, (i) to receive from the Facility Lessee
and the Guarantor all notices, certificates, reports, filings, opinions of
counsel and other documents and all

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<PAGE>
information that the Facility Lessee is permitted or required to give or
furnish to the Owner Lessor or the Owner Participant, as the case may be,
pursuant to the Facility Lease or any other Operative Document; (ii) to inspect
the Facility and the records relating thereto pursuant to Section 12 of the
Facility Lease; (iii) to provide such insurance as may be permitted by Section
11 of the Facility Lease; (iv) to provide notices to the Facility Lessee or the
Guarantor to the extent otherwise permitted by the Operative Documents; and (v)
to perform for the Facility Lessee as provided in Section 20 of the Facility
Lease.

     (c)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall retain the right to the exclusion of the Indenture Trustee to
exercise the rights of the Owner Lessor under, and to determine compliance by
the Facility Lessee with, the provisions of Sections 10 (other than Section 10.3
thereof), 13, 14 and 15 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to retain such rights upon notice from the Indenture
Trustee stating that such rights shall no longer be retained by the Owner
Lessor;

     (d)   Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or, if
accelerated, such acceleration has theretofore been rescinded) or the Indenture
Trustee shall not have exercised any of its rights pursuant to Section 4 hereof
to take possession of, foreclose, sell or otherwise take control of all or any
part of the Indenture Estate, the Owner Lessor shall have the right, to be
exercised jointly with the Indenture Trustee, (i) to exercise the rights with
respect to the Facility Lessee's use and operation, modification or maintenance
of the Undivided Interest, (ii) to exercise the Owner Lessor's right under
Section 13.1 of the Participation Agreement to withhold or grant its consent to
an assignment by the Facility Lessee of its rights under the Facility Lease, and
(iii) to exercise the rights of the Owner Lessor under Section 10.3 of the
Facility Lease; provided, however, that if a Lease Indenture Event of Default
shall have occurred and be continuing, the Owner Lessor shall cease to exercise
such rights under this clause (iii) upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;
provided further, however, that (A) the Owner Lessor shall have no right to
receive any Periodic Rent or other payments other than Excepted Payments payable
to the Owner Lessor, or the Owner Participant and (B) no determination by the
Owner Lessor or the Indenture Trustee

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<PAGE>
that the Facility Lessee is in compliance with the provisions of any applicable
Assigned Document shall be binding upon or otherwise affect the rights
hereunder of the Indenture Trustee or any Noteholder on the one hand or the
Owner Lessor or the Owner Participant on the other hand;

     (e)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek specific
performance of the covenants of the Facility Lessee under the Operative
Documents relating to the protection, insurance, maintenance, possession, use
and return of the Property Interest, the performance by the Facility Lessee of
the Owner Lessor's obligations under the South Point Ground Lease, the exercise
of any renewal or extension rights with respect to the South Point Ground Lease
and any action pursuant to Sections 5.20 or 13.3 of the Participation Agreement
(subject to the conditions set forth in Section 5.20 or 13.3, as applicable, of
the Participation Agreement); and

     (f)   Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture Trustee
the right to, and the Indenture Trustee shall not, release the Guarantor of its
obligations under the Calpine Guaranty in respect of payment of the Equity
Portion of Termination Value, unpaid amounts of the Equity Portion of Periodic
Rent (and all amounts of overdue interest relating to such amount) and other
amounts constituting Excepted Payments, unless such release results in payment
in full to the Owner Lessor of all such unpaid amounts as certified to the
Indenture Trustee by the Owner Lessor, and all claims of the Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as

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provided in the Operative Documents, but subject to the terms of this Indenture,
the Owner Lessor shall not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Facility, the Facility Site, any part of
the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Owner Lessor hereby expressly authorizes the Indenture
Trustee to prepare, file, record, obtain, execute and deliver, from time to
time, such financing statements, continuation statements, control agreements
and recognition agreements as Indenture Trustee shall deem appropriate. The
Owner Lessor hereby further authorizes any account holder or bank or financial
institution to execute and deliver from time to time such control agreements
and recognition agreements as shall be requested or required by Indenture
Trustee. The Indenture Trustee shall, at the written request and expense of the
Facility Lessee, as provided in the Participation Agreement, execute and
deliver to the Facility Lessee and the Facility Lessee will file or record, if
not already filed or recorded, such financing statements or other documents and
such continuation statements or other documents with respect to financing
statements or other documents previously filed relating to the Lien created by
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and
powers herein granted. Upon the reasonable instructions (which instructions
shall be accompanied by the form of document to be filed) at any time and from
time to time of the Facility Lessee or the Indenture Trustee, the Owner Lessor
shall authorize, execute, file or record any financing statement (and any
continuation statement with respect to any such financing statement), and any
other document relating to the security interest and assignment created by this
Indenture as may be specified in such instructions. In addition, the Indenture
Trustee and the Owner Lessor will authorize or execute such continuation
statements with respect to financing statements and other documents relating to
the Lien created by this Indenture in the Indenture Estate as may be specified
from time to time in written instructions of any Noteholder (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the form of such continuation statement or other document to be
filed). Neither the Indenture Trustee nor, except as

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<PAGE>
otherwise herein expressly provided, the Owner Lessor shall have responsibility
for the protection, perfection or preservation of the Lien created by this
Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall not
be liable under any circumstances, except (a) for its own negligence or willful
misconduct, (b) in the case of any inaccuracy of any representation or warranty
of the Indenture Trustee or the Lease Indenture Company contained in Section 3.5
of the Participation Agreement, in the certificate delivered by the Indenture
Trustee at the Closing pursuant to Section 4.6 of the Participation Agreement,
or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the Indenture
Trustee shall not be liable for any action or inaction of the Owner Trust;
provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other

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<PAGE>
     officers of the Indenture Trustee, unless it shall be proven that the
     Indenture Trustee was negligent in ascertaining the pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
     its own funds or otherwise incur financial liability for the performance
     of any of its duties hereunder or the exercise of any of its rights or
     powers if there is reasonable ground for believing that the repayment of
     such funds or adequate indemnity against such risk or liability is not
     reasonably assured to it, and none of the provisions contained in this
     Indenture shall in any event require the Indenture Trustee to perform, or
     be responsible for the manner of performance of, any of the obligations of
     the Owner Lessor, under this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty
(a) to see to any registration, recording or filing of any Operative Document
(or any financing or continuation statements in respect thereto) or to see to
the maintenance of any such

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<PAGE>
registration, recording or filing, (b) to see to any insurance on the
Facilities or the Facilities or to effect or maintain any such insurance, (c)
except as otherwise provided in Section 5.5 hereof or in Section 10 of the
Participation Agreement, to see to the payment or discharge of any Tax or any
Lien of any kind owing with respect to, or assessed or levied against, any part
of the Indenture Estate, (d) to confirm or verify the contents of any report,
notice, request, demand, certificate, financial statement or other instrument
of the Facility Lessee, (e) to inspect the Facility at any time or ascertain or
inquire as to the performance or observance of any of the Facility Lessee's
covenants with respect to the Facility or (f) to exercise any of the trusts or
powers vested in it by this Indenture or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction
of any of the Noteholders, pursuant to the provisions of this Indenture, unless
such Noteholders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby (which in the case of the Majority in Interest of
Noteholders will be deemed to be satisfied by a letter agreement with respect
to such costs from such Majority in Interest of Noteholders).  Notwithstanding
the foregoing, the Indenture Trustee shall furnish to each Noteholder and to
the Owner Lessor and the Owner Participant promptly upon receipt thereof
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Indenture Trustee
hereunder or under any of the Operative Documents unless the Indenture Trustee
shall reasonably believe that each such Noteholder, the Owner Lessor and the
Owner Participant shall have received copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)   The Owner Lessor represents and warrants that it has not assigned
or pledged any of its estate, right, title or interest subject to this
Indenture, to anyone other than the Indenture Trustee.

     (b)   NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE ESTATE, except
that the Owner Lessor represents and warrants that on

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the Closing Date it shall have received whatever title or interest to the
Undivided Interests and the Facility Site as were conveyed to it by the
Facility Lessee and that on the Closing Date the Undivided Interests shall be
free of Owner Lessor's Liens and the Owner Participant's Liens; or (ii) any
representation or warranty as to the validity, legality or enforceability of
this Indenture, the Lessor Notes or any of the other Operative Documents, or as
to the correctness of any statement contained in any thereof, except that each
of the Owner Lessor and the Indenture Trustee represents and warrants that this
Indenture and the Participation Agreement have been, and, in the case of the
Owner Lessor, the other Operative Documents to which it is or is to become a
party have been or will be, executed and delivered by one of its officers who
is and will be duly authorized to execute and deliver such document on its
behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this Indenture
for the purpose of paying, or securing the payment of, the principal of or
Make-Whole Amount or interest on the Lessor Notes shall be held in trust. Except
as specifically provided herein or in the Facility Lease, any moneys received by
the Indenture Trustee hereunder need not be segregated in any manner except to
the extent required by Applicable Law and may be deposited under such general
conditions as may be prescribed by Applicable Law, and neither the Owner Lessor
nor the Indenture Trustee shall be liable for any interest thereon; provided,
however, subject to Section 6.5 hereof, that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof to the extent known to the Indenture
Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which any
other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such

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<PAGE>
Noteholder or other Person, as the case may be. As to any fact or matter
the manner of ascertainment of which is not specifically described herein, the
Indenture Trustee for all purposes hereof may rely on an Officer's Certificate
of the Owner Lessor or the Facility Lessee or a Noteholder as to such fact or
matter, and such certificate shall constitute full protection to the Indenture
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. The Indenture Trustee shall have the right to request
instructions from the Owner Lessor or the Majority in Interest of Noteholders
with respect to taking or refraining from taking any action in connection with
the Lease Indenture or any other Operative Document to which it is a party, and
shall be entitled to act or refrain from taking such action unless and until the
Indenture Trustee shall have received written instructions from the Owner Lessor
or the Majority in Interest of Noteholders, and the Indenture Trustee shall not
incur liability by reason of so acting (except as provided in Section 6.1) or
refraining from acting. In the administration of the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Indenture Estate (but subject to the priorities of payment
set forth in Section 3 hereof), consult with independent skilled Persons to be
selected and retained by it (other than Persons regularly in its employ) as to
matters within their particular competence, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion, within such Person's area of competence,
of any such Person, so long as the Indenture Trustee shall have exercised
reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee;
Appointment of Successor.

     (a)   Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the

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<PAGE>
Owner Lessor shall give prompt written notification thereof to each Noteholder
and the Facility Lessee. Such removal will be effective on the acceptance of
appointment by the successor Indenture Trustee or Account Bank pursuant to the
provisions of subsection (b) below. In the case of the resignation or removal
of the Indenture Trustee or Account Bank, a Majority in Interest of Noteholders
may appoint a successor Indenture Trustee or Account Bank by an instrument
signed by such holders. If a successor Indenture Trustee or Account Bank shall
not have been appointed within thirty (30) days after such resignation or
removal, the Indenture Trustee, Account Bank or any Noteholder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee or
Account Bank to act until such time, if any, as a successor shall have been
appointed by a Majority in Interest of Noteholders as above provided. The
successor Indenture Trustee or Account Bank so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee or Account Bank appointed by a Majority in Interest of Noteholders as
above provided.

     (b)   Acceptance of Appointment. Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee or Account Bank hereunder in the trusts hereunder applicable to it with
like effect as if originally named the Indenture Trustee or Account Bank
herein; but nevertheless, upon the written request of such successor Indenture
Trustee or Account Bank or a Majority in Interest of Noteholders, such
predecessor Indenture Trustee or Account Bank shall execute and deliver an
instrument transferring to such successor Indenture Trustee or Account Bank,
upon the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee or Account Bank, and
such predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)   Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or

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<PAGE>
indirect subsidiary of a corporation which has a combined capital and surplus
of at least $150,000,000 provided such corporation guarantees the performance
of the obligations of such trust company or bank as Indenture Trustee or
Account Bank, or (C) is a member of a bank holding company group having a
combined capital and surplus of at least $150,000,000 provided the parent of
such bank holding company group or a member which itself has a combined capital
and surplus of at least $150,000,000 guarantees the performance of the
obligations of such trust company or bank, and (ii) is willing, able and
legally qualified to perform the duties of Indenture Trustee or Account Bank
hereunder upon reasonable or customary terms. No successor Indenture Trustee or
Account Bank, however appointed, shall become such if such appointment would
result in the violation of any Applicable Law or create a conflict or
relationship involving a conflict of interest under the Trust Indenture Act of
1939, as amended.

     (d)   Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)   Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)   Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Inden-

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ture Estate, this Indenture, the Facility Lease, the Lessor Notes or any of the
transactions contemplated by the Operative Documents, (ii) the Indenture
Trustee shall be advised by counsel, satisfactory to it, that it is so
necessary or prudent in the interest of the Noteholders or (iii) a Majority in
Interest of Noteholders deems it so necessary or prudent and shall have
requested in writing the Indenture Trustee to do so, then in any such case the
Indenture Trustee shall execute and deliver from time to time all instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more Persons approved by the Indenture Trustee either to act as
additional trustee or trustees of all or any part of the Indenture Estate,
jointly with the Indenture Trustee, or to act as separate trustee or trustees
of all or any part of the Indenture Estate, in any such case with such powers
as may be provided in such instruments or agreements, and to vest in such bank,
trust company or Person as such additional trustee or separate trustee, as the
case may be, any property, title, right or power of the Indenture Trustee
deemed necessary or advisable by the Indenture Trustee, subject to the
remaining provisions of this Section 7.2. The Owner Lessor hereby consents to
all actions taken by the Indenture Trustee under the provisions of this Section
7.2 and agrees, upon the Indenture Trustee's request, to join in and execute,
acknowledge and deliver any or all such instruments or agreements; and the
Owner Lessor hereby makes, constitutes and appoints the Indenture Trustee its
agent and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such instrument or agreement in the event that the
Owner Lessor shall not itself execute and deliver the same within fifteen (15)
days after receipt by it of such request so to do; provided, however, that the
Indenture Trustee shall exercise due care in selecting any additional or
separate trustee if such additional or separate trustee shall not be a Person
possessing trust powers under Applicable Law. If at any time the Indenture
Trustee shall deem it no longer necessary or prudent in order to conform to any
such law or take any such action or shall be advised by such counsel that it is
no longer so necessary or prudent in the interest of the Noteholders or in the
event that the Indenture Trustee shall have been requested to do so in writing
by a Majority in Interest of Noteholders, the Indenture Trustee shall execute
and deliver all instruments and agreements necessary or proper to remove any
additional trustee or separate trustee. In such connection, the Indenture
Trustee may act on behalf of the Owner Lessor to the same extent as is provided
above. Notwithstanding anything contained to the contrary in this Section
7.2(a), to the extent the laws of any jurisdiction preclude the Indenture
Trustee from taking any action hereunder either alone, jointly or through a
separate trustee under the direction and control of the Indenture Trustee, the
Owner Lessor, at the instruction of the Indenture Trustee, shall appoint a
separate trustee for such jurisdiction, which separate trustee shall have full
power and authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but not subject to
the same limitations in

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<PAGE>
any exercise of his power and authority as those to which the Indenture
Trustee is subject.

     (b)   The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)   Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)   Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections

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8.2 and 8.3 hereof, but only upon the written direction of a Majority in
Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and

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<PAGE>
with the consent of the Owner Lessor, the Indenture Trustee shall enter into
any indenture or indentures supplemental hereto or execute any amendment,
modification, supplement, waiver or consent with respect to any other Operative
Document (a) to evidence the succession of another Person as a Lessor Manager
or the appointment of a co-manager in accordance with the terms of the LLC
Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant
to the provisions of Section 7 hereof and to define the rights, powers, duties
and obligations conferred upon any such separate trustee or trustees or
co-trustee or co-trustees, (b) to correct, confirm or amplify the description
of any property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may be lawfully granted or
conferred and which are not contrary or inconsistent with this Indenture, (f)
to add to the covenants or agreements to be observed by the Facility Lessee or
the Owner Lessor and which are not contrary to this Indenture, to add Indenture
Events of Defaults for the benefit of Noteholders or surrender any right or
power of the Owner Lessor, provided it has consented thereto, (g) to effect the
assumption of all or, to the extent otherwise provided hereunder, part of the
Lessor Notes by the Facility Lessee, provided that the supplemental indenture
will contain all of the covenants applicable to the Facility Lessee contained
in the Facility Lease and the Participation Agreement for the benefit of the
Indenture Trustees or the holders of such Lessor Notes, such that the Facility
Lessee's obligations contained therein, if applicable in the event that the
Facility Lease are terminated, will continue to be in full force and effect,
(h) to comply with requirements of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body, (i) to modify, eliminate or add to the
provisions of any Operative Documents to such extent as shall be necessary to
qualify or continue the qualification of this Lease Indenture or the Pass
Through Trust Agreements (including any supplements thereto) under the Trust
Indenture Act, or similar federal statute enacted after the Closing Date, and
to add to this Indenture such other provisions as may be expressly required or
permitted by the Trust Indenture Act of 1939 (if such qualification is
required), and (j) to effect

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<PAGE>
any indenture or indentures supplemental hereto or any amendment, modification,
supplement, waiver or consent with respect to any other Operative Document,
provided such supplemental indenture, amendment, modification, supplement,
waiver or consent shall not reasonably be expected to materially and adversely
affect the interest of the Noteholders; provided, however, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of each then outstanding
Lessor Note, cause any of the events specified in clauses (i) through (v) of
the first sentence of Section 8.1 hereof to occur; and provided, further, that
no such amendment, modification, supplement, waiver or consent contemplated by
this Section 8.2 shall, without the consent of the holder of a Majority in
Interest of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14,
5.31, 6, or 13.1 of the Participation Agreement or Section 19 of the Lease, or
modify in any material respect the provisions of the Calpine Guaranty (other
than, in each case, any amendment, modification, supplement, waiver or consent
having no adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                 MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

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<PAGE>
     (a)   Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)   Release.

          (i)   Whenever a Component is replaced pursuant to the Facility
     Lease, such component shall automatically and without further act of
     any Person be released from the Lien of this Lease Indenture and the
     Indenture Trustee shall, upon the written request of the Owner Lessor
     or the Facility Lessee, execute and deliver to, and as directed in
     writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the replaced Component
     from the Lien of this Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and
     deliver to, or as directed in writing by, the Facility Lessee or the
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the Indenture Estate from the Lien of this Indenture;
     provided that all sums secured by this Indenture have been paid to the
     Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further

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<PAGE>
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties hereto, the Owner Participant,
the Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

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<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile: (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor

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<PAGE>
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile: (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          South Point Energy, LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly

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<PAGE>
waived by the parties hereto or by any Person claiming by, through or under
the parties hereto and (d) under no circumstances shall Wells Fargo, be
personally liable for the payment of any indebtedness or expenses of the Owner
Lessor or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Owner Lessor
under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts.  This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. Except for those provisions relating to the
creation, perfection, enforcement, interpretation and foreclosure of the deed
of trust lien and security agreement covering the real property described on
Exhibit A hereto (the "Real Property") and fixtures thereon, the appointment
and actions of a receiver and related provisions regarding enforcement of liens
and security agreements relating to the Real Property and fixtures thereon,
which provisions of this Indenture shall be governed by, enforced in accordance
with and interpreted according to Arizona law (excluding its choice of law
provisions), and except to the extent that the laws of the United States of
America (hereinafter "Federal Law") require the application of Federal Law (in
which limited case(s) Federal Law shall apply to those issues or matters as to
which Federal Law is required to apply), this Indenture and the Lessor Notes
shall be in all other respects governed by and construed in accordance with the
laws of the State of New York, including all matters of construction, validity
and

                                       76
<PAGE>
performance (without giving effect to the conflicts of laws provisions
thereof, other than New York General Obligation Law Section 5-1401), except to
the extent mandatory choice of law rules require the application of laws of
another jurisdiction. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness

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<PAGE>
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder

                                       78
<PAGE>
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.   Fixture Financing Statement. This Indenture also is
intended to serve as a fixture filing financing statement and as a financing
statement with respect to goods or items, or other personal property that is or
will be attached to the Real Property, as permitted under the Arizona Uniform
Commercial Code and the Owner Lessor hereby authorizes this Indenture to so
serve and to be filed and/or recorded as such. In addition, a photographic,
electronic or other copy of this Indenture and/or any financing statement
related hereto shall be sufficient for filing and/or recording as a financing
statement. In connection therewith, the following information is provided:

     (a)   Name and address of Debtor:

           South Point OL-4, LLC
           c/o Wells Fargo Bank Northwest, National Association
           MAC U1254-031
           79 South Main Street
           Salt Lake City, UT 84111
           Telephone: (801) 246-5630
           Facsimile: (801) 246-5053
           Attention:  Corporate Trust Services

     (b)   Name and Address of Secured Party (from which information concerning
the security interest may be obtained):
           State Street Bank and Trust Company of Connecticut,
           National Association,
           as Indenture Trustee

                                       79
<PAGE>
           225 Asylum Street, Goodwin Square
           Hartford, CT 06103
           Telephone: (860) 244-1822
           Facsimile:  (860) 244-1889
           Attention:  Corporate Trust Department

     (c)   The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)   Recording: This Indenture is to be recorded and/or filed in the
official real estate or other records of the County of Mohave, State of
Arizona, and in the records of the Bureau of Indian Affairs in Albuquerque, New
Mexico.

                                       80
<PAGE>
     (e)   Type of Filing: This is a commercial filing and NOT a consumer
filing under the UCC as enacted and in effect in the State of Arizona.

              (Remainder of Page Intentionally Left Blank)

                                       81
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.


                    SOUTH POINT OL-4, LLC, as Owner Lessor/Trustor

                    By:   Wells Fargo Bank Northwest, National Association,
                          not in its individual capacity but solely as the
                          Lessor Manager

                    By: ________________________________________________________
                          Name:
                          Title:

                    STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                    NATIONAL ASSOCIATION, as Indenture Trustee and Account Bank

                    By: ________________________________________________________
                          Name:
                          Title:
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by _________________________, the _______________________of Wells
Fargo Bank Northwest, National Association, not in its individual capacity but
solely as the Lessor Manager of South Point OL-4, LLC, a Delaware limited
liability company, as the Owner Lessor/Trustor (the "Owner Lessor"), to be the
free act and deed on behalf of the national banking association as the Lessor
Manager of the Owner Lessor under the LLC Agreement dated as of __________,
2001.

                                 Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK    )
                     )    SS.:
COUNTY OF NEW YORK   )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by _________________________, the _______________________of State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, to be the free act and deed on behalf of the corporation.

                                 Notary Public

My Commission Expires
<PAGE>
                                                                      EXHIBIT A
                                                             to Lease Indenture

                          DESCRIPTION OF FACILITY SITE

The East half (E1/2) of Section 8, Township 17 North, Range 21 West of the Gila
and Salt River Base and Meridian, Mohave County, Arizona.

Reserving therefrom, all mineral rights on, under or within said land, as
reserved by the Fort Mojave Indian Tribe.
<PAGE>
                                                                      EXHIBIT B
                                                             to Lease Indenture

                 FORM OF SOUTH POINT LESSOR NOTE SERIES [A][B]

                             SOUTH POINT OL-4, LLC
                NONRECOURSE PROMISSORY NOTE (SOUTH POINT) DUE IN
                     A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012][2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                 Issued at: New York, New York
                                                  Issue Date: October __, 2001

$[             ]

     SOUTH POINT OL-4, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019], as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set forth on Schedule I multiplied by the percentage
set forth on Schedule I under the column

                                     B-1-1
<PAGE>
headed "Percentage of Principal Amount Payable" for such date unless the
Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                     B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                     B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be

                                     B-1-4
<PAGE>
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                     B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    SOUTH POINT OL-4, LLC
                                    a Delaware limited liability company,

                                    By:   Wells Fargo Bank Northwest, National
                                          Association, not in its individual
                                          capacity but solely as the Lessor
                                          Manager

                                    By: ________________________________________
                                          Name:
                                          Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                       STATE STREET BANK AND TRUST
                                       COMPANY OF CONNECTICUT,
                                       NATIONAL ASSOCIATION,
                                       not in its individual capacity, but
                                       solely as the Indenture Trustee

                                       _________________________________________
                                       Name:
                                       Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________   ____________________________________________
                         (Signature of Transferor)

                         NOTE: The signature to this assignment must
                         correspond with the name as written upon the
                         face of the within-mentioned instrument in
                         every particular, without alteration or any
                         change whatsoever.
<PAGE>
                                   SCHEDULE I

                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         Principal Portion: $43,000,000

<TABLE>
<CAPTION>
                                                                    Percentage of Principal
                                                                    -----------------------
Regular Distribution Date                                                    Amount Payable
-------------------------                                                    --------------
<S>                                                                 <C>
May 30, 2002....................................................               22.79069767%
November 30, 2002...............................................               15.40697674%
May 30, 2003....................................................                9.36046512%
November 30, 2003...............................................                9.76744186%
May 30, 2004....................................................                9.06976744%
November 30, 2004...............................................                0.00000000%
May 30, 2005....................................................                0.00000000%
November 30, 2005...............................................                0.00000000%
May 30, 2006....................................................                0.00000000%
November 30, 2006...............................................                0.00000000%
May 30, 2007....................................................                0.00000000%
November 30, 2007...............................................                0.00000000%
May 30, 2008....................................................                0.00000000%
November 30, 2008...............................................                0.00000000%
May 30, 2009....................................................                0.00000000%
November 30, 2009...............................................                0.00000000%
May 30, 2010....................................................                0.00000000%
November 30, 2010...............................................                0.00000000%
May 30, 2011....................................................                0.00000000%
November 30, 2011...............................................               33.60465117%
                                                                               ------------

Total...........................................................              100.00000000%
                                                                              =============
</TABLE>
<PAGE>
                             Series B Lessor Notes.

                        PRINCIPAL PORTION:  $12,125,000

<TABLE>
<CAPTION>
                                                                  Percentage of Initial
                                                                  ---------------------
Regular Distribution Date                                              Principal Amount
-------------------------                                              ----------------
<S>                                                                       <C>
May 30, 2002....................................................            0.00000000%
November 30, 2002...............................................            0.00000000%
May 30, 2003....................................................            0.00000000%
November 30, 2003...............................................            0.00000000%
May 30, 2004....................................................            0.00000000%
November 30, 2004...............................................            0.00000000%
May 30, 2005....................................................            0.00000000%
November 30, 2005...............................................            0.00000000%
May 30, 2006....................................................            0.00000000%
November 30, 2006...............................................            0.00000000%
May 30, 2007....................................................            0.00000000%
November 30, 2007...............................................            0.00000000%
May 30, 2008....................................................            0.00000000%
November 30, 2008...............................................            0.00000000%
May 30, 2009....................................................            0.00000000%
November 30, 2009...............................................            0.00000000%
May 30, 2010....................................................            0.00000000%
November 30, 2010...............................................            0.00000000%
May 30, 2011....................................................            0.00000000%
November 30, 2011...............................................            0.00000000%
May 30, 2012....................................................            0.00000000%
November 30, 2012...............................................            0.00000000%
May 30, 2013....................................................            0.00000000%
November 30, 2013...............................................            0.00000000%
May 30, 2014....................................................            0.00000000%
November 30, 2014...............................................            0.00000000%
May 30, 2015....................................................            0.00000000%
November 30, 2015...............................................            0.00000000%
May 30, 2016....................................................            0.00000000%
November 30, 2016...............................................            0.00000000%
May 30, 2017....................................................            0.00000000%
November 30, 2017...............................................            0.00000000%
May 30, 2018....................................................            0.00000000%
November 30, 2018...............................................            0.00000000%
May 30, 2019....................................................          100.00000000%
                                                                          -------------
Total...........................................................          100.00000000%
                                                                          =============
</TABLE>

                                     B-1-10
<PAGE>
                                                                      EXHIBIT C
                                                             to Lease Indenture

                     FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                        _______________________________________,
                                        not in its individual capacity but
                                        solely as the Indenture Trustee

                                        By: ____________________________________
                                            Name:
                                            Title:

                                      C-2
<PAGE>
                                                                      EXHIBIT D
                                                             to Lease Indenture

                          DESCRIPTION OF THE FACILITY

     That certain approximately 530 megawatt net nameplate capacity gas-fired
combined cycle electric generating facility (known also as the "South Point
Facility") together with all structures or improvements, all alterations
thereto or replacements thereof, and all other fixtures, attachments,
appliances, equipment, machinery and other articles (including, but not limited
to, the property set forth below (the "Included Property")), in each case
located on the land, or on the easements appurtenant to the land, consisting of
320 acres of land leased from the Fort Mojave Indian Tribe near Mojave Valley,
Arizona approximately 15 miles south of Bullhead City, Arizona and 5 miles east
of Needles, California, described more particularly on Exhibit A.

     Included Property

     1.   Two Combustion Turbines & Generators - Siemens Westinghouse Turbines
          (Serial Nos. 37A8063, 37A8065), Generators (Serial Nos. 94P3215,
          94P0060).

     2.   Two Heat Recovery Steam Generators - Vogt-Nem Boiler (Serial Nos.
          17382 1A-1D and 17382 2A-2D).

     3.   One Steam Turbine & Generator- Siemens Westinghouse Steam Turbine
          (Serial No. 24A3191 ) / Generator (Serial Nos. 1S94P0086 ).

     4.   One Condenser - Alstrom Condenser (Order No. 99-5080).

     5.   Water Treatment Facility - Reverse Osmosis, Brine Concentrator, Mixed
          Bed Exchangers, Multi-media Filters and associated tanks.

     6.   Eleven cell Marley Cooling Tower- including Circulating Water Pumps.

     7.   Three Generator Step Up Transformers, all electrical switchyard
          equipment and other interconnection equipment associated with the
          South Point Facility.

                                      D-1
<PAGE>
                                                                     SCHEDULE I
                                                             to Lease Indenture

                              SERIES A LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $43,000,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                      Percentage of Principal
                                                                      -----------------------
Regular Distribution Date                                                      Amount Payable
-------------------------                                                      --------------
<S>                                                                   <C>
May 30, 2002....................................................                 22.79069767%
November 30, 2002...............................................                 15.40697674%
May 30, 2003....................................................                  9.36046512%
November 30, 2003...............................................                  9.76744186%
May 30, 2004....................................................                  9.06976744%
November 30, 2004...............................................                  0.00000000%
May 30, 2005....................................................                  0.00000000%
November 30, 2005...............................................                  0.00000000%
May 30, 2006....................................................                  0.00000000%
November 30, 2006...............................................                  0.00000000%
May 30, 2007....................................................                  0.00000000%
November 30, 2007...............................................                  0.00000000%
May 30, 2008....................................................                  0.00000000%
November 30, 2008...............................................                  0.00000000%
May 30, 2009....................................................                  0.00000000%
November 30, 2009...............................................                  0.00000000%
May 30, 2010....................................................                  0.00000000%
November 30, 2010...............................................                  0.00000000%
May 30, 2011....................................................                  0.00000000%
November 30, 2011...............................................                 33.60465117%
                                                                                -------------

Total...........................................................                100.00000000%
                                                                                =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                             SERIES B LESSOR NOTE

<TABLE>
<CAPTION>
<S>                                         <C>
Initial Aggregate Principal Amount:         $12,125,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                      Percentage of Initial
                                                                      ---------------------
Regular Distribution Date                                                  Principal Amount
-------------------------                                                  ----------------
<S>                                                                   <C>
May 30, 2002....................................................                 0.00000000%
November 30, 2002...............................................                 0.00000000%
May 30, 2003....................................................                 0.00000000%
November 30, 2003...............................................                 0.00000000%
May 30, 2004....................................................                 0.00000000%
November 30, 2004...............................................                 0.00000000%
May 30, 2005....................................................                 0.00000000%
November 30, 2005...............................................                 0.00000000%
May 30, 2006....................................................                 0.00000000%
November 30, 2006...............................................                 0.00000000%
May 30, 2007....................................................                 0.00000000%
November 30, 2007...............................................                 0.00000000%
May 30, 2008....................................................                 0.00000000%
November 30, 2008...............................................                 0.00000000%
May 30, 2009....................................................                 0.00000000%
November 30, 2009...............................................                 0.00000000%
May 30, 2010....................................................                 0.00000000%
November 30, 2010...............................................                 0.00000000%
May 30, 2011....................................................                 0.00000000%
November 30, 2011...............................................                 0.00000000%
May 30, 2012....................................................                 0.00000000%
November 30, 2012...............................................                 0.00000000%
May 30, 2013....................................................                 0.00000000%
November 30, 2013...............................................                 0.00000000%
May 30, 2014....................................................                 0.00000000%
November 30, 2014...............................................                 0.00000000%
May 30, 2015....................................................                 0.00000000%
November 30, 2015...............................................                 0.00000000%
May 30, 2016....................................................                 0.00000000%
November 30, 2016...............................................                 0.00000000%
May 30, 2017....................................................                 0.00000000%
November 30, 2017...............................................                 0.00000000%
May 30, 2018....................................................                 0.00000000%
November 30, 2018...............................................                 0.00000000%
May 30, 2019....................................................               100.00000000%
                                                                               -------------

Total...........................................................               100.00000000%
                                                                               =============
</TABLE>

                                  SCHEDULE 1-2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.19
<SEQUENCE>22
<FILENAME>f80168ex4-22_19.txt
<DESCRIPTION>EXHIBIT 4.22.19
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.19


WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

================================================================================

                          INDENTURE OF TRUST, MORTGAGE,
                      SECURITY AGREEMENT AND FIXTURE FILING


                           Dated as of October18, 2001


                                     between


                             BROAD RIVER OL-1, LLC,
                                  as Mortgagor


                                       and


                           STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                as Indenture Trustee, Mortgagee and Account Bank


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

                              BROAD RIVER FACILITY


================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  Page
<S>                                                                                               <C>
SECTION 1.   DEFINITIONS. ................................................................          8

SECTION 2.   THE LESSOR NOTES.............................................................         10
     Section 2.1.   Limitation on Lessor Notes............................................         10
     Section 2.2.   Initial Lessor Notes..................................................         10
     Section 2.3.   Execution and Authentication of Lessor Notes..........................         10
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes........................         11
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of the Owner
                    Lessor, the Owner Participant or the Indenture Trustee................         12
     Section 2.6.   Method of Payment.....................................................         13
     Section 2.7.   Application of Payments...............................................         14
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes...................         14
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.....................         15
     Section 2.10.  Redemptions; Assumption...............................................         16
     Section 2.11.  Payment of Expenses on Transfer.......................................         21
     Section 2.12.  Additional Lessor Notes...............................................         21
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities Laws;
                    Legend................................................................         24
     Section 2.14.  Security for and Parity of Lessor Notes...............................         25
     Section 2.15.  Acceptance of the Indenture Trustee...................................         25

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE........         25
     Section 3.1.   Distribution of Periodic Rent.........................................         25
     Section 3.2.   Payments Following Event of Loss or Other Early Termination...........         27
     Section 3.3.   Payments After Lease Indenture Event of Default.......................         28
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..........         29
     Section 3.5.   Application of Certain Other Payments.................................         30
     Section 3.6.   Other Payments........................................................         30
     Section 3.7.   Excepted Payments.....................................................         31
     Section 3.8.   Distributions to the Owner Lessor.....................................         31
     Section 3.9.   Payments Under Assigned Documents.....................................         31
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee.............         31
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE...........         35
     Section 4.1.   Covenants of Owner Lessor.............................................         35
     Section 4.2.   Lease Indenture Events of Default.....................................         36
     Section 4.3.   Remedies of the Indenture Trustee.....................................         38
     Section 4.4.   Right to Cure Certain Lease Events of Default.........................         40
     Section 4.5.   Rescission of Acceleration............................................         43
     Section 4.6.   Return of Indenture Estate, Etc.......................................         44
     Section 4.7.   Power of Sale and Other Remedies......................................         45
     Section 4.8.   Appointment of Receiver...............................................         46
     Section 4.9.   Remedies Cumulative...................................................         46
     Section 4.10.  Waiver of Various Rights by the Owner Lessor..........................         46
     Section 4.11.  Discontinuance of Proceedings.........................................         47
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the Facility
                    Lease.................................................................         47
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc..............         47
     Section 4.14.  Further Assurances....................................................         48
     Section 4.15.  Waiver of Past Defaults...............................................         48

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR.......         48
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default................         48
     Section 5.2.   Actions Upon Instructions Generally...................................         48
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of Facility Lease..         49
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification................         49
     Section 5.5.   No Duties Except as Specified; No Action Except Under Facility Lease,
                    Indenture or Instructions.............................................         50
     Section 5.6.   Certain Rights of the Owner Lessor....................................         50
     Section 5.7.   Restrictions on Dealing with Indenture Estate.........................         53
     Section 5.8.   Filing of Financing Statements and Continuation Statements............         53

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR...........................................         54
     Section 6.1.   Acceptance of Trusts and Duties.......................................         54
     Section 6.2.   Absence of Certain Duties.............................................         56
     Section 6.3.   Representations and Warranties........................................         57
     Section 6.4.   No Segregation of Moneys; No Interest.................................         57
     Section 6.5.   Reliance; Agents; Advice of Experts...................................         58
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES...........................         59
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment of
                    Successor.............................................................         59
     Section 7.2.   Appointment of Additional and Separate Trustees.......................         61

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS.............         63
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent; Conditions and
                    Limitations...........................................................         63
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent..........         64
     Section 8.3.   Conditions to Action by the Indenture Trustee.........................         65

SECTION 9.   MISCELLANEOUS................................................................         66
     Section 9.1.   Surrender, Defeasance and Release.....................................         66
     Section 9.2.   Conveyances Pursuant to the Site Lease................................         67
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further Assurances..         67
     Section 9.4.   Indenture for Benefit of Certain Persons Only.........................         67
     Section 9.5.   Notices; Furnishing Documents, etc....................................         68
     Section 9.6.   Severability..........................................................         70
     Section 9.7.   Limitation of Liability...............................................         70
     Section 9.8.   Written Changes Only..................................................         70
     Section 9.9.   Counterparts..........................................................         70
     Section 9.10.  Successors and Permitted Assigns......................................         70
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..........         71
     Section 9.14.  Withholding Taxes: Information Reporting..............................         72
     Section 9.15.  Fixture Financing Statement...........................................         73
</TABLE>

EXHIBITS

Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility

APPENDIX A Definitions

                          INDENTURE OF TRUST, MORTGAGE,

                                       iii
<PAGE>
                      SECURITY AGREEMENT AND FIXTURE FILING

     This INDENTURE OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
(as amended, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this "Indenture"), dated as of October 18, 2001,
between BROAD RIVER OL-1, LLC, having an address set forth in Section 9.5
hereof, a Delaware limited liability company created for the benefit of the
Owner Participant referred to below, as mortgagor (the "Owner Lessor") and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
having an address set forth in Section 9.5 hereof, as mortgagee on behalf of
the Noteholders (the "Indenture Trustee") and as the Account Bank.


                                  WITNESSETH:


     WHEREAS, Broad River Energy, LLC (the "Facility Lessee") is the lessee
under that certain Lease Agreement (the "FILOT Lease") by and between itself
and Cherokee County, South Carolina, a body politic and corporate and a
political subdivision of the State of South Carolina, as landlord (the
"County") in connection with the Facility and the Facility Site (each as
hereinafter defined), a memorandum of which FILOT Lease was recorded in the
office of the Cherokee County Clerk of Court in Book 71, page 200;

     WHEREAS, the Facility Lessee has assigned the Undivided Interest and the
Ground Interest to the Owner Lessor pursuant to that certain Assignment
Agreement, a memorandum of which shall be recorded with this Indenture in the
Office of the Cherokee County Clerk of Court;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has subleased from the
Owner Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Facility Site Lease"),
with the Facility Lessee pursuant to which the Facility Lessee has subleased
the Ground Interest from the Owner Lessor for a term of years;

                                       2
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assigned to the Owner Lessor by the Facility Lessee and (ii) grant to
the Indenture Trustee the security interests herein provided;

     WHEREAS, this Indenture is regarded as a mortgage under the laws of the
State of South Carolina as a security agreement under the Uniform Commercial
Codes of the States of New York, Delaware and South Carolina, and as a fixture
filing under the laws of the State of South Carolina;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, the latest stated maturity date of the Initial Lessor Notes is
May 30, 2019;

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and

                                       3
<PAGE>
accrued, deferred or capitalized interest on the Lessor Notes and of all
other amounts owing with respect to all Lessor Notes from time to time
outstanding hereunder, and the prompt payment when and as due of any and all
other amounts from time to time owing in respect of the Secured Indebtedness
and (ii) the performance and observance by the Owner Lessor for the benefit of
the holders of the Lessor Notes and the Indenture Trustee of all other
obligations, agreements, and covenants of the Owner Lessor set forth
hereinafter and in the Lessor Notes, the Operative Documents and the other
documents, certificates and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, mortgages, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee and
its successors and permitted assigns, for the benefit of the holders of the
Lessor Notes from time to time, a first priority security interest in and
mortgage lien on all estate, right, title and interest of the Owner Lessor in,
to and under the following described property, rights, interests and
privileges, whether now held or hereafter acquired (which collectively,
including all property hereafter specifically subjected to the security
interest created by this Indenture by any supplement hereto, exclusive of
Excepted Payments) are included within, and are hereafter referred to as, the
"Indenture Estate"):

     (1)  the Undivided Interest (including the Facility Purchase Option), the
Owner Lessor's interest in any Components; the Owner Lessor's interest in any
Improvements; the Ground Interest (including the Land Purchase Option); the
Facility Lease and all payments of any kind by the Facility Lessee thereunder
(including Rent); any rights of the Owner Lessor as assignee of the Facility
Lessee under the Facility Lease; the Facility Site Lease and all payments of
any kind by the Facility Lessee thereunder; the Assignment Agreement (and all
rights with respect to the FILOT Lease conveyed thereby); the Owner Lessor's
interest in all tangible property located on or at or attached to the Facility
Site as to which an interest in such tangible property arises under applicable
real estate law ("fixtures"); the Calpine Guaranty, the Ownership and Operation
Agreement and all and any interest in any property now or hereafter granted to
the Owner Lessor pursuant to any provision of the Facility Lease or the FILOT
Lease (including, without limitation, the option to purchase set forth in
Section 10.02 of the FILOT Lease); the FILOT Lease, and each other Operative
Document to which the Owner Lessor is a party other than the Tax Indemnity
Agreement, the Tri-Party Agreement and the LLC Agreement (the Undivided
Interest, the Owner Lessor's interest in any Components, the Owner Lessor's
interest in any fixtures, Improvements and the Ground Interest are collectively
referred to as the "Property Interest" and the documents specifically referred
to above in this paragraph (1) are collectively referred to as the

                                       4
<PAGE>
"Assigned Documents"), including, without limitation, (x) all rights of the
Owner Lessor to receive any payments or other amounts or, subject to Section
5.6 hereof, to exercise any election or option or to make any decision or
determination or to give or receive any notice, consent, waiver or approval or
to make any demand or to take any other action under or in respect of any such
document, to accept surrender or redelivery of the Property Interest or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Lessor, whether acting under any such document or by statute or at law or
in equity or otherwise, arising out of any Lease Default or Lease Event of
Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or any
part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the

                                       5
<PAGE>
extent of the Owner Lessor's interest therein) of all insurance maintained
pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located, including, without
limitation, that which may be acquired pursuant to the option to purchase in
Section 10.02 of the FILOT Lease; and

     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the

                                       6
<PAGE>
Facility Lease (other than Excepted Payments) directly to the Indenture Trustee
at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Indenture. Further, the Owner Lessor agrees
that promptly on receipt thereof, it will transfer to the Indenture Trustee any
and all moneys from time to time received by it constituting part of the
Indenture Estate, whether or not expressly referred to in the immediately
preceding sentence, for distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
South Carolina.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall the Indenture Trustee or the Noteholders
be required or obligated in any manner, except as herein expressly provided, to
perform or fulfill any obligation of the Owner Lessor under or pursuant to any
such Assigned Document or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim, or to take any action to
collect or enforce the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.

                                       7
<PAGE>
     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under (other than (x) the exercise of the
purchase option pursuant to the FILOT Lease and the right to make the
determinations and take the actions contemplated by Section 14 of the
Participation Agreement (subject to the satisfaction of the conditions set
forth in Section 14 of the Participation Agreement) including, without
limitation, the Owner Lessor's right to direct that title to the Land (to the
extent of the Owner Lessor's Percentage Interest) be conferred from the County
to the Facility Lessee and (y) any action pursuant to Section 5.20 of the
Participation Agreement (subject to the conditions set forth in Section 5.20 of
the Participation Agreement)), the terms of any of the Assigned Documents or
revoke or terminate any of the Assigned Documents, (ii) settle or compromise
any claim arising under any of the Assigned Documents, or (iii) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder
(other than (x) the exercise of the purchase option pursuant to the FILOT Lease
and the right to make the determinations and take the actions contemplated by
Section 14 of the Participation Agreement (subject to the satisfaction of the
conditions set forth in Section 14 of the Participation Agreement) including,
without limitation, the Owner Lessor's right to direct that title to the Land
(to the extent of the Owner Lessor's Percentage Interest) be conferred from the
County to the Facility Lessee and (y) any action pursuant to Section 5.20 of
the Participation Agreement (subject to the conditions set forth in Section
5.20 of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     In the event Owner Lessor acquires the fee simple title or any other
greater estate or interest in the Facility and/or the Facility Site (including,
without limitation, pursuant

                                       8
<PAGE>
to the option to purchase as set forth in Section 10.02 of the FILOT Lease),
such acquisition will merge with the leasehold estate created by the FILOT
Lease, and such other title, estate or interest shall immediately and
automatically become subject to the lien hereof and such title, estate or
interest shall be part of the Indenture Estate and included within the term and
definition of "Property Interest." The Owner Lessor shall execute, acknowledge
and deliver any instruments requested by the Indenture Trustee to confirm the
coverage of the lien hereof upon such other greater estate or interest. The
Owner Lessor shall pay any and all conveyance or mortgage taxes, and filing or
similar fees in connection with the execution, delivery, filing or recording of
any such instrument.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes from time to time
outstanding and to protect the security of this Indenture, and the Indenture
Trustee agrees to accept the trusts and duties hereinafter set forth, as
follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 850 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Gaffney, South Carolina and more fully
described in Exhibit D to this Indenture. The Facility does not include the
Facility Site.

                                       9
<PAGE>
     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and accrued, deferred or capitalized interest on and other amounts due
under all Lessor Notes and all other sums payable to the Indenture Trustee or
the Noteholders from time to time hereunder and under the Participation
Agreement and the other Operative Documents by the Facility Lessee, the Owner
Participant and the Owner Lessor, including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     accrued, deferred or capitalized interest thereon at the rate provided in
     each Lessor Note and the Make-Whole Amount thereon and together with any
     and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Lessor Notes, and principal of such Lessor
     Notes being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with accrued, deferred or capitalized interest
     thereon at the rate provided in each Additional Lessor Note and the
     Make-Whole Amount thereon (if any) and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Additional Lessor Notes, and principal of such Additional Lessor
     Notes being due and payable as provided in each such Additional Lessor
     Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to
     Section 4.13 hereof (whether or not the Owner Lessor remains the owner of
     the Indenture Estate at the time of such advances); and

                                       10
<PAGE>
          (iv)   Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes" or, individually, an
"Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such

                                       11
<PAGE>
Lessor Note has been duly authenticated and delivered hereunder. The Indenture
Trustee shall authenticate and deliver the Initial Lessor Notes for original
issue on the Closing Date in the principal amount specified in Section 2.2,
upon a written order of the Owner Lessor signed by the Lessor Manager. The
Indenture Trustee shall authenticate and deliver Additional Lessor Notes, upon
a written order of the Owner Lessor executed by the Lessor Manager and
satisfaction of the conditions specified in Section 2.12. Such order shall
specify the principal amount of the Additional Lessor Notes to be authenticated
and the date on which the original issue of Additional Lessor Notes is to be
authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto. Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

                                       12
<PAGE>
     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor Notes or
under this Indenture. The Indenture Trustee and each Noteholder, by its
acceptance thereof, agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the
Indenture Trustee or such Noteholder, as the case may be, as herein provided
and that, except as expressly provided in this Indenture, the Participation
Agreement or any other Operative Document, none of the Owner Participant, the
Owner Lessor, the Trust Company, the Lease Indenture Company, nor the Indenture
Trustee, nor any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Indenture Trustee for any amounts payable hereunder, under
such Lessor Note or for any performance to be rendered under any Assigned
Document or for any liability under any Assigned Document. Without prejudice to
the foregoing, the Owner Lessor will duly and punctually pay or cause to be
paid the principal of, Make-Whole Amount, if any, and interest on all Lessor
Notes according to their terms and the terms of this Indenture. Nothing
contained in this Section 2.5 limiting the liability of the Owner Lessor shall
derogate from the right of the Indenture Trustee and the Noteholders to proceed
against the Indenture Estate and the Calpine Guaranty to secure and enforce all
payments and obligations due hereunder and under the Assigned Documents and the
Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

                                       13
<PAGE>
     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an office
or agency where Lessor Notes may be presented for payment (the "Paying Agent").
The Owner Lessor may have one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Owner Lessor initially
appoints the Indenture Trustee as Paying Agent in connection with the Lessor
Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor shall
require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Lessor Notes and shall notify the
Indenture Trustee of any default by the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any

                                       14
<PAGE>
Lessor Note, the Owner Lessor and the Indenture Trustee may deem and treat the
Person in whose name any Lessor Note is registered on the Note Register as the
absolute owner and holder of such Lessor Note for the purpose of receiving
payment of all amounts payable with respect to such Lessor Note and for all
other purposes, and neither the Owner Lessor nor the Indenture Trustee shall be
affected by any notice to the contrary. All payments made on any Lessor Note in
accordance with the provisions of this Section 2.6 shall be valid and effective
to satisfy and discharge the liability on such Lessor Note to the extent of the
sums so paid and (except as provided herein) neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration
of transfer and exchange of Lessor Notes (such register being referred to
herein as the "Note Register"). If any Lessor Note is surrendered at said
office for registration of transfer or exchange (accompanied by a written
instrument of transfer duly executed by or on behalf of the holder thereof,
together with the amount of any applicable transfer taxes), the Owner Lessor
will execute and the Indenture Trustee will authenticate and deliver, in the
name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer or
exchange shall be valid

                                       15
<PAGE>
obligations of the Owner Lessor entitled to the same security and benefits to
which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or
Lessor Notes surrendered. Every Lessor Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Indenture Trustee duly executed by the holder thereof or his attorney duly
authorized in writing, and the Indenture Trustee may require an opinion of
counsel as to compliance of any such transfer with the Securities Act. The
Indenture Trustee shall make a notation on each new Lessor Note of the amount
of all payments of principal previously made on the old Lessor Note or Lessor
Notes with respect to which such new Lessor Note is issued and the date on
which such new Lessor Note is issued and the date to which interest on such old
Lessor Note or Lessor Notes shall have been paid. The Indenture Trustee shall
not be required to register the transfer or exchange of any Lessor Note during
the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this

                                       16
<PAGE>
Indenture shall be redeemed, in whole but not in part, at a price equal to the
principal amount thereof, together with accrued interest thereon, if any, on
the earliest to occur on the date of redemption, but without any Make-Whole
Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and
     effectuates an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee

                                       17
<PAGE>
and the Owner Lessor. The Facility Lessee will execute and deliver, and the
Indenture Trustee will authenticate, to each Noteholder in exchange for such
old Lessor Note a new Lessor Note, in a principal amount equal to the
outstanding principal amount of such old Lessor Note and otherwise in
substantially similar form and tenor to such old Lessor Note but indicating
that the Facility Lessee is the issuer thereof. When such assumption agreement
becomes effective, the Owner Lessor shall be released and discharged without
further act from all obligations and liabilities assumed by the Facility
Lessee. All documentation in connection with any such assumption (including an
indenture supplemental to this Indenture which shall, among other things,
contain provisions appropriately amending references to the Facility Lease in
this Indenture and contain covenants by the Facility Lessee similar to those
contained in the Facility Lease (other than any covenants which were solely for
the benefit of the Owner Participant), changed as appropriate, and amendments
or supplements to the other Operative Documents, officers' certificates,
opinions of counsel and regulatory approvals) shall be prepared by and at the
expense of the Facility Lessee acceptable in form and substance to the
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and
     agreed that the Facility Lessee's counsel on the Closing Date shall be
     deemed acceptable), addressed to the Indenture Trustee and the
     Noteholders, to the effect that (1) the assumption agreement and each
     other instrument, document or agreement executed and delivered by the
     Facility Lessee in connection with the assumption contemplated by the
     assumption agreement (collectively, the "Assumption Documents") have been
     duly authorized, executed and delivered by the Facility Lessee, (2) each
     Assumption Document and the assumptions contemplated thereby do not
     contravene (x) the Organic Documents of the Facility Lessee, (y) any
     provision of any security issued by the Facility Lessee or of any
     agreement, instrument or other undertaking to which the Facility Lessee
     is a party or by which it or any of its property is bound or (z) any
     Applicable Law, (3) no Governmental Approval is necessary or required in
     connection with any Assumption Document or the assumption contemplated
     thereby (or, if any such Governmental Approval is necessary or required,
     that the same has been duly obtained and is final and in full force and
     effect and any period for the filing of notice of rehearing or
     application for judicial review of the issuance of such Governmental
     Approval has expired

                                       18
<PAGE>
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder and (6) the lien of this Indenture will continue
     to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause a
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

          (iii)    Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to

                                       19
<PAGE>
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       20
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i)   the date of redemption;

          (ii)   the redemption price;

          (iii)   the name and address of the Paying Agent;

          (iv)   that Lessor Notes called for redemption must be surrendered
     to the Paying Agent to collect the redemption price;

          (v)   that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue
     on and after the redemption date; and

          (vi)   the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a new
Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the

                                       21
<PAGE>
Indenture Trustee and the Owner Participant of any tax or other governmental
charge in connection therewith or any charges and expenses connected with such
tax or governmental charge paid or payable by the Owner Lessor or the Indenture
Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       22
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the
     conditions in respect of the issuance of such Additional Lessor Notes
     contained in this Section 2.12 have been satisfied, (3) specifying the
     amount of the costs and expenses relating to the issuance and sale of
     such Additional Lessor Notes, (4) stating that payments pursuant to the
     Facility Lease and all supplements thereto of Periodic Rent and
     Termination Value, together with all other amounts payable pursuant to
     the terms of the Facility Lease, are calculated to be sufficient to pay
     when due all of the principal of and interest on the outstanding Lessor
     Notes, after taking into account the issuance of such Additional Lessor
     Notes and any related redemption of Lessor Notes theretofore outstanding
     and (5) all conditions to the Supplemental Financing or refinancing
     contained in Section 11.1 or ll.2 of the Participation Agreement or in
     any other provision of the Operative Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default as
     to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be
     reasonably acceptable to the Indenture Trustee;

                                       23
<PAGE>
          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of
     the Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and enforceability of the Additional Lessor Notes
     and that all conditions hereunder to the authentication and delivery of
     such Additional Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)  This Indenture secures not only existing indebtedness but also
secures, in accordance with Section 29-3-50, as amended, Code of Laws of South
Carolina 1976, all future advances and readvances that may subsequently be made
to the Owner Lessor by the Indenture Trustee, evidenced by the Lessor Notes,
including any Additional Lessor Notes, or other promissory notes, and all
renewals and extensions thereof; provided however, that nothing contained
herein shall create an obligation on the part of the Indenture Trustee to make
future advances or readvances to the Owner Lessor, the maximum amount of all
indebtedness outstanding at any one time secured hereby not to exceed Two
Hundred Fifty Two Million Two Hundred Thousand Dollars ($252,200,000), plus
interest thereon (whether deferred, accrued, or capitalized), all charges and
expenses of collection incurred by the holder of this Indenture, including
court costs and reasonable attorney's fees, or pursuant to promissory notes or
other instruments evidencing such future advances which may be hereafter
executed and delivered by Owner Lessor to Indenture Trustee. In the event that
any notice described in Section 29-3-50 is properly filed and served on the
Indenture Trustee as set forth

                                       24
<PAGE>
therein, any commitment, agreement, or obligation to make future advances to or
for the benefit of Owner Lessor shall immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

               THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                  SECTION 3.
                     RECEIPT, DISTRIBUTION AND APPLICATION
                        OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic

                                       25
<PAGE>
Rent received by the Indenture Trustee shall be distributed by the Indenture
Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each such Lessor Note bears to
     the aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the

                                       26
<PAGE>
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the extent not then required to be
distributed pursuant to clause "First" of Section 3.1(a)) as part of the
Indenture Estate and shall not distribute any such payment of Periodic Rent or
interest pursuant to clause "Second" of Section 3.1(a) until such time as such
Lease Indenture Event of Default shall be cured or waived or until such time as
the Indenture Trustee shall have received written instructions from a Majority
in Interest of Noteholders to make such a distribution; provided that such
amounts must be returned to the Owner Lessor within six (6) months from the
receipt thereof by the Indenture Trustee unless (i) the Indenture Trustee has
declared the unpaid principal of all Lessor Notes due and payable (or such
amounts shall have automatically become due and payable), pursuant to Section
4.2(a) and the Indenture Trustee is diligently pursuing any dispossessary
remedies available under Section 4.3 hereof (unless such remedies are stayed or
prevented by operation of law) or (ii) any other Lease Indenture Event of
Default shall have occurred during the intervening period and be continuing, in
which case, such six-month period will be restarted from the date such other
Lease Indenture Event of Default shall have occurred. Upon the cure or waiver
of such Lease Indenture Event of Default, withheld Periodic Rent shall, subject
to clause (ii) of the immediately preceding sentence, be distributed to the
Owner Lessor (to the extent that all payments to be distributed pursuant to
clause "First" of Section 3.1(a) have been made), and no further withholding of
Periodic Rent on account of such Lease Indenture Event of Default shall be
effected.

     Section 3.2.   Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early

                                       27
<PAGE>
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     in full the applicable redemption price (as described in Section 2.10(a)
     or 2.10(d) hereof or any supplemental indenture hereto) (including,
     interest on overdue principal and, to the extent permitted by Applicable
     Law, overdue interest) upon all of the Lessor Notes which shall be
     distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder, plus the Make-Whole Amount, if any, and accrued but
     unpaid interest thereon to the scheduled date of distribution to the
     Noteholders bears to the aggregate unpaid principal amount of all such
     Lessor Notes held by all such holders, together with the Make-Whole
     Amount, if any, plus accrued but unpaid interest thereon to the date of
     scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the
     aggregate amount of such payments and amounts to which all such holders
     are so entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the

                                       28
<PAGE>
Facility Lease or from the application of Section 4.3 hereof) and after either
(a) the Indenture Trustee has declared the Facility Lease to be in default
pursuant to Section 17 thereof or (b) the entire principal amount of Lessor
Notes shall have been declared or shall automatically have become due and
payable, together with all payments or amounts then held or thereafter received
by the Indenture Trustee hereunder, shall, so long as such declaration shall
not have been rescinded, be distributed forthwith by the Indenture Trustee in
the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder and accrued but unpaid interest thereon to the scheduled
     date of distribution to the Noteholders bears to the aggregate unpaid
     principal amount of all such Lessor Notes held by all such holders and
     accrued but unpaid interest thereon to the date of scheduled distribution
     to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

                                       29
<PAGE>
     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture
Event of Default; provided, however, that any such payment received by the
Indenture Trustee which is payable to the Facility Lessee shall not be held by
the Indenture Trustee unless a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing.

                                       30
<PAGE>
     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;
     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise directed
in writing by the Owner Lessor, all amounts from time to time distributable by
the Indenture Trustee to the Owner Lessor in accordance with the provisions
hereof shall be paid by the Indenture Trustee in immediately available funds to
the Owner Participant's Account. Any amounts payable to the Trust Company in
its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other

                                       31
<PAGE>
disposition thereof or otherwise constituting a part of the Indenture Estate to
which the Owner Lessor is not entitled hereunder, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Facility Lessee, the Owner Lessor or otherwise) with
respect to the Facility Lease, any other Assigned Document or the Facility in
the manner provided in Section 2.7 hereof, and this Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a part
of the Indenture Trustee Account Collateral and shall not constitute payment of
any Indebtedness or any other obligation of the Owner Lessor until applied as
hereinafter provided.

                                       32
<PAGE>
     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the
     Indenture Trustee's Account is and will be maintained as a "securities
     account" (within the meaning of Section 8-501(a) of the UCC), (C) the
     Owner Lessor is the "entitlement holder" (within the meaning of Section
     8-102(a)(7) of the UCC) in respect of the "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) credited to the Indenture
     Trustee's Account, (D) all property delivered to the Account Bank
     pursuant to this Indenture or any other Operative Document will be held
     by the Account Bank and promptly credited to the Indenture Trustee's
     Account by an appropriate entry in its records in accordance with this
     Indenture, (E) all "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) in registered form or payable to or to the order
     of and credited to the Indenture Trustee's Account shall be registered in
     the name of, payable to or to the order of, or indorsed to, the Account
     Bank or in blank, or credited to another securities account maintained in
     the name of the Account Bank, and in no case will any financial asset
     credited to the Indenture Trustee's Account be registered in the name of,
     payable to or to the order of, or indorsed to, the Owner Lessor except to
     the extent the foregoing have been subsequently indorsed by the Owner
     Lessor to the Account Bank or in blank, (F) the Account Bank shall not
     change the name or account number of the Indenture Trustee's Account
     without the prior written consent of the Indenture Trustee, (G) the
     Account Bank is acting and shall at all times act as and perform all of
     the duties of the "securities intermediary," within the meaning of
     Article 8 of the UCC, with respect to the Indenture Trustee's Account and
     the financial assets credited thereto and (H) the Account Bank shall

                                       33
<PAGE>
     not enter into any other agreement governing, or with respect to, the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each
     item of property (including any security, instrument or obligation,
     share, participation, interest, cash or cash equivalents or other
     property whatsoever) credited to the Indenture Trustee's Account shall be
     treated as a "financial asset" within the meaning of Section 8-l02(a)(9)
     of the UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the
     UCC) or any other order from the Indenture Trustee directing the transfer
     or redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the
     meaning of Section 8-102(a)(17) of the UCC) carried or to be carried in
     the Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements respect to the
     financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any
     financial asset relating to the Indenture Trustee's Account.

          (iv)   Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law
     or otherwise a lien or security interest in the Indenture Trustee's
     Account or any security entitlement credited thereto, the Account Bank
     agrees that such lien or security interest shall be subordinate to the
     lien and security interest of the Indenture Trustee for the benefit of
     the Indenture Trustee and each Noteholder. The financial assets standing
     to the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient
     funds).

                                       34
<PAGE>
          (v)   No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or
     hereafter entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any
     Person asserts any lien, encumbrance or adverse claim (including any
     writ, garnishment, judgment, warrant of attachment, execution or similar
     process) against the Indenture Trustee's Account or in any financial
     asset credited thereto, the Account Bank will promptly notify the
     Indenture Trustee and the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                       35
<PAGE>
                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor.  The Owner Lessor hereby
covenants and agrees as follows:


     (a)  the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is

                                       36
<PAGE>
waived by the Owner Lessor and the Owner Participant and (ii) the insurance
maintained by the Facility Lessee still constitutes Prudent Industry Practice);
or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have
been incorrect in any material respect when made and continues to be material
and unremedied for a period of 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days,

                                       37
<PAGE>
so long as such party diligently pursues such remedy and such condition is
reasonably capable of being remedied within such extended period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written instructions from a Majority in Interest of Noteholders
shall declare, by written notice to the Owner Lessor and the Owner Participant,
the unpaid principal amount of all Lessor Notes, with accrued interest thereon,
to be immediately due and payable, upon which declaration such principal amount
and such accrued interest shall immediately become due and payable (except in
the case of a Lease Indenture Event of Default under Section 4.2(e) or (f),
such principal and interest shall automatically become due and payable
immediately without any such declaration or notice) without further act or
notice of any kind. If any Make-Whole amount is due and payable pursuant to
Section 2.10 (c)

                                       38
<PAGE>
or (d) at the time of any such acceleration, such Make-Whole
Amount shall also be due and payable in connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for such price or prices and on such terms as the Indenture
Trustee, in its unfettered discretion, may determine, or as may be required by
law, so long as the Owner Participant and the Owner Lessor are afforded a
commercially reasonable opportunity to bid for all or such part of the
Indenture Estate in connection therewith unless Section 4.7 shall otherwise be
applicable; provided that 20 days shall be deemed to be a commercially
reasonable opportunity to bid for purposes of this Section 4.3(b). The
Indenture Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Noteholders asserted or upheld in any bankruptcy,
receivership or other judicial proceedings.

                                       39
<PAGE>
     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)  Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-day period following the date of commencement of a
stay or other prevention or (b) the date of repossession of the Facility under
the applicable Facility Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

                                       40
<PAGE>
     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the Owner Lessor shall be deemed to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default

                                       41
<PAGE>
under Section 4.2(b), (e) or (f), or any Lease Indenture Event of Default
hereunder shall have occurred and be continuing) be subrogated to the rights of
the Indenture Trustee and the Noteholders to receive the payment of Periodic
Rent or Supplemental Rent, as the case may be, with respect to which the Owner
Lessor made such payment and interest on account of such Periodic Rent payment
or Supplemental Rent payment being overdue in the manner set forth in the next
two sentences. If the Indenture Trustee shall thereafter receive such payment
of Periodic Rent, Supplemental Rent or such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 3.1 hereof, forthwith, remit
such payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes

                                       42
<PAGE>
having been accelerated or the Indenture Trustee having exercised any remedy
under the Facility Lease intended to dispossess the Facility Lessee of the
Facility, (y) the Lessor Notes have been accelerated pursuant to Section 4.3(a)
and such acceleration has not theretofore been rescinded, or (z) an Enforcement
Notice giving notice of the intent of the Indenture Trustee to dispossess the
Facility Lessee of the Facility under the Facility Lease has been given
pursuant to Section 5.1 within the previous 30 days, (ii) no Lease Indenture
Event of Default of the nature described in any of clauses (b) through (f) of
Section 4.2 hereof shall have occurred and be continuing and (iii) the Owner
Lessor shall give written notice to the Indenture Trustee of the Owner Lessor's
intention to purchase all of the Lessor Notes in accordance with this
paragraph, then, upon receipt within 10 Business Days after such notice from
the Owner Lessor of an amount equal to the sum of (x) the aggregate unpaid
principal amount of any unpaid Lessor Notes then held by the Noteholders,
together with accrued but unpaid interest thereon to the date of such receipt
(as well as any interest on overdue principal and, to the extent permitted by
Applicable Law, overdue interest), plus (y) the aggregate amount, if any, of
all sums which, if Section 3.3 were then applicable, such Noteholder would be
entitled to be paid before any payments were to be made to the Owner Lessor but
excluding any Make-Whole Amount, such Noteholder will forthwith (and upon its
receipt of the payment referred to in clause (1) below, will be deemed to)
sell, assign, transfer and convey to the Owner Lessor (without recourse or
warranty of any kind other than of title to the Lessor Notes so conveyed) all
of the right, title and interest of such Noteholder in and to the Indenture
Estate, this Indenture, all Lessor Notes held by such Noteholder and the
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law.  All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all

                                       43
<PAGE>
costs and expenses of collection incurred by or on behalf of the holders of the
Lessor Notes (including counsel fees and expenses and all expenses and
reasonable compensation of the Indenture Trustee) and (b) every other Lease
Indenture Event of Default shall have been remedied, then a Majority in
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate the possession of
which the Indenture Trustee shall at the time be entitled to hereunder. If the
Owner Lessor shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture
Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right
to immediate possession and requiring the Owner Lessor to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Lessor hereby specifically consents, and (ii) pursue all or
any part of the Indenture Estate wherever it may be found and enter any of the
premises wherever all or part of the Indenture Estate may be or is supposed to
be and search for all or part of the Indenture Estate and take possession of
and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee

                                       44
<PAGE>
shall be entitled to collect and receive all rents (including Periodic Rent and
Supplemental Rent), revenues, issues, income, products and profits of the
Indenture Estate and every part thereof (without prejudice to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
cash held by, or required to be deposited with, the Indenture Trustee
hereunder) and to apply the same to the management of or otherwise dealing with
the Indenture Estate and of conducting the business thereof, and of all
expenditures with respect to the Indenture Estate and the making of all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner Lessor and the Facility Lessee relating to the
Indenture Estate and the Operative Documents), or under any provision of, this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all Persons properly engaged and employed by the
Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the right to foreclose this Indenture and to have a judicial
sale of the Indenture Estate or any part of the Indenture Estate as the
Indenture Trustee shall determine, in its sole discretion, with any such
sale(s) to be under the judgment or decree of a court of competent
jurisdiction. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, proceed by
a suit or suits in law or in equity or by any other appropriate proceeding or
remedy (i) to enforce payment of the Lessor Notes or the performance of any
term, covenant, condition or agreement of this Indenture or any other right,
and (ii) to pursue any other remedy available to it, all as the Indenture
Trustee shall determine most effectual for such purposes. Upon any foreclosure
sale, the Indenture Trustee may bid for and purchase the Indenture Estate and
shall be entitled to apply all or any part of the Secured Indebtedness as a
credit to the purchase price. In the event of a foreclosure sale of the
Indenture Estate, the proceeds of said sale shall be applied as provided in
Section 3.3 hereof. In the event of any such foreclosure sale by the Indenture
Trustee, the Owner Lessor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be
summarily dispossessed according to provisions of law applicable to tenants
holding over. The Indenture Trustee, at the Indenture Trustee's option, is
authorized to foreclose this Indenture subject to the rights of any tenants of
the Indenture Estate, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their

                                       45
<PAGE>
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal amount
of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. Except as
otherwise set forth herein, to the maximum extent permitted by Applicable Law,
the Owner Lessor waives the benefit of all laws now existing or that may
subsequently be enacted provided for (i) any appraisement before sale of any
portion of the Indenture Estate, (ii) any extension of the time for the
enforcement of the collection of the Secured Indebtedness or the creation or
extension of a period of redemption from any sale made in collecting such debt,
(iii) exemption of the Indenture Estate from attachment, levy or sale under
execution or exemption from civil process and (iv) any requirement that the
Indenture Estate be sole in separate lots, trusts or parcels. Except as
otherwise set forth herein, to the full extent the Owner Lessor may do so, the
Owner Lessor agrees that it will not at any time insist upon, plead, claim or
take the benefit or advantage of any law not or hereafter in force provided for
any appraisement, valuation, stay exemption,

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<PAGE>
extension or redemption, reinstatement or requiring foreclosure of this
Indenture before exercising any other remedy granted hereunder and the Owner
Lessor, for itself and its successors and assigns, and for any and all Persons
ever claiming any interest in the Indenture Estate, to the maximum extent
permitted by law, hereby waives and releases all rights of redemption,
reinstatement, valuation, appraisement, stay of execution, notice of election
to mature or declare due the whole of the Secured Indebtedness and marshaling
in the event of foreclosure on the Liens hereby created.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall
take or cause to be taken any action contrary to the right of the Facility
Lessee, including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon

                                       47
<PAGE>
from the date of payment or incurrence, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand.  The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms of
Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to

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<PAGE>
time of a Majority in Interest of Noteholders, the Indenture Trustee shall take
such action, or refrain from taking such action, including any of the following
actions as may be specified in such instructions: (a) give such notice,
direction or consent or exercise such right, remedy or power or take such
action hereunder or under any Assigned Document, or in respect of any part of
or all the Indenture Estate, as it shall be entitled to take and as shall be
specified in such instructions; (b) take such action with respect to or to
preserve or protect the Indenture Estate (including the discharge of Liens) as
it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall,
execute and file or cause to be executed and filed any financing statement (and
any continuation statement with respect to such financing statement) or any
similar instrument or document relating to the security interest or the
assignment created by this Indenture or granted by the Owner Lessor herein as
may be necessary to protect and preserve the security interest or assignment
created by or granted pursuant to this Indenture, to the extent otherwise
entitled to do so and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in this
Section 5.3 shall be deemed to expand the instances in which the Owner Lessor
is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and

                                       49
<PAGE>
Section 4.3 hereof or this Section 5, the Indenture Estate, for any fee as
compensation for its services hereunder.

     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with any part of the Indenture
Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the terms of the Facility Lease, to the extent applicable to the Indenture
Trustee as assignee of the Owner Lessor, (b) in accordance with the powers
granted to, or the authority conferred upon, the Indenture Trustee pursuant to
this Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor.  Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of

                                       51
<PAGE>
the Indenture Estate, the Owner Lessor shall retain the right to the exclusion
of the Indenture Trustee to exercise the rights of the Owner Lessor under, and
to determine compliance by the Facility Lessee with, the provisions of Sections
10 (other than Section 10.3 thereof), 13, 14 and 15 of the Facility Lease;
provided, however, that if a Lease Indenture Event of Default shall have
occurred and be continuing, the Owner Lessor shall cease to retain such rights
upon notice from the Indenture Trustee stating that such rights shall no longer
be retained by the Owner Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the Facility Lessee under the
Operative Documents relating to the protection, insurance, maintenance,
possession, use and return of the Property Interest, the performance by the
Facility Lessee of the Owner Lessor's obligations under the FILOT Lease and the
exercise of any renewal or extension rights with respect to the FILOT Lease and
to make the determinations and

                                       52
<PAGE>
take the actions contemplated by Section 14 of the Participation Agreement
(subject to the satisfaction of the conditions set forth in Section 14 of the
Participation Agreement) including, without limitation, the Owner Lessor's
right to direct that title to the Land (to the extent of the Owner Lessor's
Percentage Interest) be conferred from the County to the Facility Lessee; and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by

                                       53
<PAGE>
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and powers
herein granted. Upon the reasonable instructions (which instructions shall be
accompanied by the form of document to be filed) at any time and from time to
time of the Facility Lessee or the Indenture Trustee, the Owner Lessor shall
execute and file any financing statement (and any continuation statement with
respect to any such financing statement), and any other document relating to the
security interest and assignment created by this Indenture as may be specified
in such instructions. In addition, the Indenture Trustee and the Owner Lessor
will execute such continuation statements with respect to financing statements
and other documents relating to the Lien created by this Indenture in the
Indenture Estate as may be specified from time to time in written instructions
of any Noteholder (which instructions may, by their terms, be operative only at
a future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the

                                       54
<PAGE>
Indenture Trustee shall not be liable for any action or inaction of the Owner
Trust; provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall
     not be liable except for the performance of such duties and obligations as
     are specifically set forth in the Operative Documents, no implied
     covenants or obligations shall be read into the Operative Documents
     against the Indenture Trustee and, in the absence of bad faith on the part
     of the Indenture Trustee, the Indenture Trustee may conclusively rely, as
     to the truth of the statements and the correctness of the opinions
     expressed therein, upon any notes or opinions furnished to the Indenture
     Trustee and conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the
     Indenture Trustee, or exercising or omitting to exercise any trust or
     power conferred upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
     its own funds or otherwise incur financial liability for the performance
     of any of its duties

                                       55
<PAGE>
     hereunder or the exercise of any of its rights or powers if there is
     reasonable ground for believing that the repayment of such funds or
     adequate indemnity against such risk or liability is not reasonably assured
     to it, and none of the provisions contained in this Indenture shall in any
     event require the Indenture Trustee to perform, or be responsible for the
     manner of performance of, any of the obligations of the Owner Lessor, under
     this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Section 5.2 hereof and except as provided in
Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty (a) to see
to any registration, recording or filing of any Operative Document (or any
financing or continuation statements in respect thereto) or to see to the
maintenance of any such registration, recording or filing, (b) to see to any
insurance on the Facilities or the Facilities or to effect or maintain any such
insurance, (c) except as otherwise provided in Section 5.5 hereof or in Section
10 of the Participation Agreement, to see to the payment or discharge of any
Tax or any Lien of any kind owing with respect to, or assessed or levied
against, any part of the Indenture Estate, (d) to confirm or verify the
contents of any report, notice, request, demand, certificate, financial
statement or other instrument of the Facility Lessee, (e) to inspect the
Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents unless the Indenture Trustee shall reasonably believe
that each such Noteholder, the Owner Lessor and the Owner Participant shall
have received copies thereof.

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<PAGE>
     Section 6.3.   Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL BE
DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

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<PAGE>
     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of competence, of any such Person, so long
as the Indenture Trustee shall have exercised reasonable care in selecting such
Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

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<PAGE>
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)  Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If a
successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)  Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee or
Account Bank hereunder in the trusts hereunder applicable to it with like
effect as if originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture

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<PAGE>
Trustee or Account Bank shall duly assign, transfer deliver and pay over to
such successor Indenture Trustee all moneys or other property then held by such
predecessor Indenture Trustee or Account Bank hereunder. To the extent required
by Applicable Law or upon request of the successor Indenture Trustee or Account
Bank, the Owner Lessor shall execute any and all documents confirming the
vesting of such estates, properties, rights and powers in the successor
Indenture Trustee or Account Bank.

     (c)  Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)  Appointment of Account Bank. The Indenture Trustee and each Noteholder
hereby irrevocably designate and appoint State Street Trust Bank and Trust
Company of Connecticut, National Association as the Account Bank under this
Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)  Merger, etc. Any Person into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Indenture Trustee shall be
a party, or any Person to which substantially all the corporate trust business
of the Indenture Trustee

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<PAGE>
may be transferred, shall, subject to the terms of subsection (c) of this
Section 7.1, be the Indenture Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request
so to do; provided, however, that the Indenture Trustee shall exercise due care
in selecting any additional or separate trustee if such additional or separate
trustee shall not be a Person possessing trust powers under Applicable Law. If
at any time the Indenture Trustee shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be advised
by such counsel that it is no longer so necessary or prudent in the interest of
the Noteholders or in the event that the Indenture Trustee shall have been
requested to do so in writing by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver all instruments and agreements
necessary or proper to remove any additional trustee or separate trustee. In
such connection, the Indenture Trustee may act on behalf of the Owner Lessor to
the same extent as is provided above. Notwithstanding anything contained to the
contrary

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<PAGE>
in this Section 7.2(a), to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly or
through a separate trustee under the direction and control of the Indenture
Trustee, the Owner Lessor, at the instruction of the Indenture Trustee, shall
appoint a separate trustee for such jurisdiction, which separate trustee shall
have full power and authority to take all action hereunder as to matters
relating to such jurisdiction without the consent of the Indenture Trustee, but
not subject to the same limitations in any exercise of his power and authority
as those to which the Indenture Trustee is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)  Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.

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<PAGE>
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                              AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

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<PAGE>
     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions of
Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any other
Operative Document (a) to evidence the succession of another Person as a Lessor
Manager or the appointment of a co-manager in accordance with the terms of the
LLC Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant to
the provisions of Section 7 hereof and to define the rights, powers, duties and
obligations conferred upon any such separate trustee or trustees or co-trustee
or co-trustees, (b) to correct, confirm or amplify the description of any
property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner that
will not in the judgment of the Indenture Trustee materially adversely affect
the interests of the Noteholders, (e) to grant or confer upon the Indenture
Trustee for the benefit of the Noteholders any additional rights, remedies,
powers, authority or security which may be lawfully granted or conferred and
which are not contrary or inconsistent with this Indenture, (f) to add to the
covenants or agreements to be observed by the Facility Lessee or the Owner
Lessor and which are not contrary to this Indenture, to add Indenture Events of
Defaults for the benefit of Noteholders or surrender any right or power of the
Owner Lessor, provided it has consented thereto, (g) to effect the assumption of
all or, to the extent otherwise provided hereunder, part of the Lessor Notes by
the Facility Lessee, provided that the supplemental indenture will contain all
of the covenants applicable to the Facility Lessee contained in the Facility
Lease and the Participation Agreement for the benefit of the Indenture Trustees
or the holders of such Lessor Notes, such that the Facility Lessee's obligations
contained therein, if applicable in the event that the Facility Lease are
terminated, will continue to be in full force and effect, (h) to comply with
requirements of the SEC, any applicable law, rules or regulations of any
exchange or quotation system on which the Certificates are listed, or any
regulatory body, (i) to modify, eliminate or add to the provisions of any
Operative Documents to such extent as shall be necessary to qualify or continue
the qualification of this Lease Indenture or the Pass Through Trust Agreements
(including any supplements thereto) under the Trust Indenture Act, or similar
federal statute enacted

                                       64
<PAGE>
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

                                       65
<PAGE>
     (a)  Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i)   Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person
     be released from the Lien of this Lease Indenture and the Indenture
     Trustee shall, upon the written request of the Owner Lessor or the
     Facility Lessee, execute and deliver to, and as directed in writing by,
     the Facility Lessee or the Owner Lessor an appropriate instrument (in due
     form for recording) releasing the replaced Component from the Lien of this
     Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and deliver
     to, or as directed in writing by, the Facility Lessee or the Owner Lessor
     an appropriate instrument (in due form for recording) releasing the
     Indenture Estate from the Lien of this Indenture; provided that all sums
     secured by this Indenture have been paid to the Persons entitled to such
     sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

                                       66
<PAGE>
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility Lessee
(with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and any
successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for the
sole and exclusive benefit of the parties hereto, the Owner Participant, the
Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       67
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071

                                       68
<PAGE>
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          Broad River Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under

                                       69
<PAGE>
no circumstances shall Wells Fargo, be personally liable for the payment of any
indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall be
in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of South Carolina. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

                                       70
<PAGE>
     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present

                                       71
<PAGE>
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Lessor Notes, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Noteholders and to pay to the Noteholders from amounts received
by Paying Agent pursuant hereto such additional amounts so that the net amount
actually received by the Noteholders, after reduction for such withheld
amounts, shall be equal to the full amount of principal, Make-Whole Amount,
interest and other amounts otherwise due and payable hereunder; provided,
however, that, notwithstanding the foregoing, the Paying Agent shall be
required to pay such additional amounts only if and to the extent that (a) the
Facility Lessee is required to indemnify the Noteholders for such amounts under
Section 9 of the Participation Agreement and (b) the Facility Lessee has not
paid such amounts within three (3) days after notice of nonpayment, (ii) that
it will file any necessary withholding tax returns or statements when due, and
(iii) that, as promptly as possible after the payment thereof, it will deliver
to each Noteholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Noteholders may
reasonably request from time to time. The Indenture Trustee agrees to file any
other information as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is

                                       72
<PAGE>
caused by the Indenture Trustee's failure to act in accordance with its
standard of care under this Lease Indenture.

     Section 9.15.   Fixture Financing Statement.  This Indenture also is
intended to serve as a fixture financing statement under the South Carolina
Uniform Commercial Codes. In connection therewith, the following information is
provided:

     (a)  Name and address of Debtor:

          Broad River OL-1, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     (b)  Name and Address of Secured Party (from which  information  concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded in the real estate records
of the Office of the Cherokee County Clerk of Court.

     (e)  Type of Filing: This is a commercial filing under Section 36-9-402 of
the Code of Laws of South Carolina, 1976 (as amended).


                  (Remainder of Page Intentionally Left Blank)

                                       73
<PAGE>
     Section 9.16.   Waiver of Appraisal Rights. The laws of South Carolina
provide that in any real estate foreclosure proceeding a defendant against whom
a personal judgment is taken or asked may within thirty days after the sale of
the mortgaged property apply to the court for an order or appraisal. The
statutory appraisal value as approved by the court would be substituted for the
high bid and may decrease the amount of any deficiency owing in connection with
the transaction. THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY
APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED
PROPERTY.

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                                        BROAD RIVER OL-1, LLC

                                        By:   Wells  Fargo Bank  Northwest,
                                              National Association, not in its
                                              individual capacity but solely as
                                              the Lessor Manager


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness


                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CONNECTICUT, NATIONAL ASSOCIATION,
                                        as Indenture Trustee and Account Bank


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________, personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.




                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________ personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.



                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

All that certain piece, parcel, or lot of land situate, lying and being in
Cherokee County, South Carolina, and being shown and designated as 60.35 acres
on a survey dated July 21, 2001, revised September 18, 2001 prepared by
Professional Surveying Services for Broad River Energy, LLC and, according to
said survey, having the following metes and bounds:

Commencing at an existing PK nail in the center of the intersection of Old Ford
Road (SC Highway S-11-50) and Victory Trail (US Highway 329), thence proceeding
North 23-25-35 West 869.86' to an existing iron pin being a common corner of the
subject property, the right of way of Victory Trail and property of George and
Sheri McAbee and being the point of beginning, thence South 48-08-18 West for a
distance of 175.29' to a new iron pin; thence North 71-14-56 West for a distance
of 154.21' to a new iron pin; thence North 71-14-56 West for a distance of
649.72' to a new iron pin; thence South 65-27-23 West for a distance of 427.49'
to a new iron located on the northeastern right of way of Old Ford Road (SC
Highway S-11-50), thence from said point of beginning North 60-16-19 West for a
distance of 92.28' to a point; thence North 56-10-13 West for a distance of
88.18' to a point; thence North 55-42-37 West for a distance of 82.30' to a
point; thence North 53-16-26 West for a distance of 71.52' to a point; thence
North 52-27-22 West for a distance of 82.98' to a point; thence North 52-41-28
West for a distance of 75.44' to a point; thence North 54-42-28 West for a
distance of 65.08' to a point; thence North 57-40-37 West for a distance of
58.84' to a point; thence North 60-36-21 West for a distance of 63.75' to a
point; thence North 64-06-03 West for a distance of 40.07' to a point; thence
North 64-06-03 West for a distance of 45.30' to a point; thence North 67-35-54
West for a distance of 73.25' to a point; thence North 71-21-36 West for a
distance of 31.41' to a point; thence North 71-21-36 West for a distance of
41.47' to a point; thence North 74-35-41 West for a distance of 62.79' to a
point; thence North 77-23-54 West for a distance of 45.86' to a point thence
North 79-42-10 West for a distance of 51.62' to a point; thence North 81-57-05
West for a distance of 51.46' to a point; thence North 82-49-05 West for a
distance of 59.21' to a new iron pin; thence North 35-23-20 East for a distance
of 1,164.01' to a new iron, thence North 35-23-20 East for a distance of 457.09'
to an existing iron pin; thence North 33-29-01 East for a distance of 473.49' to
a large 2" iron; thence North 20-04-41 West for distance of 263.22' to a large
2" iron; thence North 11-22-57 West for a distance of 131.31' to a large 2"
iron; thence North 10-02-03 East for a distance of 166.70' to a new iron located
on the southwestern
<PAGE>
right of way of Victory Trail (US Highway 329); thence continuing along the
southwestern right of way of Victory Trail (US Highway 329) the following
courses and distances: (1) South 20-59-24 East for a distance of 447.48' to a
point; (2) South 13-42-40 East for a distance of 203.64' to a point; (3) South
22-57-44 East for a distance of 151.22' to a point; (4) South 36-23-09 East for
a distance of 155.06' to a point; (5) South 22-58-12 East for a distance of
346.94' to a point; (6) South 16-30-28 East for a distance of 104.58' to a
point; (7) South 23-55-06 East for a distance of 300.17' to a point; (8) South
24-54-19 East for a distance of 200.00" to a point; (9) South 11-46-16 East for
a distance of 308-06' to a point; (10) South 30-36-57 East for a distance of
150.75' to a point; (11) South 48-23-58 East for a distance of 163.56' to a
point; (12) South 24-50-48 East for a distance of 200.00' to a point; (13)
South 30-36-57 East for a distance of 100.50' to a point; and (14) South
24-57-12 East for a distance of 195.32' to an existing iron pin, being the
point of beginning.

Being the same property conveyed to Cherokee County, South Carolina by deed of
Broad River Energy LLC, dated March 1, 2000 and recorded in the Office of the
Clerk of Court for Cherokee County on March 7, 2000 in Deed Book 71 at Page 195.

                                      A-1-2
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                  FORM OF BROAD RIVER LESSOR NOTE SERIES [A][B]

                              BROAD RIVER OL-1, LLC

                NONRECOURSE PROMISSORY NOTE (BROAD RIVER) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012] [2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                  Issued at: New York, New York

                                                   Issue Date: October __, 2001

$[_____]

     BROAD RIVER OL-1, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019] together with
interest at the rate of [ ]% per annum on the principal remaining unpaid from
time to time from and including the Issue Date until paid in full. Interest on
the outstanding principal amount under this Note shall be due and payable in
arrears semiannually at the rate specified above, commencing on May 30, 2002,
and on each May 30 and November 30 thereafter until the principal of this Note
is paid in full or made available for payment. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set

                                      B-1-1
<PAGE>
forth on Schedule I multiplied by the percentage set forth on Schedule I under
the column headed "Percentage of Principal Amount Payable" for such date unless
the Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                      B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                      B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

                                      B-1-4
<PAGE>
     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    BROAD RIVER OL-1, LLC
                                    a Delaware limited liability company,



                                    By:  Wells Fargo Bank Northwest, National
                                         Association, not in its individual
                                         capacity but solely as the Lessor
                                         Manager


                                    By:  ______________________________________
                                           Name:
                                           Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                    STATE STREET BANK AND TRUST
                                    COMPANY OF CONNECTICUT,
                                    NATIONAL ASSOCIATION,
                                    not in its individual capacity, but solely
                                    as the Indenture Trustee



                                    __________________________________________
                                    Name:
                                    Title:
<PAGE>
                             FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto


Insert Taxpayer Identification No.


__________________________________


________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)


________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing


________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.


Date: ________________              ____________________________________________
                                    (Signature of Transferor)


                                    NOTE: The signature to this assignment must
                                    correspond with the name as written upon the
                                    face of the within-mentioned instrument in
                                    every particular, without alteration or any
                                    change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         PRINCIPAL PORTION: $25,175,000

<TABLE>
<CAPTION>
                                                                                 Percentage of Principal
                                                                                 -----------------------
Regular Distribution Date                                                                 Amount Payable
-------------------------                                                                 --------------
<S>                                                                              <C>
May 30, 2002..................................................................               0.00000000%
November 30, 2002.............................................................               0.00000000%
May 30, 2003..................................................................               0.00000000%
November 30, 2003.............................................................              10.32770606%
May 30, 2004..................................................................              12.21449851%
November 30, 2004.............................................................               5.26315789%
May 30, 2005..................................................................               5.36246276%
November 30, 2005.............................................................               5.56107249%
May 30, 2006..................................................................               6.45481629%
November 30, 2006.............................................................               6.85203575%
May 30, 2007..................................................................               7.54716981%
November 30, 2007.............................................................               8.04369414%
May 30, 2008..................................................................               8.83813307%
November 30, 2008.............................................................               9.33465740%
May 30, 2009..................................................................              10.02979146%
November 30, 2009.............................................................               4.17080437%
                                                                                           -------------

Total.........................................................................             100.00000000%
                                                                                           =============
</TABLE>
<PAGE>
                             Series B Lessor Notes.

                         PRINCIPAL PORTION: $37,875,000


<TABLE>
<CAPTION>
                                                                                             Percentage of Principal
                                                                                             -----------------------
Regular Distribution Date                                                                             Amount Payable
-------------------------                                                                             --------------
<S>                                                                                          <C>
May 30, 2002..............................................................................               0.00000000%
November 30, 2002.........................................................................               0.00000000%
May 30, 2003..............................................................................               0.00000000%
November 30, 2003.........................................................................               0.00000000%
May 30, 2004..............................................................................               0.00000000%
November 30, 2004.........................................................................               0.00000000%
May 30, 2005..............................................................................               0.00000000%
November 30, 2005.........................................................................               0.00000000%
May 30, 2006..............................................................................               0.00000000%
November 30, 2006.........................................................................               0.00000000%
May 30, 2007..............................................................................               0.00000000%
November 30, 2007.........................................................................               0.00000000%
May 30, 2008..............................................................................               0.00000000%
November 30, 2008.........................................................................               0.00000000%
May 30, 2009..............................................................................               0.00000000%
November 30, 2009.........................................................................               0.00000000%
May 30, 2010..............................................................................               0.00000000%
November 30, 2010.........................................................................               0.00000000%
May 30, 2011..............................................................................               0.00000000%
November 30, 2011.........................................................................               0.00000000%
May 30, 2012..............................................................................               0.00000000%
November 30, 2012.........................................................................               0.00000000%
May 30, 2013..............................................................................               0.00000000%
November 30, 2013.........................................................................               0.00000000%
May 30, 2014..............................................................................               0.00000000%
November 30, 2014.........................................................................               0.00000000%
May 30, 2015..............................................................................               0.00000000%
November 30, 2015.........................................................................               0.00000000%
May 30, 2016..............................................................................               0.00000000%
November 30, 2016.........................................................................               0.00000000%
May 30, 2017..............................................................................               0.00000000%
November 30, 2017.........................................................................               0.00000000%
May 30, 2018..............................................................................               0.00000000%
November 30, 2018.........................................................................               0.00000000%
May 30, 2019..............................................................................             100.00000000%
                                                                                                       -------------

Total.....................................................................................             100.00000000%
                                                                                                       =============
</TABLE>

                                     B-1-10
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                       _______________________________________,
                                       not in its individual capacity but
                                       solely as the Indenture Trustee



                                       By:  __________________________________
                                            Name:
                                            Title:

                                       C-2
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE


                           DESCRIPTION OF THE FACILITY


     That certain approximately 850 megawatt net nameplate capacity generating
facility, (known also as the "Broad River Facility") together with all
structures or improvements, all alterations thereto or replacements thereof,
and all other fixtures, attachments, appliances, equipment, machinery and other
articles (including, but not limited to, the property set forth below (the
"Included Property")), in each case located on the land, or the easements
appurtenant to the land, consisting of approximately sixty acres located
approximately one mile south of U.S. Highway 29 and three miles east of the
city of Gaffney in Cherokee County, South Carolina, such land described more
particularly on Exhibit A.

Included Property

     1.  Five Combustion Turbines - General Electric, Model MS7001FA; Serial #
         297329, Serial # 297330, Serial # 297331, Serial # 297620, Serial #
         297405.

     2.  Five CT Generators - General Electric, Model 7FH2, 18kV, Serial #
         337X800, Serial # 337X801, Serial # 337X802, Serial # 337X811, Serial
         # 337X812.

     3.  Three Innovative Steam Technologies Once through Steam Generators
         (OTSGs); Serial # C00037-2, Serial # C00037-1, Serial # C00037-0.

     4.  Five Combustion Turbine Step-up Transformers (GSU) - Prolec, Serial #
         G574-01, Serial # G574-02, Serial # G574-03, Serial # G574-04, Serial
         # G574-05 and other interconnection equipment associated with the
         Broad River Facility.

                                     D-1-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

Initial Aggregate Principal Amount:         $25,175,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:

<TABLE>
<CAPTION>
                                                                                            Percentage of Principal
                                                                                            -----------------------
Regular Distribution Date                                                                            Amount Payable
-------------------------                                                                            --------------
<S>                                                                                                   <C>
May 30, 2002..................................................................                         0.00000000%
November 30, 2002.............................................................                         0.00000000%
May 30, 2003..................................................................                         0.00000000%
November 30, 2003.............................................................                        10.32770606%
May 30, 2004..................................................................                        12.21449851%
November 30, 2004.............................................................                         5.26315789%
May 30, 2005..................................................................                         5.36246276%
November 30, 2005.............................................................                         5.56107249%
May 30, 2006..................................................................                         6.45481629%
November 30, 2006.............................................................                         6.85203575%
May 30, 2007..................................................................                         7.54716981%
November 30, 2007.............................................................                         8.04369414%
May 30, 2008..................................................................                         8.83813307%
November 30, 2008.............................................................                         9.33465740%
May 30, 2009..................................................................                        10.02979146%
November 30, 2009.............................................................                         4.17080437%
                                                                                                        -----------


Total.........................................................................                        100.00000000%
                                                                                                      =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                              SERIES B LESSOR NOTE


Initial Aggregate Principal Amount:         $37,875,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:

<TABLE>
<CAPTION>
                                                                                                 Percentage of Principal
                                                                                                 -----------------------
Regular Distribution Date                                                                                 Amount Payable
-------------------------                                                                                 --------------
<S>                                                                                              <C>
May 30, 2002............................................................................                     0.00000000%
November 30, 2002.......................................................................                     0.00000000%
May 30, 2003............................................................................                     0.00000000%
November 30, 2003.......................................................................                     0.00000000%
May 30, 2004............................................................................                     0.00000000%
November 30, 2004.......................................................................                     0.00000000%
May 30, 2005............................................................................                     0.00000000%
November 30, 2005.......................................................................                     0.00000000%
May 30, 2006............................................................................                     0.00000000%
November 30, 2006.......................................................................                     0.00000000%
May 30, 2007............................................................................                     0.00000000%
November 30, 2007.......................................................................                     0.00000000%
May 30, 2008............................................................................                     0.00000000%
November 30, 2008.......................................................................                     0.00000000%
May 30, 2009............................................................................                     0.00000000%
November 30, 2009.......................................................................                     0.00000000%
May 30, 2010............................................................................                     0.00000000%
November 30, 2010.......................................................................                     0.00000000%
May 30, 2011............................................................................                     0.00000000%
November 30, 2011.......................................................................                     0.00000000%
May 30, 2012............................................................................                     0.00000000%
November 30, 2012.......................................................................                     0.00000000%
May 30, 2013............................................................................                     0.00000000%
November 30, 2013.......................................................................                     0.00000000%
May 30, 2014............................................................................                     0.00000000%
November 30, 2014.......................................................................                     0.00000000%
May 30, 2015............................................................................                     0.00000000%
November 30, 2015.......................................................................                     0.00000000%
May 30, 2016............................................................................                     0.00000000%
November 30, 2016.......................................................................                     0.00000000%
May 30, 2017............................................................................                     0.00000000%
November 30, 2017.......................................................................                     0.00000000%
May 30, 2018............................................................................                     0.00000000%
November 30, 2018.......................................................................                     0.00000000%
May 30, 2019............................................................................                   100.00000000%
                                                                                                           -------------

Total...................................................................................                   100.00000000%
                                                                                                           =============
</TABLE>

                                  SCHEDULE 1-2


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.20
<SEQUENCE>23
<FILENAME>f80168ex4-22_20.txt
<DESCRIPTION>EXHIBIT 4.22.20
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.20


WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036

================================================================================

                          INDENTURE OF TRUST, MORTGAGE,
                      SECURITY AGREEMENT AND FIXTURE FILING


                           Dated as of October18, 2001


                                     between


                             BROAD RIVER OL-2, LLC,
                                  as Mortgagor


                                       and


                           STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                as Indenture Trustee, Mortgagee and Account Bank


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

                              BROAD RIVER FACILITY


================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   Page
<S>                                                                                                <C>
SECTION 1.   DEFINITIONS. ..................................................................         8

SECTION 2.   THE LESSOR NOTES...............................................................        10
     Section 2.1.   Limitation on Lessor Notes..............................................        10
     Section 2.2.   Initial Lessor Notes....................................................        10
     Section 2.3.   Execution and Authentication of Lessor Notes............................        10
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes..........................        11
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of the Owner
                    Lessor, the Owner Participant or the Indenture Trustee..................        12
     Section 2.6.   Method of Payment.......................................................        13
     Section 2.7.   Application of Payments.................................................        14
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.....................        14
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.......................        15
     Section 2.10.  Redemptions; Assumption.................................................        16
     Section 2.11.  Payment of Expenses on Transfer.........................................        21
     Section 2.12.  Additional Lessor Notes.................................................        21
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities Laws;
                    Legend..................................................................        24
     Section 2.14.  Security for and Parity of Lessor Notes.................................        25
     Section 2.15.  Acceptance of the Indenture Trustee.....................................        25

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE..........        25
     Section 3.1.   Distribution of Periodic Rent...........................................        25
     Section 3.2.   Payments Following Event of Loss or Other Early Termination.............        27
     Section 3.3.   Payments After Lease Indenture Event of Default.........................        28
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee............        29
     Section 3.5.   Application of Certain Other Payments...................................        30
     Section 3.6.   Other Payments..........................................................        30
     Section 3.7.   Excepted Payments.......................................................        31
     Section 3.8.   Distributions to the Owner Lessor.......................................        31
     Section 3.9.   Payments Under Assigned Documents.......................................        31
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee...............        31
</TABLE>

                                        i
<PAGE>
<TABLE>
<S>                                                                                                <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE.............        35
     Section 4.1.   Covenants of Owner Lessor...............................................        35
     Section 4.2.   Lease Indenture Events of Default.......................................        36
     Section 4.3.   Remedies of the Indenture Trustee.......................................        38
     Section 4.4.   Right to Cure Certain Lease Events of Default...........................        40
     Section 4.5.   Rescission of Acceleration..............................................        43
     Section 4.6.   Return of Indenture Estate, Etc.........................................        44
     Section 4.7.   Power of Sale and Other Remedies........................................        45
     Section 4.8.   Appointment of Receiver.................................................        46
     Section 4.9.   Remedies Cumulative.....................................................        46
     Section 4.10.  Waiver of Various Rights by the Owner Lessor............................        46
     Section 4.11.  Discontinuance of Proceedings...........................................        47
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the Facility
                    Lease...................................................................        47
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc................        47
     Section 4.14.  Further Assurances......................................................        48
     Section 4.15.  Waiver of Past Defaults.................................................        48

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR.........        48
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default..................        48
     Section 5.2.   Actions Upon Instructions Generally.....................................        48
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of Facility Lease....        49
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification..................        49
     Section 5.5.   No Duties Except as Specified; No Action Except Under Facility Lease,
                    Indenture or Instructions...............................................        50
     Section 5.6.   Certain Rights of the Owner Lessor......................................        50
     Section 5.7.   Restrictions on Dealing with Indenture Estate...........................        53
     Section 5.8.   Filing of Financing Statements and Continuation Statements..............        53

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR.............................................        54
     Section 6.1.   Acceptance of Trusts and Duties.........................................        54
     Section 6.2.   Absence of Certain Duties...............................................        56
     Section 6.3.   Representations and Warranties..........................................        57
     Section 6.4.   No Segregation of Moneys; No Interest...................................        57
     Section 6.5.   Reliance; Agents; Advice of Experts.....................................        58
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                               <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES.............................        59
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment of
                    Successor...............................................................        59
     Section 7.2.   Appointment of Additional and Separate Trustees.........................        61

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS...............        63
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent; Conditions and
                    Limitations.............................................................        63
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent............        64
     Section 8.3.   Conditions to Action by the Indenture Trustee...........................        65

SECTION 9.   MISCELLANEOUS..................................................................        66
     Section 9.1.   Surrender, Defeasance and Release.......................................        66
     Section 9.2.   Conveyances Pursuant to the Site Lease..................................        67
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further Assurances....        67
     Section 9.4.   Indenture for Benefit of Certain Persons Only...........................        67
     Section 9.5.   Notices; Furnishing Documents, etc......................................        68
     Section 9.6.   Severability............................................................        70
     Section 9.7.   Limitation of Liability.................................................        70
     Section 9.8.   Written Changes Only....................................................        70
     Section 9.9.   Counterparts............................................................        70
     Section 9.10.  Successors and Permitted Assigns........................................        70
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate............        71
     Section 9.14.  Withholding Taxes: Information Reporting................................        72
     Section 9.15.  Fixture Financing Statement.............................................        73
</TABLE>

EXHIBITS

<TABLE>
<S>                  <C>
Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility
</TABLE>

APPENDIX A Definitions

                          INDENTURE OF TRUST, MORTGAGE,

                                       iii

<PAGE>

                      SECURITY AGREEMENT AND FIXTURE FILING

     This INDENTURE OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
(as amended, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this "Indenture"), dated as of October 18, 2001,
between BROAD RIVER OL-2, LLC, having an address set forth in Section 9.5
hereof, a Delaware limited liability company created for the benefit of the
Owner Participant referred to below, as mortgagor (the "Owner Lessor") and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
having an address set forth in Section 9.5 hereof, as mortgagee on behalf of
the Noteholders (the "Indenture Trustee") and as the Account Bank.

                                  WITNESSETH:

     WHEREAS, Broad River Energy, LLC (the "Facility Lessee") is the lessee
under that certain Lease Agreement (the "FILOT Lease") by and between itself
and Cherokee County, South Carolina, a body politic and corporate and a
political subdivision of the State of South Carolina, as landlord (the
"County") in connection with the Facility and the Facility Site (each as
hereinafter defined), a memorandum of which FILOT Lease was recorded in the
office of the Cherokee County Clerk of Court in Book 71, page 200;

     WHEREAS, the Facility Lessee has assigned the Undivided Interest and the
Ground Interest to the Owner Lessor pursuant to that certain Assignment
Agreement, a memorandum of which shall be recorded with this Indenture in the
Office of the Cherokee County Clerk of Court;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has subleased from the
Owner Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Facility Site Lease"),
with the Facility Lessee pursuant to which the Facility Lessee has subleased
the Ground Interest from the Owner Lessor for a term of years;

                                       2
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assigned to the Owner Lessor by the Facility Lessee and (ii) grant to
the Indenture Trustee the security interests herein provided;

     WHEREAS, this Indenture is regarded as a mortgage under the laws of the
State of South Carolina as a security agreement under the Uniform Commercial
Codes of the States of New York, Delaware and South Carolina, and as a fixture
filing under the laws of the State of South Carolina;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, the latest stated maturity date of the Initial Lessor Notes is
May 30, 2019;

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and

                                       3
<PAGE>
accrued, deferred or capitalized interest on the Lessor Notes and of all
other amounts owing with respect to all Lessor Notes from time to time
outstanding hereunder, and the prompt payment when and as due of any and all
other amounts from time to time owing in respect of the Secured Indebtedness
and (ii) the performance and observance by the Owner Lessor for the benefit of
the holders of the Lessor Notes and the Indenture Trustee of all other
obligations, agreements, and covenants of the Owner Lessor set forth
hereinafter and in the Lessor Notes, the Operative Documents and the other
documents, certificates and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, mortgages, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee and
its successors and permitted assigns, for the benefit of the holders of the
Lessor Notes from time to time, a first priority security interest in and
mortgage lien on all estate, right, title and interest of the Owner Lessor in,
to and under the following described property, rights, interests and
privileges, whether now held or hereafter acquired (which collectively,
including all property hereafter specifically subjected to the security
interest created by this Indenture by any supplement hereto, exclusive of
Excepted Payments) are included within, and are hereafter referred to as, the
"Indenture Estate"):

     (1)  the Undivided Interest (including the Facility Purchase Option), the
Owner Lessor's interest in any Components; the Owner Lessor's interest in any
Improvements; the Ground Interest (including the Land Purchase Option); the
Facility Lease and all payments of any kind by the Facility Lessee thereunder
(including Rent); any rights of the Owner Lessor as assignee of the Facility
Lessee under the Facility Lease; the Facility Site Lease and all payments of
any kind by the Facility Lessee thereunder; the Assignment Agreement (and all
rights with respect to the FILOT Lease conveyed thereby); the Owner Lessor's
interest in all tangible property located on or at or attached to the Facility
Site as to which an interest in such tangible property arises under applicable
real estate law ("fixtures"); the Calpine Guaranty, the Ownership and Operation
Agreement and all and any interest in any property now or hereafter granted to
the Owner Lessor pursuant to any provision of the Facility Lease or the FILOT
Lease (including, without limitation, the option to purchase set forth in
Section 10.02 of the FILOT Lease); the FILOT Lease, and each other Operative
Document to which the Owner Lessor is a party other than the Tax Indemnity
Agreement, the Tri-Party Agreement and the LLC Agreement (the Undivided
Interest, the Owner Lessor's interest in any Components, the Owner Lessor's
interest in any fixtures, Improvements and the Ground Interest are collectively
referred to as the "Property Interest" and the documents specifically referred
to above in this paragraph (1) are collectively referred to as the

                                       4
<PAGE>
"Assigned Documents"), including, without limitation, (x) all rights of the
Owner Lessor to receive any payments or other amounts or, subject to Section
5.6 hereof, to exercise any election or option or to make any decision or
determination or to give or receive any notice, consent, waiver or approval or
to make any demand or to take any other action under or in respect of any such
document, to accept surrender or redelivery of the Property Interest or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Lessor, whether acting under any such document or by statute or at law or
in equity or otherwise, arising out of any Lease Default or Lease Event of
Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or any
part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the

                                       5
<PAGE>
extent of the Owner Lessor's interest therein) of all insurance maintained
pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located, including, without
limitation, that which may be acquired pursuant to the option to purchase in
Section 10.02 of the FILOT Lease; and

     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the

                                       6
<PAGE>
Facility Lease (other than Excepted Payments) directly to the Indenture Trustee
at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Indenture. Further, the Owner Lessor agrees
that promptly on receipt thereof, it will transfer to the Indenture Trustee any
and all moneys from time to time received by it constituting part of the
Indenture Estate, whether or not expressly referred to in the immediately
preceding sentence, for distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
South Carolina.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall the Indenture Trustee or the Noteholders
be required or obligated in any manner, except as herein expressly provided, to
perform or fulfill any obligation of the Owner Lessor under or pursuant to any
such Assigned Document or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim, or to take any action to
collect or enforce the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.

                                       7
<PAGE>
     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under (other than (x) the exercise of the
purchase option pursuant to the FILOT Lease and the right to make the
determinations and take the actions contemplated by Section 14 of the
Participation Agreement (subject to the satisfaction of the conditions set
forth in Section 14 of the Participation Agreement) including, without
limitation, the Owner Lessor's right to direct that title to the Land (to the
extent of the Owner Lessor's Percentage Interest) be conferred from the County
to the Facility Lessee and (y) any action pursuant to Section 5.20 of the
Participation Agreement (subject to the conditions set forth in Section 5.20 of
the Participation Agreement)), the terms of any of the Assigned Documents or
revoke or terminate any of the Assigned Documents, (ii) settle or compromise
any claim arising under any of the Assigned Documents, or (iii) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder
(other than (x) the exercise of the purchase option pursuant to the FILOT Lease
and the right to make the determinations and take the actions contemplated by
Section 14 of the Participation Agreement (subject to the satisfaction of the
conditions set forth in Section 14 of the Participation Agreement) including,
without limitation, the Owner Lessor's right to direct that title to the Land
(to the extent of the Owner Lessor's Percentage Interest) be conferred from the
County to the Facility Lessee and (y) any action pursuant to Section 5.20 of
the Participation Agreement (subject to the conditions set forth in Section
5.20 of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     In the event Owner Lessor acquires the fee simple title or any other
greater estate or interest in the Facility and/or the Facility Site (including,
without limitation, pursuant

                                       8
<PAGE>
to the option to purchase as set forth in Section 10.02 of the FILOT Lease),
such acquisition will merge with the leasehold estate created by the FILOT
Lease, and such other title, estate or interest shall immediately and
automatically become subject to the lien hereof and such title, estate or
interest shall be part of the Indenture Estate and included within the term and
definition of "Property Interest." The Owner Lessor shall execute, acknowledge
and deliver any instruments requested by the Indenture Trustee to confirm the
coverage of the lien hereof upon such other greater estate or interest. The
Owner Lessor shall pay any and all conveyance or mortgage taxes, and filing or
similar fees in connection with the execution, delivery, filing or recording of
any such instrument.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes from time to time
outstanding and to protect the security of this Indenture, and the Indenture
Trustee agrees to accept the trusts and duties hereinafter set forth, as
follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 850 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Gaffney, South Carolina and more fully
described in Exhibit D to this Indenture. The Facility does not include the
Facility Site.

                                       9
<PAGE>
     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and accrued, deferred or capitalized interest on and other amounts due
under all Lessor Notes and all other sums payable to the Indenture Trustee or
the Noteholders from time to time hereunder and under the Participation
Agreement and the other Operative Documents by the Facility Lessee, the Owner
Participant and the Owner Lessor, including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     accrued, deferred or capitalized interest thereon at the rate provided in
     each Lessor Note and the Make-Whole Amount thereon and together with any
     and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Lessor Notes, and principal of such Lessor
     Notes being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture
     Trusteeunder the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with accrued, deferred or capitalized interest
     thereon at the rate provided in each Additional Lessor Note and the
     Make-Whole Amount thereon (if any) and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Additional Lessor Notes, and principal of such Additional Lessor
     Notes being due and payable as provided in each such Additional Lessor
     Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to
     Section 4.13 hereof (whether or not the Owner Lessor remains the owner of
     the Indenture Estate at the time of such advances); and

                                       10
<PAGE>
          (iv)   Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes" or, individually, an
"Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such

                                       11
<PAGE>
Lessor Note has been duly authenticated and delivered hereunder. The Indenture
Trustee shall authenticate and deliver the Initial Lessor Notes for original
issue on the Closing Date in the principal amount specified in Section 2.2,
upon a written order of the Owner Lessor signed by the Lessor Manager. The
Indenture Trustee shall authenticate and deliver Additional Lessor Notes, upon
a written order of the Owner Lessor executed by the Lessor Manager and
satisfaction of the conditions specified in Section 2.12. Such order shall
specify the principal amount of the Additional Lessor Notes to be authenticated
and the date on which the original issue of Additional Lessor Notes is to be
authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto. Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

                                       12
<PAGE>
     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor Notes or
under this Indenture. The Indenture Trustee and each Noteholder, by its
acceptance thereof, agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the
Indenture Trustee or such Noteholder, as the case may be, as herein provided
and that, except as expressly provided in this Indenture, the Participation
Agreement or any other Operative Document, none of the Owner Participant, the
Owner Lessor, the Trust Company, the Lease Indenture Company, nor the Indenture
Trustee, nor any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Indenture Trustee for any amounts payable hereunder, under
such Lessor Note or for any performance to be rendered under any Assigned
Document or for any liability under any Assigned Document. Without prejudice to
the foregoing, the Owner Lessor will duly and punctually pay or cause to be
paid the principal of, Make-Whole Amount, if any, and interest on all Lessor
Notes according to their terms and the terms of this Indenture. Nothing
contained in this Section 2.5 limiting the liability of the Owner Lessor shall
derogate from the right of the Indenture Trustee and the Noteholders to proceed
against the Indenture Estate and the Calpine Guaranty to secure and enforce all
payments and obligations due hereunder and under the Assigned Documents and the
Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

                                       13
<PAGE>
     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an office
or agency where Lessor Notes may be presented for payment (the "Paying Agent").
The Owner Lessor may have one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Owner Lessor initially
appoints the Indenture Trustee as Paying Agent in connection with the Lessor
Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor shall
require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Lessor Notes and shall notify the
Indenture Trustee of any default by the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any

                                       14
<PAGE>
Lessor Note, the Owner Lessor and the Indenture Trustee may deem and treat the
Person in whose name any Lessor Note is registered on the Note Register as the
absolute owner and holder of such Lessor Note for the purpose of receiving
payment of all amounts payable with respect to such Lessor Note and for all
other purposes, and neither the Owner Lessor nor the Indenture Trustee shall be
affected by any notice to the contrary. All payments made on any Lessor Note in
accordance with the provisions of this Section 2.6 shall be valid and effective
to satisfy and discharge the liability on such Lessor Note to the extent of the
sums so paid and (except as provided herein) neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration
of transfer and exchange of Lessor Notes (such register being referred to
herein as the "Note Register"). If any Lessor Note is surrendered at said
office for registration of transfer or exchange (accompanied by a written
instrument of transfer duly executed by or on behalf of the holder thereof,
together with the amount of any applicable transfer taxes), the Owner Lessor
will execute and the Indenture Trustee will authenticate and deliver, in the
name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer or
exchange shall be valid

                                       15
<PAGE>
obligations of the Owner Lessor entitled to the same security and benefits to
which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or
Lessor Notes surrendered. Every Lessor Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Indenture Trustee duly executed by the holder thereof or his attorney duly
authorized in writing, and the Indenture Trustee may require an opinion of
counsel as to compliance of any such transfer with the Securities Act. The
Indenture Trustee shall make a notation on each new Lessor Note of the amount
of all payments of principal previously made on the old Lessor Note or Lessor
Notes with respect to which such new Lessor Note is issued and the date on
which such new Lessor Note is issued and the date to which interest on such old
Lessor Note or Lessor Notes shall have been paid. The Indenture Trustee shall
not be required to register the transfer or exchange of any Lessor Note during
the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this

                                       16
<PAGE>
Indenture shall be redeemed, in whole but not in part, at a price equal to the
principal amount thereof, together with accrued interest thereon, if any, on
the earliest to occur on the date of redemption, but without any Make-Whole
Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and
     effectuates an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee

                                       17
<PAGE>
and the Owner Lessor. The Facility Lessee will execute and deliver, and the
Indenture Trustee will authenticate, to each Noteholder in exchange for such
old Lessor Note a new Lessor Note, in a principal amount equal to the
outstanding principal amount of such old Lessor Note and otherwise in
substantially similar form and tenor to such old Lessor Note but indicating
that the Facility Lessee is the issuer thereof. When such assumption agreement
becomes effective, the Owner Lessor shall be released and discharged without
further act from all obligations and liabilities assumed by the Facility
Lessee. All documentation in connection with any such assumption (including an
indenture supplemental to this Indenture which shall, among other things,
contain provisions appropriately amending references to the Facility Lease in
this Indenture and contain covenants by the Facility Lessee similar to those
contained in the Facility Lease (other than any covenants which were solely for
the benefit of the Owner Participant), changed as appropriate, and amendments
or supplements to the other Operative Documents, officers' certificates,
opinions of counsel and regulatory approvals) shall be prepared by and at the
expense of the Facility Lessee acceptable in form and substance to the
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and
     agreed that the Facility Lessee's counsel on the Closing Date shall be
     deemed acceptable), addressed to the Indenture Trustee and the
     Noteholders, to the effect that (1) the assumption agreement and each
     other instrument, document or agreement executed and delivered by the
     Facility Lessee in connection with the assumption contemplated by the
     assumption agreement (collectively, the "Assumption Documents") have been
     duly authorized, executed and delivered by the Facility Lessee, (2) each
     Assumption Document and the assumptions contemplated thereby do not
     contravene (x) the Organic Documents of the Facility Lessee, (y) any
     provision of any security issued by the Facility Lessee or of any
     agreement, instrument or other undertaking to which the Facility Lessee
     is a party or by which it or any of its property is bound or (z) any
     Applicable Law, (3) no Governmental Approval is necessary or required in
     connection with any Assumption Document or the assumption contemplated
     thereby (or, if any such Governmental Approval is necessary or required,
     that the same has been duly obtained and is final and in full force and
     effect and any period for the filing of notice of rehearing or
     application for judicial review of the issuance of such Governmental
     Approval has expired

                                       18
<PAGE>
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder and (6) the lien of this Indenture will continue
     to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause a
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

          (iii)    Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to

                                       19
<PAGE>
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       20
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i)   the date of redemption;

          (ii)   the redemption price;

          (iii)   the name and address of the Paying Agent;

          (iv)   that Lessor Notes called for redemption must be surrendered
     to the Paying Agent to collect the redemption price;

          (v)   that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue
     on and after the redemption date; and

          (vi)   the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a new
Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the

                                       21
<PAGE>
Indenture Trustee and the Owner Participant of any tax or other governmental
charge in connection therewith or any charges and expenses connected with such
tax or governmental charge paid or payable by the Owner Lessor or the Indenture
Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       22
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the
     conditions in respect of the issuance of such Additional Lessor Notes
     contained in this Section 2.12 have been satisfied, (3) specifying the
     amount of the costs and expenses relating to the issuance and sale of
     such Additional Lessor Notes, (4) stating that payments pursuant to the
     Facility Lease and all supplements thereto of Periodic Rent and
     Termination Value, together with all other amounts payable pursuant to
     the terms of the Facility Lease, are calculated to be sufficient to pay
     when due all of the principal of and interest on the outstanding Lessor
     Notes, after taking into account the issuance of such Additional Lessor
     Notes and any related redemption of Lessor Notes theretofore outstanding
     and (5) all conditions to the Supplemental Financing or refinancing
     contained in Section 11.1 or ll.2 of the Participation Agreement or in
     any other provision of the Operative Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default as
     to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be
     reasonably acceptable to the Indenture Trustee;

                                       23
<PAGE>
          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of
     the Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and enforceability of the Additional Lessor Notes
     and that all conditions hereunder to the authentication and delivery of
     such Additional Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)  This Indenture secures not only existing indebtedness but also
secures, in accordance with Section 29-3-50, as amended, Code of Laws of South
Carolina 1976, all future advances and readvances that may subsequently be made
to the Owner Lessor by the Indenture Trustee, evidenced by the Lessor Notes,
including any Additional Lessor Notes, or other promissory notes, and all
renewals and extensions thereof; provided however, that nothing contained
herein shall create an obligation on the part of the Indenture Trustee to make
future advances or readvances to the Owner Lessor, the maximum amount of all
indebtedness outstanding at any one time secured hereby not to exceed Two
Hundred Fifty Two Million Two Hundred Thousand Dollars ($252,200,000), plus
interest thereon (whether deferred, accrued, or capitalized), all charges and
expenses of collection incurred by the holder of this Indenture, including
court costs and reasonable attorney's fees, or pursuant to promissory notes or
other instruments evidencing such future advances which may be hereafter
executed and delivered by Owner Lessor to Indenture Trustee. In the event that
any notice described in Section 29-3-50 is properly filed and served on the
Indenture Trustee as set forth

                                       24
<PAGE>
therein, any commitment, agreement, or obligation to make future advances to or
for the benefit of Owner Lessor shall immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                  SECTION 3.
                     RECEIPT, DISTRIBUTION AND APPLICATION
                        OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic

                                       25
<PAGE>
Rent received by the Indenture Trustee shall be distributed by the Indenture
Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each such Lessor Note bears to
     the aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the

                                       26
<PAGE>
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the extent not then required to be
distributed pursuant to clause "First" of Section 3.1(a)) as part of the
Indenture Estate and shall not distribute any such payment of Periodic Rent or
interest pursuant to clause "Second" of Section 3.1(a) until such time as such
Lease Indenture Event of Default shall be cured or waived or until such time as
the Indenture Trustee shall have received written instructions from a Majority
in Interest of Noteholders to make such a distribution; provided that such
amounts must be returned to the Owner Lessor within six (6) months from the
receipt thereof by the Indenture Trustee unless (i) the Indenture Trustee has
declared the unpaid principal of all Lessor Notes due and payable (or such
amounts shall have automatically become due and payable), pursuant to Section
4.2(a) and the Indenture Trustee is diligently pursuing any dispossessary
remedies available under Section 4.3 hereof (unless such remedies are stayed or
prevented by operation of law) or (ii) any other Lease Indenture Event of
Default shall have occurred during the intervening period and be continuing, in
which case, such six-month period will be restarted from the date such other
Lease Indenture Event of Default shall have occurred. Upon the cure or waiver
of such Lease Indenture Event of Default, withheld Periodic Rent shall, subject
to clause (ii) of the immediately preceding sentence, be distributed to the
Owner Lessor (to the extent that all payments to be distributed pursuant to
clause "First" of Section 3.1(a) have been made), and no further withholding of
Periodic Rent on account of such Lease Indenture Event of Default shall be
effected.

     Section 3.2.   Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early

                                       27
<PAGE>
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     in full the applicable redemption price (as described in Section 2.10(a)
     or 2.10(d) hereof or any supplemental indenture hereto) (including,
     interest on overdue principal and, to the extent permitted by Applicable
     Law, overdue interest) upon all of the Lessor Notes which shall be
     distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder, plus the Make-Whole Amount, if any, and accrued but
     unpaid interest thereon to the scheduled date of distribution to the
     Noteholders bears to the aggregate unpaid principal amount of all such
     Lessor Notes held by all such holders, together with the Make-Whole
     Amount, if any, plus accrued but unpaid interest thereon to the date of
     scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the
     aggregate amount of such payments and amounts to which all such holders
     are so entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the

                                       28
<PAGE>
Facility Lease or from the application of Section 4.3 hereof) and after either
(a) the Indenture Trustee has declared the Facility Lease to be in default
pursuant to Section 17 thereof or (b) the entire principal amount of Lessor
Notes shall have been declared or shall automatically have become due and
payable, together with all payments or amounts then held or thereafter received
by the Indenture Trustee hereunder, shall, so long as such declaration shall
not have been rescinded, be distributed forthwith by the Indenture Trustee in
the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder and accrued but unpaid interest thereon to the scheduled
     date of distribution to the Noteholders bears to the aggregate unpaid
     principal amount of all such Lessor Notes held by all such holders and
     accrued but unpaid interest thereon to the date of scheduled distribution
     to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

                                       29
<PAGE>
     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture
Event of Default; provided, however, that any such payment received by the
Indenture Trustee which is payable to the Facility Lessee shall not be held by
the Indenture Trustee unless a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing.

                                       30
<PAGE>
     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;
     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise directed
in writing by the Owner Lessor, all amounts from time to time distributable by
the Indenture Trustee to the Owner Lessor in accordance with the provisions
hereof shall be paid by the Indenture Trustee in immediately available funds to
the Owner Participant's Account. Any amounts payable to the Trust Company in
its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other

                                       31
<PAGE>
disposition thereof or otherwise constituting a part of the Indenture Estate to
which the Owner Lessor is not entitled hereunder, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Facility Lessee, the Owner Lessor or otherwise) with
respect to the Facility Lease, any other Assigned Document or the Facility in
the manner provided in Section 2.7 hereof, and this Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a part
of the Indenture Trustee Account Collateral and shall not constitute payment of
any Indebtedness or any other obligation of the Owner Lessor until applied as
hereinafter provided.

                                       32
<PAGE>
     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the
     Indenture Trustee's Account is and will be maintained as a "securities
     account" (within the meaning of Section 8-501(a) of the UCC), (C) the
     Owner Lessor is the "entitlement holder" (within the meaning of Section
     8-102(a)(7) of the UCC) in respect of the "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) credited to the Indenture
     Trustee's Account, (D) all property delivered to the Account Bank
     pursuant to this Indenture or any other Operative Document will be held
     by the Account Bank and promptly credited to the Indenture Trustee's
     Account by an appropriate entry in its records in accordance with this
     Indenture, (E) all "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) in registered form or payable to or to the order
     of and credited to the Indenture Trustee's Account shall be registered in
     the name of, payable to or to the order of, or indorsed to, the Account
     Bank or in blank, or credited to another securities account maintained in
     the name of the Account Bank, and in no case will any financial asset
     credited to the Indenture Trustee's Account be registered in the name of,
     payable to or to the order of, or indorsed to, the Owner Lessor except to
     the extent the foregoing have been subsequently indorsed by the Owner
     Lessor to the Account Bank or in blank, (F) the Account Bank shall not
     change the name or account number of the Indenture Trustee's Account
     without the prior written consent of the Indenture Trustee, (G) the
     Account Bank is acting and shall at all times act as and perform all of
     the duties of the "securities intermediary," within the meaning of
     Article 8 of the UCC, with respect to the Indenture Trustee's Account and
     the financial assets credited thereto and (H) the Account Bank shall

                                       33
<PAGE>
     not enter into any other agreement governing, or with respect to, the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each
     item of property (including any security, instrument or obligation,
     share, participation, interest, cash or cash equivalents or other
     property whatsoever) credited to the Indenture Trustee's Account shall be
     treated as a "financial asset" within the meaning of Section 8-l02(a)(9)
     of the UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the
     UCC) or any other order from the Indenture Trustee directing the transfer
     or redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the
     meaning of Section 8-102(a)(17) of the UCC) carried or to be carried in
     the Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements respect to the
     financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any
     financial asset relating to the Indenture Trustee's Account.

          (iv)   Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law
     or otherwise a lien or security interest in the Indenture Trustee's
     Account or any security entitlement credited thereto, the Account Bank
     agrees that such lien or security interest shall be subordinate to the
     lien and security interest of the Indenture Trustee for the benefit of
     the Indenture Trustee and each Noteholder. The financial assets standing
     to the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient
     funds).

                                       34
<PAGE>
          (v)   No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or
     hereafter entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any
     Person asserts any lien, encumbrance or adverse claim (including any
     writ, garnishment, judgment, warrant of attachment, execution or similar
     process) against the Indenture Trustee's Account or in any financial
     asset credited thereto, the Account Bank will promptly notify the
     Indenture Trustee and the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                       35
<PAGE>
                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor.  The Owner Lessor hereby
covenants and agrees as follows:


     (a)  the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is

                                       36
<PAGE>
waived by the Owner Lessor and the Owner Participant and (ii) the insurance
maintained by the Facility Lessee still constitutes Prudent Industry Practice);
or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have
been incorrect in any material respect when made and continues to be material
and unremedied for a period of 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days,

                                       37
<PAGE>
so long as such party diligently pursues such remedy and such condition is
reasonably capable of being remedied within such extended period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written instructions from a Majority in Interest of Noteholders
shall declare, by written notice to the Owner Lessor and the Owner Participant,
the unpaid principal amount of all Lessor Notes, with accrued interest thereon,
to be immediately due and payable, upon which declaration such principal amount
and such accrued interest shall immediately become due and payable (except in
the case of a Lease Indenture Event of Default under Section 4.2(e) or (f),
such principal and interest shall automatically become due and payable
immediately without any such declaration or notice) without further act or
notice of any kind. If any Make-Whole amount is due and payable pursuant to
Section 2.10 (c)

                                       38
<PAGE>
or (d) at the time of any such acceleration, such Make-Whole
Amount shall also be due and payable in connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for such price or prices and on such terms as the Indenture
Trustee, in its unfettered discretion, may determine, or as may be required by
law, so long as the Owner Participant and the Owner Lessor are afforded a
commercially reasonable opportunity to bid for all or such part of the
Indenture Estate in connection therewith unless Section 4.7 shall otherwise be
applicable; provided that 20 days shall be deemed to be a commercially
reasonable opportunity to bid for purposes of this Section 4.3(b). The
Indenture Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Noteholders asserted or upheld in any bankruptcy,
receivership or other judicial proceedings.

                                       39
<PAGE>
     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)  Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-day period following the date of commencement of a
stay or other prevention or (b) the date of repossession of the Facility under
the applicable Facility Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

                                       40
<PAGE>
     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the Owner Lessor shall be deemed to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default

                                       41
<PAGE>
under Section 4.2(b), (e) or (f), or any Lease Indenture Event of Default
hereunder shall have occurred and be continuing) be subrogated to the rights of
the Indenture Trustee and the Noteholders to receive the payment of Periodic
Rent or Supplemental Rent, as the case may be, with respect to which the Owner
Lessor made such payment and interest on account of such Periodic Rent payment
or Supplemental Rent payment being overdue in the manner set forth in the next
two sentences. If the Indenture Trustee shall thereafter receive such payment
of Periodic Rent, Supplemental Rent or such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 3.1 hereof, forthwith, remit
such payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes

                                       42
<PAGE>
having been accelerated or the Indenture Trustee having exercised any remedy
under the Facility Lease intended to dispossess the Facility Lessee of the
Facility, (y) the Lessor Notes have been accelerated pursuant to Section 4.3(a)
and such acceleration has not theretofore been rescinded, or (z) an Enforcement
Notice giving notice of the intent of the Indenture Trustee to dispossess the
Facility Lessee of the Facility under the Facility Lease has been given
pursuant to Section 5.1 within the previous 30 days, (ii) no Lease Indenture
Event of Default of the nature described in any of clauses (b) through (f) of
Section 4.2 hereof shall have occurred and be continuing and (iii) the Owner
Lessor shall give written notice to the Indenture Trustee of the Owner Lessor's
intention to purchase all of the Lessor Notes in accordance with this
paragraph, then, upon receipt within 10 Business Days after such notice from
the Owner Lessor of an amount equal to the sum of (x) the aggregate unpaid
principal amount of any unpaid Lessor Notes then held by the Noteholders,
together with accrued but unpaid interest thereon to the date of such receipt
(as well as any interest on overdue principal and, to the extent permitted by
Applicable Law, overdue interest), plus (y) the aggregate amount, if any, of
all sums which, if Section 3.3 were then applicable, such Noteholder would be
entitled to be paid before any payments were to be made to the Owner Lessor but
excluding any Make-Whole Amount, such Noteholder will forthwith (and upon its
receipt of the payment referred to in clause (1) below, will be deemed to)
sell, assign, transfer and convey to the Owner Lessor (without recourse or
warranty of any kind other than of title to the Lessor Notes so conveyed) all
of the right, title and interest of such Noteholder in and to the Indenture
Estate, this Indenture, all Lessor Notes held by such Noteholder and the
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law.  All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all

                                       43
<PAGE>
costs and expenses of collection incurred by or on behalf of the holders of the
Lessor Notes (including counsel fees and expenses and all expenses and
reasonable compensation of the Indenture Trustee) and (b) every other Lease
Indenture Event of Default shall have been remedied, then a Majority in
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate the possession of
which the Indenture Trustee shall at the time be entitled to hereunder. If the
Owner Lessor shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture
Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right
to immediate possession and requiring the Owner Lessor to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Lessor hereby specifically consents, and (ii) pursue all or
any part of the Indenture Estate wherever it may be found and enter any of the
premises wherever all or part of the Indenture Estate may be or is supposed to
be and search for all or part of the Indenture Estate and take possession of
and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee

                                       44
<PAGE>
shall be entitled to collect and receive all rents (including Periodic Rent and
Supplemental Rent), revenues, issues, income, products and profits of the
Indenture Estate and every part thereof (without prejudice to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
cash held by, or required to be deposited with, the Indenture Trustee
hereunder) and to apply the same to the management of or otherwise dealing with
the Indenture Estate and of conducting the business thereof, and of all
expenditures with respect to the Indenture Estate and the making of all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner Lessor and the Facility Lessee relating to the
Indenture Estate and the Operative Documents), or under any provision of, this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all Persons properly engaged and employed by the
Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the right to foreclose this Indenture and to have a judicial
sale of the Indenture Estate or any part of the Indenture Estate as the
Indenture Trustee shall determine, in its sole discretion, with any such
sale(s) to be under the judgment or decree of a court of competent
jurisdiction. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, proceed by
a suit or suits in law or in equity or by any other appropriate proceeding or
remedy (i) to enforce payment of the Lessor Notes or the performance of any
term, covenant, condition or agreement of this Indenture or any other right,
and (ii) to pursue any other remedy available to it, all as the Indenture
Trustee shall determine most effectual for such purposes. Upon any foreclosure
sale, the Indenture Trustee may bid for and purchase the Indenture Estate and
shall be entitled to apply all or any part of the Secured Indebtedness as a
credit to the purchase price. In the event of a foreclosure sale of the
Indenture Estate, the proceeds of said sale shall be applied as provided in
Section 3.3 hereof. In the event of any such foreclosure sale by the Indenture
Trustee, the Owner Lessor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be
summarily dispossessed according to provisions of law applicable to tenants
holding over. The Indenture Trustee, at the Indenture Trustee's option, is
authorized to foreclose this Indenture subject to the rights of any tenants of
the Indenture Estate, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their

                                       45
<PAGE>
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal amount
of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. Except as
otherwise set forth herein, to the maximum extent permitted by Applicable Law,
the Owner Lessor waives the benefit of all laws now existing or that may
subsequently be enacted provided for (i) any appraisement before sale of any
portion of the Indenture Estate, (ii) any extension of the time for the
enforcement of the collection of the Secured Indebtedness or the creation or
extension of a period of redemption from any sale made in collecting such debt,
(iii) exemption of the Indenture Estate from attachment, levy or sale under
execution or exemption from civil process and (iv) any requirement that the
Indenture Estate be sole in separate lots, trusts or parcels. Except as
otherwise set forth herein, to the full extent the Owner Lessor may do so, the
Owner Lessor agrees that it will not at any time insist upon, plead, claim or
take the benefit or advantage of any law not or hereafter in force provided for
any appraisement, valuation, stay exemption,

                                       46
<PAGE>
extension or redemption, reinstatement or requiring foreclosure of this
Indenture before exercising any other remedy granted hereunder and the Owner
Lessor, for itself and its successors and assigns, and for any and all Persons
ever claiming any interest in the Indenture Estate, to the maximum extent
permitted by law, hereby waives and releases all rights of redemption,
reinstatement, valuation, appraisement, stay of execution, notice of election
to mature or declare due the whole of the Secured Indebtedness and marshaling
in the event of foreclosure on the Liens hereby created.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall
take or cause to be taken any action contrary to the right of the Facility
Lessee, including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon

                                       47
<PAGE>
from the date of payment or incurrence, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand.  The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms of
Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to

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<PAGE>
time of a Majority in Interest of Noteholders, the Indenture Trustee shall take
such action, or refrain from taking such action, including any of the following
actions as may be specified in such instructions: (a) give such notice,
direction or consent or exercise such right, remedy or power or take such
action hereunder or under any Assigned Document, or in respect of any part of
or all the Indenture Estate, as it shall be entitled to take and as shall be
specified in such instructions; (b) take such action with respect to or to
preserve or protect the Indenture Estate (including the discharge of Liens) as
it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall,
execute and file or cause to be executed and filed any financing statement (and
any continuation statement with respect to such financing statement) or any
similar instrument or document relating to the security interest or the
assignment created by this Indenture or granted by the Owner Lessor herein as
may be necessary to protect and preserve the security interest or assignment
created by or granted pursuant to this Indenture, to the extent otherwise
entitled to do so and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in this
Section 5.3 shall be deemed to expand the instances in which the Owner Lessor
is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and

                                       49
<PAGE>
Section 4.3 hereof or this Section 5, the Indenture Estate, for any fee as
compensation for its services hereunder.

     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with any part of the Indenture
Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the terms of the Facility Lease, to the extent applicable to the Indenture
Trustee as assignee of the Owner Lessor, (b) in accordance with the powers
granted to, or the authority conferred upon, the Indenture Trustee pursuant to
this Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor.  Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

         (a)  The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of

                                       51
<PAGE>
the Indenture Estate, the Owner Lessor shall retain the right to the exclusion
of the Indenture Trustee to exercise the rights of the Owner Lessor under, and
to determine compliance by the Facility Lessee with, the provisions of Sections
10 (other than Section 10.3 thereof), 13, 14 and 15 of the Facility Lease;
provided, however, that if a Lease Indenture Event of Default shall have
occurred and be continuing, the Owner Lessor shall cease to retain such rights
upon notice from the Indenture Trustee stating that such rights shall no longer
be retained by the Owner Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the Facility Lessee under the
Operative Documents relating to the protection, insurance, maintenance,
possession, use and return of the Property Interest, the performance by the
Facility Lessee of the Owner Lessor's obligations under the FILOT Lease and the
exercise of any renewal or extension rights with respect to the FILOT Lease and
to make the determinations and

                                       52
<PAGE>
take the actions contemplated by Section 14 of the Participation Agreement
(subject to the satisfaction of the conditions set forth in Section 14 of the
Participation Agreement) including, without limitation, the Owner Lessor's
right to direct that title to the Land (to the extent of the Owner Lessor's
Percentage Interest) be conferred from the County to the Facility Lessee; and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by

                                       53
<PAGE>
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and powers
herein granted. Upon the reasonable instructions (which instructions shall be
accompanied by the form of document to be filed) at any time and from time to
time of the Facility Lessee or the Indenture Trustee, the Owner Lessor shall
execute and file any financing statement (and any continuation statement with
respect to any such financing statement), and any other document relating to the
security interest and assignment created by this Indenture as may be specified
in such instructions. In addition, the Indenture Trustee and the Owner Lessor
will execute such continuation statements with respect to financing statements
and other documents relating to the Lien created by this Indenture in the
Indenture Estate as may be specified from time to time in written instructions
of any Noteholder (which instructions may, by their terms, be operative only at
a future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the

                                       54
<PAGE>
Indenture Trustee shall not be liable for any action or inaction of the Owner
Trust; provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall
     not be liable except for the performance of such duties and obligations as
     are specifically set forth in the Operative Documents, no implied
     covenants or obligations shall be read into the Operative Documents
     against the Indenture Trustee and, in the absence of bad faith on the part
     of the Indenture Trustee, the Indenture Trustee may conclusively rely, as
     to the truth of the statements and the correctness of the opinions
     expressed therein, upon any notes or opinions furnished to the Indenture
     Trustee and conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the
     Indenture Trustee, or exercising or omitting to exercise any trust or
     power conferred upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
     its own funds or otherwise incur financial liability for the performance
     of any of its duties

                                       55
<PAGE>
     hereunder or the exercise of any of its rights or powers if there is
     reasonable ground for believing that the repayment of such funds or
     adequate indemnity against such risk or liability is not reasonably assured
     to it, and none of the provisions contained in this Indenture shall in any
     event require the Indenture Trustee to perform, or be responsible for the
     manner of performance of, any of the obligations of the Owner Lessor, under
     this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Section 5.2 hereof and except as provided in
Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty (a) to see
to any registration, recording or filing of any Operative Document (or any
financing or continuation statements in respect thereto) or to see to the
maintenance of any such registration, recording or filing, (b) to see to any
insurance on the Facilities or the Facilities or to effect or maintain any such
insurance, (c) except as otherwise provided in Section 5.5 hereof or in Section
10 of the Participation Agreement, to see to the payment or discharge of any
Tax or any Lien of any kind owing with respect to, or assessed or levied
against, any part of the Indenture Estate, (d) to confirm or verify the
contents of any report, notice, request, demand, certificate, financial
statement or other instrument of the Facility Lessee, (e) to inspect the
Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents unless the Indenture Trustee shall reasonably believe
that each such Noteholder, the Owner Lessor and the Owner Participant shall
have received copies thereof.

                                       56
<PAGE>
     Section 6.3.   Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL BE
DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

                                       57
<PAGE>
     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of competence, of any such Person, so long
as the Indenture Trustee shall have exercised reasonable care in selecting such
Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

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     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)  Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If a
successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)  Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee or
Account Bank hereunder in the trusts hereunder applicable to it with like
effect as if originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture

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<PAGE>
Trustee or Account Bank shall duly assign, transfer deliver and pay over to
such successor Indenture Trustee all moneys or other property then held by such
predecessor Indenture Trustee or Account Bank hereunder. To the extent required
by Applicable Law or upon request of the successor Indenture Trustee or Account
Bank, the Owner Lessor shall execute any and all documents confirming the
vesting of such estates, properties, rights and powers in the successor
Indenture Trustee or Account Bank.

     (c)  Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)  Appointment of Account Bank. The Indenture Trustee and each Noteholder
hereby irrevocably designate and appoint State Street Trust Bank and Trust
Company of Connecticut, National Association as the Account Bank under this
Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)  Merger, etc. Any Person into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Indenture Trustee shall be
a party, or any Person to which substantially all the corporate trust business
of the Indenture Trustee

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<PAGE>
may be transferred, shall, subject to the terms of subsection (c) of this
Section 7.1, be the Indenture Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request
so to do; provided, however, that the Indenture Trustee shall exercise due care
in selecting any additional or separate trustee if such additional or separate
trustee shall not be a Person possessing trust powers under Applicable Law. If
at any time the Indenture Trustee shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be advised
by such counsel that it is no longer so necessary or prudent in the interest of
the Noteholders or in the event that the Indenture Trustee shall have been
requested to do so in writing by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver all instruments and agreements
necessary or proper to remove any additional trustee or separate trustee. In
such connection, the Indenture Trustee may act on behalf of the Owner Lessor to
the same extent as is provided above. Notwithstanding anything contained to the
contrary

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<PAGE>
in this Section 7.2(a), to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly or
through a separate trustee under the direction and control of the Indenture
Trustee, the Owner Lessor, at the instruction of the Indenture Trustee, shall
appoint a separate trustee for such jurisdiction, which separate trustee shall
have full power and authority to take all action hereunder as to matters
relating to such jurisdiction without the consent of the Indenture Trustee, but
not subject to the same limitations in any exercise of his power and authority
as those to which the Indenture Trustee is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)  Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.

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<PAGE>
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                              AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

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<PAGE>
     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions of
Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any other
Operative Document (a) to evidence the succession of another Person as a Lessor
Manager or the appointment of a co-manager in accordance with the terms of the
LLC Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant to
the provisions of Section 7 hereof and to define the rights, powers, duties and
obligations conferred upon any such separate trustee or trustees or co-trustee
or co-trustees, (b) to correct, confirm or amplify the description of any
property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner that
will not in the judgment of the Indenture Trustee materially adversely affect
the interests of the Noteholders, (e) to grant or confer upon the Indenture
Trustee for the benefit of the Noteholders any additional rights, remedies,
powers, authority or security which may be lawfully granted or conferred and
which are not contrary or inconsistent with this Indenture, (f) to add to the
covenants or agreements to be observed by the Facility Lessee or the Owner
Lessor and which are not contrary to this Indenture, to add Indenture Events of
Defaults for the benefit of Noteholders or surrender any right or power of the
Owner Lessor, provided it has consented thereto, (g) to effect the assumption of
all or, to the extent otherwise provided hereunder, part of the Lessor Notes by
the Facility Lessee, provided that the supplemental indenture will contain all
of the covenants applicable to the Facility Lessee contained in the Facility
Lease and the Participation Agreement for the benefit of the Indenture Trustees
or the holders of such Lessor Notes, such that the Facility Lessee's obligations
contained therein, if applicable in the event that the Facility Lease are
terminated, will continue to be in full force and effect, (h) to comply with
requirements of the SEC, any applicable law, rules or regulations of any
exchange or quotation system on which the Certificates are listed, or any
regulatory body, (i) to modify, eliminate or add to the provisions of any
Operative Documents to such extent as shall be necessary to qualify or continue
the qualification of this Lease Indenture or the Pass Through Trust Agreements
(including any supplements thereto) under the Trust Indenture Act, or similar
federal statute enacted

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<PAGE>
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

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<PAGE>
     (a)  Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i)   Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person
     be released from the Lien of this Lease Indenture and the Indenture
     Trustee shall, upon the written request of the Owner Lessor or the
     Facility Lessee, execute and deliver to, and as directed in writing by,
     the Facility Lessee or the Owner Lessor an appropriate instrument (in due
     form for recording) releasing the replaced Component from the Lien of this
     Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and deliver
     to, or as directed in writing by, the Facility Lessee or the Owner Lessor
     an appropriate instrument (in due form for recording) releasing the
     Indenture Estate from the Lien of this Indenture; provided that all sums
     secured by this Indenture have been paid to the Persons entitled to such
     sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

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<PAGE>
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility Lessee
(with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and any
successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for the
sole and exclusive benefit of the parties hereto, the Owner Participant, the
Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

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<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071

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<PAGE>
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          Broad River Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under

                                       69
<PAGE>
no circumstances shall Wells Fargo, be personally liable for the payment of any
indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall be
in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of South Carolina. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

                                       70
<PAGE>
     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present

                                       71
<PAGE>
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Lessor Notes, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Noteholders and to pay to the Noteholders from amounts received
by Paying Agent pursuant hereto such additional amounts so that the net amount
actually received by the Noteholders, after reduction for such withheld
amounts, shall be equal to the full amount of principal, Make-Whole Amount,
interest and other amounts otherwise due and payable hereunder; provided,
however, that, notwithstanding the foregoing, the Paying Agent shall be
required to pay such additional amounts only if and to the extent that (a) the
Facility Lessee is required to indemnify the Noteholders for such amounts under
Section 9 of the Participation Agreement and (b) the Facility Lessee has not
paid such amounts within three (3) days after notice of nonpayment, (ii) that
it will file any necessary withholding tax returns or statements when due, and
(iii) that, as promptly as possible after the payment thereof, it will deliver
to each Noteholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Noteholders may
reasonably request from time to time. The Indenture Trustee agrees to file any
other information as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is

                                       72
<PAGE>
caused by the Indenture Trustee's violation of the Code and only to the extent
such liability is caused by the Indenture Trustee's failure to act in
accordance with its standard of care under this Lease Indenture.

     Section 9.15.   Fixture Financing Statement.  This Indenture also is
intended to serve as a fixture financing statement under the South Carolina
Uniform Commercial Codes. In connection therewith, the following information is
provided:

     (a)  Name and address of Debtor:

          Broad River OL-2, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     (b)  Name and Address of Secured Party (from which  information  concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded in the real estate records
of the Office of the Cherokee County Clerk of Court.

     (e)  Type of Filing: This is a commercial filing under Section 36-9-402 of
the Code of Laws of South Carolina, 1976 (as amended).


                  (Remainder of Page Intentionally Left Blank)

                                       73
<PAGE>
     Section 9.16.   Waiver of Appraisal Rights. The laws of South Carolina
provide that in any real estate foreclosure proceeding a defendant against whom
a personal judgment is taken or asked may within thirty days after the sale of
the mortgaged property apply to the court for an order or appraisal. The
statutory appraisal value as approved by the court would be substituted for the
high bid and may decrease the amount of any deficiency owing in connection with
the transaction. THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY
APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED
PROPERTY.

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                                        BROAD RIVER OL-2, LLC

                                        By:   Wells  Fargo Bank  Northwest,
                                              National Association, not in its
                                              individual capacity but solely as
                                              the Lessor Manager


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness


                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CONNECTICUT, NATIONAL ASSOCIATION,
                                        as Indenture Trustee and Account Bank


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________ personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.



                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________ personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.



                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

All that certain piece, parcel, or lot of land situate, lying and being in
Cherokee County, South Carolina, and being shown and designated as 60.35 acres
on a survey dated July 21, 2001, revised September 18, 2001 prepared by
Professional Surveying Services for Broad River Energy, LLC and, according to
said survey, having the following metes and bounds:

Commencing at an existing PK nail in the center of the intersection of Old Ford
Road (SC Highway S-11-50) and Victory Trail (US Highway 329), thence proceeding
North 23-25-35 West 869.86' to an existing iron pin being a common corner of the
subject property, the right of way of Victory Trail and property of George and
Sheri McAbee and being the point of beginning, thence South 48-08-18 West for a
distance of 175.29' to a new iron pin; thence North 71-14-56 West for a distance
of 154.21' to a new iron pin; thence North 71-14-56 West for a distance of
649.72' to a new iron pin; thence South 65-27-23 West for a distance of 427.49'
to a new iron located on the northeastern right of way of Old Ford Road (SC
Highway S-11-50), thence from said point of beginning North 60-16-19 West for a
distance of 92.28' to a point; thence North 56-10-13 West for a distance of
88.18' to a point; thence North 55-42-37 West for a distance of 82.30' to a
point; thence North 53-16-26 West for a distance of 71.52' to a point; thence
North 52-27-22 West for a distance of 82.98' to a point; thence North 52-41-28
West for a distance of 75.44' to a point; thence North 54-42-28 West for a
distance of 65.08' to a point; thence North 57-40-37 West for a distance of
58.84' to a point; thence North 60-36-21 West for a distance of 63.75' to a
point; thence North 64-06-03 West for a distance of 40.07' to a point; thence
North 64-06-03 West for a distance of 45.30' to a point; thence North 67-35-54
West for a distance of 73.25' to a point; thence North 71-21-36 West for a
distance of 31.41' to a point; thence North 71-21-36 West for a distance of
41.47' to a point; thence North 74-35-41 West for a distance of 62.79' to a
point; thence North 77-23-54 West for a distance of 45.86' to a point thence
North 79-42-10 West for a distance of 51.62' to a point; thence North 81-57-05
West for a distance of 51.46' to a point; thence North 82-49-05 West for a
distance of 59.21' to a new iron pin; thence North 35-23-20 East for a distance
of 1,164.01' to a new iron, thence North 35-23-20 East for a distance of 457.09'
to an existing iron pin; thence North 33-29-01 East for a distance of 473.49' to
a large 2" iron; thence North 20-04-41 West for distance of 263.22' to a large
2" iron; thence North 11-22-57 West for a distance of 131.31' to a large 2"
iron; thence North 10-02-03 East for a distance of 166.70' to a new iron located
on the southwestern
<PAGE>
right of way of Victory Trail (US Highway 329); thence continuing along the
southwestern right of way of Victory Trail (US Highway 329) the following
courses and distances: (1) South 20-59-24 East for a distance of 447.48' to a
point; (2) South 13-42-40 East for a distance of 203.64' to a point; (3) South
22-57-44 East for a distance of 151.22' to a point; (4) South 36-23-09 East for
a distance of 155.06' to a point; (5) South 22-58-12 East for a distance of
346.94' to a point; (6) South 16-30-28 East for a distance of 104.58' to a
point; (7) South 23-55-06 East for a distance of 300.17' to a point; (8) South
24-54-19 East for a distance of 200.00" to a point; (9) South 11-46-16 East for
a distance of 308-06' to a point; (10) South 30-36-57 East for a distance of
150.75' to a point; (11) South 48-23-58 East for a distance of 163.56' to a
point; (12) South 24-50-48 East for a distance of 200.00' to a point; (13)
South 30-36-57 East for a distance of 100.50' to a point; and (14) South
24-57-12 East for a distance of 195.32' to an existing iron pin, being the
point of beginning.

Being the same property conveyed to Cherokee County, South Carolina by deed of
Broad River Energy LLC, dated March 1, 2000 and recorded in the Office of the
Clerk of Court for Cherokee County on March 7, 2000 in Deed Book 71 at Page 195.

                                      A-1-2
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                  FORM OF BROAD RIVER LESSOR NOTE SERIES [A][B]

                              BROAD RIVER OL-2, LLC
                NONRECOURSE PROMISSORY NOTE (BROAD RIVER) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012] [2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                  Issued at: New York, New York

                                                   Issue Date: October __, 2001

$[_____]

     BROAD RIVER OL-2, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019] together with
interest at the rate of [ ]% per annum on the principal remaining unpaid from
time to time from and including the Issue Date until paid in full. Interest on
the outstanding principal amount under this Note shall be due and payable in
arrears semiannually at the rate specified above, commencing on May 30, 2002,
and on each May 30 and November 30 thereafter until the principal of this Note
is paid in full or made available for payment. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set

                                      B-1-1
<PAGE>
forth on Schedule I multiplied by the percentage set forth on Schedule I under
the column headed "Percentage of Principal Amount Payable" for such date unless
the Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                      B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                      B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

                                      B-1-4
<PAGE>
     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    BROAD RIVER OL-2, LLC
                                    a Delaware limited liability company,



                                    By:  Wells Fargo Bank Northwest, National
                                         Association, not in its individual
                                         capacity but solely as the Lessor
                                         Manager


                                    By: _______________________________________
                                         Name:
                                         Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                    STATE STREET BANK AND TRUST
                                    COMPANY OF CONNECTICUT,
                                    NATIONAL ASSOCIATION,
                                    not in its individual capacity, but solely
                                    as the Indenture Trustee



                                    ___________________________________________
                                    Name:
                                    Title:
<PAGE>
                             FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto


Insert Taxpayer Identification No.


__________________________________


________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)


________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing


________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.


Date: ________________              ____________________________________________
                                    (Signature of Transferor)


                                    NOTE: The signature to this assignment must
                                    correspond with the name as written upon the
                                    face of the within-mentioned instrument in
                                    every particular, without alteration or any
                                    change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         PRINCIPAL PORTION: $25,175,000

<TABLE>
<CAPTION>
                                                                                           Percentage of Principal
                                                                                           -----------------------
Regular Distribution Date                                                                           Amount Payable
-------------------------                                                                           --------------
<S>                                                                                        <C>
May 30, 2002..........................................................................                 0.00000000%
November 30, 2002.....................................................................                 0.00000000%
May 30, 2003..........................................................................                 0.00000000%
November 30, 2003.....................................................................                10.32770606%
May 30, 2004..........................................................................                12.21449851%
November 30, 2004.....................................................................                 5.26315789%
May 30, 2005..........................................................................                 5.36246276%
November 30, 2005.....................................................................                 5.56107249%
May 30, 2006..........................................................................                 6.45481629%
November 30, 2006.....................................................................                 6.85203575%
May 30, 2007..........................................................................                 7.54716981%
November 30, 2007.....................................................................                 8.04369414%
May 30, 2008..........................................................................                 8.83813307%
November 30, 2008.....................................................................                 9.33465740%
May 30, 2009..........................................................................                10.02979146%
November 30, 2009.....................................................................                 4.17080437%
                                                                                                      -------------

Total.................................................................................                100.00000000%
                                                                                                      =============
</TABLE>
<PAGE>
                             Series B Lessor Notes.


                         PRINCIPAL PORTION: $37,875,000


<TABLE>
<CAPTION>
                                                                                            Percentage of Principal
                                                                                            -----------------------
Regular Distribution Date                                                                            Amount Payable
-------------------------                                                                            --------------
<S>                                                                                         <C>
May 30, 2002............................................................................                0.00000000%
November 30, 2002.......................................................................                0.00000000%
May 30, 2003............................................................................                0.00000000%
November 30, 2003.......................................................................                0.00000000%
May 30, 2004............................................................................                0.00000000%
November 30, 2004.......................................................................                0.00000000%
May 30, 2005............................................................................                0.00000000%
November 30, 2005.......................................................................                0.00000000%
May 30, 2006............................................................................                0.00000000%
November 30, 2006.......................................................................                0.00000000%
May 30, 2007............................................................................                0.00000000%
November 30, 2007.......................................................................                0.00000000%
May 30, 2008............................................................................                0.00000000%
November 30, 2008.......................................................................                0.00000000%
May 30, 2009............................................................................                0.00000000%
November 30, 2009.......................................................................                0.00000000%
May 30, 2010............................................................................                0.00000000%
November 30, 2010.......................................................................                0.00000000%
May 30, 2011............................................................................                0.00000000%
November 30, 2011.......................................................................                0.00000000%
May 30, 2012............................................................................                0.00000000%
November 30, 2012.......................................................................                0.00000000%
May 30, 2013............................................................................                0.00000000%
November 30, 2013.......................................................................                0.00000000%
May 30, 2014............................................................................                0.00000000%
November 30, 2014.......................................................................                0.00000000%
May 30, 2015............................................................................                0.00000000%
November 30, 2015.......................................................................                0.00000000%
May 30, 2016............................................................................                0.00000000%
November 30, 2016.......................................................................                0.00000000%
May 30, 2017............................................................................                0.00000000%
November 30, 2017.......................................................................                0.00000000%
May 30, 2018............................................................................                0.00000000%
November 30, 2018.......................................................................                0.00000000%
May 30, 2019............................................................................              100.00000000%
                                                                                                      -------------

Total...................................................................................              100.00000000%
                                                                                                      =============
</TABLE>

                                     B-1-10
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION


     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                        _______________________________________
                                        not in its individual capacity but
                                        solely as the Indenture Trustee



                                        By:____________________________________
                                           Name:
                                           Title:

                                       C-2
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE




                           DESCRIPTION OF THE FACILITY


     That certain approximately 850 megawatt net nameplate capacity generating
facility, (known also as the "Broad River Facility") together with all
structures or improvements, all alterations thereto or replacements thereof,
and all other fixtures, attachments, appliances, equipment, machinery and other
articles (including, but not limited to, the property set forth below (the
"Included Property")), in each case located on the land, or the easements
appurtenant to the land, consisting of approximately sixty acres located
approximately one mile south of U.S. Highway 29 and three miles east of the
city of Gaffney in Cherokee County, South Carolina, such land described more
particularly on Exhibit A.

Included Property

     1.  Five Combustion Turbines - General Electric, Model MS7001FA; Serial #
         297329, Serial # 297330, Serial # 297331, Serial # 297620, Serial #
         297405.

     2.  Five CT Generators - General Electric, Model 7FH2, 18kV, Serial #
         337X800, Serial # 337X801, Serial # 337X802, Serial # 337X811, Serial
         # 337X812.

     3.  Three Innovative Steam Technologies Once through Steam Generators
         (OTSGs); Serial # C00037-2, Serial # C00037-1, Serial # C00037-0.

     4.  Five Combustion Turbine Step-up Transformers (GSU) - Prolec, Serial #
         G574-01, Serial # G574-02, Serial # G574-03, Serial # G574-04, Serial
         # G574-05 and other interconnection equipment associated with the
         Broad River Facility.

                                     D-1-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

Initial Aggregate Principal Amount:         $25,175,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:

<TABLE>
<CAPTION>
                                                                                  Percentage of Principal
                                                                                  -----------------------
Regular Distribution Date                                                                  Amount Payable
-------------------------                                                                  --------------
<S>                                                                               <C>
May 30, 2002..................................................................                0.00000000%
November 30, 2002.............................................................                0.00000000%
May 30, 2003..................................................................                0.00000000%
November 30, 2003.............................................................               10.32770606%
May 30, 2004..................................................................               12.21449851%
November 30, 2004.............................................................                5.26315789%
May 30, 2005..................................................................                5.36246276%
November 30, 2005.............................................................                5.56107249%
May 30, 2006..................................................................                6.45481629%
November 30, 2006.............................................................                6.85203575%
May 30, 2007..................................................................                7.54716981%
November 30, 2007.............................................................                8.04369414%
May 30, 2008..................................................................                8.83813307%
November 30, 2008.............................................................                9.33465740%
May 30, 2009..................................................................               10.02979146%
November 30, 2009.............................................................                4.17080437%
                                                                                              -----------

Total.........................................................................               100.00000000%
                                                                                             =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                              SERIES B LESSOR NOTE


<TABLE>
<S>                                         <C>
Initial Aggregate Principal Amount:         $37,875,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                                           Percentage of Principal
                                                                                           -----------------------
Regular Distribution Date                                                                           Amount Payable
-------------------------                                                                           --------------
<S>                                                                                        <C>
May 30, 2002............................................................................               0.00000000%
November 30, 2002.......................................................................               0.00000000%
May 30, 2003............................................................................               0.00000000%
November 30, 2003.......................................................................               0.00000000%
May 30, 2004............................................................................               0.00000000%
November 30, 2004.......................................................................               0.00000000%
May 30, 2005............................................................................               0.00000000%
November 30, 2005.......................................................................               0.00000000%
May 30, 2006............................................................................               0.00000000%
November 30, 2006.......................................................................               0.00000000%
May 30, 2007............................................................................               0.00000000%
November 30, 2007.......................................................................               0.00000000%
May 30, 2008............................................................................               0.00000000%
November 30, 2008.......................................................................               0.00000000%
May 30, 2009............................................................................               0.00000000%
November 30, 2009.......................................................................               0.00000000%
May 30, 2010............................................................................               0.00000000%
November 30, 2010.......................................................................               0.00000000%
May 30, 2011............................................................................               0.00000000%
November 30, 2011.......................................................................               0.00000000%
May 30, 2012............................................................................               0.00000000%
November 30, 2012.......................................................................               0.00000000%
May 30, 2013............................................................................               0.00000000%
November 30, 2013.......................................................................               0.00000000%
May 30, 2014............................................................................               0.00000000%
November 30, 2014.......................................................................               0.00000000%
May 30, 2015............................................................................               0.00000000%
November 30, 2015.......................................................................               0.00000000%
May 30, 2016............................................................................               0.00000000%
November 30, 2016.......................................................................               0.00000000%
May 30, 2017............................................................................               0.00000000%
November 30, 2017.......................................................................               0.00000000%
May 30, 2018............................................................................               0.00000000%
November 30, 2018.......................................................................               0.00000000%
May 30, 2019............................................................................             100.00000000%
                                                                                                     -------------

Total...................................................................................             100.00000000%
                                                                                                     =============
</TABLE>

                                  SCHEDULE 1-2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.21
<SEQUENCE>24
<FILENAME>f80168ex4-22_21.txt
<DESCRIPTION>EXHIBIT 4.22.21
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.21


WHEN RECORDED, RETURN TO:

SARAH M. WARD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK  10036
================================================================================
                          INDENTURE OF TRUST, MORTGAGE,
                      SECURITY AGREEMENT AND FIXTURE FILING


                           Dated as of October 18, 2001


                                     between


                             BROAD RIVER OL-3, LLC,
                                  as Mortgagor


                                       and


                           STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                as Indenture Trustee, Mortgagee and Account Bank


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

                              BROAD RIVER FACILITY


================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  Page
<S>                                                                                               <C>
SECTION 1.   DEFINITIONS. ..................................................................         8

SECTION 2.   THE LESSOR NOTES...............................................................        10
     Section 2.1.   Limitation on Lessor Notes..............................................        10
     Section 2.2.   Initial Lessor Notes....................................................        10
     Section 2.3.   Execution and Authentication of Lessor Notes............................        10
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes..........................        11
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of the Owner
                    Lessor, the Owner Participant or the Indenture Trustee..................        12
     Section 2.6.   Method of Payment.......................................................        13
     Section 2.7.   Application of Payments.................................................        14
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.....................        14
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.......................        15
     Section 2.10.  Redemptions; Assumption.................................................        16
     Section 2.11.  Payment of Expenses on Transfer.........................................        21
     Section 2.12.  Additional Lessor Notes.................................................        21
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities Laws; Legend.        24
     Section 2.14.  Security for and Parity of Lessor Notes.................................        25
     Section 2.15.  Acceptance of the Indenture Trustee.....................................        25

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE..........        25
     Section 3.1.   Distribution of Periodic Rent...........................................        25
     Section 3.2.   Payments Following Event of Loss or Other Early Termination.............        27
     Section 3.3.   Payments After Lease Indenture Event of Default.........................        28
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee............        29
     Section 3.5.   Application of Certain Other Payments...................................        30
     Section 3.6.   Other Payments..........................................................        30
     Section 3.7.   Excepted Payments.......................................................        31
     Section 3.8.   Distributions to the Owner Lessor.......................................        31
     Section 3.9.   Payments Under Assigned Documents.......................................        31
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee...............        31
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                               <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE.............        35
     Section 4.1.   Covenants of Owner Lessor...............................................        35
     Section 4.2.   Lease Indenture Events of Default.......................................        36
     Section 4.3.   Remedies of the Indenture Trustee.......................................        38
     Section 4.4.   Right to Cure Certain Lease Events of Default...........................        40
     Section 4.5.   Rescission of Acceleration..............................................        43
     Section 4.6.   Return of Indenture Estate, Etc.........................................        44
     Section 4.7.   Power of Sale and Other Remedies........................................        45
     Section 4.8.   Appointment of Receiver.................................................        46
     Section 4.9.   Remedies Cumulative.....................................................        46
     Section 4.10.  Waiver of Various Rights by the Owner Lessor............................        46
     Section 4.11.  Discontinuance of Proceedings...........................................        47
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the Facility
                    Lease...................................................................        47
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc................        47
     Section 4.14.  Further Assurances......................................................        48
     Section 4.15.  Waiver of Past Defaults.................................................        48

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR.........        48
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default..................        48
     Section 5.2.   Actions Upon Instructions Generally.....................................        48
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of Facility Lease....        49
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification..................        49
     Section 5.5.   No Duties Except as Specified; No Action Except Under Facility Lease,
                    Indenture or Instructions...............................................        50
     Section 5.6.   Certain Rights of the Owner Lessor......................................        50
     Section 5.7.   Restrictions on Dealing with Indenture Estate...........................        53
     Section 5.8.   Filing of Financing Statements and Continuation Statements..............        53

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR.............................................        54
     Section 6.1.   Acceptance of Trusts and Duties.........................................        54
     Section 6.2.   Absence of Certain Duties...............................................        56
     Section 6.3.   Representations and Warranties..........................................        57
     Section 6.4.   No Segregation of Moneys; No Interest...................................        57
     Section 6.5.   Reliance; Agents; Advice of Experts.....................................        58
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                               <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES.............................        59
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment of
                    Successor...............................................................        59
     Section 7.2.   Appointment of Additional and Separate Trustees.........................        61

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS...............        63
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent; Conditions and
                    Limitations.............................................................        63
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent............        64
     Section 8.3.   Conditions to Action by the Indenture Trustee...........................        65

SECTION 9.   MISCELLANEOUS..................................................................        66
     Section 9.1.   Surrender, Defeasance and Release.......................................        66
     Section 9.2.   Conveyances Pursuant to the Site Lease..................................        67
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further Assurances....        67
     Section 9.4.   Indenture for Benefit of Certain Persons Only...........................        67
     Section 9.5.   Notices; Furnishing Documents, etc......................................        68
     Section 9.6.   Severability............................................................        70
     Section 9.7.   Limitation of Liability.................................................        70
     Section 9.8.   Written Changes Only....................................................        70
     Section 9.9.   Counterparts............................................................        70
     Section 9.10.  Successors and Permitted Assigns........................................        70
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate............        71
     Section 9.14.  Withholding Taxes: Information Reporting................................        72
     Section 9.15.  Fixture Financing Statement.............................................        73
</TABLE>

EXHIBITS

<TABLE>
<S>                  <C>
Exhibit A            Description of Facility Site
Exhibit B            Form of Lessor Note
Exhibit C            Form of Certificate of Authentication
Exhibit D            Description of the Facility
</TABLE>

APPENDIX A Definitions

                          INDENTURE OF TRUST, MORTGAGE,

                                       iii
<PAGE>
                      SECURITY AGREEMENT AND FIXTURE FILING

     This INDENTURE OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
(as amended, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this "Indenture"), dated as of October 18, 2001,
between BROAD RIVER OL-3, LLC, having an address set forth in Section 9.5
hereof, a Delaware limited liability company created for the benefit of the
Owner Participant referred to below, as mortgagor (the "Owner Lessor") and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
having an address set forth in Section 9.5 hereof, as mortgagee on behalf of
the Noteholders (the "Indenture Trustee") and as the Account Bank.

                                  WITNESSETH:

     WHEREAS, Broad River Energy, LLC (the "Facility Lessee") is the lessee
under that certain Lease Agreement (the "FILOT Lease") by and between itself
and Cherokee County, South Carolina, a body politic and corporate and a
political subdivision of the State of South Carolina, as landlord (the
"County") in connection with the Facility and the Facility Site (each as
hereinafter defined), a memorandum of which FILOT Lease was recorded in the
office of the Cherokee County Clerk of Court in Book 71, page 200;

     WHEREAS, the Facility Lessee has assigned the Undivided Interest and the
Ground Interest to the Owner Lessor pursuant to that certain Assignment
Agreement, a memorandum of which shall be recorded with this Indenture in the
Office of the Cherokee County Clerk of Court;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has subleased from the
Owner Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Facility Site Lease"),
with the Facility Lessee pursuant to which the Facility Lessee has subleased
the Ground Interest from the Owner Lessor for a term of years;

                                       2
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assigned to the Owner Lessor by the Facility Lessee and (ii) grant to
the Indenture Trustee the security interests herein provided;

     WHEREAS, this Indenture is regarded as a mortgage under the laws of the
State of South Carolina as a security agreement under the Uniform Commercial
Codes of the States of New York, Delaware and South Carolina, and as a fixture
filing under the laws of the State of South Carolina;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, the latest stated maturity date of the Initial Lessor Notes is
May 30, 2019;

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and

                                       3
<PAGE>
accrued, deferred or capitalized interest on the Lessor Notes and of all
other amounts owing with respect to all Lessor Notes from time to time
outstanding hereunder, and the prompt payment when and as due of any and all
other amounts from time to time owing in respect of the Secured Indebtedness
and (ii) the performance and observance by the Owner Lessor for the benefit of
the holders of the Lessor Notes and the Indenture Trustee of all other
obligations, agreements, and covenants of the Owner Lessor set forth
hereinafter and in the Lessor Notes, the Operative Documents and the other
documents, certificates and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, mortgages, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee and
its successors and permitted assigns, for the benefit of the holders of the
Lessor Notes from time to time, a first priority security interest in and
mortgage lien on all estate, right, title and interest of the Owner Lessor in,
to and under the following described property, rights, interests and
privileges, whether now held or hereafter acquired (which collectively,
including all property hereafter specifically subjected to the security
interest created by this Indenture by any supplement hereto, exclusive of
Excepted Payments) are included within, and are hereafter referred to as, the
"Indenture Estate"):

     (1)  the Undivided Interest (including the Facility Purchase Option), the
Owner Lessor's interest in any Components; the Owner Lessor's interest in any
Improvements; the Ground Interest (including the Land Purchase Option); the
Facility Lease and all payments of any kind by the Facility Lessee thereunder
(including Rent); any rights of the Owner Lessor as assignee of the Facility
Lessee under the Facility Lease; the Facility Site Lease and all payments of
any kind by the Facility Lessee thereunder; the Assignment Agreement (and all
rights with respect to the FILOT Lease conveyed thereby); the Owner Lessor's
interest in all tangible property located on or at or attached to the Facility
Site as to which an interest in such tangible property arises under applicable
real estate law ("fixtures"); the Calpine Guaranty, the Ownership and Operation
Agreement and all and any interest in any property now or hereafter granted to
the Owner Lessor pursuant to any provision of the Facility Lease or the FILOT
Lease (including, without limitation, the option to purchase set forth in
Section 10.02 of the FILOT Lease); the FILOT Lease, and each other Operative
Document to which the Owner Lessor is a party other than the Tax Indemnity
Agreement, the Tri-Party Agreement and the LLC Agreement (the Undivided
Interest, the Owner Lessor's interest in any Components, the Owner Lessor's
interest in any fixtures, Improvements and the Ground Interest are collectively
referred to as the "Property Interest" and the documents specifically referred
to above in this paragraph (1) are collectively referred to as the

                                       4
<PAGE>
"Assigned Documents"), including, without limitation, (x) all rights of the
Owner Lessor to receive any payments or other amounts or, subject to Section
5.6 hereof, to exercise any election or option or to make any decision or
determination or to give or receive any notice, consent, waiver or approval or
to make any demand or to take any other action under or in respect of any such
document, to accept surrender or redelivery of the Property Interest or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Lessor, whether acting under any such document or by statute or at law or
in equity or otherwise, arising out of any Lease Default or Lease Event of
Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or any
part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the

                                       5
<PAGE>
extent of the Owner Lessor's interest therein) of all insurance maintained
pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located, including, without
limitation, that which may be acquired pursuant to the option to purchase in
Section 10.02 of the FILOT Lease; and

     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the

                                       6
<PAGE>
Facility Lease (other than Excepted Payments) directly to the Indenture Trustee
at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Indenture. Further, the Owner Lessor agrees
that promptly on receipt thereof, it will transfer to the Indenture Trustee any
and all moneys from time to time received by it constituting part of the
Indenture Estate, whether or not expressly referred to in the immediately
preceding sentence, for distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
South Carolina.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall the Indenture Trustee or the Noteholders
be required or obligated in any manner, except as herein expressly provided, to
perform or fulfill any obligation of the Owner Lessor under or pursuant to any
such Assigned Document or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim, or to take any action to
collect or enforce the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.

                                       7
<PAGE>
     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under (other than (x) the exercise of the
purchase option pursuant to the FILOT Lease and the right to make the
determinations and take the actions contemplated by Section 14 of the
Participation Agreement (subject to the satisfaction of the conditions set
forth in Section 14 of the Participation Agreement) including, without
limitation, the Owner Lessor's right to direct that title to the Land (to the
extent of the Owner Lessor's Percentage Interest) be conferred from the County
to the Facility Lessee and (y) any action pursuant to Section 5.20 of the
Participation Agreement (subject to the conditions set forth in Section 5.20 of
the Participation Agreement)), the terms of any of the Assigned Documents or
revoke or terminate any of the Assigned Documents, (ii) settle or compromise
any claim arising under any of the Assigned Documents, or (iii) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder
(other than (x) the exercise of the purchase option pursuant to the FILOT Lease
and the right to make the determinations and take the actions contemplated by
Section 14 of the Participation Agreement (subject to the satisfaction of the
conditions set forth in Section 14 of the Participation Agreement) including,
without limitation, the Owner Lessor's right to direct that title to the Land
(to the extent of the Owner Lessor's Percentage Interest) be conferred from the
County to the Facility Lessee and (y) any action pursuant to Section 5.20 of
the Participation Agreement (subject to the conditions set forth in Section
5.20 of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     In the event Owner Lessor acquires the fee simple title or any other
greater estate or interest in the Facility and/or the Facility Site (including,
without limitation, pursuant

                                       8
<PAGE>
to the option to purchase as set forth in Section 10.02 of the FILOT Lease),
such acquisition will merge with the leasehold estate created by the FILOT
Lease, and such other title, estate or interest shall immediately and
automatically become subject to the lien hereof and such title, estate or
interest shall be part of the Indenture Estate and included within the term and
definition of "Property Interest." The Owner Lessor shall execute, acknowledge
and deliver any instruments requested by the Indenture Trustee to confirm the
coverage of the lien hereof upon such other greater estate or interest. The
Owner Lessor shall pay any and all conveyance or mortgage taxes, and filing or
similar fees in connection with the execution, delivery, filing or recording of
any such instrument.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes from time to time
outstanding and to protect the security of this Indenture, and the Indenture
Trustee agrees to accept the trusts and duties hereinafter set forth, as
follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 850 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Gaffney, South Carolina and more fully
described in Exhibit D to this Indenture. The Facility does not include the
Facility Site.

                                       9
<PAGE>
     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and accrued, deferred or capitalized interest on and other amounts due
under all Lessor Notes and all other sums payable to the Indenture Trustee or
the Noteholders from time to time hereunder and under the Participation
Agreement and the other Operative Documents by the Facility Lessee, the Owner
Participant and the Owner Lessor, including:

          (i)   The indebtedness evidenced by the Lessor Notes, together with
     accrued, deferred or capitalized interest thereon at the rate provided in
     each Lessor Note and the Make-Whole Amount thereon and together with any
     and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Lessor Notes, and principal of such Lessor
     Notes being due and payable as provided in such Lessor Notes;

          (ii)   Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture
     Trusteeunder the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with accrued, deferred or capitalized interest
     thereon at the rate provided in each Additional Lessor Note and the
     Make-Whole Amount thereon (if any) and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Additional Lessor Notes, and principal of such Additional Lessor
     Notes being due and payable as provided in each such Additional Lessor
     Note.

          (iii)   Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to
     Section 4.13 hereof (whether or not the Owner Lessor remains the owner of
     the Indenture Estate at the time of such advances); and

                                       10
<PAGE>
          (iv)   Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes" or, individually, an
"Initial Lessor Note".

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such

                                       11
<PAGE>
Lessor Note has been duly authenticated and delivered hereunder. The Indenture
Trustee shall authenticate and deliver the Initial Lessor Notes for original
issue on the Closing Date in the principal amount specified in Section 2.2,
upon a written order of the Owner Lessor signed by the Lessor Manager. The
Indenture Trustee shall authenticate and deliver Additional Lessor Notes, upon
a written order of the Owner Lessor executed by the Lessor Manager and
satisfaction of the conditions specified in Section 2.12. Such order shall
specify the principal amount of the Additional Lessor Notes to be authenticated
and the date on which the original issue of Additional Lessor Notes is to be
authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto. Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

                                       12
<PAGE>
     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor Notes or
under this Indenture. The Indenture Trustee and each Noteholder, by its
acceptance thereof, agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the
Indenture Trustee or such Noteholder, as the case may be, as herein provided
and that, except as expressly provided in this Indenture, the Participation
Agreement or any other Operative Document, none of the Owner Participant, the
Owner Lessor, the Trust Company, the Lease Indenture Company, nor the Indenture
Trustee, nor any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Indenture Trustee for any amounts payable hereunder, under
such Lessor Note or for any performance to be rendered under any Assigned
Document or for any liability under any Assigned Document. Without prejudice to
the foregoing, the Owner Lessor will duly and punctually pay or cause to be
paid the principal of, Make-Whole Amount, if any, and interest on all Lessor
Notes according to their terms and the terms of this Indenture. Nothing
contained in this Section 2.5 limiting the liability of the Owner Lessor shall
derogate from the right of the Indenture Trustee and the Noteholders to proceed
against the Indenture Estate and the Calpine Guaranty to secure and enforce all
payments and obligations due hereunder and under the Assigned Documents and the
Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

                                       13
<PAGE>
     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an office
or agency where Lessor Notes may be presented for payment (the "Paying Agent").
The Owner Lessor may have one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Owner Lessor initially
appoints the Indenture Trustee as Paying Agent in connection with the Lessor
Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor shall
require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Lessor Notes and shall notify the
Indenture Trustee of any default by the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any

                                       14
<PAGE>
Lessor Note, the Owner Lessor and the Indenture Trustee may deem and treat the
Person in whose name any Lessor Note is registered on the Note Register as the
absolute owner and holder of such Lessor Note for the purpose of receiving
payment of all amounts payable with respect to such Lessor Note and for all
other purposes, and neither the Owner Lessor nor the Indenture Trustee shall be
affected by any notice to the contrary. All payments made on any Lessor Note in
accordance with the provisions of this Section 2.6 shall be valid and effective
to satisfy and discharge the liability on such Lessor Note to the extent of the
sums so paid and (except as provided herein) neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration
of transfer and exchange of Lessor Notes (such register being referred to
herein as the "Note Register"). If any Lessor Note is surrendered at said
office for registration of transfer or exchange (accompanied by a written
instrument of transfer duly executed by or on behalf of the holder thereof,
together with the amount of any applicable transfer taxes), the Owner Lessor
will execute and the Indenture Trustee will authenticate and deliver, in the
name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer or
exchange shall be valid

                                       15
<PAGE>
obligations of the Owner Lessor entitled to the same security and benefits to
which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or
Lessor Notes surrendered. Every Lessor Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Indenture Trustee duly executed by the holder thereof or his attorney duly
authorized in writing, and the Indenture Trustee may require an opinion of
counsel as to compliance of any such transfer with the Securities Act. The
Indenture Trustee shall make a notation on each new Lessor Note of the amount
of all payments of principal previously made on the old Lessor Note or Lessor
Notes with respect to which such new Lessor Note is issued and the date on
which such new Lessor Note is issued and the date to which interest on such old
Lessor Note or Lessor Notes shall have been paid. The Indenture Trustee shall
not be required to register the transfer or exchange of any Lessor Note during
the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this

                                       16
<PAGE>
Indenture shall be redeemed, in whole but not in part, at a price equal to the
principal amount thereof, together with accrued interest thereon, if any, on
the earliest to occur on the date of redemption, but without any Make-Whole
Amount or other premium:

          (i)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)   if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii)   if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and
     effectuates an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 13.1 of the Facility Lease; and

          (iv)   if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee

                                       17
<PAGE>
and the Owner Lessor. The Facility Lessee will execute and deliver, and the
Indenture Trustee will authenticate, to each Noteholder in exchange for such
old Lessor Note a new Lessor Note, in a principal amount equal to the
outstanding principal amount of such old Lessor Note and otherwise in
substantially similar form and tenor to such old Lessor Note but indicating
that the Facility Lessee is the issuer thereof. When such assumption agreement
becomes effective, the Owner Lessor shall be released and discharged without
further act from all obligations and liabilities assumed by the Facility
Lessee. All documentation in connection with any such assumption (including an
indenture supplemental to this Indenture which shall, among other things,
contain provisions appropriately amending references to the Facility Lease in
this Indenture and contain covenants by the Facility Lessee similar to those
contained in the Facility Lease (other than any covenants which were solely for
the benefit of the Owner Participant), changed as appropriate, and amendments
or supplements to the other Operative Documents, officers' certificates,
opinions of counsel and regulatory approvals) shall be prepared by and at the
expense of the Facility Lessee acceptable in form and substance to the
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)   the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and
     agreed that the Facility Lessee's counsel on the Closing Date shall be
     deemed acceptable), addressed to the Indenture Trustee and the
     Noteholders, to the effect that (1) the assumption agreement and each
     other instrument, document or agreement executed and delivered by the
     Facility Lessee in connection with the assumption contemplated by the
     assumption agreement (collectively, the "Assumption Documents") have been
     duly authorized, executed and delivered by the Facility Lessee, (2) each
     Assumption Document and the assumptions contemplated thereby do not
     contravene (x) the Organic Documents of the Facility Lessee, (y) any
     provision of any security issued by the Facility Lessee or of any
     agreement, instrument or other undertaking to which the Facility Lessee
     is a party or by which it or any of its property is bound or (z) any
     Applicable Law, (3) no Governmental Approval is necessary or required in
     connection with any Assumption Document or the assumption contemplated
     thereby (or, if any such Governmental Approval is necessary or required,
     that the same has been duly obtained and is final and in full force and
     effect and any period for the filing of notice of rehearing or
     application for judicial review of the issuance of such Governmental
     Approval has expired

                                       18
<PAGE>
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder and (6) the lien of this Indenture will continue
     to be a first priority perfected lien on the Indenture Estate;

          (ii)   the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause a
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

          (iii)    Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv)   the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)   the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest
     in the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to

                                       19
<PAGE>
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)   All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this clause
     (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (iii)   The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       20
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i)   the date of redemption;

          (ii)   the redemption price;

          (iii)   the name and address of the Paying Agent;

          (iv)   that Lessor Notes called for redemption must be surrendered
     to the Paying Agent to collect the redemption price;

          (v)   that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue
     on and after the redemption date; and

          (vi)   the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a new
Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture Trustee for, or to provide funds for, the payment on an After-Tax
Basis to the Owner Lessor, the

                                       21
<PAGE>
Indenture Trustee and the Owner Participant of any tax or other governmental
charge in connection therewith or any charges and expenses connected with such
tax or governmental charge paid or payable by the Owner Lessor or the Indenture
Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       22
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)   a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii)   an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the
     conditions in respect of the issuance of such Additional Lessor Notes
     contained in this Section 2.12 have been satisfied, (3) specifying the
     amount of the costs and expenses relating to the issuance and sale of
     such Additional Lessor Notes, (4) stating that payments pursuant to the
     Facility Lease and all supplements thereto of Periodic Rent and
     Termination Value, together with all other amounts payable pursuant to
     the terms of the Facility Lease, are calculated to be sufficient to pay
     when due all of the principal of and interest on the outstanding Lessor
     Notes, after taking into account the issuance of such Additional Lessor
     Notes and any related redemption of Lessor Notes theretofore outstanding
     and (5) all conditions to the Supplemental Financing or refinancing
     contained in Section 11.1 or ll.2 of the Participation Agreement or in
     any other provision of the Operative Documents have been satisfied;

          (iii)   with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b)
     through (f) of Section 4.2 hereof or Lease Indenture Event of Default as
     to the Owner Lessor or the Lessor Manager, as the case may be, has
     occurred and is continuing;

          (iv)   such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be
     reasonably acceptable to the Indenture Trustee;

                                       23
<PAGE>
          (v)   a request and authorization to the Indenture Trustee by the
     Owner Lessor to authenticate and deliver such Additional Lessor Notes to
     or upon the order of the Person or Persons noted in such request at the
     address set forth therein, and in such principal amounts as are stated
     therein, upon payment to the Indenture Trustee, but for the account of
     the Owner Lessor, of the sum or sums specified in such request and
     authorization;

          (vi)   the consent of the Facility Lessee to such request and
     authorization; and

          (vii)   an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the
     authorization, validity and enforceability of the Additional Lessor Notes
     and that all conditions hereunder to the authentication and delivery of
     such Additional Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)  This Indenture secures not only existing indebtedness but also
secures, in accordance with Section 29-3-50, as amended, Code of Laws of South
Carolina 1976, all future advances and readvances that may subsequently be made
to the Owner Lessor by the Indenture Trustee, evidenced by the Lessor Notes,
including any Additional Lessor Notes, or other promissory notes, and all
renewals and extensions thereof; provided however, that nothing contained
herein shall create an obligation on the part of the Indenture Trustee to make
future advances or readvances to the Owner Lessor, the maximum amount of all
indebtedness outstanding at any one time secured hereby not to exceed Two
Hundred Fifty Two Million Two Hundred Thousand Dollars ($252,200,000), plus
interest thereon (whether deferred, accrued, or capitalized), all charges and
expenses of collection incurred by the holder of this Indenture, including
court costs and reasonable attorney's fees, or pursuant to promissory notes or
other instruments evidencing such future advances which may be hereafter
executed and delivered by Owner Lessor to Indenture Trustee. In the event that
any notice described in Section 29-3-50 is properly filed and served on the
Indenture Trustee as set forth

                                       24
<PAGE>
therein, any commitment, agreement, or obligation to make future advances to or
for the benefit of Owner Lessor shall immediately terminate.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                  SECTION 3.
                     RECEIPT, DISTRIBUTION AND APPLICATION
                        OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic

                                       25
<PAGE>
Rent received by the Indenture Trustee shall be distributed by the Indenture
Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each such Lessor Note bears to
     the aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the

                                       26
<PAGE>
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the extent not then required to be
distributed pursuant to clause "First" of Section 3.1(a)) as part of the
Indenture Estate and shall not distribute any such payment of Periodic Rent or
interest pursuant to clause "Second" of Section 3.1(a) until such time as such
Lease Indenture Event of Default shall be cured or waived or until such time as
the Indenture Trustee shall have received written instructions from a Majority
in Interest of Noteholders to make such a distribution; provided that such
amounts must be returned to the Owner Lessor within six (6) months from the
receipt thereof by the Indenture Trustee unless (i) the Indenture Trustee has
declared the unpaid principal of all Lessor Notes due and payable (or such
amounts shall have automatically become due and payable), pursuant to Section
4.2(a) and the Indenture Trustee is diligently pursuing any dispossessary
remedies available under Section 4.3 hereof (unless such remedies are stayed or
prevented by operation of law) or (ii) any other Lease Indenture Event of
Default shall have occurred during the intervening period and be continuing, in
which case, such six-month period will be restarted from the date such other
Lease Indenture Event of Default shall have occurred. Upon the cure or waiver
of such Lease Indenture Event of Default, withheld Periodic Rent shall, subject
to clause (ii) of the immediately preceding sentence, be distributed to the
Owner Lessor (to the extent that all payments to be distributed pursuant to
clause "First" of Section 3.1(a) have been made), and no further withholding of
Periodic Rent on account of such Lease Indenture Event of Default shall be
effected.

     Section 3.2.   Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early

                                       27
<PAGE>
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     in full the applicable redemption price (as described in Section 2.10(a)
     or 2.10(d) hereof or any supplemental indenture hereto) (including,
     interest on overdue principal and, to the extent permitted by Applicable
     Law, overdue interest) upon all of the Lessor Notes which shall be
     distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder, plus the Make-Whole Amount, if any, and accrued but
     unpaid interest thereon to the scheduled date of distribution to the
     Noteholders bears to the aggregate unpaid principal amount of all such
     Lessor Notes held by all such holders, together with the Make-Whole
     Amount, if any, plus accrued but unpaid interest thereon to the date of
     scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the
     aggregate amount of such payments and amounts to which all such holders
     are so entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the

                                       28
<PAGE>
Facility Lease or from the application of Section 4.3 hereof) and after either
(a) the Indenture Trustee has declared the Facility Lease to be in default
pursuant to Section 17 thereof or (b) the entire principal amount of Lessor
Notes shall have been declared or shall automatically have become due and
payable, together with all payments or amounts then held or thereafter received
by the Indenture Trustee hereunder, shall, so long as such declaration shall
not have been rescinded, be distributed forthwith by the Indenture Trustee in
the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder and accrued but unpaid interest thereon to the scheduled
     date of distribution to the Noteholders bears to the aggregate unpaid
     principal amount of all such Lessor Notes held by all such holders and
     accrued but unpaid interest thereon to the date of scheduled distribution
     to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

                                       29
<PAGE>
     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture
Event of Default; provided, however, that any such payment received by the
Indenture Trustee which is payable to the Facility Lessee shall not be held by
the Indenture Trustee unless a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing.

                                       30
<PAGE>
     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;
     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise directed
in writing by the Owner Lessor, all amounts from time to time distributable by
the Indenture Trustee to the Owner Lessor in accordance with the provisions
hereof shall be paid by the Indenture Trustee in immediately available funds to
the Owner Participant's Account. Any amounts payable to the Trust Company in
its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other

                                       31
<PAGE>
disposition thereof or otherwise constituting a part of the Indenture Estate to
which the Owner Lessor is not entitled hereunder, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Facility Lessee, the Owner Lessor or otherwise) with
respect to the Facility Lease, any other Assigned Document or the Facility in
the manner provided in Section 2.7 hereof, and this Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a part
of the Indenture Trustee Account Collateral and shall not constitute payment of
any Indebtedness or any other obligation of the Owner Lessor until applied as
hereinafter provided.

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<PAGE>
     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i)   Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the
     Indenture Trustee's Account is and will be maintained as a "securities
     account" (within the meaning of Section 8-501(a) of the UCC), (C) the
     Owner Lessor is the "entitlement holder" (within the meaning of Section
     8-102(a)(7) of the UCC) in respect of the "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) credited to the Indenture
     Trustee's Account, (D) all property delivered to the Account Bank
     pursuant to this Indenture or any other Operative Document will be held
     by the Account Bank and promptly credited to the Indenture Trustee's
     Account by an appropriate entry in its records in accordance with this
     Indenture, (E) all "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) in registered form or payable to or to the order
     of and credited to the Indenture Trustee's Account shall be registered in
     the name of, payable to or to the order of, or indorsed to, the Account
     Bank or in blank, or credited to another securities account maintained in
     the name of the Account Bank, and in no case will any financial asset
     credited to the Indenture Trustee's Account be registered in the name of,
     payable to or to the order of, or indorsed to, the Owner Lessor except to
     the extent the foregoing have been subsequently indorsed by the Owner
     Lessor to the Account Bank or in blank, (F) the Account Bank shall not
     change the name or account number of the Indenture Trustee's Account
     without the prior written consent of the Indenture Trustee, (G) the
     Account Bank is acting and shall at all times act as and perform all of
     the duties of the "securities intermediary," within the meaning of
     Article 8 of the UCC, with respect to the Indenture Trustee's Account and
     the financial assets credited thereto and (H) the Account Bank shall

                                       33
<PAGE>
     not enter into any other agreement governing, or with respect to, the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee.

          (ii)   Financial Assets Election. The Account Bank agrees that each
     item of property (including any security, instrument or obligation,
     share, participation, interest, cash or cash equivalents or other
     property whatsoever) credited to the Indenture Trustee's Account shall be
     treated as a "financial asset" within the meaning of Section 8-l02(a)(9)
     of the UCC.

          (iii)   Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the
     UCC) or any other order from the Indenture Trustee directing the transfer
     or redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the
     meaning of Section 8-102(a)(17) of the UCC) carried or to be carried in
     the Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements respect to the
     financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any
     financial asset relating to the Indenture Trustee's Account.

          (iv)   Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law
     or otherwise a lien or security interest in the Indenture Trustee's
     Account or any security entitlement credited thereto, the Account Bank
     agrees that such lien or security interest shall be subordinate to the
     lien and security interest of the Indenture Trustee for the benefit of
     the Indenture Trustee and each Noteholder. The financial assets standing
     to the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient
     funds).

                                       34
<PAGE>
          (v)   No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or
     hereafter entered into, the terms of this Section 3.12 shall prevail.

          (vi)   Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any
     Person asserts any lien, encumbrance or adverse claim (including any
     writ, garnishment, judgment, warrant of attachment, execution or similar
     process) against the Indenture Trustee's Account or in any financial
     asset credited thereto, the Account Bank will promptly notify the
     Indenture Trustee and the Owner Lessor in writing thereof.

          (vii)   Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof. Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                       35
<PAGE>
                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor.  The Owner Lessor hereby
covenants and agrees as follows:


     (a)  the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is

                                       36
<PAGE>
waived by the Owner Lessor and the Owner Participant and (ii) the insurance
maintained by the Facility Lessee still constitutes Prudent Industry Practice);
or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have
been incorrect in any material respect when made and continues to be material
and unremedied for a period of 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days,

                                       37
<PAGE>
so long as such party diligently pursues such remedy and such condition is
reasonably capable of being remedied within such extended period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written instructions from a Majority in Interest of Noteholders
shall declare, by written notice to the Owner Lessor and the Owner Participant,
the unpaid principal amount of all Lessor Notes, with accrued interest thereon,
to be immediately due and payable, upon which declaration such principal amount
and such accrued interest shall immediately become due and payable (except in
the case of a Lease Indenture Event of Default under Section 4.2(e) or (f),
such principal and interest shall automatically become due and payable
immediately without any such declaration or notice) without further act or
notice of any kind. If any Make-Whole amount is due and payable pursuant to
Section 2.10 (c)

                                       38
<PAGE>
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for such price or prices and on such terms as the Indenture
Trustee, in its unfettered discretion, may determine, or as may be required by
law, so long as the Owner Participant and the Owner Lessor are afforded a
commercially reasonable opportunity to bid for all or such part of the
Indenture Estate in connection therewith unless Section 4.7 shall otherwise be
applicable; provided that 20 days shall be deemed to be a commercially
reasonable opportunity to bid for purposes of this Section 4.3(b). The
Indenture Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Noteholders asserted or upheld in any bankruptcy,
receivership or other judicial proceedings.

                                       39
<PAGE>
     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)  Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-day period following the date of commencement of a
stay or other prevention or (b) the date of repossession of the Facility under
the applicable Facility Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

                                       40
<PAGE>
     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the Owner Lessor shall be deemed to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default

                                       41
<PAGE>
under Section 4.2(b), (e) or (f), or any Lease Indenture Event of Default
hereunder shall have occurred and be continuing) be subrogated to the rights of
the Indenture Trustee and the Noteholders to receive the payment of Periodic
Rent or Supplemental Rent, as the case may be, with respect to which the Owner
Lessor made such payment and interest on account of such Periodic Rent payment
or Supplemental Rent payment being overdue in the manner set forth in the next
two sentences. If the Indenture Trustee shall thereafter receive such payment
of Periodic Rent, Supplemental Rent or such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 3.1 hereof, forthwith, remit
such payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof. The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes

                                       42
<PAGE>
having been accelerated or the Indenture Trustee having exercised any remedy
under the Facility Lease intended to dispossess the Facility Lessee of the
Facility, (y) the Lessor Notes have been accelerated pursuant to Section 4.3(a)
and such acceleration has not theretofore been rescinded, or (z) an Enforcement
Notice giving notice of the intent of the Indenture Trustee to dispossess the
Facility Lessee of the Facility under the Facility Lease has been given
pursuant to Section 5.1 within the previous 30 days, (ii) no Lease Indenture
Event of Default of the nature described in any of clauses (b) through (f) of
Section 4.2 hereof shall have occurred and be continuing and (iii) the Owner
Lessor shall give written notice to the Indenture Trustee of the Owner Lessor's
intention to purchase all of the Lessor Notes in accordance with this
paragraph, then, upon receipt within 10 Business Days after such notice from
the Owner Lessor of an amount equal to the sum of (x) the aggregate unpaid
principal amount of any unpaid Lessor Notes then held by the Noteholders,
together with accrued but unpaid interest thereon to the date of such receipt
(as well as any interest on overdue principal and, to the extent permitted by
Applicable Law, overdue interest), plus (y) the aggregate amount, if any, of
all sums which, if Section 3.3 were then applicable, such Noteholder would be
entitled to be paid before any payments were to be made to the Owner Lessor but
excluding any Make-Whole Amount, such Noteholder will forthwith (and upon its
receipt of the payment referred to in clause (1) below, will be deemed to)
sell, assign, transfer and convey to the Owner Lessor (without recourse or
warranty of any kind other than of title to the Lessor Notes so conveyed) all
of the right, title and interest of such Noteholder in and to the Indenture
Estate, this Indenture, all Lessor Notes held by such Noteholder and the
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law.  All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all

                                       43
<PAGE>
costs and expenses of collection incurred by or on behalf of the holders of the
Lessor Notes (including counsel fees and expenses and all expenses and
reasonable compensation of the Indenture Trustee) and (b) every other Lease
Indenture Event of Default shall have been remedied, then a Majority in
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate the possession of
which the Indenture Trustee shall at the time be entitled to hereunder. If the
Owner Lessor shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture
Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right
to immediate possession and requiring the Owner Lessor to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Lessor hereby specifically consents, and (ii) pursue all or
any part of the Indenture Estate wherever it may be found and enter any of the
premises wherever all or part of the Indenture Estate may be or is supposed to
be and search for all or part of the Indenture Estate and take possession of
and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee

                                       44
<PAGE>
shall be entitled to collect and receive all rents (including Periodic Rent and
Supplemental Rent), revenues, issues, income, products and profits of the
Indenture Estate and every part thereof (without prejudice to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
cash held by, or required to be deposited with, the Indenture Trustee
hereunder) and to apply the same to the management of or otherwise dealing with
the Indenture Estate and of conducting the business thereof, and of all
expenditures with respect to the Indenture Estate and the making of all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner Lessor and the Facility Lessee relating to the
Indenture Estate and the Operative Documents), or under any provision of, this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all Persons properly engaged and employed by the
Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the right to foreclose this Indenture and to have a judicial
sale of the Indenture Estate or any part of the Indenture Estate as the
Indenture Trustee shall determine, in its sole discretion, with any such
sale(s) to be under the judgment or decree of a court of competent
jurisdiction. Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, proceed by
a suit or suits in law or in equity or by any other appropriate proceeding or
remedy (i) to enforce payment of the Lessor Notes or the performance of any
term, covenant, condition or agreement of this Indenture or any other right,
and (ii) to pursue any other remedy available to it, all as the Indenture
Trustee shall determine most effectual for such purposes. Upon any foreclosure
sale, the Indenture Trustee may bid for and purchase the Indenture Estate and
shall be entitled to apply all or any part of the Secured Indebtedness as a
credit to the purchase price. In the event of a foreclosure sale of the
Indenture Estate, the proceeds of said sale shall be applied as provided in
Section 3.3 hereof. In the event of any such foreclosure sale by the Indenture
Trustee, the Owner Lessor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be
summarily dispossessed according to provisions of law applicable to tenants
holding over. The Indenture Trustee, at the Indenture Trustee's option, is
authorized to foreclose this Indenture subject to the rights of any tenants of
the Indenture Estate, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their

                                       45
<PAGE>
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal amount
of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. Except as
otherwise set forth herein, to the maximum extent permitted by Applicable Law,
the Owner Lessor waives the benefit of all laws now existing or that may
subsequently be enacted provided for (i) any appraisement before sale of any
portion of the Indenture Estate, (ii) any extension of the time for the
enforcement of the collection of the Secured Indebtedness or the creation or
extension of a period of redemption from any sale made in collecting such debt,
(iii) exemption of the Indenture Estate from attachment, levy or sale under
execution or exemption from civil process and (iv) any requirement that the
Indenture Estate be sole in separate lots, trusts or parcels. Except as
otherwise set forth herein, to the full extent the Owner Lessor may do so, the
Owner Lessor agrees that it will not at any time insist upon, plead, claim or
take the benefit or advantage of any law not or hereafter in force provided for
any appraisement, valuation, stay exemption,

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<PAGE>
extension or redemption, reinstatement or requiring foreclosure of this
Indenture before exercising any other remedy granted hereunder and the Owner
Lessor, for itself and its successors and assigns, and for any and all Persons
ever claiming any interest in the Indenture Estate, to the maximum extent
permitted by law, hereby waives and releases all rights of redemption,
reinstatement, valuation, appraisement, stay of execution, notice of election
to mature or declare due the whole of the Secured Indebtedness and marshaling
in the event of foreclosure on the Liens hereby created.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall
take or cause to be taken any action contrary to the right of the Facility
Lessee, including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon

                                       47
<PAGE>
from the date of payment or incurrence, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand.  The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms of
Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to

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<PAGE>
time of a Majority in Interest of Noteholders, the Indenture Trustee shall take
such action, or refrain from taking such action, including any of the following
actions as may be specified in such instructions: (a) give such notice,
direction or consent or exercise such right, remedy or power or take such
action hereunder or under any Assigned Document, or in respect of any part of
or all the Indenture Estate, as it shall be entitled to take and as shall be
specified in such instructions; (b) take such action with respect to or to
preserve or protect the Indenture Estate (including the discharge of Liens) as
it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee. The Indenture Trustee may, and upon written instructions
from a Majority in Interest of Noteholders, the Indenture Trustee shall,
execute and file or cause to be executed and filed any financing statement (and
any continuation statement with respect to such financing statement) or any
similar instrument or document relating to the security interest or the
assignment created by this Indenture or granted by the Owner Lessor herein as
may be necessary to protect and preserve the security interest or assignment
created by or granted pursuant to this Indenture, to the extent otherwise
entitled to do so and as shall be specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in this
Section 5.3 shall be deemed to expand the instances in which the Owner Lessor
is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and

                                       49
<PAGE>
Section 4.3 hereof or this Section 5, the Indenture Estate, for any fee as
compensation for its services hereunder.

     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with any part of the Indenture
Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the terms of the Facility Lease, to the extent applicable to the Indenture
Trustee as assignee of the Owner Lessor, (b) in accordance with the powers
granted to, or the authority conferred upon, the Indenture Trustee pursuant to
this Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor.  Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of

                                       51
<PAGE>
the Indenture Estate, the Owner Lessor shall retain the right to the exclusion
of the Indenture Trustee to exercise the rights of the Owner Lessor under, and
to determine compliance by the Facility Lessee with, the provisions of Sections
10 (other than Section 10.3 thereof), 13, 14 and 15 of the Facility Lease;
provided, however, that if a Lease Indenture Event of Default shall have
occurred and be continuing, the Owner Lessor shall cease to retain such rights
upon notice from the Indenture Trustee stating that such rights shall no longer
be retained by the Owner Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the Facility Lessee under the
Operative Documents relating to the protection, insurance, maintenance,
possession, use and return of the Property Interest, the performance by the
Facility Lessee of the Owner Lessor's obligations under the FILOT Lease and the
exercise of any renewal or extension rights with respect to the FILOT Lease and
to make the determinations and

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<PAGE>
take the actions contemplated by Section 14 of the Participation Agreement
(subject to the satisfaction of the conditions set forth in Section 14 of the
Participation Agreement) including, without limitation, the Owner Lessor's
right to direct that title to the Land (to the extent of the Owner Lessor's
Percentage Interest) be conferred from the County to the Facility Lessee; and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by

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<PAGE>
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee. At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and powers
herein granted. Upon the reasonable instructions (which instructions shall be
accompanied by the form of document to be filed) at any time and from time to
time of the Facility Lessee or the Indenture Trustee, the Owner Lessor shall
execute and file any financing statement (and any continuation statement with
respect to any such financing statement), and any other document relating to the
security interest and assignment created by this Indenture as may be specified
in such instructions. In addition, the Indenture Trustee and the Owner Lessor
will execute such continuation statements with respect to financing statements
and other documents relating to the Lien created by this Indenture in the
Indenture Estate as may be specified from time to time in written instructions
of any Noteholder (which instructions may, by their terms, be operative only at
a future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the

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<PAGE>
Indenture Trustee shall not be liable for any action or inaction of the Owner
Trust; provided, however, that:

          (i)   Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall
     not be liable except for the performance of such duties and obligations as
     are specifically set forth in the Operative Documents, no implied
     covenants or obligations shall be read into the Operative Documents
     against the Indenture Trustee and, in the absence of bad faith on the part
     of the Indenture Trustee, the Indenture Trustee may conclusively rely, as
     to the truth of the statements and the correctness of the opinions
     expressed therein, upon any notes or opinions furnished to the Indenture
     Trustee and conforming to the requirements of this Indenture;

          (ii)   The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii)   The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the
     Indenture Trustee, or exercising or omitting to exercise any trust or
     power conferred upon the Indenture Trustee, under this Indenture;

          (iv)   The Indenture Trustee shall not be required to take notice or
     be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof. In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v)   The Indenture Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability for the performance of
any of its duties

                                       55
<PAGE>
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Indenture shall in any event require the Indenture
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Owner Lessor, under this Indenture; and

          (vi)   The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Section 5.2 hereof and except as provided in
Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty (a) to see
to any registration, recording or filing of any Operative Document (or any
financing or continuation statements in respect thereto) or to see to the
maintenance of any such registration, recording or filing, (b) to see to any
insurance on the Facilities or the Facilities or to effect or maintain any such
insurance, (c) except as otherwise provided in Section 5.5 hereof or in Section
10 of the Participation Agreement, to see to the payment or discharge of any
Tax or any Lien of any kind owing with respect to, or assessed or levied
against, any part of the Indenture Estate, (d) to confirm or verify the
contents of any report, notice, request, demand, certificate, financial
statement or other instrument of the Facility Lessee, (e) to inspect the
Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents unless the Indenture Trustee shall reasonably believe
that each such Noteholder, the Owner Lessor and the Owner Participant shall
have received copies thereof.

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<PAGE>
     Section 6.3.   Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL BE
DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

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<PAGE>
     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of competence, of any such Person, so long
as the Indenture Trustee shall have exercised reasonable care in selecting such
Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

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<PAGE>
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)  Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If a
successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)  Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Indenture Trustee or
Account Bank hereunder in the trusts hereunder applicable to it with like
effect as if originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture

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<PAGE>
Trustee or Account Bank shall duly assign, transfer deliver and pay over to
such successor Indenture Trustee all moneys or other property then held by such
predecessor Indenture Trustee or Account Bank hereunder. To the extent required
by Applicable Law or upon request of the successor Indenture Trustee or Account
Bank, the Owner Lessor shall execute any and all documents confirming the
vesting of such estates, properties, rights and powers in the successor
Indenture Trustee or Account Bank.

     (c)  Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)  Appointment of Account Bank. The Indenture Trustee and each Noteholder
hereby irrevocably designate and appoint State Street Trust Bank and Trust
Company of Connecticut, National Association as the Account Bank under this
Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture. The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)  Merger, etc. Any Person into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Indenture Trustee shall be
a party, or any Person to which substantially all the corporate trust business
of the Indenture Trustee

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<PAGE>
may be transferred, shall, subject to the terms of subsection (c) of this
Section 7.1, be the Indenture Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request
so to do; provided, however, that the Indenture Trustee shall exercise due care
in selecting any additional or separate trustee if such additional or separate
trustee shall not be a Person possessing trust powers under Applicable Law. If
at any time the Indenture Trustee shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be advised
by such counsel that it is no longer so necessary or prudent in the interest of
the Noteholders or in the event that the Indenture Trustee shall have been
requested to do so in writing by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver all instruments and agreements
necessary or proper to remove any additional trustee or separate trustee. In
such connection, the Indenture Trustee may act on behalf of the Owner Lessor to
the same extent as is provided above. Notwithstanding anything contained to the
contrary

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<PAGE>
in this Section 7.2(a), to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly or
through a separate trustee under the direction and control of the Indenture
Trustee, the Owner Lessor, at the instruction of the Indenture Trustee, shall
appoint a separate trustee for such jurisdiction, which separate trustee shall
have full power and authority to take all action hereunder as to matters
relating to such jurisdiction without the consent of the Indenture Trustee, but
not subject to the same limitations in any exercise of his power and authority
as those to which the Indenture Trustee is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)  Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.

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<PAGE>
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                              AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

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<PAGE>
     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions of
Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any other
Operative Document (a) to evidence the succession of another Person as a Lessor
Manager or the appointment of a co-manager in accordance with the terms of the
LLC Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant to
the provisions of Section 7 hereof and to define the rights, powers, duties and
obligations conferred upon any such separate trustee or trustees or co-trustee
or co-trustees, (b) to correct, confirm or amplify the description of any
property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner that
will not in the judgment of the Indenture Trustee materially adversely affect
the interests of the Noteholders, (e) to grant or confer upon the Indenture
Trustee for the benefit of the Noteholders any additional rights, remedies,
powers, authority or security which may be lawfully granted or conferred and
which are not contrary or inconsistent with this Indenture, (f) to add to the
covenants or agreements to be observed by the Facility Lessee or the Owner
Lessor and which are not contrary to this Indenture, to add Indenture Events of
Defaults for the benefit of Noteholders or surrender any right or power of the
Owner Lessor, provided it has consented thereto, (g) to effect the assumption of
all or, to the extent otherwise provided hereunder, part of the Lessor Notes by
the Facility Lessee, provided that the supplemental indenture will contain all
of the covenants applicable to the Facility Lessee contained in the Facility
Lease and the Participation Agreement for the benefit of the Indenture Trustees
or the holders of such Lessor Notes, such that the Facility Lessee's obligations
contained therein, if applicable in the event that the Facility Lease are
terminated, will continue to be in full force and effect, (h) to comply with
requirements of the SEC, any applicable law, rules or regulations of any
exchange or quotation system on which the Certificates are listed, or any
regulatory body, (i) to modify, eliminate or add to the provisions of any
Operative Documents to such extent as shall be necessary to qualify or continue
the qualification of this Lease Indenture or the Pass Through Trust Agreements
(including any supplements thereto) under the Trust Indenture Act, or similar
federal statute enacted

                                       64
<PAGE>
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election. With every such document and election, the Indenture Trustee shall be
furnished with evidence that all necessary consents have been obtained and with
an opinion of counsel that such document complies with the provisions of this
Indenture, does not deprive the Indenture Trustee or the holders of the Lessor
Notes of the benefits of the Lien hereby created on any property subject hereto
or of the assignments contained herein (except as otherwise consented to in
accordance with Section 8.1 hereof) and that all consents required by the terms
hereof in connection with the execution of such document or the making of such
election have been obtained. The Indenture Trustee shall be fully authorized
and protected in relying on such opinion.

                                   SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

                                       65
<PAGE>
     (a)  Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i)   Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person
     be released from the Lien of this Lease Indenture and the Indenture
     Trustee shall, upon the written request of the Owner Lessor or the
     Facility Lessee, execute and deliver to, and as directed in writing by,
     the Facility Lessee or the Owner Lessor an appropriate instrument (in due
     form for recording) releasing the replaced Component from the Lien of this
     Indenture.

          (ii)   Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and deliver
     to, or as directed in writing by, the Facility Lessee or the Owner Lessor
     an appropriate instrument (in due form for recording) releasing the
     Indenture Estate from the Lien of this Indenture; provided that all sums
     secured by this Indenture have been paid to the Persons entitled to such
     sums.

     Section 9.2.   Conveyances Pursuant to the Site Lease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

                                       66
<PAGE>
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility Lessee
(with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and any
successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for the
sole and exclusive benefit of the parties hereto, the Owner Participant, the
Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       67
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071

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<PAGE>
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          Broad River Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under

                                       69
<PAGE>
no circumstances shall Wells Fargo, be personally liable for the payment of any
indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall be
in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of South Carolina. Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

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<PAGE>
     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall set forth in detail the calculation thereof). For purposes of this
Section 9.13, "Excess Amount" means the amount by which such payment exceeds
the amount which would have been received by such holder and the Indenture
Trustee in respect of such principal or interest if the Owner Participant had
not become subject to the recourse liability referred to in clause (b) above.
Nothing contained in this Section 9.13 shall prevent the Indenture Trustee or
any Noteholder from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant under the Participation
Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present

                                       71
<PAGE>
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Lessor Notes, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Noteholders and to pay to the Noteholders from amounts received
by Paying Agent pursuant hereto such additional amounts so that the net amount
actually received by the Noteholders, after reduction for such withheld
amounts, shall be equal to the full amount of principal, Make-Whole Amount,
interest and other amounts otherwise due and payable hereunder; provided,
however, that, notwithstanding the foregoing, the Paying Agent shall be
required to pay such additional amounts only if and to the extent that (a) the
Facility Lessee is required to indemnify the Noteholders for such amounts under
Section 9 of the Participation Agreement and (b) the Facility Lessee has not
paid such amounts within three (3) days after notice of nonpayment, (ii) that
it will file any necessary withholding tax returns or statements when due, and
(iii) that, as promptly as possible after the payment thereof, it will deliver
to each Noteholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Noteholders may
reasonably request from time to time. The Indenture Trustee agrees to file any
other information as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is

                                       72
<PAGE>
caused by the Indenture Trustee's violation of the Code and only to the extent
such liability is caused by the Indenture Trustee's failure to act in
accordance with its standard of care under this Lease Indenture.

     Section 9.15.   Fixture Financing Statement.  This Indenture also is
intended to serve as a fixture financing statement under the South Carolina
Uniform Commercial Codes. In connection therewith, the following information is
provided:

     (a)  Name and address of Debtor:

          Broad River OL-3, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     (b)  Name and Address of Secured Party (from which  information  concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded in the real estate records
of the Office of the Cherokee County Clerk of Court.

     (e)  Type of Filing: This is a commercial filing under Section 36-9-402 of
the Code of Laws of South Carolina, 1976 (as amended).


                  (Remainder of Page Intentionally Left Blank)

                                       73
<PAGE>
     Section 9.16.   Waiver of Appraisal Rights. The laws of South Carolina
provide that in any real estate foreclosure proceeding a defendant against whom
a personal judgment is taken or asked may within thirty days after the sale of
the mortgaged property apply to the court for an order or appraisal. The
statutory appraisal value as approved by the court would be substituted for the
high bid and may decrease the amount of any deficiency owing in connection with
the transaction. THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY
APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED
PROPERTY.

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                                        BROAD RIVER OL-3, LLC

                                        By:   Wells  Fargo Bank  Northwest,
                                              National Association, not in its
                                              individual capacity but solely as
                                              the Lessor Manager


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness


                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CONNECTICUT, NATIONAL ASSOCIATION,
                                        as Indenture Trustee and Account Bank


_____________________________           By:____________________________________
Witness                                 Name:
                                        Title:


_____________________________
Witness
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________ personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.





                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
STATE OF                            )
                                    )        ACKNOWLEDGMENT
COUNTY OF                           )

     I,_________________________________, Notary Public for the Sate of
________________, do hereby certify that the above-named,______________________
___________________________ personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand an official seal this the________ day of__________, 2001.





                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

All that certain piece, parcel, or lot of land situate, lying and being in
Cherokee County, South Carolina, and being shown and designated as 60.35 acres
on a survey dated July 21, 2001, revised September 18, 2001 prepared by
Professional Surveying Services for Broad River Energy, LLC and, according to
said survey, having the following metes and bounds:

Commencing at an existing PK nail in the center of the intersection of Old Ford
Road (SC Highway S-11-50) and Victory Trail (US Highway 329), thence proceeding
North 23-25-35 West 869.86' to an existing iron pin being a common corner of the
subject property, the right of way of Victory Trail and property of George and
Sheri McAbee and being the point of beginning, thence South 48-08-18 West for a
distance of 175.29' to a new iron pin; thence North 71-14-56 West for a distance
of 154.21' to a new iron pin; thence North 71-14-56 West for a distance of
649.72' to a new iron pin; thence South 65-27-23 West for a distance of 427.49'
to a new iron located on the northeastern right of way of Old Ford Road (SC
Highway S-11-50), thence from said point of beginning North 60-16-19 West for a
distance of 92.28' to a point; thence North 56-10-13 West for a distance of
88.18' to a point; thence North 55-42-37 West for a distance of 82.30' to a
point; thence North 53-16-26 West for a distance of 71.52' to a point; thence
North 52-27-22 West for a distance of 82.98' to a point; thence North 52-41-28
West for a distance of 75.44' to a point; thence North 54-42-28 West for a
distance of 65.08' to a point; thence North 57-40-37 West for a distance of
58.84' to a point; thence North 60-36-21 West for a distance of 63.75' to a
point; thence North 64-06-03 West for a distance of 40.07' to a point; thence
North 64-06-03 West for a distance of 45.30' to a point; thence North 67-35-54
West for a distance of 73.25' to a point; thence North 71-21-36 West for a
distance of 31.41' to a point; thence North 71-21-36 West for a distance of
41.47' to a point; thence North 74-35-41 West for a distance of 62.79' to a
point; thence North 77-23-54 West for a distance of 45.86' to a point thence
North 79-42-10 West for a distance of 51.62' to a point; thence North 81-57-05
West for a distance of 51.46' to a point; thence North 82-49-05 West for a
distance of 59.21' to a new iron pin; thence North 35-23-20 East for a distance
of 1,164.01' to a new iron, thence North 35-23-20 East for a distance of 457.09'
to an existing iron pin; thence North 33-29-01 East for a distance of 473.49' to
a large 2" iron; thence North 20-04-41 West for distance of 263.22' to a large
2" iron; thence North 11-22-57 West for a distance of 131.31' to a large 2"
iron; thence North 10-02-03 East for a distance of 166.70' to a new iron located
on the southwestern
<PAGE>
right of way of Victory Trail (US Highway 329); thence continuing along the
southwestern right of way of Victory Trail (US Highway 329) the following
courses and distances: (1) South 20-59-24 East for a distance of 447.48' to a
point; (2) South 13-42-40 East for a distance of 203.64' to a point; (3) South
22-57-44 East for a distance of 151.22' to a point; (4) South 36-23-09 East for
a distance of 155.06' to a point; (5) South 22-58-12 East for a distance of
346.94' to a point; (6) South 16-30-28 East for a distance of 104.58' to a
point; (7) South 23-55-06 East for a distance of 300.17' to a point; (8) South
24-54-19 East for a distance of 200.00" to a point; (9) South 11-46-16 East for
a distance of 308-06' to a point; (10) South 30-36-57 East for a distance of
150.75' to a point; (11) South 48-23-58 East for a distance of 163.56' to a
point; (12) South 24-50-48 East for a distance of 200.00' to a point; (13)
South 30-36-57 East for a distance of 100.50' to a point; and (14) South
24-57-12 East for a distance of 195.32' to an existing iron pin, being the
point of beginning.

Being the same property conveyed to Cherokee County, South Carolina by deed of
Broad River Energy LLC, dated March 1, 2000 and recorded in the Office of the
Clerk of Court for Cherokee County on March 7, 2000 in Deed Book 71 at Page 195.

                                      A-1-2
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                  FORM OF BROAD RIVER LESSOR NOTE SERIES [A][B]

                              BROAD RIVER OL-3, LLC
                NONRECOURSE PROMISSORY NOTE (BROAD RIVER) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012] [2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                  Issued at: New York, New York

                                                   Issue Date: October __, 2001

$[_____]

     BROAD RIVER OL-3, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019] together with
interest at the rate of [ ]% per annum on the principal remaining unpaid from
time to time from and including the Issue Date until paid in full. Interest on
the outstanding principal amount under this Note shall be due and payable in
arrears semiannually at the rate specified above, commencing on May 30, 2002,
and on each May 30 and November 30 thereafter until the principal of this Note
is paid in full or made available for payment. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set

                                      B-1-1
<PAGE>
forth on Schedule I multiplied by the percentage set forth on Schedule I under
the column headed "Percentage of Principal Amount Payable" for such date unless
the Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                      B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day. Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                      B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Note may be required to exchange this Note for a new Note evidencing such
assumption.

                                      B-1-4
<PAGE>
     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                    BROAD RIVER OL-3, LLC
                                    a Delaware limited liability company,



                                    By:  Wells Fargo Bank Northwest, National
                                         Association, not in its individual
                                         capacity but solely as the Lessor
                                         Manager


                                    By:  ______________________________________
                                         Name:
                                         Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                    STATE STREET BANK AND TRUST
                                    COMPANY OF CONNECTICUT,
                                    NATIONAL ASSOCIATION,
                                    not in its individual capacity, but solely
                                    as the Indenture Trustee



                                    ___________________________________________
                                    Name:
                                    Title:
<PAGE>
                             FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto


Insert Taxpayer Identification No.


__________________________________


________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)


________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing


________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.


Date: ________________              ____________________________________________
                                    (Signature of Transferor)


                                    NOTE: The signature to this assignment must
                                    correspond with the name as written upon the
                                    face of the within-mentioned instrument in
                                    every particular, without alteration or any
                                    change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                         PRINCIPAL PORTION: $25,175,000

<TABLE>
<CAPTION>
                                                                                                 Percentage of Principal
                                                                                                 -----------------------
Regular Distribution Date                                                                                 Amount Payable
-------------------------                                                                                 --------------
<S>                                                                                              <C>
May 30, 2002.............................................................................                    0.00000000%
November 30, 2002........................................................................                    0.00000000%
May 30, 2003.............................................................................                    0.00000000%
November 30, 2003........................................................................                   10.32770606%
May 30, 2004.............................................................................                   12.21449851%
November 30, 2004........................................................................                    5.26315789%
May 30, 2005.............................................................................                    5.36246276%
November 30, 2005........................................................................                    5.56107249%
May 30, 2006.............................................................................                    6.45481629%
November 30, 2006........................................................................                    6.85203575%
May 30, 2007.............................................................................                    7.54716981%
November 30, 2007........................................................................                    8.04369414%
May 30, 2008.............................................................................                    8.83813307%
November 30, 2008........................................................................                    9.33465740%
May 30, 2009.............................................................................                   10.02979146%
November 30, 2009........................................................................                    4.17080437%
                                                                                                           -------------



Total....................................................................................                  100.00000000%
                                                                                                           =============
</TABLE>
<PAGE>
                             Series B Lessor Notes.


                         PRINCIPAL PORTION: $37,875,000


<TABLE>
<CAPTION>
                                                                                                          Percentage of Principal
                                                                                                          -----------------------
Regular Distribution Date                                                                                          Amount Payable
-------------------------                                                                                          --------------
<S>                                                                                                       <C>
May 30, 2002..............................................................................                             0.00000000%
November 30, 2002.........................................................................                             0.00000000%
May 30, 2003..............................................................................                             0.00000000%
November 30, 2003.........................................................................                             0.00000000%
May 30, 2004..............................................................................                             0.00000000%
November 30, 2004.........................................................................                             0.00000000%
May 30, 2005..............................................................................                             0.00000000%
November 30, 2005.........................................................................                             0.00000000%
May 30, 2006..............................................................................                             0.00000000%
November 30, 2006.........................................................................                             0.00000000%
May 30, 2007..............................................................................                             0.00000000%
November 30, 2007.........................................................................                             0.00000000%
May 30, 2008..............................................................................                             0.00000000%
November 30, 2008.........................................................................                             0.00000000%
May 30, 2009..............................................................................                             0.00000000%
November 30, 2009.........................................................................                             0.00000000%
May 30, 2010..............................................................................                             0.00000000%
November 30, 2010.........................................................................                             0.00000000%
May 30, 2011..............................................................................                             0.00000000%
November 30, 2011.........................................................................                             0.00000000%
May 30, 2012..............................................................................                             0.00000000%
November 30, 2012.........................................................................                             0.00000000%
May 30, 2013..............................................................................                             0.00000000%
November 30, 2013.........................................................................                             0.00000000%
May 30, 2014..............................................................................                             0.00000000%
November 30, 2014.........................................................................                             0.00000000%
May 30, 2015..............................................................................                             0.00000000%
November 30, 2015.........................................................................                             0.00000000%
May 30, 2016..............................................................................                             0.00000000%
November 30, 2016.........................................................................                             0.00000000%
May 30, 2017..............................................................................                             0.00000000%
November 30, 2017.........................................................................                             0.00000000%
May 30, 2018..............................................................................                             0.00000000%
November 30, 2018.........................................................................                             0.00000000%
May 30, 2019..............................................................................                           100.00000000%
                                                                                                                     -------------

Total.....................................................................................                           100.00000000%
                                                                                                                     =============
</TABLE>

                                     B-1-10
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION


     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                        _______________________________________
                                        not in its individual capacity but
                                        solely as the Indenture Trustee



                                        By: ___________________________________
                                            Name:
                                            Title:

                                       C-2
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE




                           DESCRIPTION OF THE FACILITY


     That certain approximately 850 megawatt net nameplate capacity generating
facility, (known also as the "Broad River Facility") together with all
structures or improvements, all alterations thereto or replacements thereof,
and all other fixtures, attachments, appliances, equipment, machinery and other
articles (including, but not limited to, the property set forth below (the
"Included Property")), in each case located on the land, or the easements
appurtenant to the land, consisting of approximately sixty acres located
approximately one mile south of U.S. Highway 29 and three miles east of the
city of Gaffney in Cherokee County, South Carolina, such land described more
particularly on Exhibit A.

Included Property

     1.  Five Combustion Turbines - General Electric, Model MS7001FA; Serial #
         297329, Serial # 297330, Serial # 297331, Serial # 297620, Serial #
         297405.

     2.  Five CT Generators - General Electric, Model 7FH2, 18kV, Serial #
         337X800, Serial # 337X801, Serial # 337X802, Serial # 337X811, Serial
         # 337X812.

     3.  Three Innovative Steam Technologies Once through Steam Generators
         (OTSGs); Serial # C00037-2, Serial # C00037-1, Serial # C00037-0.

     4.  Five Combustion Turbine Step-up Transformers (GSU) - Prolec, Serial #
         G574-01, Serial # G574-02, Serial # G574-03, Serial # G574-04, Serial
         # G574-05 and other interconnection equipment associated with the
         Broad River Facility.

                                     D-1-1
<PAGE>
                                                                     SCHEDULE I
                                                             TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

Initial Aggregate Principal Amount:         $25,175,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:

<TABLE>
<CAPTION>
                                                                                                            Percentage of Principal
                                                                                                            -----------------------
Regular Distribution Date                                                                                            Amount Payable
-------------------------                                                                                            --------------
<S>                                                                                                         <C>
May 30, 2002.............................................................................                                0.00000000%
November 30, 2002........................................................................                                0.00000000%
May 30, 2003.............................................................................                                0.00000000%
November 30, 2003........................................................................                               10.32770606%
May 30, 2004.............................................................................                               12.21449851%
November 30, 2004........................................................................                                5.26315789%
May 30, 2005.............................................................................                                5.36246276%
November 30, 2005........................................................................                                5.56107249%
May 30, 2006.............................................................................                                6.45481629%
November 30, 2006........................................................................                                6.85203575%
May 30, 2007.............................................................................                                7.54716981%
November 30, 2007........................................................................                                8.04369414%
May 30, 2008.............................................................................                                8.83813307%
November 30, 2008........................................................................                                9.33465740%
May 30, 2009.............................................................................                               10.02979146%
November 30, 2009........................................................................                                4.17080437%
                                                                                                                       -------------



Total....................................................................................                              100.00000000%
                                                                                                                       =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                              SERIES B LESSOR NOTE


<TABLE>
<S>                                         <C>
Initial Aggregate Principal Amount:         $37,875,000
Final Maturity Date:                        May 30, 2019
Interest Rate:                              9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     Percentage of Principal
                                                                                                     -----------------------
Regular Distribution Date                                                                                     Amount Payable
-------------------------                                                                                     --------------
<S>                                                                                                  <C>
May 30, 2002..............................................................................                       0.00000000%
November 30, 2002.........................................................................                       0.00000000%
May 30, 2003..............................................................................                       0.00000000%
November 30, 2003.........................................................................                       0.00000000%
May 30, 2004..............................................................................                       0.00000000%
November 30, 2004.........................................................................                       0.00000000%
May 30, 2005..............................................................................                       0.00000000%
November 30, 2005.........................................................................                       0.00000000%
May 30, 2006..............................................................................                       0.00000000%
November 30, 2006.........................................................................                       0.00000000%
May 30, 2007..............................................................................                       0.00000000%
November 30, 2007.........................................................................                       0.00000000%
May 30, 2008..............................................................................                       0.00000000%
November 30, 2008.........................................................................                       0.00000000%
May 30, 2009..............................................................................                       0.00000000%
November 30, 2009.........................................................................                       0.00000000%
May 30, 2010..............................................................................                       0.00000000%
November 30, 2010.........................................................................                       0.00000000%
May 30, 2011..............................................................................                       0.00000000%
November 30, 2011.........................................................................                       0.00000000%
May 30, 2012..............................................................................                       0.00000000%
November 30, 2012.........................................................................                       0.00000000%
May 30, 2013..............................................................................                       0.00000000%
November 30, 2013.........................................................................                       0.00000000%
May 30, 2014..............................................................................                       0.00000000%
November 30, 2014.........................................................................                       0.00000000%
May 30, 2015..............................................................................                       0.00000000%
November 30, 2015.........................................................................                       0.00000000%
May 30, 2016..............................................................................                       0.00000000%
November 30, 2016.........................................................................                       0.00000000%
May 30, 2017..............................................................................                       0.00000000%
November 30, 2017.........................................................................                       0.00000000%
May 30, 2018..............................................................................                       0.00000000%
November 30, 2018.........................................................................                       0.00000000%
May 30, 2019..............................................................................                     100.00000000%
                                                                                                               -------------



Total.....................................................................................                     100.00000000%
                                                                                                               =============
</TABLE>

                                  SCHEDULE 1-2


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.22
<SEQUENCE>25
<FILENAME>f80168ex4-22_22.txt
<DESCRIPTION>EXHIBIT 4.22.22
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.22


WHEN RECORDED, RETURN TO:

Sarah M. Ward, Esq.
Skadden, Arps, Slate, Meagher & Flom, LLP
Four Times Square
New York, New York  10036

================================================================================

                          INDENTURE OF TRUST, MORTGAGE,
                      SECURITY AGREEMENT AND FIXTURE FILING

                          Dated as of October 18, 2001

                                    between

                             BROAD RIVER OL-4, LLC,
                                  as Mortgagor

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                as Indenture Trustee, Mortgagee and Account Bank


                              BROAD RIVER FACILITY

================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                      Page
<S>                                                                                   <C>
SECTION 1.  DEFINITIONS..............................................................  8

SECTION 2.  THE LESSOR NOTES......................................................... 10
     Section 2.1.   Limitation on Lessor Notes....................................... 10
     Section 2.2.   Initial Lessor Notes............................................. 10
     Section 2.3.   Execution and Authentication of Lessor Notes..................... 10
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes................... 11
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee.......................................................... 12
     Section 2.6.   Method of Payment................................................ 13
     Section 2.7.   Application of Payments.......................................... 14
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.............. 14
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes................ 15
     Section 2.10.  Redemptions; Assumption.......................................... 16
     Section 2.11.  Payment of Expenses on Transfer.................................. 21
     Section 2.12.  Additional Lessor Notes.......................................... 21
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend..................................................... 24
     Section 2.14.  Security for and Parity of Lessor Notes.......................... 25
     Section 2.15.  Acceptance of the Indenture Trustee.............................. 25

SECTION 3.  RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
            FROM INDENTURE ESTATE.................................................... 25
     Section 3.1.   Distribution of Periodic Rent.................................... 25
     Section 3.2.   Payments Following Event of Loss or Other Early Termination...... 27
     Section 3.3.   Payments After Lease Indenture Event of Default.................. 28
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee..... 29
     Section 3.5.   Application of Certain Other Payments............................ 30
     Section 3.6.   Other Payments................................................... 30
     Section 3.7.   Excepted Payments................................................ 31
     Section 3.8.   Distributions to the Owner Lessor................................ 31
     Section 3.9.   Payments Under Assigned Documents................................ 31
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee........ 31
</TABLE>

                                        i
<PAGE>
<TABLE>
<S>                                                                                   <C>
SECTION 4.  COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE....... 35
     Section 4.1.   Covenants of Owner Lessor........................................ 35
     Section 4.2.   Lease Indenture Events of Default................................ 36
     Section 4.3.   Remedies of the Indenture Trustee................................ 38
     Section 4.4.   Right to Cure Certain Lease Events of Default.................... 40
     Section 4.5.   Rescission of Acceleration....................................... 43
     Section 4.6.   Return of Indenture Estate, Etc.................................. 44
     Section 4.7.   Power of Sale and Other Remedies................................. 45
     Section 4.8.   Appointment of Receiver.......................................... 46
     Section 4.9.   Remedies Cumulative.............................................. 46
     Section 4.10.  Waiver of Various Rights by the Owner Lessor..................... 46
     Section 4.11.  Discontinuance of Proceedings.................................... 47
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
                    the Facility Lease............................................... 47
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc......... 47
     Section 4.14.  Further Assurances............................................... 48
     Section 4.15.  Waiver of Past Defaults.......................................... 48

SECTION 5.  DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR... 48
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default........... 48
     Section 5.2.   Actions Upon Instructions Generally.............................. 48
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease................................................... 49
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification........... 49
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions........................ 50
     Section 5.6.   Certain Rights of the Owner Lessor............................... 50
     Section 5.7.   Restrictions on Dealing with Indenture Estate.................... 53
     Section 5.8.   Filing of Financing Statements and Continuation Statements....... 53

SECTION 6.  INDENTURE TRUSTEE AND OWNER LESSOR....................................... 54
     Section 6.1.   Acceptance of Trusts and Duties.................................. 54
     Section 6.2.   Absence of Certain Duties........................................ 56
     Section 6.3.   Representations and Warranties................................... 57
     Section 6.4.   No Segregation of Moneys; No Interest............................ 57
     Section 6.5.   Reliance; Agents; Advice of Experts.............................. 58
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                   <C>
SECTION 7.  SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES......................  59
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
                    of Successor....................................................  59
     Section 7.2.   Appointment of Additional and Separate Trustees.................  61

SECTION 8.  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS........  63
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations....................................... 63
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent..... 64
     Section 8.3.   Conditions to Action by the Indenture Trustee.................... 65

SECTION 9.  MISCELLANEOUS............................................................ 66
     Section 9.1.   Surrender, Defeasance and Release................................ 66
     Section 9.2.   Conveyances Pursuant to the Site Lease........................... 67
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances....................................................... 67
     Section 9.4.   Indenture for Benefit of Certain Persons Only.................... 67
     Section 9.5.   Notices; Furnishing Documents, etc............................... 68
     Section 9.6.   Severability..................................................... 70
     Section 9.7.   Limitation of Liability.......................................... 70
     Section 9.8.   Written Changes Only............................................. 70
     Section 9.9.   Counterparts..................................................... 70
     Section 9.10.  Successors and Permitted Assigns................................. 70
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate..... 71
     Section 9.14.  Withholding Taxes: Information Reporting......................... 72
     Section 9.15.  Fixture Financing Statement...................................... 73
</TABLE>

<TABLE>
<CAPTION>
EXHIBITS

<S>                 <C>
Exhibit A           Description of Facility Site
Exhibit B           Form of Lessor Note
Exhibit C           Form of Certificate of Authentication
Exhibit D           Description of the Facility
</TABLE>

APPENDIX A Definitions

                 INDENTURE OF TRUST, MORTGAGE,

                                       iii
<PAGE>
                      SECURITY AGREEMENT AND FIXTURE FILING

     This INDENTURE OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
(as amended, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this "Indenture"), dated as of October 18, 2001,
between BROAD RIVER OL-4, LLC, having an address set forth in Section 9.5
hereof, a Delaware limited liability company created for the benefit of the
Owner Participant referred to below, as mortgagor (the "Owner Lessor") and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
having an address set forth in Section 9.5 hereof, as mortgagee on behalf of
the Noteholders (the "Indenture Trustee") and as the Account Bank.

                                  WITNESSETH:

     WHEREAS, Broad River Energy, LLC (the "Facility Lessee") is the lessee
under that certain Lease Agreement (the "FILOT Lease") by and between itself
and Cherokee County, South Carolina, a body politic and corporate and a
political subdivision of the State of South Carolina, as landlord (the
"County") in connection with the Facility and the Facility Site (each as
hereinafter defined), a memorandum of which FILOT Lease was recorded in the
office of the Cherokee County Clerk of Court in Book 71, page 200;

     WHEREAS, the Facility Lessee has assigned the Undivided Interest and the
Ground Interest to the Owner Lessor pursuant to that certain Assignment
Agreement, a memorandum of which shall be recorded with this Indenture in the
Office of the Cherokee County Clerk of Court;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has subleased from the
Owner Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Lease, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Facility Site Lease"),
with the Facility Lessee pursuant to which the Facility Lessee has subleased
the Ground Interest from the Owner Lessor for a term of years;

                                        2
<PAGE>
     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;

     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Assumption Price for the Undivided
Interest assigned to the Owner Lessor by the Facility Lessee and (ii) grant to
the Indenture Trustee the security interests herein provided;

     WHEREAS, this Indenture is regarded as a mortgage under the laws of the
State of South Carolina as a security agreement under the Uniform Commercial
Codes of the States of New York, Delaware and South Carolina, and as a fixture
filing under the laws of the State of South Carolina;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, the latest stated maturity date of the Initial Lessor Notes is
May 30, 2019;

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and

                                        3
<PAGE>
accrued, deferred or capitalized interest on the Lessor Notes and of all other
amounts owing with respect to all Lessor Notes from time to time outstanding
hereunder, and the prompt payment when and as due of any and all other amounts
from time to time owing in respect of the Secured Indebtedness and (ii) the
performance and observance by the Owner Lessor for the benefit of the holders
of the Lessor Notes and the Indenture Trustee of all other obligations,
agreements, and covenants of the Owner Lessor set forth hereinafter and in the
Lessor Notes, the Operative Documents and the other documents, certificates and
agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, mortgages, conveys, assigns,
transfers, pledges, bargains, sells and confirms unto the Indenture Trustee and
its successors and permitted assigns, for the benefit of the holders of the
Lessor Notes from time to time, a first priority security interest in and
mortgage lien on all estate, right, title and interest of the Owner Lessor in,
to and under the following described property, rights, interests and
privileges, whether now held or hereafter acquired (which collectively,
including all property hereafter specifically subjected to the security
interest created by this Indenture by any supplement hereto, exclusive of
Excepted Payments) are included within, and are hereafter referred to as, the
"Indenture Estate"):

     (1)  the Undivided Interest (including the Facility Purchase Option), the
Owner Lessor's interest in any Components; the Owner Lessor's interest in any
Improvements; the Ground Interest (including the Land Purchase Option); the
Facility Lease and all payments of any kind by the Facility Lessee thereunder
(including Rent); any rights of the Owner Lessor as assignee of the Facility
Lessee under the Facility Lease; the Facility Site Lease and all payments of
any kind by the Facility Lessee thereunder; the Assignment Agreement (and all
rights with respect to the FILOT Lease conveyed thereby); the Owner Lessor's
interest in all tangible property located on or at or attached to the Facility
Site as to which an interest in such tangible property arises under applicable
real estate law ("fixtures"); the Calpine Guaranty, the Ownership and Operation
Agreement and all and any interest in any property now or hereafter granted to
the Owner Lessor pursuant to any provision of the Facility Lease or the FILOT
Lease (including, without limitation, the option to purchase set forth in
Section 10.02 of the FILOT Lease); the FILOT Lease, and each other Operative
Document to which the Owner Lessor is a party other than the Tax Indemnity
Agreement, the Tri-Party Agreement and the LLC Agreement (the Undivided
Interest, the Owner Lessor's interest in any Components, the Owner Lessor's
interest in any fixtures, Improvements and the Ground Interest are collectively
referred to as the "Property Interest" and the documents specifically referred
to above in this paragraph (1) are collectively referred to as the

                                        4
<PAGE>
"Assigned Documents"), including, without limitation, (x) all rights of the
Owner Lessor to receive any payments or other amounts or, subject to Section
5.6 hereof, to exercise any election or option or to make any decision or
determination or to give or receive any notice, consent, waiver or approval or
to make any demand or to take any other action under or in respect of any such
document, to accept surrender or redelivery of the Property Interest or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Lessor, whether acting under any such document or by statute or at law or
in equity or otherwise, arising out of any Lease Default or Lease Event of
Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or any
part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the

                                        5
<PAGE>
extent of the Owner Lessor's interest therein) of all insurance maintained
pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests therein
now held or hereafter acquired by the Owner Lessor pursuant to the terms of any
Assigned Document, wherever located, including, without limitation, that which
may be acquired pursuant to the option to purchase in Section 10.02 of the
FILOT Lease; and

     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the

                                        6
<PAGE>
Facility Lease (other than Excepted Payments) directly to the Indenture Trustee
at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Indenture. Further, the Owner Lessor agrees
that promptly on receipt thereof, it will transfer to the Indenture Trustee any
and all moneys from time to time received by it constituting part of the
Indenture Estate, whether or not expressly referred to in the immediately
preceding sentence, for distribution pursuant to this Indenture.

     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
South Carolina.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall the Indenture Trustee or the Noteholders
be required or obligated in any manner, except as herein expressly provided, to
perform or fulfill any obligation of the Owner Lessor under or pursuant to any
such Assigned Document or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim, or to take any action to
collect or enforce the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.

                                        7
<PAGE>
     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under (other than (x) the exercise of the
purchase option pursuant to the FILOT Lease and the right to make the
determinations and take the actions contemplated by Section 14 of the
Participation Agreement (subject to the satisfaction of the conditions set
forth in Section 14 of the Participation Agreement) including, without
limitation, the Owner Lessor's right to direct that title to the Land (to the
extent of the Owner Lessor's Percentage Interest) be conferred from the County
to the Facility Lessee and (y) any action pursuant to Section 5.20 of the
Participation Agreement (subject to the conditions set forth in Section 5.20 of
the Participation Agreement)), the terms of any of the Assigned Documents or
revoke or terminate any of the Assigned Documents, (ii) settle or compromise
any claim arising under any of the Assigned Documents, or (iii) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder
(other than (x) the exercise of the purchase option pursuant to the FILOT Lease
and the right to make the determinations and take the actions contemplated by
Section 14 of the Participation Agreement (subject to the satisfaction of the
conditions set forth in Section 14 of the Participation Agreement) including,
without limitation, the Owner Lessor's right to direct that title to the Land
(to the extent of the Owner Lessor's Percentage Interest) be conferred from the
County to the Facility Lessee and (y) any action pursuant to Section 5.20 of
the Participation Agreement (subject to the conditions set forth in Section
5.20 of the Participation Agreement)).

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     In the event Owner Lessor acquires the fee simple title or any other
greater estate or interest in the Facility and/or the Facility Site (including,
without limitation, pursuant

                                        8
<PAGE>
to the option to purchase as set forth in Section 10.02 of the FILOT Lease),
such acquisition will merge with the leasehold estate created by the FILOT
Lease, and such other title, estate or interest shall immediately and
automatically become subject to the lien hereof and such title, estate or
interest shall be part of the Indenture Estate and included within the term and
definition of "Property Interest." The Owner Lessor shall execute, acknowledge
and deliver any instruments requested by the Indenture Trustee to confirm the
coverage of the lien hereof upon such other greater estate or interest. The
Owner Lessor shall pay any and all conveyance or mortgage taxes, and filing or
similar fees in connection with the execution, delivery, filing or recording of
any such instrument.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes from time to time
outstanding and to protect the security of this Indenture, and the Indenture
Trustee agrees to accept the trusts and duties hereinafter set forth, as
follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 850 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Gaffney, South Carolina and more fully
described in Exhibit D to this Indenture. The Facility does not include the
Facility Site.

                                        9
<PAGE>
     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and accrued, deferred or capitalized interest on and other amounts due
under all Lessor Notes and all other sums payable to the Indenture Trustee or
the Noteholders from time to time hereunder and under the Participation
Agreement and the other Operative Documents by the Facility Lessee, the Owner
Participant and the Owner Lessor, including:

          (i)  The indebtedness evidenced by the Lessor Notes, together with
     accrued, deferred or capitalized interest thereon at the rate provided
     in each Lessor Note and the Make-Whole Amount thereon and together with
     any and all renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Lessor Notes, and principal of such Lessor
     Notes being due and payable as provided in such Lessor Notes;

          (ii)  Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant
     to Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with accrued, deferred or capitalized interest
     thereon at the rate provided in each Additional Lessor Note and the
     Make-Whole Amount thereon (if any) and together with any and all
     renewals, modifications, consolidations and extensions of the
     indebtedness evidenced by such Additional Lessor Notes, and principal of
     such Additional Lessor Notes being due and payable as provided in each
     such Additional Lessor Note.

          (iii)  Any and all additional advances made by the Indenture Trustee
     to protect or preserve the Indenture Estate or the security interest and
     other interests created hereby on the Indenture Estate or for taxes,
     assessments or insurance premiums as hereinafter provided or for
     performance of any of the Owner Lessor's obligations hereunder or for any
     other purpose provided herein, including advances made pursuant to
     Section 4.13 hereof (whether or not the Owner Lessor remains the owner of
     the Indenture Estate at the time of such advances); and

                                       10
<PAGE>
          (iv)  Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided leasehold
interest in the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.  Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

     Section 2.2.  Initial Lessor Notes. There are hereby created and
established hereunder two series of Lessor Notes consisting of the Series A
Lessor Notes and the Series B Lessor Notes, each in substantially the form set
forth in Exhibit B to this Indenture and each such series in the aggregate
principal amount, having installments payable on the dates and in the amounts
and having the final maturity date and interest rate set forth in Schedule I to
this Indenture (respectively, the "Series A Lessor Notes" and the "Series B
Lessor Notes", collectively, the "Initial Lessor Notes" or, individually, an
"Initial Lessor Note".

     Section 2.3.  Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such

                                       11
<PAGE>
Lessor Note has been duly authenticated and delivered hereunder. The Indenture
Trustee shall authenticate and deliver the Initial Lessor Notes for original
issue on the Closing Date in the principal amount specified in Section 2.2,
upon a written order of the Owner Lessor signed by the Lessor Manager. The
Indenture Trustee shall authenticate and deliver Additional Lessor Notes, upon
a written order of the Owner Lessor executed by the Lessor Manager and
satisfaction of the conditions specified in Section 2.12. Such order shall
specify the principal amount of the Additional Lessor Notes to be authenticated
and the date on which the original issue of Additional Lessor Notes is to be
authenticated.

     Section 2.4.  Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

     (b)  Principal and Interest. The principal amount of each series of Initial
Lessor Notes shall be due and payable in a series of installments having final
payment dates set forth in Schedule I hereto. The principal of each Initial
Lessor Note shall be due and payable in installments on the dates and in the
amounts set forth in Schedule I hereto. Schedule I hereto to the contrary
notwithstanding, the last payment made under such Initial Lessor Note shall be
equal to the then unpaid balance of the principal of such Lessor Note plus all
accrued and unpaid interest on, and any other amounts due under, such Initial
Lessor Note. Each Initial Lessor Note shall bear interest on the principal from
time to time outstanding from and including the date of issuance thereof
(computed on the basis of a 360-day year of twelve 30-day months) until paid in
full at the rate set forth in such Initial Lessor Note and Schedule I hereto.
Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)  Overdue Payments. Interest (computed on the basis of a 360-day year of
twelve 30-day months) on any overdue principal, Make-Whole Amount (if any) and,
to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

                                       12
<PAGE>
     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.  Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor Notes or
under this Indenture. The Indenture Trustee and each Noteholder, by its
acceptance thereof, agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the
Indenture Trustee or such Noteholder, as the case may be, as herein provided
and that, except as expressly provided in this Indenture, the Participation
Agreement or any other Operative Document, none of the Owner Participant, the
Owner Lessor, the Trust Company, the Lease Indenture Company, nor the Indenture
Trustee, nor any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Indenture Trustee for any amounts payable hereunder, under
such Lessor Note or for any performance to be rendered under any Assigned
Document or for any liability under any Assigned Document. Without prejudice to
the foregoing, the Owner Lessor will duly and punctually pay or cause to be
paid the principal of, Make-Whole Amount, if any, and interest on all Lessor
Notes according to their terms and the terms of this Indenture. Nothing
contained in this Section 2.5 limiting the liability of the Owner Lessor shall
derogate from the right of the Indenture Trustee and the Noteholders to proceed
against the Indenture Estate and the Calpine Guaranty to secure and enforce all
payments and obligations due hereunder and under the Assigned Documents and the
Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

                                       13
<PAGE>
     Section 2.6.  Method of Payment. The Owner Lessor shall maintain an office
or agency where Lessor Notes may be presented for payment (the "Paying Agent").
The Owner Lessor may have one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Owner Lessor initially
appoints the Indenture Trustee as Paying Agent in connection with the Lessor
Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor shall
require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Lessor Notes and shall notify the
Indenture Trustee of any default by the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any

                                       14
<PAGE>
Lessor Note, the Owner Lessor and the Indenture Trustee may deem and treat the
Person in whose name any Lessor Note is registered on the Note Register as the
absolute owner and holder of such Lessor Note for the purpose of receiving
payment of all amounts payable with respect to such Lessor Note and for all
other purposes, and neither the Owner Lessor nor the Indenture Trustee shall be
affected by any notice to the contrary. All payments made on any Lessor Note in
accordance with the provisions of this Section 2.6 shall be valid and effective
to satisfy and discharge the liability on such Lessor Note to the extent of the
sums so paid and (except as provided herein) neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     Section 2.7.  Application of Payments.  Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.  Registration, Transfer and Exchange of Lessor Notes.  The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar").  The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange.  The Owner Lessor may have one or more co-registrars.  The Owner
Lessor initially appoints the Indenture Trustee as Registrar in connection with
the Lessor Notes.  The Indenture Trustee shall maintain at the Indenture
Trustee Office a register in which it will provide for the registration,
registration of transfer and exchange of Lessor Notes (such register being
referred to herein as the "Note Register").  If any Lessor Note is surrendered
at said office for registration of transfer or exchange (accompanied by a
written instrument of transfer duly executed by or on behalf of the holder
thereof, together with the amount of any applicable transfer taxes), the Owner
Lessor will execute and the Indenture Trustee will authenticate and deliver, in
the name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount.  Any Lessor Note or Lessor Notes issued in a registration of transfer
or exchange shall be valid

                                       15
<PAGE>
obligations of the Owner Lessor entitled to the same security and benefits to
which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or
Lessor Notes surrendered.  Every Lessor Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Indenture Trustee duly executed by the holder thereof or his attorney duly
authorized in writing, and the Indenture Trustee may require an opinion of
counsel as to compliance of any such transfer with the Securities Act.  The
Indenture Trustee shall make a notation on each new Lessor Note of the amount
of all payments of principal previously made on the old Lessor Note or Lessor
Notes with respect to which such new Lessor Note is issued and the date on
which such new Lessor Note is issued and the date to which interest on such old
Lessor Note or Lessor Notes shall have been paid.  The Indenture Trustee shall
not be required to register the transfer or exchange of any Lessor Note during
the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.  Mutilated, Destroyed, Lost or Stolen Lessor Notes.  Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount.  Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.  Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this

                                       16
<PAGE>
Indenture shall be redeemed, in whole but not in part, at a price equal to the
principal amount thereof, together with accrued interest thereon, if any, on
the earliest to occur on the date of redemption, but without any Make-Whole
Amount or other premium:

          (i)  if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of the occurrence of an Event of Loss (other than a
     Regulatory Event of Loss or an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss"), on the applicable
     Termination Date provided in Section 10.2(a) of the Facility Lease;

          (ii)  if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination
     Date provided in Section 10.2(a) of the Facility Lease;

          (iii)  if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv)  if the Facility Lease is terminated pursuant to clause (a)
     of Section 14.1 thereof, on the Obsolescence Termination Date.  Any such
     redemption shall be made in accordance with the applicable provisions of
     Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee

                                       17
<PAGE>
and the Owner Lessor.  The Facility Lessee will execute and deliver, and the
Indenture Trustee will authenticate, to each Noteholder in exchange for such
old Lessor Note a new Lessor Note, in a principal amount equal to the
outstanding principal amount of such old Lessor Note and otherwise in
substantially similar form and tenor to such old Lessor Note but indicating
that the Facility Lessee is the issuer thereof.  When such assumption agreement
becomes effective, the Owner Lessor shall be released and discharged without
further act from all obligations and liabilities assumed by the Facility
Lessee.  All documentation in connection with any such assumption (including an
indenture supplemental to this Indenture which shall, among other things,
contain provisions appropriately amending references to the Facility Lease in
this Indenture and contain covenants by the Facility Lessee similar to those
contained in the Facility Lease (other than any covenants which were solely for
the benefit of the Owner Participant), changed as appropriate, and amendments
or supplements to the other Operative Documents, officers' certificates,
opinions of counsel and regulatory approvals) shall be prepared by and at the
expense of the Facility Lessee acceptable in form and substance to the
Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)  the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to
     the effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption
     Document and the assumptions contemplated thereby do not contravene (x)
     the Organic Documents of the Facility Lessee, (y) any provision of any
     security issued by the Facility Lessee or of any agreement, instrument or
     other undertaking to which the Facility Lessee is a party or by which it
     or any of its property is bound or (z) any Applicable Law, (3) no
     Governmental Approval is necessary or required in connection with any
     Assumption Document or the assumption contemplated thereby (or, if any
     such Governmental Approval is necessary or required, that the same has
     been duly obtained and is final and in full force and effect and any
     period for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired

                                       18
<PAGE>
     without any such notice or application having been made), (4) each
     Assumption Document is a legal, valid and binding obligation of the
     Facility Lessee, enforceable in accordance with its terms, (5) such
     assumption agreement and the assumption of the Lessor Notes thereunder
     shall not cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder and (6) the lien of this Indenture will continue
     to be a first priority perfected lien on the Indenture Estate;

          (ii)  the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause a
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder;

          (iii)  Moody's and S&P shall have confirmed that such assumption will
     not result in a downgrading of the rating on the Certificates;

          (iv) the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v)  the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)  All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to

                                       19
<PAGE>
     Section 11.2 of the Participation Agreement.  The Owner Lessor's failure
     to consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)  All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease.  The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (iii)  The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clauses (v),
     (vi) or (vii) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur.  The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period.  Such notice shall
be accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       20
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity.  Each such notice shall state:

          (i)  the date of redemption;

          (ii)  the redemption price;

          (iii)  the name and address of the Paying Agent;

          (iv)  that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v)  that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue
     on and after the redemption date; and

          (vi)  the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes.  In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption.  Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.  Payment of Expenses on Transfer.  Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the
Owner Lessor or the Indenture Trustee may require from the party requesting
such new Lessor Note or Lessor Notes payment of a sum to reimburse the Owner
Lessor and the Indenture Trustee for, or to provide funds for, the payment on
an After-Tax Basis to the Owner Lessor, the

                                       21
<PAGE>
Indenture Trustee and the Owner Participant of any tax or other governmental
charge in connection therewith or any charges and expenses connected with such
tax or governmental charge paid or payable by the Owner Lessor or the Indenture
Trustee.

     Section 2.12.  Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture.  Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date.  The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       22
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee.  Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i)  a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii)  an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the
     conditions in respect of the issuance of such Additional Lessor Notes
      contained in this Section 2.12 have been satisfied, (3) specifying the
     amount of the costs and expenses relating to the issuance and sale of such
     Additional Lessor Notes, (4) stating that payments pursuant to the
     Facility Lease and all supplements thereto of Periodic Rent and
     Termination Value, together with all other amounts payable pursuant to the
     terms of the Facility Lease, are calculated to be sufficient to pay when
     due all of the principal of and interest on the outstanding Lessor Notes,
     after taking into account the issuance of such Additional Lessor Notes and
     any related redemption of Lessor Notes theretofore outstanding and (5) all
     conditions to the Supplemental Financing or refinancing contained in
     Section 11.1 or ll.2 of the Participation Agreement or in any other
     provision of the Operative Documents have been satisfied;

          (iii)  with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f) of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and
     is continuing;

          (iv)  such additional documents, certificates and opinions as shall
     be reasonably required by the Indenture Trustee, and as shall be
     reasonably acceptable to the Indenture Trustee;

                                       23
<PAGE>
          (v)  a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address
     set forth therein, and in such principal amounts as are stated therein,
     upon payment to the Indenture Trustee, but for the account of the Owner
     Lessor, of the sum or sums specified in such request and authorization;

          (vi)  the consent of the Facility Lessee to such request and
     authorization; and

          (vii)  an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and enforceability of the Additional Lessor Notes and that all
     conditions hereunder to the authentication and delivery of such Additional
     Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     (e)  This Indenture secures not only existing indebtedness but also
secures, in accordance with Section 29-3-50, as amended, Code of Laws of South
Carolina 1976, all future advances and readvances that may subsequently be made
to the Owner Lessor by the Indenture Trustee, evidenced by the Lessor Notes,
including any Additional Lessor Notes, or other promissory notes, and all
renewals and extensions thereof; provided however, that nothing contained
herein shall create an obligation on the part of the Indenture Trustee to make
future advances or readvances to the Owner Lessor, the maximum amount of all
indebtedness outstanding at any one time secured hereby not to exceed Two
Hundred Fifty Two Million Two Hundred Thousand Dollars ($252,200,000), plus
interest thereon (whether deferred, accrued, or capitalized), all charges and
expenses of collection incurred by the holder of this Indenture, including
court costs and reasonable attorney's fees, or pursuant to promissory notes or
other instruments evidencing such future advances which may be hereafter
executed and delivered by Owner Lessor to Indenture Trustee.  In the event that
any notice described in Section 29-3-50 is properly filed and served on the
Indenture Trustee as set forth

                                       24
<PAGE>
therein, any commitment, agreement, or obligation to make future advances to or
for the benefit of Owner Lessor shall immediately terminate.

     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
Laws; Legend.  Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended.  Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the Owner Lessor an opinion of counsel, which
opinion and which counsel shall be reasonably satisfactory to the Indenture
Trustee, the Owner Lessor and the Facility Lessee, to the effect that such
transfer will not violate the registration provisions of the Securities Act or
require qualification of this Indenture under the Trust Indenture Act of 1939,
as amended, and all Lessor Notes issued hereunder shall be endorsed with a
legend which shall read substantially as follows:

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
     NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.  Security for and Parity of Lessor Notes.  All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.  Acceptance of the Indenture Trustee.  Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                   SECTION 3.
                     RECEIPT, DISTRIBUTION AND APPLICATION
                        OF INCOME FROM INDENTURE ESTATE

     Section 3.1.  Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution.  Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic

                                       25
<PAGE>
Rent received by the Indenture Trustee shall be distributed by the Indenture
Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any Noteholder
     over any other Noteholder, in the proportion that the amount of such
     payment then due and payable under each such Lessor Note bears to the
     aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default.  If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First."  To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be.  The portion
of each such payment made to the Indenture Trustee which is to be distributed
by the Indenture Trustee in payment of Lessor Notes shall be applied in
accordance with Section 2.7 hereof.  Any payment received by the Indenture
Trustee pursuant to Section 4.3 hereof as a result of payment by the Owner
Lessor of principal or interest or both (as well as any interest on overdue
principal and, to the extent permitted by Applicable Law, on overdue interest)
then due on all Lessor Notes shall be distributed to the Noteholders, ratably,
without priority of one over the other, in the proportion that the amount of
such payment or payments then due and unpaid on all Lessor Notes held by each
such Noteholder bears to the aggregate amount of the payments then due and
unpaid on all Lessor Notes outstanding; and the Owner Lessor shall (to the
extent of such payment made by it) be subrogated to the rights of the

                                       26
<PAGE>
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee.  If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the extent not then required to be
distributed pursuant to clause "First" of Section 3.1(a)) as part of the
Indenture Estate and shall not distribute any such payment of Periodic Rent or
interest pursuant to clause "Second" of Section 3.1(a) until such time as such
Lease Indenture Event of Default shall be cured or waived or until such time as
the Indenture Trustee shall have received written instructions from a Majority
in Interest of Noteholders to make such a distribution; provided that such
amounts must be returned to the Owner Lessor within six (6) months from the
receipt thereof by the Indenture Trustee unless (i) the Indenture Trustee has
declared the unpaid principal of all Lessor Notes due and payable (or such
amounts shall have automatically become due and payable), pursuant to Section
4.2(a) and the Indenture Trustee is diligently pursuing any dispossessary
remedies available under Section 4.3 hereof (unless such remedies are stayed or
prevented by operation of law) or (ii) any other Lease Indenture Event of
Default shall have occurred during the intervening period and be continuing, in
which case, such six-month period will be restarted from the date such other
Lease Indenture Event of Default shall have occurred.  Upon the cure or waiver
of such Lease Indenture Event of Default, withheld Periodic Rent shall, subject
to clause (ii) of the immediately preceding sentence, be distributed to the
Owner Lessor (to the extent that all payments to be distributed pursuant to
clause "First" of Section 3.1(a) have been made), and no further withholding of
Periodic Rent on account of such Lease Indenture Event of Default shall be
effected.

     Section 3.2.  Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early

                                       27
<PAGE>
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
      connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder, plus the Make-Whole Amount, if any, and accrued but unpaid
     interest thereon to the scheduled date of distribution to the Noteholders
     bears to the aggregate unpaid principal amount of all such Lessor Notes
     held by all such holders, together with the Make-Whole Amount, if any,
     plus accrued but unpaid interest thereon to the date of scheduled
     distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.  Payments After Lease Indenture Event of Default.  All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the

                                       28
<PAGE>
Facility Lease or from the application of Section 4.3 hereof) and after either
(a) the Indenture Trustee has declared the Facility Lease to be in default
pursuant to Section 17 thereof or (b) the entire principal amount of Lessor
Notes shall have been declared or shall automatically have become due and
payable, together with all payments or amounts then held or thereafter received
by the Indenture Trustee hereunder, shall, so long as such declaration shall
not have been rescinded, be distributed forthwith by the Indenture Trustee in
the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
      connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then outstanding
     and all accrued but unpaid interest on such Lessor Notes to the date of
     such distribution (including interest on overdue principal and, to the
     extent permitted by Applicable Law, overdue interest) shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder and accrued but unpaid interest thereon to the scheduled date
     of distribution to the Noteholders bears to the aggregate unpaid principal
     amount of all such Lessor Notes held by all such holders and accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

                                       29
<PAGE>
     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

     Section 3.4.  Investment of Certain Payments Held by the Indenture
Trustee.  Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction.  The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3.  If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.  Application of Certain Other Payments.  Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document.  If at the time of the receipt by
the Indenture Trustee of any payment referred to in the preceding sentence
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall hold such payment as part of the Indenture Estate,
but the Indenture Trustee shall, except as otherwise provided in Section 3.1(b)
or 3.1(c) hereof, cease to hold such payment and shall apply such payment to
the purpose for which it was made in accordance with the terms of such
Operative Document if and whenever there is no longer continuing any Lease
Indenture Event of Default; provided, however, that any such payment received
by the Indenture Trustee which is payable to the Facility Lessee shall not be
held by the Indenture Trustee unless a Significant Lease Default or Lease Event
of Default shall have occurred and be continuing.

                                       30
<PAGE>
     Section 3.6.  Other Payments.  Except as otherwise provided in Section 3.5
hereof:

     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.  Excepted Payments.  Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.  Distributions to the Owner Lessor.  Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account.  Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.  Payments Under Assigned Documents.  Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder.  The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other

                                       31
<PAGE>
disposition thereof or otherwise constituting a part of the Indenture Estate to
which the Owner Lessor is not entitled hereunder, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions.  The Indenture Trustee agrees to apply payments from time to time
received by it (from the Facility Lessee, the Owner Lessor or otherwise) with
respect to the Facility Lease, any other Assigned Document or the Facility in
the manner provided in Section 2.7 hereof, and this Section 3.

     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee.  Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11  Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)  The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof.  The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto.  The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings.  This Indenture
governs and shall be the only agreement governing the Indenture Trustee's
Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture.  All such amounts shall constitute a
part of the Indenture Trustee Account Collateral and shall not constitute
payment of any Indebtedness or any other obligation of the Owner Lessor until
applied as hereinafter provided.

                                       32
<PAGE>
     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12  The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i)  Establishment of Securities Account.  The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the
     Indenture Trustee's Account as set forth in Section 3.11, (B) the
     Indenture Trustee's Account is and will be maintained as a "securities
     account" (within the meaning of Section 8-501(a) of the UCC), (C) the
     Owner Lessor is the "entitlement holder" (within the meaning of Section
     8-102(a)(7) of the UCC) in respect of the "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) credited to the Indenture
     Trustee's Account, (D) all property delivered to the Account Bank pursuant
     to this Indenture or any other Operative Document will be held by the
     Account Bank and promptly credited to the Indenture Trustee's Account by
     an appropriate entry in its records in accordance with this Indenture, (E)
     all "financial assets" (within the meaning of Section 8-102(a)(9) of the
     UCC) in registered form or payable to or to the order of and credited to
     the Indenture Trustee's Account shall be registered in the name of,
     payable to or to the order of, or indorsed to, the Account Bank or in
     blank, or credited to another securities account maintained in the name of
     the Account Bank, and in no case will any financial asset credited to the
     Indenture Trustee's Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Owner Lessor except to the extent the
     foregoing have been subsequently indorsed by the Owner Lessor to the
     Account Bank or in blank, (F) the Account Bank shall not change the name
     or account number of the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee, (G) the Account Bank is acting
     and shall at all times act as and perform all of the duties of the
     "securities intermediary," within the meaning of Article 8 of the UCC,
     with respect to the Indenture Trustee's Account and the financial assets
     credited thereto and (H) the Account Bank shall

                                       33
<PAGE>
     not enter into any other agreement governing, or with respect to, the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee.

          (ii)  Financial Assets Election.  The Account Bank agrees that each
     item of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalents or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated
     as a "financial asset" within the meaning of Section 8-l02(a)(9) of the
     UCC.

          (iii)  Entitlement Orders.  Notwithstanding anything in this
     Indenture to the contrary, if at any time the Account Bank shall receive
     any "entitlement order" (within the meaning of Section 8-102(a)(8) of the
     UCC) or any other order from the Indenture Trustee directing the transfer
     or redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person.  The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements respect to the
     financial assets credited to the Indenture Trustee's Account and the Owner
     Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements".  Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any
     financial asset relating to the Indenture Trustee's Account.

          (iv)  Subordination of Lien; Waiver of Set-Off.  In the event that
     the Account Bank has or subsequently obtains by agreement, operation of
     law or otherwise a lien or security interest in the Indenture Trustee's
     Account or any security entitlement credited thereto, the Account Bank
     agrees that such lien or security interest shall be subordinate to the
     lien and security interest of the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder.  The financial assets standing to
     the credit of the Indenture Trustee's Account will not be subject to
     deduction, set-off, banker's lien, or any other right in favor of any
     Person other than the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder (except for the face amount of any checks
     which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient funds).

                                       34
<PAGE>
          (v)  No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture.  The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof.  In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi)  Notice of Adverse Claims.  Except for the claims and interest
     of the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto.  If any
     Person asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar
     process) against the Indenture Trustee's Account or in any financial asset
     credited thereto, the Account Bank will promptly notify the Indenture
     Trustee and the Owner Lessor in writing thereof.

          (vii)  Rights and Powers of the Indenture Trustee.  The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
      neither be affected by the bankruptcy of the Owner Lessor nor the lapse
     of time.

     (b)  Limited Rights of the Owner Lessor.  The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof.  Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                       35
<PAGE>
                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.  Covenants of Owner Lessor.  The Owner Lessor hereby
covenants and agrees as follows:

     (a)  the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.  Lease Indenture Events of Default.  Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is

                                       36
<PAGE>
waived by the Owner Lessor and the Owner Participant and (ii) the insurance
maintained by the Facility Lessee still constitutes Prudent Industry Practice);
or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing pursuant to Section 4.6 of the Participation
Agreement, or any representation or warranty made by the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) under the OP
Guaranty or in the certificate delivered by such OP Guarantor at the Closing
pursuant to Section 4.6 of the Participation Agreement, shall prove to have
been incorrect in any material respect when made and continues to be material
and unremedied for a period of 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 120 days,

                                       37
<PAGE>
so long as such party diligently pursues such remedy and such condition is
reasonably capable of being remedied within such extended period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.  Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written instructions from a Majority in Interest of Noteholders
shall declare, by written notice to the Owner Lessor and the Owner Participant,
the unpaid principal amount of all Lessor Notes, with accrued interest thereon,
to be immediately due and payable, upon which declaration such principal amount
and such accrued interest shall immediately become due and payable (except in
the case of a Lease Indenture Event of Default under Section 4.2(e) or (f),
such principal and interest shall automatically become due and payable
immediately without any such declaration or notice) without further act or
notice of any kind.  If any Make-Whole amount is due and payable pursuant to
Section 2.10 (c)

                                       38
<PAGE>
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law.  The Indenture
Trustee may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for such price or prices and on such terms as the Indenture
Trustee, in its unfettered discretion, may determine, or as may be required by
law, so long as the Owner Participant and the Owner Lessor are afforded a
commercially reasonable opportunity to bid for all or such part of the
Indenture Estate in connection therewith unless Section 4.7 shall otherwise be
applicable; provided that 20 days shall be deemed to be a commercially
reasonable opportunity to bid for purposes of this Section 4.3(b). The
Indenture Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Noteholders asserted or upheld in any bankruptcy,
receivership or other judicial proceedings.

                                       39
<PAGE>
     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided.  In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)  Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-day period following the date of commencement of a
stay or other prevention or (b) the date of repossession of the Facility under
the applicable Facility Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

                                       40
<PAGE>
     Section 4.4.  Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the Owner Lessor shall be deemed to
have cured any Lease Indenture Event of Default which arose or would have
arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate.  Upon such payment or performance by the Owner Lessor,
the Owner Lessor shall (to the extent of such payment made by it and the costs
and expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default

                                       41
<PAGE>
under Section 4.2(b), (e) or (f), or any Lease Indenture Event of Default
hereunder shall have occurred and be continuing) be subrogated to the rights of
the Indenture Trustee and the Noteholders to receive the payment of Periodic
Rent or Supplemental Rent, as the case may be, with respect to which the Owner
Lessor made such payment and interest on account of such Periodic Rent payment
or Supplemental Rent payment being overdue in the manner set forth in the next
two sentences.  If the Indenture Trustee shall thereafter receive such payment
of Periodic Rent, Supplemental Rent or such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 3.1 hereof, forthwith, remit
such payment of Periodic Rent or Supplemental Rent, as the case may be (to the
extent of the payment made by the Owner Lessor pursuant to this Section 4.4)
and such interest to the Owner Lessor in reimbursement for the funds so
advanced by it, provided that if (A) any event which, with the passing of time
or giving of notice or both, would become a Lease Indenture Event of Default
under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then
shall be overdue, such payment shall not be remitted to the Owner Lessor but
shall be held by the Indenture Trustee as security for the obligations secured
hereby and distributed in accordance with Section 3.1 hereof.  The Owner Lessor
shall not attempt to recover any amount paid by it on behalf of the Facility
Lessee pursuant to this Section 4.4 except by demanding of the Facility Lessee
payment of such amount or by commencing an action against the Facility Lessee
for the payment of such amount, and except where a Lease Indenture Event of
Default (other than a Lease Event of Default) has occurred and is continuing,
the Owner Lessor shall be entitled to receive the amount of such payment and
the costs and expenses incurred in connection with such payments and
performance thereof together with interest thereon from the Facility Lessee
(but neither the Owner Lessor nor the Owner Participant shall have any right to
collect such amounts by exercise of any of the remedies under Section 17 of the
Facility Lease) or, if paid by the Facility Lessee to the Indenture Trustee,
from the Indenture Trustee to the extent of funds actually received by the
Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes

                                       42
<PAGE>
having been accelerated or the Indenture Trustee having exercised any remedy
under the Facility Lease intended to dispossess the Facility Lessee of the
Facility, (y) the Lessor Notes have been accelerated pursuant to Section 4.3(a)
and such acceleration has not theretofore been rescinded, or (z) an Enforcement
Notice giving notice of the intent of the Indenture Trustee to dispossess the
Facility Lessee of the Facility under the Facility Lease has been given
pursuant to Section 5.1 within the previous 30 days, (ii) no Lease Indenture
Event of Default of the nature described in any of clauses (b) through (f) of
Section 4.2 hereof shall have occurred and be continuing and (iii) the Owner
Lessor shall give written notice to the Indenture Trustee of the Owner Lessor's
intention to purchase all of the Lessor Notes in accordance with this
paragraph, then, upon receipt within 10 Business Days after such notice from
the Owner Lessor of an amount equal to the sum of (x) the aggregate unpaid
principal amount of any unpaid Lessor Notes then held by the Noteholders,
together with accrued but unpaid interest thereon to the date of such receipt
(as well as any interest on overdue principal and, to the extent permitted by
Applicable Law, overdue interest), plus (y) the aggregate amount, if any, of
all sums which, if Section 3.3 were then applicable, such Noteholder would be
entitled to be paid before any payments were to be made to the Owner Lessor but
excluding any Make-Whole Amount, such Noteholder will forthwith (and upon its
receipt of the payment referred to in clause (1) below, will be deemed to)
sell, assign, transfer and convey to the Owner Lessor (without recourse or
warranty of any kind other than of title to the Lessor Notes so conveyed) all
of the right, title and interest of such Noteholder in and to the Indenture
Estate, this Indenture, all Lessor Notes held by such Noteholder and the
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law.  All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.  Rescission of Acceleration.  If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all

                                       43
<PAGE>
costs and expenses of collection incurred by or on behalf of the holders of the
Lessor Notes (including counsel fees and expenses and all expenses and
reasonable compensation of the Indenture Trustee) and (b) every other Lease
Indenture Event of Default shall have been remedied, then a Majority in
Interest of Noteholders may, by written notice or notices to the Owner Lessor,
the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease
and their respective consequences, but no such rescission and annulment shall
extend to or affect any subsequent Lease Indenture Event of Default or impair
any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.  Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate the possession of
which the Indenture Trustee shall at the time be entitled to hereunder.  If the
Owner Lessor shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture
Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right
to immediate possession and requiring the Owner Lessor to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Lessor hereby specifically consents, and (ii) pursue all or
any part of the Indenture Estate wherever it may be found and enter any of the
premises wherever all or part of the Indenture Estate may be or is supposed to
be and search for all or part of the Indenture Estate and take possession of
and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee

                                       44
<PAGE>
shall be entitled to collect and receive all rents (including Periodic Rent and
Supplemental Rent), revenues, issues, income, products and profits of the
Indenture Estate and every part thereof (without prejudice to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
cash held by, or required to be deposited with, the Indenture Trustee
hereunder) and to apply the same to the management of or otherwise dealing with
the Indenture Estate and of conducting the business thereof, and of all
expenditures with respect to the Indenture Estate and the making of all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner Lessor and the Facility Lessee relating to the
Indenture Estate and the Operative Documents), or under any provision of, this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all Persons properly engaged and employed by the
Indenture Trustee.

     Section 4.7.  Power of Sale and Other Remedies.  In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the right to foreclose this Indenture and to have a judicial
sale of the Indenture Estate or any part of the Indenture Estate as the
Indenture Trustee shall determine, in its sole discretion, with any such
sale(s) to be under the judgment or decree of a court of competent
jurisdiction.  Further, if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may, in addition to and not
in abrogation of other rights and remedies provided in this Section, proceed by
a suit or suits in law or in equity or by any other appropriate proceeding or
remedy (i) to enforce payment of the Lessor Notes or the performance of any
term, covenant, condition or agreement of this Indenture or any other right,
and (ii) to pursue any other remedy available to it, all as the Indenture
Trustee shall determine most effectual for such purposes.  Upon any foreclosure
sale, the Indenture Trustee may bid for and purchase the Indenture Estate and
shall be entitled to apply all or any part of the Secured Indebtedness as a
credit to the purchase price.  In the event of a foreclosure sale of the
Indenture Estate, the proceeds of said sale shall be applied as provided in
Section 3.3 hereof.  In the event of any such foreclosure sale by the Indenture
Trustee, the Owner Lessor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be
summarily dispossessed according to provisions of law applicable to tenants
holding over.  The Indenture Trustee, at the Indenture Trustee's option, is
authorized to foreclose this Indenture subject to the rights of any tenants of
the Indenture Estate, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their

                                       45
<PAGE>
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.  Appointment of Receiver.  If the outstanding principal
amount of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment.  Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.  Remedies Cumulative.  Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any right, power
or remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy.  No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.  Waiver of Various Rights by the Owner Lessor.  Except as
otherwise set forth herein, to the maximum extent permitted by Applicable Law,
the Owner Lessor waives the benefit of all laws now existing or that may
subsequently be enacted provided for (i) any appraisement before sale of any
portion of the Indenture Estate, (ii) any extension of the time for the
enforcement of the collection of the Secured Indebtedness or the creation or
extension of a period of redemption from any sale made in collecting such debt,
(iii) exemption of the Indenture Estate from attachment, levy or sale under
execution or exemption from civil process and (iv) any requirement that the
Indenture Estate be sole in separate lots, trusts or parcels.  Except as
otherwise set forth herein, to the full extent the Owner Lessor may do so, the
Owner Lessor agrees that it will not at any time insist upon, plead, claim or
take the benefit or advantage of any law not or hereafter in force provided for
any appraisement, valuation, stay exemption,

                                       46
<PAGE>
extension or redemption, reinstatement or requiring foreclosure of this
Indenture before exercising any other remedy granted hereunder and the Owner
Lessor, for itself and its successors and assigns, and for any and all Persons
ever claiming any interest in the Indenture Estate, to the maximum extent
permitted by law, hereby waives and releases all rights of redemption,
reinstatement, valuation, appraisement, stay of execution, notice of election
to mature or declare due the whole of the Secured Indebtedness and marshaling
in the event of foreclosure on the Liens hereby created.

     Section 4.11.  Discontinuance of Proceedings.  In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease.  Notwithstanding any other provision of any of the
Operative Documents, so long as no Lease Event of Default under the Facility
Lease shall have been declared (or deemed to have been declared), the Indenture
Trustee and the Noteholders shall be subject to the Facility Lessee's rights
under the Facility Lease, and neither the Indenture Trustee nor any Noteholders
shall take or cause to be taken any action contrary to the right of the
Facility Lessee, including its rights to quiet use and possession of the
Facility.

     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor.  No such entry shall be deemed an eviction.  All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon

                                       47
<PAGE>
from the date of payment or incurrence, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand.  The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.

     Section 4.14.  Further Assurances.  The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.  Waiver of Past Defaults.  Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder.  Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                  SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.  Notice of Action Upon Lease Indenture Event of Default.  The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b).
The Indenture Trustee shall take such action, or refrain from taking such
action, as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.  Actions Upon Instructions Generally.  Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to

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<PAGE>
time of a Majority in Interest of Noteholders, the Indenture Trustee shall take
such action, or refrain from taking such action, including any of the following
actions as may be specified in such instructions: (a) give such notice,
direction or consent or exercise such right, remedy or power or take such
action hereunder or under any Assigned Document, or in respect of any part of
or all the Indenture Estate, as it shall be entitled to take and as shall be
specified in such instructions; (b) take such action with respect to or to
preserve or protect the Indenture Estate (including the discharge of Liens) as
it shall be entitled to take and as shall be specified in such instructions;
and (c) waive, consent to, approve (as satisfactory to it) or disapprove all
matters required by the terms of any Operative Document to be satisfactory to
the Indenture Trustee.  The Indenture Trustee may, and upon written
instructions from a Majority in Interest of Noteholders, the Indenture Trustee
shall, execute and file or cause to be executed and filed any financing
statement (and any continuation statement with respect to such financing
statement) or any similar instrument or document relating to the security
interest or the assignment created by this Indenture or granted by the Owner
Lessor herein as may be necessary to protect and preserve the security interest
or assignment created by or granted pursuant to this Indenture, to the extent
otherwise entitled to do so and as shall be specified in such instructions.

     Section 5.3.  Action Upon Payment of Lessor Notes or Termination of
Facility Lease.  Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture.  Nothing in
this Section 5.3 shall be deemed to expand the instances in which the Owner
Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.  Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and

                                       49
<PAGE>
Section 4.3 hereof or this Section 5, the Indenture Estate, for any fee as
compensation for its services hereunder.

     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee.  The Indenture
Trustee shall not be required to take any action under Section 4 or Section
5.2, 5.3 or 9.1 hereof, nor shall any other provision of this Indenture be
deemed to impose a duty on the Indenture Trustee to take any action, if it
shall have been advised by counsel (who shall not be an employee of the
Indenture Trustee) that such action is contrary to the terms hereof or is
otherwise contrary to Applicable Law or (unless it shall have been indemnified
in manner and form satisfactory to the Indenture Trustee) may result in
personal liability to the Indenture Trustee.

     Section 5.5.  No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or
in connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the terms of the Facility Lease, to the extent applicable to the
Indenture Trustee as assignee of the Owner Lessor, (b) in accordance with the
powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture or in accordance with the express terms hereof or
with written instructions from a Majority in Interest of Noteholders in
accordance with Section 5.2 hereof.

     Section 5.6.  Certain Rights of the Owner Lessor.  Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant to Section 4 hereof to take possession of, foreclose, sell or
otherwise take control of all or any part of

                                       51
<PAGE>
the Indenture Estate, the Owner Lessor shall retain the right to the exclusion
of the Indenture Trustee to exercise the rights of the Owner Lessor under, and
to determine compliance by the Facility Lessee with, the provisions of Sections
10 (other than Section 10.3 thereof), 13, 14 and 15 of the Facility Lease;
provided, however, that if a Lease Indenture Event of Default shall have
occurred and be continuing, the Owner Lessor shall cease to retain such rights
upon notice from the Indenture Trustee stating that such rights shall no longer
be retained by the Owner Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the Facility Lessee under the
Operative Documents relating to the protection, insurance, maintenance,
possession, use and return of the Property Interest, the performance by the
Facility Lessee of the Owner Lessor's obligations under the FILOT Lease and the
exercise of any renewal or extension rights with respect to the FILOT Lease and
to make the determinations and

                                       52
<PAGE>
take the actions contemplated by Section 14 of the Participation Agreement
(subject to the satisfaction of the conditions set forth in Section 14 of the
Participation Agreement) including, without limitation, the Owner Lessor's
right to direct that title to the Land (to the extent of the Owner Lessor's
Percentage Interest) be conferred from the County to the Facility Lessee; and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture
Trustee of the exclusive right, so long as this Indenture shall be in effect,
to declare the Facility Lease to be in default under Section 16 thereof and
thereafter to exercise the remedies pursuant to Section 17 of the Facility
Lease (except as expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.  Restrictions on Dealing with Indenture Estate.  Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.  Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate.  The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by

                                       53
<PAGE>
this Indenture in the Indenture Estate as may be supplied to the Indenture
Trustee by the Facility Lessee.  At any time and from time to time, upon the
request of the Facility Lessee or the Indenture Trustee, at the expense of the
Facility Lessee (and upon receipt of the form of document so to be executed),
the Owner Lessor shall promptly and duly execute and deliver any and all such
further instruments and documents as the Facility Lessee or the Indenture
Trustee may request in obtaining the full benefits of the security interest and
assignment created or intended to be created hereby and of the rights and
powers herein granted.  Upon the reasonable instructions (which instructions
shall be accompanied by the form of document to be filed) at any time and from
time to time of the Facility Lessee or the Indenture Trustee, the Owner Lessor
shall execute and file any financing statement (and any continuation statement
with respect to any such financing statement), and any other document relating
to the security interest and assignment created by this Indenture as may be
specified in such instructions.  In addition, the Indenture Trustee and the
Owner Lessor will execute such continuation statements with respect to
financing statements and other documents relating to the Lien created by this
Indenture in the Indenture Estate as may be specified from time to time in
written instructions of any Noteholder (which instructions may, by their terms,
be operative only at a future date and which shall be accompanied by the form
of such continuation statement or other document to be filed).  Neither the
Indenture Trustee nor, except as otherwise herein expressly provided, the Owner
Lessor shall have responsibility for the protection, perfection or preservation
of the Lien created by this Indenture.

                                  SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.  Acceptance of Trusts and Duties.  The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof.  If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs.  The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture Company and the

                                       54
<PAGE>
Indenture Trustee shall not be liable for any action or inaction of the Owner
Trust; provided, however, that:

          (i)  Prior to the occurrence of a Lease Indenture Event of
     Default of which a Responsible Officer of the Indenture Trustee shall have
     Actual Knowledge, and after the curing of all such Indenture Events of
     Default which may have occurred, the duties and obligations of the
     Indenture Trustee shall be determined solely by the express provisions of
     the Operative Documents to which it is a party, the Indenture Trustee
     shall not be liable except for the performance of such duties and
     obligations as are specifically set forth in the Operative Documents, no
     implied covenants or obligations shall be read into the Operative
     Documents against the Indenture Trustee and, in the absence of bad faith
     on the part of the Indenture Trustee, the Indenture Trustee may
     conclusively rely, as to the truth of the statements and the correctness
     of the opinions expressed therein, upon any notes or opinions furnished to
     the Indenture Trustee and conforming to the requirements of this Indenture;

          (ii)  The Indenture Trustee shall not be liable in its
     individual capacity for an error of judgment made in good faith by a
     Responsible Officer or other officers of the Indenture Trustee, unless it
     shall be proven that the Indenture Trustee was negligent in ascertaining
     the pertinent facts;

          (iii)  The Indenture Trustee shall not be liable in its
     individual capacity with respect to any action taken, suffered or omitted
     to be taken by it in good faith in accordance with this Indenture or at
     the direction of the Majority in Interest of Noteholders, relating to the
     time, method and place of conducting any proceeding or remedy available to
     the Indenture Trustee, or exercising or omitting to exercise any trust or
     power conferred upon the Indenture Trustee, under this Indenture;

          (iv)  The Indenture Trustee shall not be required to take notice
     or be deemed to have notice or knowledge of any default, Lease Event of
     Default, Significant Lease Default or Lease Indenture Event of Default
     (except for a Lease Indenture Event of Default resulting from an event of
     nonpayment) unless a Responsible Officer of the Indenture Trustee shall
     have received written notice thereof.  In the absence of receipt of such
     notice, the Indenture Trustee may conclusively assume that there is no
     default or Lease Indenture Event of Default;

          (v) The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of any
     of its duties

                                       55
<PAGE>
     hereunder or the exercise of any of its rights or powers if there is
     reasonable ground for believing that the repayment of such funds or
     adequate indemnity against such risk or liability is not reasonably assured
     to it, and none of the provisions contained in this Indenture shall in any
     event require the Indenture Trustee to perform, or be responsible for the
     manner of performance of, any of the obligations of the Owner Lessor, under
     this Indenture; and

          (vi) The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.  Absence of Certain Duties.  Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no
duty (a) to see to any registration, recording or filing of any Operative
Document (or any financing or continuation statements in respect thereto) or to
see to the maintenance of any such registration, recording or filing, (b) to
see to any insurance on the Facilities or the Facilities or to effect or
maintain any such insurance, (c) except as otherwise provided in Section 5.5
hereof or in Section 10 of the Participation Agreement, to see to the payment
or discharge of any Tax or any Lien of any kind owing with respect to, or
assessed or levied against, any part of the Indenture Estate, (d) to confirm or
verify the contents of any report, notice, request, demand, certificate,
financial statement or other instrument of the Facility Lessee, (e) to inspect
the Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents unless the Indenture Trustee shall reasonably believe
that each such Noteholder, the Owner Lessor and the Owner Participant shall
have received copies thereof.

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<PAGE>
     Section 6.3.  Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.  No Segregation of Moneys; No Interest.  All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

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<PAGE>
     Section 6.5.  Reliance; Agents; Advice of Experts.  The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties.  The
Indenture Trustee may accept in good faith a certified copy of a resolution of
the managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect.  As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be.  As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.  The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting.  In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of competence, of any such Person, so long
as the Indenture Trustee shall have exercised reasonable care in selecting such
Person.

                                  SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

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<PAGE>
     Section 7.1.  Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)  Resignation or Removal.  Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below.  In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee.  Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below.  In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders.  If
a successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided.  The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)  Acceptance of Appointment.  Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee or Account Bank hereunder in the trusts hereunder applicable to it with
like effect as if originally named the Indenture Trustee or Account Bank
herein; but nevertheless, upon the written request of such successor Indenture
Trustee or Account Bank or a Majority in Interest of Noteholders, such
predecessor Indenture Trustee or Account Bank shall execute and deliver an
instrument transferring to such successor Indenture Trustee or Account Bank,
upon the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee or Account Bank, and
such predecessor Indenture

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<PAGE>
Trustee or Account Bank shall duly assign, transfer deliver and pay over to
such successor Indenture Trustee all moneys or other property then held by such
predecessor Indenture Trustee or Account Bank hereunder.  To the extent
required by Applicable Law or upon request of the successor Indenture Trustee
or Account Bank, the Owner Lessor shall execute any and all documents
confirming the vesting of such estates, properties, rights and powers in the
successor Indenture Trustee or Account Bank.

     (c)  Qualifications.  Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms.  No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)  Appointment of Account Bank.  The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank").  The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account.  The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture.  The
Account Bank shall not have duties or responsibilities except those expressly
set forth in Sections 3.11 and 3.12 of this Indenture.  The Indenture Trustee,
at the written direction of a Majority in Interest of Noteholders, may remove
and replace the Account Bank pursuant to the terms of Section 7.1(a) and direct
such Account Bank according to the terms of this Indenture.

     (e)  Merger, etc.  Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee

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<PAGE>
may be transferred, shall, subject to the terms of subsection (c) of this
Section 7.1, be the Indenture Trustee under this Indenture without further act.

     Section 7.2.  Appointment of Additional and Separate Trustees.

     (a)  Appointment.  Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2.  The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request
so to do; provided, however, that the Indenture Trustee shall exercise due care
in selecting any additional or separate trustee if such additional or separate
trustee shall not be a Person possessing trust powers under Applicable Law.  If
at any time the Indenture Trustee shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be advised
by such counsel that it is no longer so necessary or prudent in the interest of
the Noteholders or in the event that the Indenture Trustee shall have been
requested to do so in writing by a Majority in Interest of Noteholders, the
Indenture Trustee shall execute and deliver all instruments and agreements
necessary or proper to remove any additional trustee or separate trustee.  In
such connection, the Indenture Trustee may act on behalf of the Owner Lessor to
the same extent as is provided above.  Notwithstanding anything contained to
the contrary

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<PAGE>
in this Section 7.2(a), to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly or
through a separate trustee under the direction and control of the Indenture
Trustee, the Owner Lessor, at the instruction of the Indenture Trustee, shall
appoint a separate trustee for such jurisdiction, which separate trustee shall
have full power and authority to take all action hereunder as to matters
relating to such jurisdiction without the consent of the Indenture Trustee, but
not subject to the same limitations in any exercise of his power and authority
as those to which the Indenture Trustee is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name.  In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc.  Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

     (d)  Subject to Indenture, etc.  Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee.  Notwithstanding any other provision of this Section 7.2,
(i) the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.

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<PAGE>
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                              AND OTHER DOCUMENTS

     Section 8.1.  Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations.  At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as between the Noteholders and the Owner
Lessor, (iv) reduce the amount (except to any amount as shall be sufficient to
pay the aggregate principal of, Make-Whole Amount, if any, and interest on all
outstanding Lessor Notes) or extend the time of payment of Periodic Rent or
Termination Value except as expressly provided in Section 3.5 of the Facility
Lease, or change any of the circumstances under which Periodic Rent or
Termination Value is payable, (v) consent to any assignment of the Facility
Lease if in connection therewith the Facility Lessee will be released from its
obligation to pay Periodic Rent and Termination Value, except as expressly
provided in Section 13 of the Participation Agreement, or release the Facility
Lessee of its obligation to pay Periodic Rent or Termination Value or change
the absolute and unconditional character of such obligations as set forth in
Section 9 of the Facility Lease; (vi) consent to any release of the Guarantor
under Section 8.4 of the Calpine Guaranty or (vii) deprive the Indenture
Trustee of the Lien on the Indenture Estate or permit the creation of any Lien
on the Indenture Estate ranking equally or prior to the Lien of the Indenture
Trustee, except for Permitted Liens.

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<PAGE>
     Section 8.2.  Supplemental Indentures and other Amendments Without
Consent.  Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any
other Operative Document (a) to evidence the succession of another Person as a
Lessor Manager or the appointment of a co-manager in accordance with the terms
of the LLC Agreement, or to evidence the succession of a successor as the
Indenture Trustee hereunder, the removal of the Indenture Trustee or the
appointment of any separate or additional trustee or trustees, in each case if
done pursuant to the provisions of Section 7 hereof and to define the rights,
powers, duties and obligations conferred upon any such separate trustee or
trustees or co-trustee or co-trustees, (b) to correct, confirm or amplify the
description of any property at any time subject to the Lien of this Indenture
or to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee, (c) to provide for any evidence of the creation and issuance
of any Additional Lessor Notes pursuant to, and subject to the conditions of,
Section 2.12 and to establish the form and the terms of such Additional Lessor
Notes, (d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may be lawfully granted or
conferred and which are not contrary or inconsistent with this Indenture, (f)
to add to the covenants or agreements to be observed by the Facility Lessee or
the Owner Lessor and which are not contrary to this Indenture, to add Indenture
Events of Defaults for the benefit of Noteholders or surrender any right or
power of the Owner Lessor, provided it has consented thereto, (g) to effect the
assumption of all or, to the extent otherwise provided hereunder, part of the
Lessor Notes by the Facility Lessee, provided that the supplemental indenture
will contain all of the covenants applicable to the Facility Lessee contained
in the Facility Lease and the Participation Agreement for the benefit of the
Indenture Trustees or the holders of such Lessor Notes, such that the Facility
Lessee's obligations contained therein, if applicable in the event that the
Facility Lease are terminated, will continue to be in full force and effect,
(h) to comply with requirements of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body, (i) to modify, eliminate or add to the
provisions of any Operative Documents to such extent as shall be necessary to
qualify or continue the qualification of this Lease Indenture or the Pass
Through Trust Agreements (including any supplements thereto) under the Trust
Indenture Act, or similar federal statute enacted

                                       64
<PAGE>
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.  Conditions to Action by the Indenture Trustee.  If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the Participation Agreement, or would
materially increase its administrative duties or responsibilities hereunder or
thereunder or may result in personal liability for it (unless it shall have
been provided an indemnity satisfactory to the Indenture Trustee), the
Indenture Trustee may in its discretion decline to execute such document or the
election.  With every such document and election, the Indenture Trustee shall
be furnished with evidence that all necessary consents have been obtained and
with an opinion of counsel that such document complies with the provisions of
this Indenture, does not deprive the Indenture Trustee or the holders of the
Lessor Notes of the benefits of the Lien hereby created on any property subject
hereto or of the assignments contained herein (except as otherwise consented to
in accordance with Section 8.1 hereof) and that all consents required by the
terms hereof in connection with the execution of such document or the making of
such election have been obtained.  The Indenture Trustee shall be fully
authorized and protected in relying on such opinion.

                                    SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.  Surrender, Defeasance and Release.

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<PAGE>
     (a)  Surrender and Cancellation of Indenture.  This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof.  Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby.  If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i)  Whenever a Component is replaced pursuant to the Facility
     Lease, such component shall automatically and without further act of any
     Person be released from the Lien of this Lease Indenture and the Indenture
     Trustee shall, upon the written request of the Owner Lessor or the
     Facility Lessee, execute and deliver to, and as directed in writing by,
     the Facility Lessee or the Owner Lessor an appropriate instrument (in due
     form for recording) releasing the replaced Component from the Lien of this
     Indenture.

          (ii)  Whenever the Facility Lessee is entitled to acquire the
     Facility or have the Facility transferred to it pursuant to the express
     terms of the Facility Lease, the Indenture Trustee shall release the
     Indenture Estate from the Lien of this Indenture and execute and deliver
     to, or as directed in writing by, the Facility Lessee or the Owner Lessor
      an appropriate instrument (in due form for recording) releasing the
     Indenture Estate from the Lien of this Indenture; provided that all sums
     secured by this Indenture have been paid to the Persons entitled to such
     sums.

     Section 9.2.  Conveyances Pursuant to the Site Lease.  Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Lease shall automatically, without
further act of any Person, be released from this Lease Indenture.

                                       66
<PAGE>
     Section 9.3.  Appointment of the Indenture Trustee as Attorney; Further
Assurances.  The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.  Indenture for Benefit of Certain Persons Only.  Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties hereto, the Owner Participant,
the Facility Lessee (as provided in Sections 4.12 and 8.1 hereof) and the
Noteholders.

     Section 9.5.  Notices; Furnishing Documents, etc.  Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       67
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

          and

          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention: Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile: (860) 244-1889
          Attention: Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California, National
          Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071

                                       68
<PAGE>
          Telephone: (213) 362-7373
          Facsimile: (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          Broad River Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.  Severability.  Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.  Limitation of Liability.  It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under

                                       69
<PAGE>
no circumstances shall Wells Fargo, be personally liable for the payment of any
indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Indenture.

     Section 9.8.  Written Changes Only.  Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.  Counterparts.  This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

     Section 9.10.  Successors and Permitted Assigns.  All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder.  Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.  Headings and Table of Contents.  The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.  Governing Law.  This Indenture and the Lessor Notes shall
be in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of South Carolina.  Regardless of any provision in any other agreement, for
purposes of the Uniform Commercial Code (as in effect from time to time in any
jurisdiction including the State of New York), the "Securities Intermediary's
Jurisdiction" of the Account Bank with respect to the Indenture Trustee's
Account is the State of New York.

                                       70
<PAGE>
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor
Estate.  If (a) the Lessor Estate becomes a debtor subject to the
reorganization provisions of Title 11 of the United States Code, or any
successor provisions, (b) pursuant to such reorganization provisions the Owner
Participant is required by reason of the Owner Participant's being held to have
recourse liability that it would not otherwise have had under Section 2.5
hereof to the debtor or the trustee of the debtor, directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Notes and (c) any Noteholder or the Indenture Trustee actually receives
any Excess Amount (as hereinafter defined) which reflects any payment by the
Owner Participant on account of clause (b) above, then such Noteholder or the
Indenture Trustee, as the case may be, shall promptly refund such Excess
Amount, without interest, to the Owner Participant after receipt by such
Noteholder or the Indenture Trustee, as the case may be, of a written request
for such refund by the Owner Participant (which request shall specify the
amount of such Excess Amount and shall set forth in detail the calculation
thereof).  For purposes of this Section 9.13, "Excess Amount" means the amount
by which such payment exceeds the amount which would have been received by such
holder and the Indenture Trustee in respect of such principal or interest if
the Owner Participant had not become subject to the recourse liability referred
to in clause (b) above.  Nothing contained in this Section 9.13 shall prevent
the Indenture Trustee or any Noteholder from enforcing any personal recourse
obligations (and retaining the proceeds thereof) of the Owner Participant under
the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.  Withholding Taxes: Information Reporting.  The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law.  The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present

                                       71
<PAGE>
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Lessor Notes, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Noteholders and to pay to the Noteholders from amounts received
by Paying Agent pursuant hereto such additional amounts so that the net amount
actually received by the Noteholders, after reduction for such withheld
amounts, shall be equal to the full amount of principal, Make-Whole Amount,
interest and other amounts otherwise due and payable hereunder; provided,
however, that, notwithstanding the foregoing, the Paying Agent shall be
required to pay such additional amounts only if and to the extent that (a) the
Facility Lessee is required to indemnify the Noteholders for such amounts under
Section 9 of the Participation Agreement and (b) the Facility Lessee has not
paid such amounts within three (3) days after notice of nonpayment, (ii) that
it will file any necessary withholding tax returns or statements when due, and
(iii) that, as promptly as possible after the payment thereof, it will deliver
to each Noteholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Noteholders may
reasonably request from time to time.  The Indenture Trustee agrees to file any
other information as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest.  Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above.  The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee.  In addition, if the Indenture
Trustee has not withheld taxes on any payment made to any Noteholder, and the
Indenture Trustee is subsequently required to remit to any taxing authority any
such amount not withheld, such Noteholder shall return such amount to the
Indenture Trustee upon written demand by the Indenture Trustee.  The Indenture
Trustee shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is

                                       72
<PAGE>
caused by the Indenture Trustee's failure to act in accordance with its
standard of care under this Lease Indenture.

     Section 9.15.  Fixture Financing Statement.  This Indenture also is
intended to serve as a fixture financing statement under the South Carolina
Uniform Commercial Codes.  In connection therewith, the following information
is provided:

     (a)  Name and address of Debtor:

          Broad River OL-4, LLC
          c/o Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

     (b)  Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile: (860) 244-1889
          Attention: Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded in the real estate
records of the Office of the Cherokee County Clerk of Court.

     (e)  Type of Filing: This is a commercial filing under Section 36-9-402 of
the Code of Laws of South Carolina, 1976 (as amended).


          (Remainder of Page Intentionally Left Blank)

                                       73
<PAGE>
     Section 9.16.  Waiver of Appraisal Rights.  The laws of South Carolina
provide that in any real estate foreclosure proceeding a defendant against whom
a personal judgment is taken or asked may within thirty days after the sale of
the mortgaged property apply to the court for an order or appraisal.  The
statutory appraisal value as approved by the court would be substituted for the
high bid and may decrease the amount of any deficiency owing in connection with
the transaction.  THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY
APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED
PROPERTY.

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                                   BROAD RIVER OL-4, LLC


                                   By:  Wells Fargo Bank Northwest, National
                                        Association, not in its individual
                                        capacity but solely as the Lessor
                                        Manager


______________________________     By:  ___________________________________
Witness                                 Name:
                                        Title:


______________________________
Witness

                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CONNECTICUT, NATIONAL ASSOCIATION,
                                        as Indenture Trustee and Account Bank


______________________________     By:  ___________________________________
Witness                                 Name:
                                        Title:


______________________________
Witness
<PAGE>
STATE OF                      )
                              )         ACKNOWLEDGMENT
COUNTY OF                )

     I,______________________________, Notary Public for the Sate of __________,
do hereby certify that the above-named ________________________________________,
personally appeared before me this day and acknowledged the due execution of the
foregoing instrument.

     Witness my hand an official seal this the ______ day of ____________, 2001.


                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
STATE OF                      )
                              )         ACKNOWLEDGMENT
COUNTY OF                )

     I,______________________________, Notary Public for the Sate of __________,
do hereby certify that the above-named ________________________________________,
personally appeared before me this day and acknowledged the due execution of the
foregoing instrument.

     Witness my hand an official seal this the ______ day of ____________, 2001.


                                       Notary Public for:
                                       My Commission Expires:
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

All that certain piece, parcel, or lot of land situate, lying and being in
Cherokee County, South Carolina, and being shown and designated as 60.35 acres
on a survey dated July 21, 2001, revised September 18, 2001 prepared by
Professional Surveying Services for Broad River Energy, LLC and, according to
said survey, having the following metes and bounds:

Commencing at an existing PK nail in the center of the intersection of Old Ford
Road (SC Highway S-11-50) and Victory Trail (US Highway 329), thence proceeding
North 23-25-35 West 869.86' to an existing iron pin being a common corner of
the subject property, the right of way of Victory Trail and property of George
and Sheri McAbee and being the point of beginning, thence South 48-08-18 West
for a distance of 175.29' to a new iron pin; thence North 71-14-56 West for a
distance of 154.21' to a new iron pin; thence North 71-14-56 West for a
distance of 649.72' to a new iron pin; thence South 65-27-23 West for a
distance of 427.49' to a new iron located on the northeastern right of way of
Old Ford Road (SC Highway S-11-50), thence from said point of beginning North
60-16-19 West for a distance of 92.28' to a point; thence North 56-10-13 West
for a distance of 88.18' to a point; thence North 55-42-37 West for a distance
of 82.30' to a point; thence North 53-16-26 West for a distance of 71.52' to a
point; thence North 52-27-22 West for a distance of 82.98' to a point; thence
North 52-41-28 West for a distance of 75.44' to a point; thence North 54-42-28
West for a distance of 65.08' to a point; thence North 57-40-37 West for a
distance of 58.84' to a point; thence North 60-36-21 West for a distance of
63.75' to a point; thence North 64-06-03 West for a distance of 40.07' to a
point; thence North 64-06-03 West for a distance of 45.30' to a point; thence
North 67-35-54 West for a distance of 73.25' to a point; thence North 71-21-36
West for a distance of 31.41' to a point; thence North 71-21-36 West for a
distance of 41.47' to a point; thence North 74-35-41 West for a distance of
62.79' to a point; thence North 77-23-54 West for a distance of 45.86' to a
point thence North 79-42-10 West for a distance of 51.62' to a point; thence
North 81-57-05 West for a distance of 51.46' to a point; thence North 82-49-05
West for a distance of 59.21' to a new iron pin; thence North 35-23-20 East for
a distance of 1,164.01' to a new iron, thence North 35-23-20 East for a
distance of 457.09' to an existing iron pin; thence North 33-29-01 East for a
distance of 473.49' to a large 2" iron; thence North 20-04-41 West for distance
of 263.22' to a large 2" iron; thence North 11-22-57 West for a distance of
131.31' to a large 2" iron; thence North 10-02-03 East for a distance of
166.70' to a new iron located on the southwestern
<PAGE>
right of way of Victory Trail (US Highway 329); thence continuing along the
southwestern right of way of Victory Trail (US Highway 329) the following
courses and distances: (1) South 20-59-24 East for a distance of 447.48' to a
point; (2) South 13-42-40 East for a distance of 203.64' to a point; (3) South
22-57-44 East for a distance of 151.22' to a point; (4) South 36-23-09 East for
a distance of 155.06' to a point; (5) South 22-58-12 East for a distance of
346.94' to a point; (6) South 16-30-28 East for a distance of 104.58' to a
point; (7) South 23-55-06 East for a distance of 300.17' to a point; (8) South
24-54-19 East for a distance of 200.00" to a point; (9) South 11-46-16 East
for a distance of 308-06' to a point; (10) South 30-36-57 East for a distance
of 150.75' to a point; (11) South 48-23-58 East for a distance of 163.56' to a
point; (12) South 24-50-48 East for a distance of 200.00' to a point; (13)
South 30-36-57 East for a distance of 100.50' to a point; and (14) South
24-57-12 East for a distance of 195.32' to an existing iron pin, being the
point of beginning.

Being the same property conveyed to Cherokee County, South Carolina by deed of
Broad River Energy LLC, dated March 1, 2000 and recorded in the Office of the
Clerk of Court for Cherokee County on March 7, 2000 in Deed Book 71 at Page 195.

                                      A-1-2
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                  FORM OF BROAD RIVER LESSOR NOTE SERIES [A][B]

                              BROAD RIVER OL-4, LLC
                NONRECOURSE PROMISSORY NOTE (BROAD RIVER) DUE IN
                      A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                            OF MAY 30, [2012] [2019]

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                   Issued at: New York, New York

                                                    Issue Date: October __, 2001

$[_____]

     BROAD RIVER OL-4, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in
its capacity as pass through trustee of [the South Point, Broad River and
RockGen Series A Trust] [the South Point, Broad River and RockGen Series B
Trust], (the "Pass Through Trustee") or its registered assigns, the principal
sum of $[_____], which is due and payable in a series of installments of
principal with a final payment date of May 30, [2012][2019] together with
interest at the rate of [ ]% per annum on the principal remaining unpaid from
time to time from and including the Issue Date until paid in full.  Interest on
the outstanding principal amount under this Note shall be due and payable in
arrears semiannually at the rate specified above, commencing on May 30, 2002,
and on each May 30 and November 30 thereafter until the principal of this Note
is paid in full or made available for payment.  Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto.  The installment of principal
payable on any such date shall be in an aggregate amount equal to the product
of the Principal Portion set

                                      B-1-1
<PAGE>
forth on Schedule I multiplied by the percentage set forth on Schedule I under
the column headed "Percentage of Principal Amount Payable" for such date unless
the Principal Portion has been prepaid; provided, that the final installment of
principal shall be equal to the then unpaid principal balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture.  The holder hereof, by its acceptance of this Note, agrees
that it will look solely to the income and proceeds from the Indenture Estate
to the extent available for distribution to the holder hereof, as herein
provided, and that, none of the Owner Participant, the Owner Lessor or the
Indenture Trustee is or shall be personally liable to the holder hereof for any
amounts payable under this Note or under the Collateral Trust Indenture, or,
except as expressly provided in the Collateral Trust Indenture or, in the case
of the Owner Participant and the Owner Lessor, the Participation Agreement for
any performance to be rendered under the Collateral Trust Indenture or any
Assigned Document or for any liability under the Collateral Trust Indenture or
any Assigned Document.

     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in

                                      B-1-2
<PAGE>
the case of the final payment in respect of this Note, this Note shall be
surrendered to the Indenture Trustee, by mailing a check for the amount then
due and payable, in New York Clearing House funds, to the Noteholder, at the
last address of the Noteholder appearing on the Note Register, or by whichever
of the following methods specified by notice from the Noteholder to the
Indenture Trustee: (a) by crediting the amount to be distributed to the
Noteholder to an account maintained by the Noteholder with the Indenture
Trustee, (b) by making such payment to the Noteholder in immediately available
funds at the Indenture Trustee Office, or (c) by transferring such amount in
immediately available funds for the account of the Noteholder to the banking
institution having bank wire transfer facilities as shall be specified by the
Noteholder, such transfer to be subject to telephonic confirmation of payment.
All payments due with respect to this Note shall be made (i) as soon as
practicable prior to the close of business on the date the amounts to be
distributed by the Indenture Trustee are actually received by the Indenture
Trustee if such amounts are received by 12:00 noon, New York City time, on a
Business Day or (ii) on the next succeeding Business Day if received after such
time or if received on any day other than a Business Day.  Prior to due
presentment for registration of transfer of this Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary.  All
payments made on this Note in accordance with the provisions of this paragraph
shall be valid and effective to satisfy and discharge the liability on this
Note to the extent of the sums so paid and neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

     This Note is the Note referred to in the Collateral Trust Indenture as the
"Lessor Note".  The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust

                                      B-1-3
<PAGE>
Indenture, and the several Notes may be for varying principal amounts and may
have different maturity dates (not later than the final maturity date of the
applicable series of the Initial Lessor Notes), interest rates, redemption
provisions and other terms.  The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations.  In connection with such an assumption, the holder
of this Note may be required to exchange this Note for a new Note evidencing
such assumption.

                                      B-1-4
<PAGE>
     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture.  The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                   BROAD RIVER OL-4, LLC
                                   a Delaware limited liability company,

                                   By:  Wells Fargo Bank Northwest, National
                                        Association, not in its individual
                                        capacity but solely as the Lessor
                                        Manager

                                   By: __________________________________
                                        Name:
                                        Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                        STATE STREET BANK AND TRUST
                                        COMPANY OF CONNECTICUT,
                                        NATIONAL ASSOCIATION,
                                        not in its individual capacity, but
                                        solely as the Indenture Trustee

                                        __________________________________
                                        Name:
                                        Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

__________________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________        ____________________________________________
                              (Signature of Transferor)

                              NOTE:The signature to this assignment must
                              correspond with the name as written upon the face
                              of the within-mentioned instrument in every
                              particular, without alteration or any change
                              whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                             Series A Lessor Notes.

                        PRINCIPAL PORTION:  $25,175,000

<TABLE>
<CAPTION>
                                                              Percentage of Principal
                                                              -----------------------
Regular Distribution Date                                              Amount Payable
------------------------                                               --------------
<S>                                                           <C>
May 30, 2002............................................                  0.00000000%
November 30, 2002.......................................                  0.00000000%
May 30, 2003............................................                  0.00000000%
November 30, 2003.......................................                 10.32770606%
May 30, 2004............................................                 12.21449851%
November 30, 2004.......................................                  5.26315789%
May 30, 2005............................................                  5.36246276%
November 30, 2005.......................................                  5.56107249%
May 30, 2006............................................                  6.45481629%
November 30, 2006.......................................                  6.85203575%
May 30, 2007............................................                  7.54716981%
November 30, 2007.......................................                  8.04369414%
May 30, 2008............................................                  8.83813307%
November 30, 2008.......................................                  9.33465740%
May 30, 2009............................................                 10.02979146%
November 30, 2009.......................................                  4.17080437%
                                                                          -----------
Total...................................................                100.00000000%
                                                                        =============
</TABLE>
<PAGE>
                             Series B Lessor Notes.

                        Principal Portion:  $37,875,000

<TABLE>
<CAPTION>
                                                              Percentage of Principal
Regular Distribution Date                                              Amount Payable
<S>                                                           <C>
May 30, 2002..............................................                0.00000000%
November 30, 2002.........................................                0.00000000%
May 30, 2003..............................................                0.00000000%
November 30, 2003.........................................                0.00000000%
May 30, 2004..............................................                0.00000000%
November 30, 2004.........................................                0.00000000%
May 30, 2005..............................................                0.00000000%
November 30, 2005.........................................                0.00000000%
May 30, 2006..............................................                0.00000000%
November 30, 2006.........................................                0.00000000%
May 30, 2007..............................................                0.00000000%
November 30, 2007.........................................                0.00000000%
May 30, 2008..............................................                0.00000000%
November 30, 2008.........................................                0.00000000%
May 30, 2009..............................................                0.00000000%
November 30, 2009.........................................                0.00000000%
May 30, 2010..............................................                0.00000000%
November 30, 2010.........................................                0.00000000%
May 30, 2011..............................................                0.00000000%
November 30, 2011.........................................                0.00000000%
May 30, 2012..............................................                0.00000000%
November 30, 2012.........................................                0.00000000%
May 30, 2013..............................................                0.00000000%
November 30, 2013.........................................                0.00000000%
May 30, 2014..............................................                0.00000000%
November 30, 2014.........................................                0.00000000%
May 30, 2015..............................................                0.00000000%
November 30, 2015.........................................                0.00000000%
May 30, 2016..............................................                0.00000000%
November 30, 2016.........................................                0.00000000%
May 30, 2017..............................................                0.00000000%
November 30, 2017.........................................                0.00000000%
May 30, 2018..............................................                0.00000000%
November 30, 2018.........................................                0.00000000%
May 30, 2019..............................................               100.00000000%
                                                                         -------------
Total.....................................................               100.00000000%
                                                                         =============
</TABLE>

                                       B-1-10
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION

This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                                 ______________________________,
                                                 not in its individual capacity
                                                 but solely as the Indenture
                                                 Trustee

                                                 By:_________________________
                                                    Name:
                                                    Title:

                                      C-2
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF THE FACILITY

     That certain approximately 850 megawatt net nameplate capacity generating
facility, (known also as the "Broad River Facility") together with all
structures or improvements, all alterations thereto or replacements thereof,
and all other fixtures, attachments, appliances, equipment, machinery and other
articles (including, but not limited to, the property set forth below (the
"Included Property")), in each case located on the land, or the easements
appurtenant to the land, consisting of approximately sixty acres located
approximately one mile south of U.S. Highway 29 and three miles east of the
city of Gaffney in Cherokee County, South Carolina, such land described more
particularly on Exhibit A.

Included Property

     1.  Five Combustion Turbines - General Electric, Model MS7001FA; Serial #
         297329, Serial # 297330, Serial # 297331, Serial # 297620, Serial #
         297405.

     2.  Five CT Generators - General Electric, Model 7FH2, 18kV, Serial #
         337X800, Serial # 337X801, Serial # 337X802, Serial # 337X811, Serial
         # 337X812.

     3.  Three Innovative Steam Technologies Once through Steam Generators
         (OTSGs); Serial # C00037-2, Serial # C00037-1, Serial # C00037-0.

     4.  Five Combustion Turbine Step-up Transformers (GSU) - Prolec, Serial #
         G574-01, Serial # G574-02, Serial # G574-03, Serial # G574-04, Serial
         # G574-05 and other interconnection equipment associated with the
         Broad River Facility.

                                      D-1-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

<TABLE>
<S>                                    <C>
Initial Aggregate Principal Amount:    $25,175,000
Final Maturity Date:                   May 30, 2012
Interest Rate:                         8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                           Percentage of Principal
                                                                           -----------------------
Regular Distribution Date                                                           Amount Payable
-------------------------                                                           --------------
<S>                                                                        <C>
May 30, 2002.......................................................                   0.00000000%
November 30, 2002..................................................                   0.00000000%
May 30, 2003.......................................................                   0.00000000%
November 30, 2003..................................................                  10.32770606%
May 30, 2004.......................................................                  12.21449851%
November 30, 2004..................................................                   5.26315789%
May 30, 2005.......................................................                   5.36246276%
November 30, 2005..................................................                   5.56107249%
May 30, 2006.......................................................                   6.45481629%
November 30, 2006..................................................                   6.85203575%
May 30, 2007.......................................................                   7.54716981%
November 30, 2007..................................................                   8.04369414%
May 30, 2008.......................................................                   8.83813307%
November 30, 2008..................................................                   9.33465740%
May 30, 2009.......................................................                  10.02979146%
November 30, 2009..................................................                   4.17080437%
                                                                                    --------------

Total..............................................................                 100.00000000%
                                                                                    =============
</TABLE>

                                  SCHEDULE 1-1
<PAGE>
                              SERIES B LESSOR NOTE

<TABLE>
<S>                                    <C>
Initial Aggregate Principal Amount:    $37,875,000
Final Maturity Date:                   May 30, 2019
Interest Rate:                         9.825%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                           Percentage of Principal
                                                                           -----------------------
Regular Distribution Date                                                           Amount Payable
-------------------------                                                           --------------
<S>                                                                        <C>
May 30, 2002.........................................................                  0.00000000%
November 30, 2002....................................................                  0.00000000%
May 30, 2003.........................................................                  0.00000000%
November 30, 2003....................................................                  0.00000000%
May 30, 2004.........................................................                  0.00000000%
November 30, 2004....................................................                  0.00000000%
May 30, 2005.........................................................                  0.00000000%
November 30, 2005....................................................                  0.00000000%
May 30, 2006.........................................................                  0.00000000%
November 30, 2006....................................................                  0.00000000%
May 30, 2007.........................................................                  0.00000000%
November 30, 2007....................................................                  0.00000000%
May 30, 2008.........................................................                  0.00000000%
November 30, 2008....................................................                  0.00000000%
May 30, 2009.........................................................                  0.00000000%
November 30, 2009....................................................                  0.00000000%
May 30, 2010.........................................................                  0.00000000%
November 30, 2010....................................................                  0.00000000%
May 30, 2011.........................................................                  0.00000000%
November 30, 2011....................................................                  0.00000000%
May 30, 2012.........................................................                  0.00000000%
November 30, 2012....................................................                  0.00000000%
May 30, 2013.........................................................                  0.00000000%
November 30, 2013....................................................                  0.00000000%
May 30, 2014.........................................................                  0.00000000%
November 30, 2014....................................................                  0.00000000%
May 30, 2015.........................................................                  0.00000000%
November 30, 2015....................................................                  0.00000000%
May 30, 2016.........................................................                  0.00000000%
November 30, 2016....................................................                  0.00000000%
May 30, 2017.........................................................                  0.00000000%
November 30, 2017....................................................                  0.00000000%
May 30, 2018.........................................................                  0.00000000%
November 30, 2018....................................................                  0.00000000%
May 30, 2019.........................................................                100.00000000%
                                                                                     -------------

Total................................................................                100.00000000%
                                                                                    =============
</TABLE>

                                  SCHEDULE 1-2



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.23
<SEQUENCE>26
<FILENAME>f80168ex4-22_23.txt
<DESCRIPTION>EXHIBIT 4.22.23
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.23


                               Document Name:
Document Number    Indenture of Trust, Mortgage and
                   Security Agreement
=====================================================

                                                     Recording Area
                                                     ==========================
                                                     Name and Return Address

                                                     Sarah M. Ward, Esq.
                                                     Skadden, Arps, Slate,
                                                     Meagher & Flom, LLP
                                                     Four Times Square
                                                     New York, NY 10036

                                                     Name of Preparer of the
                                                     Document:
                                                     Sarah M. Ward, Esq.

                                                     Parcel Identification
                                                     Number (PIN)

===============================================================================
<PAGE>
                         INDENTURE OF TRUST, MORTGAGE
                            AND SECURITY AGREEMENT

                         Dated as of October 18, 2001

                                  between

                             ROCKGEN OL-1, LLC

                                   and

                         STATE STREET BANK AND TRUST
                 COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                     as Indenture Trustee and Account Bank

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

                                ROCKGEN FACILITY

                                      2
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              Page
<S>                                                                                           <C>
SECTION 1.   DEFINITIONS....................................................................   8

SECTION 2.   THE LESSOR NOTES...............................................................   9
     Section 2.1.   Limitation on Lessor Notes..............................................   9
     Section 2.2.   Initial Lessor Notes....................................................   9
     Section 2.3.   Execution and Authentication of Lessor Notes............................   9
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes..........................  10
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee.................................................................  11
     Section 2.6.   Method of Payment.......................................................  12
     Section 2.7.   Application of Payments.................................................  13
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.....................  13
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.......................  14
     Section 2.10.  Redemptions; Assumption.................................................  15
     Section 2.11.  Payment of Expenses on Transfer.........................................  20
     Section 2.12.  Additional Lessor Notes.................................................  20
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend............................................................  23
     Section 2.14.  Security for and Parity of Lessor Notes.................................  23
     Section 2.15.  Acceptance of the Indenture Trustee.....................................  23

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE..........  23
     Section 3.1.   Distribution of Periodic Rent...........................................  23
     Section 3.2.   Payments Following Event of Loss or Other Early Termination.............  25
     Section 3.3.   Payments After Lease Indenture Event of Default.........................  27
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee............  28
     Section 3.5.   Application of Certain Other Payments...................................  28
     Section 3.6.   Other Payments..........................................................  29
     Section 3.7.   Excepted Payments.......................................................  29
     Section 3.8.   Distributions to the Owner Lessor.......................................  29
     Section 3.9.   Payments Under Assigned Documents.......................................  30
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee...............  30
</TABLE>

                                        i
<PAGE>
<TABLE>
<S>                                                                                           <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE.............  34
     Section 4.1.   Covenants of Owner Lessor...............................................  34
     Section 4.2.   Lease Indenture Events of Default.......................................  34
     Section 4.3.   Remedies of the Indenture Trustee.......................................  37
     Section 4.4.   Right to Cure Certain Lease Events of Default...........................  39
     Section 4.5.   Rescission of Acceleration..............................................  42
     Section 4.6.   Return of Indenture Estate, Etc.........................................  42
     Section 4.7.   Power of Sale and Other Remedies........................................  43
     Section 4.8.   Appointment of Receiver.................................................  44
     Section 4.9.   Remedies Cumulative.....................................................  44
     Section 4.10.  Waiver of Various Rights by the Owner Lessor............................  45
     Section 4.11.  Discontinuance of Proceedings...........................................  46
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the
                    Facility Lease..........................................................  46
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc................  46
     Section 4.14.  Further Assurances......................................................  47
     Section 4.15.  Waiver of Past Defaults.................................................  47

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR.........  47
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default..................  47
     Section 5.2.   Actions Upon Instructions Generally.....................................  47
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of Facility Lease....  48
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification..................  48
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions...............................  49
     Section 5.6.   Certain Rights of the Owner Lessor......................................  49
     Section 5.7.   Restrictions on Dealing with Indenture Estate...........................  52
     Section 5.8.   Filing of Financing Statements and Continuation Statements..............  52

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR.............................................  53
     Section 6.1.   Acceptance of Trusts and Duties.........................................  53
     Section 6.2.   Absence of Certain Duties...............................................  55
     Section 6.3.   Representations and Warranties..........................................  55
     Section 6.4.   No Segregation of Moneys; No Interest...................................  56
     Section 6.5.   Reliance; Agents; Advice of Experts.....................................  56
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                           <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES.............................  57
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appoint-
                    ment of Successor.......................................................  57
     Section 7.2.   Appointment of Additional and Separate Trustees.........................  60

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS...............  62
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations .............................................  62
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent............  63
     Section 8.3.   Conditions to Action by the Indenture Trustee...........................  64

SECTION 9.   MISCELLANEOUS..................................................................  65
     Section 9.1.   Surrender, Defeasance and Release.......................................  65
     Section 9.2.   Conveyances Pursuant to the Site Sublease...............................  66
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances..............................................................  66
     Section 9.4.   Indenture for Benefit of Certain Persons Only...........................  66
     Section 9.5.   Notices; Furnishing Documents, etc......................................  66
     Section 9.6.   Severability............................................................  68
     Section 9.7.   Limitation of Liability.................................................  69
     Section 9.8.   Written Changes Only....................................................  69
     Section 9.9.   Counterparts............................................................  69
     Section 9.10.  Successors and Permitted Assigns........................................  69
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate............  70
     Section 9.14.  Withholding Taxes: Information Reporting................................  71
     Section 9.15.  Fixture Financing Statement.............................................  72
</TABLE>

EXHIBITS

Exhibit A           Description of Facility Site
Exhibit B           Form of Lessor Note
Exhibit C           Form of Certificate of Authentication
Exhibit D           Description of the Facility

APPENDIX A Definitions

                                       iii
<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

     This INDENTURE OF TRUST, MORTGAGE AND SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions hereof, this "Indenture"), dated as of October 18, 2001, between
ROCKGEN OL-1, LLC, a Delaware limited liability company created for the benefit
of the Owner Participant referred to below, as mortgagor (the "Owner Lessor")
and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as
mortgagee on behalf of the Noteholders (the "Indenture Trustee") and as the
Account Bank.

                                   WITNESSETH:

     WHEREAS, RockGen Energy LLC (the "Facility Lessee") has sold the Undivided
Interest to the Owner Lessor pursuant to the Bill of Sale and leased the Ground
Interest to the Owner Lessor pursuant to the Facility Site Lease, a memorandum
of which shall be recorded with this Indenture in the appropriate registry of
deeds described in Exhibit A attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has leased from the Owner
Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Sublease,
dated as of the date hereof (as amended, supplemented or otherwise modified
from time to time in accordance with the provisions thereof, the "Facility Site
Sublease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;
<PAGE>
     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Purchase Price for the Undivided
Interest purchased from the Facility Lessee (ii) grant to the Indenture Trustee
the security interests herein provided;

     WHEREAS, this Indenture is intended to be regarded as a mortgage under the
laws of the State of Wisconsin (and not intended to qualify as an indenture),
as a security agreement under the Uniform Commercial Codes of the States of New
York, Delaware and Wisconsin, and as a fixture filing under the laws of the
State of Wisconsin;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and interest on the Lessor Notes and of all other
amounts owing with respect to all Lessor Notes from time to time outstanding
hereunder, and the prompt payment when and as due of any and all other amounts
from time to time owing in respect of the Secured Indebtedness and (ii) the
performance and observance by the Owner Lessor for the benefit of the holders
of the Lessor Notes and the Indenture Trustee of all other obligations,
agreements, and covenants of the Owner Lessor set forth hereinafter and in

                                      2
<PAGE>
the Lessor Notes, the Operative Documents and the other documents, certificates
and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns, transfers,
pledges, bargains, sells and confirms unto the Indenture Trustee and its
successors and permitted assigns, for the benefit of the holders of the Lessor
Notes from time to time, a first priority security interest in and mortgage
lien on all estate, right, title and interest of the Owner Lessor in, to and
under the following described property, rights, interests and privileges,
whether now held or hereafter acquired (which collectively, including all
property hereafter specifically subjected to the security interest created by
this Indenture by any supplement hereto, exclusive of Excepted Payments) are
included within, and are hereafter referred to as, the "Indenture Estate"):

     (1)   the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility
Lessee thereunder (including Rent); any rights of the Owner Lessor as
collateral assignee of the Facility Lessee under the Facility Lease; the
Facility Site Lease (and all rights with respect to the Ground Interest
conveyed thereby); the Facility Site Sublease and all payments of any kind by
the Facility Lessee thereunder; the Bill of Sale (and all rights with respect
to the Facility conveyed thereby); the Owner Lessor's interest in all tangible
property located on or at or attached to the Facility Site as to which an
interest in such tangible property arises under applicable real estate law
("fixtures"); the Calpine Guaranty, the Ownership and Operation Agreement and
all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or

                                      3
<PAGE>
at law or in equity or otherwise, arising out of any Lease Default or Lease
Event of Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)   all rents (including Periodic Rent and Supplemental Rent),
royalties, issues, profits, revenues, proceeds, damages, claims, warranties and
other income from the property described in this Granting Clause, including,
without limitation, all payments or proceeds payable to the Owner Lessor as the
result of the sale of the Property Interest or the lease or other disposition
of the Property Interest, and all estate, right, title and interest of every
nature whatsoever of the Owner Lessor in and to such rents, issues, profits,
revenues and other income and every part thereof (the "Revenues");

     (3)   any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)   all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and
all proceeds (to the extent of the Owner Lessor's interest therein) of all
insurance maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)   all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located; and

                                      4
<PAGE>
     (6)   all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the Facility Lease
(other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Further, the Owner Lessor agrees that promptly on
receipt thereof, it will transfer to the Indenture Trustee any and all moneys
from time to time received by it constituting part of the Indenture Estate,
whether or not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

                                      5
<PAGE>
     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
Wisconsin. This Indenture is also intended to be a mortgage under Wisconsin
law. The maximum principal indebtedness secured by this Indenture, including
future advances and contingent obligations but excluding protective advances,
shall not at any time exceed the total amount of One Hundred Eighty One Million
Eight Hundred Thousand Dollars ($181,800,000); provided, however, that nothing
herein contained shall limit the amount secured by this Indenture if the
Secured Indebtedness is increased by protective advances; and provided,
further, such limitation as to such future advances and contingent obligations
shall only pertain to the record priority of the amount thereof secured hereby
and does not otherwise limit the amount of total indebtedness of Owner Lessor
secured hereby or limit the liability of Owner Lessor to Indenture Trustee for
such total indebtedness, including future advances and contingent obligations.
The future advances secured hereby shall be made to or for the account of Owner
Lessor and may be made under the Additional Lessor Notes, or pursuant to
promissory notes or other instruments evidencing such future advances which may
be hereafter executed and delivered by Owner Lessor to Indenture Trustee.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall

                                      6
<PAGE>
the Indenture Trustee or the Noteholders be required or obligated in any
manner, except as herein expressly provided, to perform or fulfill any
obligation of the Owner Lessor under or pursuant to any such Assigned Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under, the terms of any of the Assigned
Documents or revoke or terminate any of the Assigned Documents, (ii) settle or
compromise any claim arising under any of the Assigned Documents, or (iii)
submit or consent to the submission of any dispute, difference or other matter
arising under or in respect of any of the Assigned Documents to arbitration
thereunder.

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes

                                      7
<PAGE>
from time to time outstanding and to protect the security of this Indenture,
and the Indenture Trustee agrees to accept the trusts and duties hereinafter
set forth, as follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)   Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)   In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 520 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Christiana, Wisconsin and more fully described
in Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i) The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Lessor Notes, and principal of such Lessor Notes being due and
     payable as provided in such Lessor Notes;

          (ii) Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture

                                       8
<PAGE>
     Trustee under the Operative Documents including indemnities and
     other Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with interest thereon at the rate provided in each
     Additional Lessor Note and the Make-Whole Amount thereon (if any) and
     together with any and all renewals, modifications, consolidations and
     extensions of the indebtedness evidenced by such Additional Lessor Notes,
     and principal of such Additional Lessor Notes being due and payable as
     provided in each such Additional Lessor Note.

          (iii) Any and all additional advances made by the Indenture Trustee to
     protect or preserve the Indenture Estate or the security interest and other
     interests created hereby on the Indenture Estate or for taxes, assessments
     or insurance premiums as hereinafter provided or for performance of any of
     the Owner Lessor's obligations hereunder or for any other purpose provided
     herein, including advances made pursuant to Section 4.13 hereof (whether or
     not the Owner Lessor remains the owner of the Indenture Estate at the time
     of such advances); and

          (iv) Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided interest in
the Facility.

                                   SECTION 2.
                               THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

                                      9
<PAGE>
     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder one series of Lessor Notes consisting of the Series A
Lessor Notes, in substantially the form set forth in Exhibit B to this
Indenture and in the aggregate principal amount, having installments payable on
the dates and in the amounts and having the final maturity date and interest
rate set forth in Schedule I to this Indenture (the "Series A Lessor Notes" or,
collectively, the "Initial Lessor Notes" or, individually, an "Initial Lessor
Note").

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor
signed by the Lessor Manager. The Indenture Trustee shall authenticate and
deliver Additional Lessor Notes, upon a written order of the Owner Lessor
executed by the Lessor Manager and satisfaction of the conditions specified in
Section 2.12.  Such order shall specify the principal amount of the Additional
Lessor Notes to be
authenticated and the date on which the original issue of Additional Lessor
Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)   Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

                                      10
<PAGE>
     (b)   Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto.  Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)   Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor

                                      11
<PAGE>
Notes or under this Indenture shall be made only from the Indenture Estate, and
the Owner Lessor shall have no obligation for the payment thereof except to the
extent that there shall be sufficient income or proceeds from the Indenture
Estate to make such payments in accordance with the terms of Section 3 hereof;
and the Owner Participant shall not have any obligation for payments in respect
of the Lessor Notes or under this Indenture. The Indenture Trustee and each
Noteholder, by its acceptance thereof, agrees that it will look solely to the
income and proceeds from the Indenture Estate to the extent available for
distribution to the Indenture Trustee or such Noteholder, as the case may be,
as herein provided and that, except as expressly provided in this Indenture,
the Participation Agreement or any other Operative Document, none of the Owner
Participant, the Owner Lessor, the Trust Company, the Lease Indenture Company,
nor the Indenture Trustee, nor any Affiliate of any thereof, shall be
personally liable to such Noteholder or the Indenture Trustee for any amounts
payable hereunder, under such Lessor Note or for any performance to be rendered
under any Assigned Document or for any liability under any Assigned Document.
Without prejudice to the foregoing, the Owner Lessor will duly and punctually
pay or cause to be paid the principal of, Make-Whole Amount, if any, and
interest on all Lessor Notes according to their terms and the terms of this
Indenture. Nothing contained in this Section 2.5 limiting the liability of the
Owner Lessor shall derogate from the right of the Indenture Trustee and the
Noteholders to proceed against the Indenture Estate and the Calpine Guaranty to
secure and enforce all payments and obligations due hereunder and under the
Assigned Documents and the Lessor Notes.

     (a)   In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)   Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent"). The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)   The Owner Lessor shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest

                                      12
<PAGE>
on the Lessor Notes and shall notify the Indenture Trustee of any default by
the Owner Lessor in making any such payment.

     (b)   The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any Lessor Note, the
Owner Lessor and the Indenture Trustee may deem and treat the Person in whose
name any Lessor Note is registered on the Note Register as the absolute owner
and holder of such Lessor Note for the purpose of receiving payment of all
amounts payable with respect to such Lessor Note and for all other purposes,
and neither the Owner Lessor nor the Indenture Trustee shall be affected by any
notice to the contrary. All payments made on any Lessor Note in accordance with
the provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

                                      13
<PAGE>
     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration
of transfer and exchange of Lessor Notes (such register being referred to
herein as the "Note Register"). If any Lessor Note is surrendered at said
office for registration of transfer or exchange (accompanied by a written
instrument of transfer duly executed by or on behalf of the holder thereof,
together with the amount of any applicable transfer taxes), the Owner Lessor
will execute and the Indenture Trustee will authenticate and deliver, in the
name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer or
exchange shall be valid obligations of the Owner Lessor entitled to the same
security and benefits to which the Lessor Note or Lessor Notes so transferred
or exchanged were entitled, including rights as to interest accrued but unpaid
and to accrue so that there will not be any loss or gain of interest on the
Lessor Note or Lessor Notes surrendered. Every Lessor Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Indenture Trustee duly executed by the holder thereof or
his attorney duly authorized in writing, and the Indenture Trustee may require
an

                                      14
<PAGE>
opinion of counsel as to compliance of any such transfer with the Securities
Act. The Indenture Trustee shall make a notation on each new Lessor Note of the
amount of all payments of principal previously made on the old Lessor Note or
Lessor Notes with respect to which such new Lessor Note is issued and the date
on which such new Lessor Note is issued and the date to which interest on such
old Lessor Note or Lessor Notes shall have been paid. The Indenture Trustee
shall not be required to register the transfer or exchange of any Lessor Note
during the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)   Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i) if the Facility Lease is terminated pursuant to Section 10 thereof
     as a result of the occurrence of an Event of Loss (other than a Regulatory
     Event

                                      15
<PAGE>
     of Loss or an Event of Loss described in clause (v) or (vi) of the
     definition of "Event of Loss"), on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (ii) if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii) if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv) if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)   Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old

                                      16
<PAGE>
Lessor Note but indicating that the Facility Lessee is the issuer thereof. When
such assumption agreement becomes effective, the Owner Lessor shall be released
and discharged without further act from all obligations and liabilities assumed
by the Facility Lessee. All documentation in connection with any such
assumption (including an indenture supplemental to this Indenture which shall,
among other things, contain provisions appropriately amending references to the
Facility Lease in this Indenture and contain covenants by the Facility Lessee
similar to those contained in the Facility Lease (other than any covenants
which were solely for the benefit of the Owner Participant), changed as
appropriate, and amendments or supplements to the other Operative Documents,
officers' certificates, opinions of counsel and regulatory approvals) shall be
prepared by and at the expense of the Facility Lessee acceptable in form and
substance to the Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i) the Indenture Trustee shall have received an Opinion of Counsel of
     the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental Approval
     is necessary or required in connection with any Assumption Document or the
     assumption contemplated thereby (or, if any such Governmental Approval is
     necessary or required, that the same has been duly obtained and is final
     and in full force and effect and any period for the filing of notice of
     rehearing or application for judicial review of the issuance of such
     Governmental Approval has expired without any such notice or application
     having been made), (4) each Assumption Document is a legal, valid and
     binding obligation of the Facility Lessee, enforceable in accordance with
     its terms, (5)

                                      17
<PAGE>
     such assumption agreement and the assumption of the Lessor Notes
     thereunder shall not cause a Tax Event to occur as to any holder of any
     Lessor Note or any Certificateholder and (6) the lien of this Indenture
     will continue to be a first priority perfected lien on the Indenture
     Estate;

          (ii) the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder ;

          (iii) Moody's and S&P shall have confirmed that such assumption will
     not result in a downgrading of the rating on the Certificates;

          (iv) the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v) the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)   The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)   The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price upon an optional refinancing pursuant to
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to

                                      18
<PAGE>
     consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price on the Termination Date or Obsolescence
     Termination Date, as applicable, if the Facility Lease is terminated as a
     result of an event described in Section 13.2 or clause (b) of Section 14.1
     of the Facility Lease. The Owner Lessor's failure to consummate such
     redemption as a result of an event described in this clause (ii) following
     delivery of such notice shall not constitute a Lease Indenture Event of
     Default or any other default under the Operative Documents.

          (iii) The Lessor Notes shall be redeemed at such redemption price upon
     termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clause (v) or
     (vi) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)   If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)   At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                      19
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i) the date of redemption;

          (ii) the redemption price;

          (iii) the name and address of the Paying Agent;

          (iv) that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v) that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue on
     and after the redemption date; and

          (vi) the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)   With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)   Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

         Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of
a new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the
Owner Lessor or the Indenture Trustee may require from the party requesting
such new Lessor Note or Lessor Notes payment of a sum to reimburse the Owner
Lessor and the Indenture

                                      20
<PAGE>
Trustee for, or to provide funds for, the payment on an After-Tax Basis to the
Owner Lessor, the Indenture Trustee and the Owner Participant of any tax or
other governmental charge in connection therewith or any charges and expenses
connected with such tax or governmental charge paid or payable by the Owner
Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)   Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)   Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                      21
<PAGE>
     (c)   The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i) a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii) an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of and
     interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii) with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f) of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and is
     continuing;

                                      22
<PAGE>
          (iv) such additional documents, certificates and opinions as shall be
     reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v) a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address set
     forth therein, and in such principal amounts as are stated therein, upon
     payment to the Indenture Trustee, but for the account of the Owner Lessor,
     of the sum or sums specified in such request and authorization;

          (vi) the consent of the Facility Lessee to such request and
     authorization; and

          (vii) an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and enforceability of the Additional Lessor Notes and that all
     conditions hereunder to the authentication and delivery of such Additional
     Lessor Notes have been complied with.

     (d)   When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

                                      23
<PAGE>
     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
     NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee.  Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                   SECTION 3.
                      RECEIPT, DISTRIBUTION AND APPLICATION
                         OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)   Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic Rent received by the Indenture Trustee shall be
distributed by the Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any Noteholder
     over any other Noteholder, in the proportion that the amount of such
     payment then due and payable under each such Lessor Note bears to the
     aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

                                      24
<PAGE>
     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)   Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue,
to the extent provided in and subject to the provisions of Section 4.3(a) and
(b) hereof.

     (c)   Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the

                                      25
<PAGE>
extent not then required to be distributed pursuant to clause "First" of
Section 3.1(a)) as part of the Indenture Estate and shall not distribute any
such payment of Periodic Rent or interest pursuant to clause "Second" of
Section 3.1(a) until such time as such Lease Indenture Event of Default shall
be cured or waived or until such time as the Indenture Trustee shall have
received written instructions from a Majority in Interest of Noteholders to
make such a distribution; provided that such amounts must be returned to the
Owner Lessor within six (6) months from the receipt thereof by the Indenture
Trustee unless (i) the Indenture Trustee has declared the unpaid principal of
all Lessor Notes due and payable (or such amounts shall have automatically
become due and payable), pursuant to Section 4.2(a) and the Indenture Trustee
is diligently pursuing any dispossessary remedies available under Section 4.3
hereof (unless such remedies are stayed or prevented by operation of law) or
(ii) any other Lease Indenture Event of Default shall have occurred during the
intervening period and be continuing, in which case, such six-month period will
be restarted from the date such other Lease Indenture Event of Default shall
have occurred. Upon the cure or waiver of such Lease Indenture Event of
Default, withheld Periodic Rent shall, subject to clause (ii) of the
immediately preceding sentence, be distributed to the Owner Lessor (to the
extent that all payments to be distributed pursuant to clause "First" of
Section 3.1(a) have been made), and no further withholding of Periodic Rent on
account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early
Termination.  Any payment received by the Indenture Trustee as a result of (x)
an Event of Loss (other than a Regulatory Event of Loss in respect of which the
Facility Lessee shall, pursuant to Section 2.10(b) hereof, assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), (y) early termination
of the Facility Lease pursuant to Section 13 thereof (other than a termination
in respect of which the Facility Lessee shall, pursuant to Section 2.10(b)
hereof assume the obligations and liabilities of the Owner Lessor hereunder, in
which event only clauses "First" and "Fourth" below shall be applicable), or
(z) any early termination of the Facility Lease, in whole or in part, pursuant
to Section 14 thereof, shall be distributed on the applicable date of
redemption to the extent of available funds, in the following order of
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee

                                      26
<PAGE>
     and to the extent reimbursable and not previously reimbursed) shall be
     distributed to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder, plus the Make-Whole Amount, if any, and accrued but unpaid
     interest thereon to the scheduled date of distribution to the Noteholders
     bears to the aggregate unpaid principal amount of all such Lessor Notes
     held by all such holders, together with the Make-Whole Amount, if any,
     plus accrued but unpaid interest thereon to the date of scheduled
     distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee

                                      27
<PAGE>
hereunder, shall, so long as such declaration shall not have been rescinded, be
distributed forthwith by the Indenture Trustee in the following order of
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then outstanding
     and all accrued but unpaid interest on such Lessor Notes to the date of
     such distribution (including interest on overdue principal and, to the
     extent permitted by Applicable Law, overdue interest) shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder and accrued but unpaid interest thereon to the scheduled date
     of distribution to the Noteholders bears to the aggregate unpaid principal
     amount of all such Lessor Notes held by all such holders and accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

                                      28
<PAGE>
     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture
Event of Default; provided, however, that any such payment received by the
Indenture Trustee which is payable to the Facility Lessee shall not be held by
the Indenture Trustee unless a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing.

     Section 3.6.   Other Payments.  Except as otherwise provided in Section
3.5 hereof:

                                      29
<PAGE>
     (a)   any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)   all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other disposition thereof or otherwise constituting a part of the

                                      30
<PAGE>
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a
securities account entitled the "Indenture Trustee's Account" (the "Indenture
Trustee's Account"), which Indenture Trustee's Account shall be maintained by
the Account Bank until the date this Indenture is terminated pursuant to
Section 7.1 hereof. The account number of the Indenture Trustee's Account
established hereunder is specified in Schedule II hereto. The Indenture
Trustee's Account shall not be evidenced by passbooks or similar writings. This
Indenture governs and shall be the only agreement governing the Indenture
Trustee's Account.

     (b)   All amounts from time to time held in the Indenture Trustee's
Account shall be maintained (i) in the name of the Owner Lessor subject to the
lien and security interest of the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders as set forth herein and (ii) in
the custody of the Account Bank for and on behalf of the Indenture Trustee for
the benefit of the Indenture Trustee and each of the Noteholders for the
purposes and on the terms set forth in this Indenture. All such amounts shall
constitute a part of the Indenture Trustee Account Collateral and shall not
constitute payment of any Indebtedness or any other obligation of the Owner
Lessor until applied as hereinafter provided.

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<PAGE>
     (c)   As collateral security for the prompt payment in full when due of
the Lessor Secured Obligations owed to the Indenture Trustee and each
Noteholder, the Owner Lessor hereby pledges, assigns, hypothecates and
transfers to the Indenture Trustee for the benefit of the Indenture Trustee and
each of the Noteholders, and hereby grants to the Indenture Trustee for the
benefit of the Indenture Trustee and each of the Noteholders, a lien on and
security interest in and to, (i) the Indenture Trustee's Account and any
successor account thereto and (ii) all cash, investments, investment property,
securities or other property at any time on deposit in or credited to the
Indenture Trustee's Account, including all income or gain earned thereon and
any proceeds thereof (the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)   The Account Bank.

          (i) Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the Indenture
     Trustee's Account as set forth in Section 3.11, (B) the Indenture Trustee's
     Account is and will be maintained as a "securities account" (within the
     meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor is the
     "entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC)
     in respect of the "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) credited to the Indenture Trustee's Account, (D)
     all property delivered to the Account Bank pursuant to this Indenture or
     any other Operative Document will be held by the Account Bank and promptly
     credited to the Indenture Trustee's Account by an appropriate entry in its
     records in accordance with this Indenture, (E) all "financial assets"
     (within the meaning of Section 8-102(a)(9) of the UCC) in registered form
     or payable to or to the order of and credited to the Indenture Trustee's
     Account shall be registered in the name of, payable to or to the order of,
     or indorsed to, the Account Bank or in blank, or credited to another
     securities account maintained in the name of the Account Bank, and in no
     case will any financial asset credited to the Indenture Trustee's Account
     be registered in the name of, payable to or to the order of, or indorsed
     to, the Owner Lessor except to the extent the foregoing have been
     subsequently indorsed by the Owner Lessor to the Account Bank or in blank,
     (F) the Account Bank shall not change the name or account number of the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee, (G) the Account Bank is acting and shall at all times
     act as and perform all of the duties of the "securities intermediary,"
     within the meaning of Article 8 of the UCC, with respect to the

                                      32
<PAGE>
     Indenture Trustee's Account and the financial assets credited thereto and
     (H) the Account Bank shall not enter into any other agreement governing,
     or with respect to, the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee.

          (ii) Financial Assets Election. The Account Bank agrees that each item
     of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated as
     a "financial asset" within the meaning of Section 8-l02(a)(9) of the UCC.

          (iii) Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC)
     or any other order from the Indenture Trustee directing the transfer or
     redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements with respect to
     the financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv) Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit of
     the Indenture Trustee's Account will not be subject to deduction, set-off,
     banker's lien, or any other right in favor

                                      33
<PAGE>
     of any Person other than the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder (except for the face amount of any
     checks which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient
     funds).

          (v) No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi) Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii) Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)   Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the

                                      34
<PAGE>
Indenture Trustee's Account as expressly provided in Section 3.7 hereof. Except
as expressly provided in this Indenture, in no event shall any amounts or
Permitted Investments deposited in or credited to the Indenture Trustee's
Account be registered in the name of the Owner Lessor, payable to the order of
the Owner Lessor or specially indorsed to the Owner Lessor except to the extent
that the foregoing have been specially indorsed to the Indenture Trustee or in
blank.

                                   SECTION 4.
                       COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor.  The Owner Lessor hereby
covenants and agrees as follows:

     (a)   the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)   the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

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<PAGE>
     (a)   any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is waived by
the Owner Lessor and the Owner Participant and (ii) the insurance maintained by
the Facility Lessee still constitutes Prudent Industry Practice); or

     (b)   the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)   the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)   any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing

                                      36
<PAGE>
pursuant to Section 4.6 of the Participation Agreement, or any representation
or warranty made by the OP Guarantor (provided the OP Guaranty shall not have
been terminated or released) under the OP Guaranty or in the certificate
delivered by such OP Guarantor at the Closing pursuant to Section 4.6 of the
Participation Agreement, shall prove to have been incorrect in any material
respect when made and continues to be material and unremedied for a period of
30 days after receipt by such party of written notice thereof; provided,
however, that if such condition cannot be remedied within such 30-day period,
then the period within which to remedy such condition shall be extended up to
an additional 120 days, so long as such party diligently pursues such remedy
and such condition is reasonably capable of being remedied within such extended
period;

     (e)   the Owner Participant, the Owner Lessor or the OP Guarantor
(provided the OP Guaranty shall not have been terminated or released) shall (i)
commence a voluntary case or other proceeding seeking relief under Title 11 of
the Bankruptcy Code or liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)   an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)   In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written

                                      37
<PAGE>
instructions from a Majority in Interest of Noteholders shall declare, by
written notice to the Owner Lessor and the Owner Participant, the unpaid
principal amount of all Lessor Notes, with accrued interest thereon, to be
immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture Event of Default under Section 4.2(e) or (f), such
principal and interest shall automatically become due and payable immediately
without any such declaration or notice) without further act or notice of any
kind. If any Make-Whole amount is due and payable pursuant to Section 2.10 (c)
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b)   If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for

                                      38
<PAGE>
such price or prices and on such terms as the Indenture Trustee, in its
unfettered discretion, may determine, or as may be required by law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b). The Indenture Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.

     (c)   All rights of action and rights to assert claims under this
Indenture or under any of the Lessor Notes may be enforced by the Indenture
Trustee without the possession of the Lessor Notes at any trial or other
proceedings instituted by the Indenture Trustee, and any such trial or other
proceedings shall be brought in its own name as mortgagee of an express trust,
and any recovery or judgment shall be for the ratable benefit of the
Noteholders as herein provided. In any proceedings brought by the Indenture
Trustee (and also any proceedings involving the interpretation of any provision
of this Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)   Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-

                                      39
<PAGE>
day period following the date of commencement of a stay or other prevention or
(b) the date of repossession of the Facility under the applicable Facility
Lease.

     (e)   Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)   If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)   If the Facility Lessee shall fail to make any payment of
Supplemental Rent when the same shall become due or otherwise fail to perform
any obligation under the Facility Lease or any other Operative Document, then
the Owner Lessor may (but need not) make such payment on the date such
Supplemental Rent was payable, together with any interest due thereon on
account of the delayed payment thereof, or perform such obligation at any time
prior to the expiration of ten (10) Business Days after the Owner Lessor or the
Owner Participant shall have received notice or have Actual Knowledge of the
occurrence of such failure, and such payment or performance by the

                                      40
<PAGE>
Owner Lessor shall be deemed to have cured any Lease Indenture Event of Default
which arose or would have arisen from such failure of the Facility Lessee.

     (c)   The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic
Rent payment or Supplemental Rent payment being overdue in the manner set forth
in the next two sentences. If the Indenture Trustee shall thereafter receive
such payment of Periodic Rent, Supplemental Rent or such interest, the
Indenture Trustee shall, notwithstanding the requirements of Section 3.1
hereof, forthwith, remit such payment of Periodic Rent or Supplemental Rent, as
the case may be (to the extent of the payment made by the Owner Lessor pursuant
to this Section 4.4) and such interest to the Owner Lessor in reimbursement for
the funds so advanced by it, provided that if (A) any event which, with the
passing of time or giving of notice or both, would become a Lease Indenture
Event of Default under Section 4.2(b), (e) or (f) hereof, or any Lease
Indenture Event of Default hereunder shall have occurred and be continuing or
(B) any payment of principal, interest, or Make-Whole Amount, if any, on any
Lessor Note then shall be overdue, such payment shall not be remitted to the
Owner Lessor but shall be held by the Indenture Trustee as security for the
obligations secured hereby and distributed in accordance with Section 3.1
hereof. The Owner Lessor shall not attempt to recover any amount paid by it on
behalf of the Facility Lessee pursuant to this Section 4.4 except by demanding
of the Facility Lessee payment of such amount or by commencing an action
against the Facility Lessee for the payment of such amount, and except where a
Lease Indenture Event of Default (other than a Lease Event of Default) has
occurred and is continuing, the Owner Lessor shall be entitled to receive the
amount of such payment and the costs

                                      41
<PAGE>
and expenses incurred in connection with such payments and performance thereof
together with interest thereon from the Facility Lessee (but neither the Owner
Lessor nor the Owner Participant shall have any right to collect such amounts
by exercise of any of the remedies under Section 17 of the Facility Lease) or,
if paid by the Facility Lessee to the Indenture Trustee, from the Indenture
Trustee to the extent of funds actually received by the Indenture Trustee.

     (d)   Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)   Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes having been accelerated or the Indenture Trustee
having exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the previous 30
days, (ii) no Lease Indenture Event of Default of the nature described in any
of clauses (b) through (f) of Section 4.2 hereof shall have occurred and be
continuing and (iii) the Owner Lessor shall give written notice to the
Indenture Trustee of the Owner Lessor's intention to purchase all of the Lessor
Notes in accordance with this paragraph, then, upon receipt within 10 Business
Days after such notice from the Owner Lessor of an amount equal to the sum of
(x) the aggregate unpaid principal amount of any unpaid Lessor Notes then held
by the Noteholders, together with accrued but unpaid interest thereon to the
date of such receipt (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, overdue interest), plus (y) the aggregate
amount, if any, of all sums which, if Section 3.3 were then applicable, such
Noteholder would be entitled to be paid before any payments were to be made to
the Owner Lessor but excluding any Make-Whole Amount, such Noteholder will
forthwith (and upon its receipt of the payment referred to in clause (1) below,
will be deemed to) sell, assign, transfer and convey to the Owner Lessor
(without recourse or warranty of any kind other than of title to the Lessor
Notes so conveyed) all of the right, title and interest of such Noteholder in
and to the Indenture Estate, this Indenture, all Lessor Notes held by such
Noteholder and the

                                      42
<PAGE>
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law. All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in Interest of Noteholders may, by written notice or notices to the
Owner Lessor, the Indenture Trustee and the Facility Lessee, rescind and annul
such acceleration and any related declaration of default under the Facility
Lease and their respective consequences, but no such rescission and annulment
shall extend to or affect any subsequent Lease Indenture Event of Default or
impair any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)   If at any time the Indenture Trustee has the right to take
possession of the Indenture Estate pursuant to Section 4.3 hereof, at the
request of the Indenture Trustee, the Owner Lessor promptly shall (i) execute
and deliver to the Indenture Trustee such instruments of title and other
documents and (ii) make all such demands and give all such notices as are
permitted by the terms of the Facility Lease to be made or given by the Owner
Lessor upon the occurrence and continuance of a Lease Event of Default, in each
case as the Indenture Trustee may deem necessary or advisable to enable the

                                      43
<PAGE>
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry
of which judgment the Owner Lessor hereby specifically consents, and (ii)
pursue all or any part of the Indenture Estate wherever it may be found and
enter any of the premises wherever all or part of the Indenture Estate may be
or is supposed to be and search for all or part of the Indenture Estate and
take possession of and remove all or part of the Indenture Estate.

     (b)   Upon every such taking of possession, the Indenture Trustee may,
from time to time, as a charge against proceeds of the Indenture Estate, make
all such expenditures with respect to the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee shall have the right to deal
with the Indenture Estate and to carry on the business and exercise all rights
and powers of the Owner Lessor relating to the Indenture Estate, as the
Indenture Trustee shall deem best, and, the Indenture Trustee shall be entitled
to collect and receive all rents (including Periodic Rent and Supplemental
Rent), revenues, issues, income, products and profits of the Indenture Estate
and every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required to be deposited with, the Indenture Trustee hereunder) and to apply
the same to the management of or otherwise dealing with the Indenture Estate
and of conducting the business thereof, and of all expenditures with respect to
the Indenture Estate and the making of all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Indenture Estate or any part thereof
(including the employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the Owner Lessor and
the Facility Lessee relating to the Indenture Estate and the Operative
Documents), or under any provision of, this Indenture, as well as just and
reasonable compensation for the services of the Indenture Trustee and of all
Persons properly engaged and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the

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<PAGE>
right to foreclose this Indenture and to have a judicial sale of the Indenture
Estate or any part of the Indenture Estate as the Indenture Trustee shall
determine, in its sole discretion, with any such sale(s) to be under the
judgment or decree of a court of competent jurisdiction. Further, if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee may, in addition to and not in abrogation of other rights and remedies
provided in this Section, proceed by a suit or suits in law or in equity or by
any other appropriate proceeding or remedy (i) to enforce payment of the Lessor
Notes or the performance of any term, covenant, condition or agreement of this
Indenture or any other right, and (ii) to pursue any other remedy available to
it, all as the Indenture Trustee shall determine most effectual for such
purposes. Upon any foreclosure sale, the Indenture Trustee may bid for and
purchase the Indenture Estate and shall be entitled to apply all or any part of
the Secured Indebtedness as a credit to the purchase price. In the event of a
foreclosure sale of the Indenture Estate, the proceeds of said sale shall be
applied as provided in Section 3.3 hereof. In the event of any such foreclosure
sale by the Indenture Trustee, the Owner Lessor shall be deemed a tenant
holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over. The Indenture Trustee, at the Indenture
Trustee's option, is authorized to foreclose this Indenture subject to the
rights of any tenants of the Indenture Estate, and the failure to make any such
tenants parties to any such foreclosure proceedings and to foreclose their
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal
amount of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each

                                      45
<PAGE>
and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the
Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law,
that it will never seek or derive any benefit or advantage from any of the
following, whether now existing or hereafter in effect, in connection with any
proceeding under or in respect of this Lease Indenture:

     (a)   any stay, extension, moratorium or other similar law;

     (b)   any Applicable Law providing for the valuation of or appraisal of
any portion of the Indenture Estate in connection with a sale thereof; or

     (c)   any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture

                                      46
<PAGE>
Trustee at any time or times in the future while any of the obligations secured
hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall
take or cause to be taken any action contrary to the right of the Facility
Lessee, including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon from the date of payment
or incurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Indenture Estate to the Indenture Trustee
on demand.  The Indenture Trustee shall not be liable for any damages resulting
from

                                      47
<PAGE>
any such payment or action unless such damages shall be a consequence of
willful misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                           DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.
The Indenture Trustee shall give prompt written notice to the Owner Lessor and
the Owner Participant of any Lease Indenture Event of Default with respect to
which the Indenture Trustee has Actual Knowledge and will give the Facility
Lessee and the Owner Participant not less than 30 days' prior written notice of
the date on or after which the Indenture Trustee intends to exercise remedies
under Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may

                                      48
<PAGE>
be specified in such instructions: (a) give such notice, direction or consent
or exercise such right, remedy or power or take such action hereunder or under
any Assigned Document, or in respect of any part of or all the Indenture
Estate, as it shall be entitled to take and as shall be specified in such
instructions; (b) take such action with respect to or to preserve or protect
the Indenture Estate (including the discharge of Liens) as it shall be entitled
to take and as shall be specified in such instructions; and (c) waive, consent
to, approve (as satisfactory to it) or disapprove all matters required by the
terms of any Operative Document to be satisfactory to the Indenture Trustee.
The Indenture Trustee may, and upon written instructions from a Majority in
Interest of Noteholders, the Indenture Trustee shall, execute and file or cause
to be executed and filed any financing statement (and any continuation
statement with respect to such financing statement) or any similar instrument
or document relating to the security interest or the assignment created by this
Indenture or granted by the Owner Lessor herein as may be necessary to protect
and preserve the security interest or assignment created by or granted pursuant
to this Indenture, to the extent otherwise entitled to do so and as shall be
specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in this
Section 5.3 shall be deemed to expand the instances in which the Owner Lessor
is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)   The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

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<PAGE>
     (b)   The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)   The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or
in connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)   The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the terms of the Facility Lease, to the extent applicable to the
Indenture Trustee as assignee of the Owner Lessor, (b) in accordance with the
powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture or in accordance with the express terms hereof or
with written instructions from a Majority in Interest of Noteholders in
accordance with Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor.  Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)   The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

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<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)   The Owner Lessor shall have the right, together with or
independently of the Indenture Trustee, (i) to receive from the Facility Lessee
and the Guarantor all notices, certificates, reports, filings, opinions of
counsel and other documents and all information that the Facility Lessee is
permitted or required to give or furnish to the Owner Lessor or the Owner
Participant, as the case may be, pursuant to the Facility Lease or any other
Operative Document; (ii) to inspect the Facility and the records relating
thereto pursuant to Section 12 of the Facility Lease; (iii) to provide such
insurance as may be permitted by Section 11 of the Facility Lease; (iv) to
provide notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant

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<PAGE>
to Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall
retain the right to the exclusion of the Indenture Trustee to exercise the
rights of the Owner Lessor under, and to determine compliance by the Facility
Lessee with, the provisions of Sections 10 (other than Section 10.3 thereof),
13, 14 and 15 of the Facility Lease; provided, however, that if a Lease
Indenture Event of Default shall have occurred and be continuing, the Owner
Lessor shall cease to retain such rights upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;

     (d)   Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the

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<PAGE>
Facility Lessee under the Operative Documents relating to the protection,
insurance, maintenance, possession, use and return of the Property Interest; and

     (f)   Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture
Trustee of the exclusive right, so long as this Indenture shall be in effect,
to declare the Facility Lease to be in default under Section 16 thereof and
thereafter to exercise the remedies pursuant to Section 17 of the Facility
Lease (except as expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by this
Indenture in the Indenture Estate as may be supplied to the Indenture Trustee
by the Facility Lessee. At any time and from time to time, upon the request of
the Facility

                                      53
<PAGE>
Lessee or the Indenture Trustee, at the expense of the Facility Lessee (and
upon receipt of the form of document so to be executed), the Owner Lessor shall
promptly and duly execute and deliver any and all such further instruments and
documents as the Facility Lessee or the Indenture Trustee may request in
obtaining the full benefits of the security interest and assignment created or
intended to be created hereby and of the rights and powers herein granted. Upon
the reasonable instructions (which instructions shall be accompanied by the
form of document to be filed) at any time and from time to time of the Facility
Lessee or the Indenture Trustee, the Owner Lessor shall execute and file any
financing statement (and any continuation statement with respect to any such
financing statement), and any other document relating to the security interest
and assignment created by this Indenture as may be specified in such
instructions. In addition, the Indenture Trustee and the Owner Lessor will
execute such continuation statements with respect to financing statements and
other documents relating to the Lien created by this Indenture in the Indenture
Estate as may be specified from time to time in written instructions of any
Noteholder (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture

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<PAGE>
Company and the Indenture Trustee shall not be liable for any action or
inaction of the Owner Trust; provided, however, that:

          (i) Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii) The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii) The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv) The Indenture Trustee shall not be required to take notice or be
     deemed to have notice or knowledge of any default, Lease Event of Default,
     Significant Lease Default or Lease Indenture Event of Default (except for a
     Lease Indenture Event of Default resulting from an event of nonpayment)
     unless a Responsible Officer of the Indenture Trustee shall have received
     written notice thereof. In the absence of receipt of such notice, the
     Indenture Trustee may conclusively assume that there is no default or Lease
     Indenture Event of Default;

                                      55
<PAGE>
          (v) The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of any
     of its duties hereunder or the exercise of any of its rights or powers if
     there is reasonable ground for believing that the repayment of such funds
     or adequate indemnity against such risk or liability is not reasonably
     assured to it, and none of the provisions contained in this Indenture shall
     in any event require the Indenture Trustee to perform, or be responsible
     for the manner of performance of, any of the obligations of the Owner
     Lessor, under this Indenture; and

          (vi) The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no
duty (a) to see to any registration, recording or filing of any Operative
Document (or any financing or continuation statements in respect thereto) or to
see to the maintenance of any such registration, recording or filing, (b) to
see to any insurance on the Facilities or the Facilities or to effect or
maintain any such insurance, (c) except as otherwise provided in Section 5.5
hereof or in Section 10 of the Participation Agreement, to see to the payment
or discharge of any Tax or any Lien of any kind owing with respect to, or
assessed or levied against, any part of the Indenture Estate, (d) to confirm or
verify the contents of any report, notice, request, demand, certificate,
financial statement or other instrument of the Facility Lessee, (e) to inspect
the Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents

                                      56
<PAGE>
unless the Indenture Trustee shall reasonably believe that each such
Noteholder, the Owner Lessor and the Owner Participant shall have received
copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)   The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)   NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any

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<PAGE>
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of

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competence, of any such Person, so long as the Indenture Trustee shall have
exercised reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee;
Appointment of Successor.

     (a)   Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If a
successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)   Acceptance of Appointment. Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights,

                                      59
<PAGE>
powers and duties of the predecessor Indenture Trustee or Account Bank
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)   Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)   Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or

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<PAGE>
responsibilities except those expressly set forth in Sections 3.11 and 3.12 of
this Indenture. The Indenture Trustee, at the written direction of a Majority
in Interest of Noteholders, may remove and replace the Account Bank pursuant to
the terms of Section 7.1(a) and direct such Account Bank according to the terms
of this Indenture.

     (e)   Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)   Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such

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request so to do; provided, however, that the Indenture Trustee shall exercise
due care in selecting any additional or separate trustee if such additional or
separate trustee shall not be a Person possessing trust powers under Applicable
Law. If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law or take any such action or shall be
advised by such counsel that it is no longer so necessary or prudent in the
interest of the Noteholders or in the event that the Indenture Trustee shall
have been requested to do so in writing by a Majority in Interest of
Noteholders, the Indenture Trustee shall execute and deliver all instruments
and agreements necessary or proper to remove any additional trustee or separate
trustee. In such connection, the Indenture Trustee may act on behalf of the
Owner Lessor to the same extent as is provided above. Notwithstanding anything
contained to the contrary in this Section 7.2(a), to the extent the laws of any
jurisdiction preclude the Indenture Trustee from taking any action hereunder
either alone, jointly or through a separate trustee under the direction and
control of the Indenture Trustee, the Owner Lessor, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such jurisdiction,
which separate trustee shall have full power and authority to take all action
hereunder as to matters relating to such jurisdiction without the consent of
the Indenture Trustee, but not subject to the same limitations in any exercise
of his power and authority as those to which the Indenture Trustee is subject.

     (b)   The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)   Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

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<PAGE>
     (d)   Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as

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between the Noteholders and the Owner Lessor, (iv) reduce the amount (except to
any amount as shall be sufficient to pay the aggregate principal of, Make-Whole
Amount, if any, and interest on all outstanding Lessor Notes) or extend the
time of payment of Periodic Rent or Termination Value except as expressly
provided in Section 3.5 of the Facility Lease, or change any of the
circumstances under which Periodic Rent or Termination Value is payable, (v)
consent to any assignment of the Facility Lease if in connection therewith the
Facility Lessee will be released from its obligation to pay Periodic Rent and
Termination Value, except as expressly provided in Section 13 of the
Participation Agreement, or release the Facility Lessee of its obligation to
pay Periodic Rent or Termination Value or change the absolute and unconditional
character of such obligations as set forth in Section 9 of the Facility Lease;
(vi) consent to any release of the Guarantor under Section 8.4 of the Calpine
Guaranty or (vii) deprive the Indenture Trustee of the Lien on the Indenture
Estate or permit the creation of any Lien on the Indenture Estate ranking
equally or prior to the Lien of the Indenture Trustee, except for Permitted
Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any
other Operative Document (a) to evidence the succession of another Person as a
Lessor Manager or the appointment of a co-manager in accordance with the terms
of the LLC Agreement, or to evidence the succession of a successor as the
Indenture Trustee hereunder, the removal of the Indenture Trustee or the
appointment of any separate or additional trustee or trustees, in each case if
done pursuant to the provisions of Section 7 hereof and to define the rights,
powers, duties and obligations conferred upon any such separate trustee or
trustees or co-trustee or co-trustees, (b) to correct, confirm or amplify the
description of any property at any time subject to the Lien of this Indenture
or to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee, (c) to provide for any evidence of the creation and issuance
of any Additional Lessor Notes pursuant to, and subject to the conditions of,
Section 2.12 and to establish the form and the terms of such Additional Lessor
Notes, (d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may

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be lawfully granted or conferred and which are not contrary or inconsistent
with this Indenture, (f) to add to the covenants or agreements to be observed
by the Facility Lessee or the Owner Lessor and which are not contrary to this
Indenture, to add Indenture Events of Defaults for the benefit of Noteholders
or surrender any right or power of the Owner Lessor, provided it has consented
thereto, (g) to effect the assumption of all or, to the extent otherwise
provided hereunder, part of the Lessor Notes by the Facility Lessee, provided
that the supplemental indenture will contain all of the covenants applicable to
the Facility Lessee contained in the Facility Lease and the Participation
Agreement for the benefit of the Indenture Trustees or the holders of such
Lessor Notes, such that the Facility Lessee's obligations contained therein, if
applicable in the event that the Facility Lease are terminated, will continue
to be in full force and effect, (h) to comply with requirements of the SEC, any
applicable law, rules or regulations of any exchange or quotation system on
which the Certificates are listed, or any regulatory body, (i) to modify,
eliminate or add to the provisions of any Operative Documents to such extent as
shall be necessary to qualify or continue the qualification of this Lease
Indenture or the Pass Through Trust Agreements (including any supplements
thereto) under the Trust Indenture Act, or similar federal statute enacted
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the

                                      65
<PAGE>
Participation Agreement, or would materially increase its administrative duties
or responsibilities hereunder or thereunder or may result in personal liability
for it (unless it shall have been provided an indemnity satisfactory to the
Indenture Trustee), the Indenture Trustee may in its discretion decline to
execute such document or the election. With every such document and election,
the Indenture Trustee shall be furnished with evidence that all necessary
consents have been obtained and with an opinion of counsel that such document
complies with the provisions of this Indenture, does not deprive the Indenture
Trustee or the holders of the Lessor Notes of the benefits of the Lien hereby
created on any property subject hereto or of the assignments contained herein
(except as otherwise consented to in accordance with Section 8.1 hereof) and
that all consents required by the terms hereof in connection with the execution
of such document or the making of such election have been obtained. The
Indenture Trustee shall be fully authorized and protected in relying on such
opinion.

                                   SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

     (a)   Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)   Release.

          (i) Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person be
     released from the Lien of this Lease Indenture and the Indenture Trustee
     shall, upon the written request of the Owner Lessor or the Facility Lessee,
     execute and deliver to, and as directed in writing by, the Facility Lessee
     or the

                                      66
<PAGE>
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the replaced Component from the Lien of this Indenture.

          (ii) Whenever the Facility Lessee is entitled to acquire the Facility
     or have the Facility transferred to it pursuant to the express terms of the
     Facility Lease, the Indenture Trustee shall release the Indenture Estate
     from the Lien of this Indenture and execute and deliver to, or as directed
     in writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the Indenture Estate from
     the Lien of this Indenture; provided that all sums secured by this
     Indenture have been paid to the Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Sublease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Sublease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties

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hereto, the Owner Participant, the Facility Lessee (as provided in Sections
4.12 and 8.1 hereof) and the Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

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<PAGE>
          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

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<PAGE>
          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall Wells Fargo, be personally liable
for the payment of any indebtedness or expenses of the Owner Lessor or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts.  This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

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     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall
be in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of Wisconsin (without giving effect to the conflicts of laws provisions
thereof).  Regardless of any provision in any other agreement, for purposes of
the Uniform Commercial Code (as in effect from time to time in any jurisdiction
including the State of New York), the "Securities Intermediary's Jurisdiction"
of the Account Bank with respect to the Indenture Trustee's Account is the
State of New York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall

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set forth in detail the calculation thereof). For purposes of this Section
9.13, "Excess Amount" means the amount by which such payment exceeds the amount
which would have been received by such holder and the Indenture Trustee in
respect of such principal or interest if the Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 9.13 shall prevent the Indenture Trustee or any
Noteholder from enforcing any personal recourse obligations (and retaining the
proceeds thereof) of the Owner Participant under the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any

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necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.   Fixture Financing Statement.  This Indenture also is
intended to serve as a fixture financing statement under the Wisconsin Uniform
Commercial Codes.  In connection therewith, the following information is
provided:

     (a)   Name and address of Debtor:

           RockGen OL-1, LLC
           c/o  Wells Fargo Bank Northwest, National Association
           MAC U1254-031

                                      73
<PAGE>
           79 South Main Street
           Salt Lake City, UT 84111
           Telephone: (801) 246-5630
           Facsimile: (801) 246-5053
           Attention:  Corporate Trust Services

     (b)   Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

           State Street  Bank and Trust Company of Connecticut,
           National Association,
           as Indenture Trustee
           225 Asylum Street, Goodwin Square
           Hartford, CT 06103
           Telephone: (860) 244-1822
           Facsimile:  (860) 244-1889
           Attention:  Corporate Trust Department

     (c)   The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)   Recording: This Indenture is to be recorded in the real estate
records of Dane County, Wisconsin.

                 (Remainder of Page Intentionally Left Blank)

                                      74
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                              ROCKGEN OL-1, LLC

                              By:   Wells Fargo Bank Northwest, National
                                    Association, not in its individual
                                    capacity but solely as the Lessor Manager

                              By:
                                    Name:
                                    Title:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                              as Indenture Trustee and Account Bank

                              By:
                                    Name:

                                    Title:
<PAGE>
STATE OF NEW YORK                   )
                                    )      SS.:
COUNTY OF NEW YORK                  )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by ________________________________, the _______________________
of Wells Fargo Bank Northwest, National Association, not in its individual
capacity but solely as the Lessor Manager of South Point OL-1, LLC, a Delaware
limited liability company, as the Owner Lessor (the "Owner Lessor"), to be the
free act and deed on behalf of the national banking association as the Lessor
Manager of the Owner Lessor under the LLC Agreement dated as of __________,
2001.

Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK                   )
                                    )      SS.:
COUNTY OF NEW YORK                  )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by , the of State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, to be the free act and
deed on behalf of the corporation.

Notary Public

My Commission Expires

                                      3
<PAGE>
                                                                      EXHIBIT A
                                                             TO LEASE INDENTURE

                        DESCRIPTION OF FACILITY SITE

     The West Half of the Northwest Quarter (W1/2NW1/4) of Section Twenty-Three
     (23), Township Six (6) North, Range Twelve (12) East, in the Town of
     Christiana, Dane County, Wisconsin.

<TABLE>
<S>                    <C>
     Tax Parcel No:    016-0612-232-8500-2
                       016-0612-232-9000-5

     Property Address: 2305 Carpenter Swain Road, Dane County, WI
</TABLE>
<PAGE>
                                                                      EXHIBIT B
                                                             TO LEASE INDENTURE
                         FORM OF ROCKGEN LESSOR NOTE

                              ROCKGEN OL-1, LLC
                  NONRECOURSE PROMISSORY NOTE (ROCKGEN) DUE IN
                     A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                                OF MAY 30, 2012

                 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
              SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
              SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                  Issued at: New York, New York

                                                   Issue Date: October __, 2001

$[_____]

     ROCKGEN OL-1, LLC, a Delaware limited liability company (herein called the
"Owner Lessor", which term includes any successor person under the Collateral
Trust Indenture hereinafter referred to), hereby promises to pay to State
Street Bank and Trust Company of Connecticut, National Association, in its
capacity as pass through trustee of the South Point, Broad River and RockGen
Series A Trust, (the "Pass Through Trustee") or its registered assigns, the
principal sum of $[_____], which is due and payable in a series of installments
of principal with a final payment date of May 30, 2012 as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such

                                    B-1-1
<PAGE>
date shall be in an aggregate amount equal to the product of the Principal
Portion set forth on Schedule I multiplied by the percentage set forth on
Schedule I under the column headed "Percentage of Principal Amount Payable" for
such date unless the Principal Portion has been prepaid; provided, that the
final installment of principal shall be equal to the then unpaid principal
balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

                                    B-1-2
<PAGE>
     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in the case of the final payment in respect of this Note,
this Note shall be surrendered to the Indenture Trustee, by mailing a check for
the amount then due and payable, in New York Clearing House funds, to the
Noteholder, at the last address of the Noteholder appearing on the Note
Register, or by whichever of the following methods specified by notice from the
Noteholder to the Indenture Trustee: (a) by crediting the amount to be
distributed to the Noteholder to an account maintained by the Noteholder with
the Indenture Trustee, (b) by making such payment to the Noteholder in
immediately available funds at the Indenture Trustee Office, or (c) by
transferring such amount in immediately available funds for the account of the
Noteholder to the banking institution having bank wire transfer facilities as
shall be specified by the Noteholder, such transfer to be subject to telephonic
confirmation of payment. All payments due with respect to this Note shall be
made (i) as soon as practicable prior to the close of business on the date the
amounts to be distributed by the Indenture Trustee are actually received by the
Indenture Trustee if such amounts are received by 12:00 noon, New York City
time, on a Business Day or (ii) on the next succeeding Business Day if received
after such time or if received on any day other than a Business Day. Prior to
due presentment for registration of transfer of this Note, the Owner Lessor and
the Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

                                      B-1-3
<PAGE>
     This Note is the Note referred to in the Collateral Trust Indenture as the
"Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust Indenture, and the several Notes may be for varying
principal amounts and may have different maturity dates (not later than the
final maturity date of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an

                                      B-1-4
<PAGE>
assumption, the holder of this Note may be required to exchange this Note for a
new Note evidencing such assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                          ROCKGEN OL-1, LLC
                          a Delaware limited liability company,

                              By:   Wells Fargo Bank Northwest, National
                                    Association, not in its individual capacity
                                    but solely as the Lessor Manager

                              By:
                                    Name:
                                    Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                    STATE STREET BANK AND TRUST
                                    COMPANY OF CONNECTICUT,
                                    NATIONAL ASSOCIATION,
                                    not in its individual capacity, but solely
                          as

                                    the Indenture Trustee

                                    Name:
                                    Title:
<PAGE>
                           FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: _________________           ____________________________________
                                  (Signature of Transferor)

                                   NOTE: The signature to this assignment must
                                   correspond with the name as written upon the
                                   face of the within-mentioned instrument in
                                   every particular, without alteration or any
                                   change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                              Series A Lessor Notes

                         Principal Portion: $45,450,000

<TABLE>
<CAPTION>
                                                                             Percentage of Principal
                                                                             -----------------------
Regular Distribution Date                                                             Amount Payable
-------------------------                                                             --------------
<S>                                                                          <C>
May 30, 2002 ..............................................................              1.21012101%

November 30, 2002..........................................................              2.58525853%
May 30, 2003 ..............................................................              3.02530253%
November 30, 2003..........................................................              3.24532453%
May 30, 2004...............................................................              3.52035204%
November 30, 2004..........................................................              3.68536854%
May 30, 2005 ..............................................................              3.96039604%
November 30, 2005..........................................................              4.12541254%
May 30, 2006 ..............................................................              4.07040704%
November 30, 2006..........................................................              4.18041804%
May 30, 2007 ..............................................................              4.73047305%
November 30, 2007..........................................................              5.00550055%
May 30, 2008 ..............................................................              5.50055006%
November 30, 2008..........................................................              5.77557756%
May 30, 2009 ..............................................................              6.16061606%
November 30, 2009..........................................................              6.43564356%
May 30, 2010 ..............................................................              6.65566557%
November 30, 2010..........................................................              6.93069307%
May 30, 2011 ..............................................................              7.20572057%
November 30, 2011..........................................................              6.60066007%
May 30, 2012 ..............................................................              5.39053905%
                                                                                       ------------

Total......................................................................            100.00000000%
                                                                                       ============
</TABLE>
<PAGE>
                                                                      EXHIBIT C
                                                             TO LEASE INDENTURE

                    FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                            ______________________________,
                                            not in its individual capacity but
                                            solely as the Indenture Trustee

                                            By: __________________________
                                                Name:
                                                Title:

                                     C-1
<PAGE>
                                                                      EXHIBIT D
                                                             TO LEASE INDENTURE

                         DESCRIPTION OF THE FACILITY

     That certain approximately 520 megawatt net nameplate capacity generating
facility, (known also as the "RockGen Facility") together with all structures
or improvements, all alterations thereto or replacements thereof, and all other
fixtures, attachments, appliances, equipment, machinery and other articles
(including, but not limited to, the property set forth below (the "Included
Property")), in each case located on the land, or on the easements appurtenant
to the land, consisting of approximately 78 acres located in the Town of
Christiana near the Village of Rockdale, in Dane County, Wisconsin, described
more particularly on Exhibit A.

     Included Property

     1.   Three Combustion Turbines - General Electric Model PG7241 FA; Serial
          #: 297570, 297571 and 297572.

     2.   Three CT Generators - General Electric, Hydrogen Cooled, Model 7FH2,
          18kV, 220000 KVA, 0.85 pf; Serial #: 337X167, 337X168 and 337X169.

     3.   Three Combustion Turbine Step-up Transformers - GE Prolec, 18/138 KV,
          220 MVA FA, WYE/DELTA, Serial #: G720-01, G720-02 and G720-03 and
          other interconnection equipment associated with the RockGen Facility.

                                      D-1-1
<PAGE>
                                                                     SCHEDULE I
                                                             TO LEASE INDENTURE

                            SERIES A LESSOR NOTE

<TABLE>
<S>                                         <C>
Initial Aggregate Principal Amount:         $45,450,000
Final Maturity Date:                        May 30, 2012
Interest Rate:                              8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                                   Percentage of Principal
                                                                                   -----------------------
Regular Distribution Date                                                                   Amount Payable
-------------------------                                                                   --------------
<S>                                                                                <C>
May 30, 2002 ..............................................................                    1.21012101%

November 30, 2002..........................................................                    2.58525853%
May 30, 2003 ..............................................................                    3.02530253%
November 30, 2003..........................................................                    3.24532453%
May 30, 2004 ..............................................................                    3.52035204%
November 30, 2004..........................................................                    3.68536854%
May 30, 2005 ..............................................................                    3.96039604%
November 30, 2005..........................................................                    4.12541254%
May 30, 2006 ..............................................................                    4.07040704%
November 30, 2006..........................................................                    4.18041804%
May 30, 2007 ..............................................................                    4.73047305%
November 30, 2007..........................................................                    5.00550055%
May 30, 2008 ..............................................................                    5.50055006%
November 30, 2008..........................................................                    5.77557756%
May 30, 2009 ..............................................................                    6.16061606%
November 30, 2009..........................................................                    6.43564356%
May 30, 2010 ..............................................................                    6.65566557%
November 30, 2010..........................................................                    6.93069307%
May 30, 2011 ..............................................................                    7.20572057%
November 30, 2011..........................................................                    6.60066007%
May 30, 2012 ..............................................................                    5.39053905%
                                                                                             ------------

Total......................................................................                  100.00000000%
                                                                                             ============
</TABLE>

                                SCHEDULE 1-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.24
<SEQUENCE>27
<FILENAME>f80168ex4-22_24.txt
<DESCRIPTION>EXHIBIT 4.22.24
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.24


                           Document Name:
Document Number   Indenture of Trust, Mortgage and
                  Security Agreement
===============   ================================


                                                    Recording Area
                                                    ============================

                                                    Name and Return Address

                                                    Sarah M. Ward, Esq.
                                                    Skadden, Arps, Slate,
                                                    Meagher & Flom, LLP
                                                    Four Times Square
                                                    New York, NY 10036

                                                    Name of Preparer of the
                                                    Document:
                                                    Sarah M. Ward, Esq.


                                                    ============================


                                                    Parcel Identification Number
                                                    (PIN)
--------------------------------------------------------------------------------
<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT


                          Dated as of October 18, 2001


                                     between


                                ROCKGEN OL-2, LLC

                                     and

                           STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank


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

                                ROCKGEN FACILITY

                                       2
<PAGE>
<TABLE>
<CAPTION>
                                      TABLE OF CONTENTS

                                                                                           Page
<S>                                                                                        <C>
SECTION 1.   DEFINITIONS.............................................................        8

SECTION 2.   THE LESSOR NOTES........................................................        9
     Section 2.1.   Limitation on Lessor Notes.......................................        9
     Section 2.2.   Initial Lessor Notes.............................................        9
     Section 2.3.   Execution and Authentication of Lessor Notes.....................        9
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes...................       10
     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability of
                    the Owner Lessor, the Owner Participant or the Indenture
                    Trustee..........................................................       11
     Section 2.6.   Method of Payment................................................       12
     Section 2.7.   Application of Payments..........................................       13
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes..............       13
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes................       14
     Section 2.10.  Redemptions; Assumption..........................................       15
     Section 2.11.  Payment of Expenses on Transfer..................................       20
     Section 2.12.  Additional Lessor Notes..........................................       20
     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
                    Laws; Legend.....................................................       23
     Section 2.14.  Security for and Parity of Lessor Notes..........................       23
     Section 2.15.  Acceptance of the Indenture Trustee..............................       23

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE ESTATE...       23
     Section 3.1.   Distribution of Periodic Rent....................................       23
     Section 3.2.   Payments Following Event of Loss or Other Early Termination......       25
     Section 3.3.   Payments After Lease Indenture Event of Default..................       27
     Section 3.4.   Investment of Certain Payments Held by the Indenture Trustee.....       28
     Section 3.5.   Application of Certain Other Payments............................       28
     Section 3.6.   Other Payments...................................................       29
     Section 3.7.   Excepted Payments................................................       29
     Section 3.8.   Distributions to the Owner Lessor................................       29
     Section 3.9.   Payments Under Assigned Documents................................       30
     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee........       30
</TABLE>

                                       i
<PAGE>
<TABLE>
<S>                                                                                      <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE TRUSTEE......      34
     Section 4.1.   Covenants of Owner Lessor........................................      34
     Section 4.2.   Lease Indenture Events of Default................................      34
     Section 4.3.   Remedies of the Indenture Trustee................................      37
     Section 4.4.   Right to Cure Certain Lease Events of Default....................      39
     SECTION 4.5.   RESCISSION OF ACCELERATION.......................................      42
     Section 4.6.   Return of Indenture Estate, Etc..................................      42
     Section 4.7.   Power of Sale and Other Remedies.................................      43
     Section 4.8.   Appointment of Receiver..........................................      44
     Section 4.9.   Remedies Cumulative..............................................      44
     Section 4.10.  Waiver of Various Rights by the Owner Lessor.....................      45
     Section 4.11.  Discontinuance of Proceedings....................................      46
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under the
                    Facility Lease...................................................      46
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc.........      46
     Section 4.14.  Further Assurances...............................................      47
     Section 4.15.  Waiver of Past Defaults..........................................      47

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND
             DUTIES OF OWNER LESSOR..................................................      47
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default...........      47
     Section 5.2.   Actions Upon Instructions Generally..............................      47
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease...................................................      48
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification...........      48
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions........................      49
     Section 5.6.   Certain Rights of the Owner Lessor...............................      49
     Section 5.7.   Restrictions on Dealing with Indenture Estate....................      52
     Section 5.8.   Filing of Financing Statements and Continuation Statements.......      52

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR......................................      53
     Section 6.1.   Acceptance of Trusts and Duties..................................      53
     Section 6.2.   Absence of Certain Duties........................................      55
     Section 6.3.   Representations and Warranties...................................      55
     Section 6.4.   No Segregation of Moneys; No Interest............................      56
     Section 6.5.   Reliance; Agents; Advice of Experts..............................      56
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                      <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES......................      57
     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
                    of Successor.....................................................      57
     Section 7.2.   Appointment of Additional and Separate Trustees..................      60

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS........      62
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations.......................................      62
     Section 8.2.   Supplemental Indentures and other Amendments Without Consent.....      63
     Section 8.3.   Conditions to Action by the Indenture Trustee....................      64

SECTION 9.   MISCELLANEOUS...........................................................      65
     Section 9.1.   Surrender, Defeasance and Release................................      65
     Section 9.2.   Conveyances Pursuant to the Site Sublease........................      66
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances.......................................................      66
     Section 9.4.   Indenture for Benefit of Certain Persons Only....................      66
     Section 9.5.   Notices; Furnishing Documents, etc...............................      66
     Section 9.6.   Severability.....................................................      68
     Section 9.7.   Limitation of Liability..........................................      69
     Section 9.8.   Written Changes Only.............................................      69
     Section 9.9.   Counterparts.....................................................      69
     Section 9.10.  Successors and Permitted Assigns.................................      69
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor Estate.....      70
     Section 9.14.  Withholding Taxes: Information Reporting.........................      71
     Section 9.15.  Fixture Financing Statement......................................      72
</TABLE>

EXHIBITS

Exhibit A           Description of Facility Site
Exhibit B           Form of Lessor Note
Exhibit C           Form of Certificate of Authentication
Exhibit D           Description of the Facility

APPENDIX A Definitions

                                       iii
<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

     This INDENTURE OF TRUST, MORTGAGE AND SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions hereof, this "Indenture"), dated as of October 18, 2001, between
ROCKGEN OL-2, LLC, a Delaware limited liability company created for the benefit
of the Owner Participant referred to below, as mortgagor (the "Owner Lessor")
and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as
mortgagee on behalf of the Noteholders (the "Indenture Trustee") and as the
Account Bank.


                                   WITNESSETH:


     WHEREAS, RockGen Energy LLC (the "Facility Lessee") has sold the Undivided
Interest to the Owner Lessor pursuant to the Bill of Sale and leased the Ground
Interest to the Owner Lessor pursuant to the Facility Site Lease, a memorandum
of which shall be recorded with this Indenture in the appropriate registry of
deeds described in Exhibit A attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has leased from the Owner
Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Sublease,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time in accordance with the provisions thereof, the "Facility Site
Sublease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;
<PAGE>
     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Purchase Price for the Undivided
Interest purchased from the Facility Lessee (ii) grant to the Indenture Trustee
the security interests herein provided;

     WHEREAS, this Indenture is intended to be regarded as a mortgage under the
laws of the State of Wisconsin (and not intended to qualify as an indenture),
as a security agreement under the Uniform Commercial Codes of the States of New
York, Delaware and Wisconsin, and as a fixture filing under the laws of the
State of Wisconsin;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding and
legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to secure
(i) the prompt payment when and as due of the principal of and the Make-Whole
Amount, if any, and interest on the Lessor Notes and of all other amounts owing
with respect to all Lessor Notes from time to time outstanding hereunder, and
the prompt payment when and as due of any and all other amounts from time to
time owing in respect of the Secured Indebtedness and (ii) the performance and
observance by the Owner Lessor for the benefit of the holders of the Lessor
Notes and the Indenture Trustee of all other obligations, agreements, and
covenants of the Owner Lessor set forth hereinafter and in

                                       2
<PAGE>
the Lessor Notes, the Operative Documents and the other documents, certificates
and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns, transfers,
pledges, bargains, sells and confirms unto the Indenture Trustee and its
successors and permitted assigns, for the benefit of the holders of the Lessor
Notes from time to time, a first priority security interest in and mortgage
lien on all estate, right, title and interest of the Owner Lessor in, to and
under the following described property, rights, interests and privileges,
whether now held or hereafter acquired (which collectively, including all
property hereafter specifically subjected to the security interest created by
this Indenture by any supplement hereto, exclusive of Excepted Payments) are
included within, and are hereafter referred to as, the "Indenture Estate"):

     (1)   the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility Lessee
thereunder (including Rent); any rights of the Owner Lessor as collateral
assignee of the Facility Lessee under the Facility Lease; the Facility Site
Lease (and all rights with respect to the Ground Interest conveyed thereby); the
Facility Site Sublease and all payments of any kind by the Facility Lessee
thereunder; the Bill of Sale (and all rights with respect to the Facility
conveyed thereby); the Owner Lessor's interest in all tangible property located
on or at or attached to the Facility Site as to which an interest in such
tangible property arises under applicable real estate law ("fixtures"); the
Calpine Guaranty, the Ownership and Operation Agreement and all and any interest
in any property now or hereafter granted to the Owner Lessor pursuant to any
provision of the Facility Lease; and each other Operative Document to which the
Owner Lessor is a party other than the Tax Indemnity Agreement and the LLC
Agreement (the Undivided Interest, the Owner Lessor's interest in any
Components, the Owner Lessor's interest in any fixtures, Improvements and the
Ground Interest are collectively referred to as the "Property Interest" and the
documents specifically referred to above in this paragraph (1) are collectively
referred to as the "Assigned Documents"), including, without limitation, (x) all
rights of the Owner Lessor to receive any payments or other amounts or, subject
to Section 5.6 hereof, to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to make any demand or to take any other action under or in respect
of any such document, to accept surrender or redelivery of the Property Interest
or any part thereof, as well as all the rights, powers and remedies on the part
of the Owner Lessor, whether acting under any such document or by statute or

                                       3
<PAGE>
at law or in equity or otherwise, arising out of any Lease Default or Lease
Event of Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)   all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)   any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)   all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and all
proceeds (to the extent of the Owner Lessor's interest therein) of all insurance
maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)   all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the terms
of any Assigned Document, wherever located; and

                                       4
<PAGE>
     (6)   all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner Participant
hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members and
appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount,
if any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the Facility Lease
(other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Further, the Owner Lessor agrees that promptly on
receipt thereof, it will transfer to the Indenture Trustee any and all moneys
from time to time received by it constituting part of the Indenture Estate,
whether or not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

                                       5
<PAGE>
     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
Wisconsin. This Indenture is also intended to be a mortgage under Wisconsin
law. The maximum principal indebtedness secured by this Indenture, including
future advances and contingent obligations but excluding protective advances,
shall not at any time exceed the total amount of One Hundred Eighty One Million
Eight Hundred Thousand Dollars ($181,800,000); provided, however, that nothing
herein contained shall limit the amount secured by this Indenture if the
Secured Indebtedness is increased by protective advances; and provided,
further, such limitation as to such future advances and contingent obligations
shall only pertain to the record priority of the amount thereof secured hereby
and does not otherwise limit the amount of total indebtedness of Owner Lessor
secured hereby or limit the liability of Owner Lessor to Indenture Trustee for
such total indebtedness, including future advances and contingent obligations.
The future advances secured hereby shall be made to or for the account of Owner
Lessor and may be made under the Additional Lessor Notes, or pursuant to
promissory notes or other instruments evidencing such future advances which may
be hereafter executed and delivered by Owner Lessor to Indenture Trustee.

     The Indenture Trustee, for itself and its successors and permitted assigns,
hereby agrees that it shall hold the Indenture Estate, in trust for the benefit
and security of (i) the holders from time to time of the Lessor Notes from time
to time outstanding, without any priority of any one Lessor Note over any other
except as herein otherwise expressly provided and (ii) the Indenture Trustee,
and for the uses and purposes and subject to the terms and provisions set forth
in this Indenture. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Lessor shall remain liable under the
Assigned Documents to perform all of the obligations assumed by it thereunder,
all in accordance with and pursuant to the terms and provisions thereof, and
the Indenture Trustee and the Noteholders shall have no obligation or liability
under any Assigned Document by reason of or arising out of the assignment
hereunder, nor shall

                                       6
<PAGE>
the Indenture Trustee or the Noteholders be required or obligated in any
manner, except as herein expressly provided, to perform or fulfill any
obligation of the Owner Lessor under or pursuant to any such Assigned Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under, the terms of any of the Assigned
Documents or revoke or terminate any of the Assigned Documents, (ii) settle or
compromise any claim arising under any of the Assigned Documents, or (iii)
submit or consent to the submission of any dispute, difference or other matter
arising under or in respect of any of the Assigned Documents to arbitration
thereunder.

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes

                                       7
<PAGE>
from time to time outstanding and to protect the security of this Indenture,
and the Indenture Trustee agrees to accept the trusts and duties hereinafter
set forth, as follows:

                                    SECTION 1.
                                   DEFINITIONS

     (a)   Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)   In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 520 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Christiana, Wisconsin and more fully described
in Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i) The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Lessor Notes, and principal of such Lessor Notes being due and
     payable as provided in such Lessor Notes;

          (ii) Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture

                                       8
<PAGE>
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant
     to Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with interest thereon at the rate provided in each
     Additional Lessor Note and the Make-Whole Amount thereon (if any) and
     together with any and all renewals, modifications, consolidations and
     extensions of the indebtedness evidenced by such Additional Lessor Notes,
     and principal of such Additional Lessor Notes being due and payable as
     provided in each such Additional Lessor Note.

          (iii) Any and all additional advances made by the Indenture Trustee to
     protect or preserve the Indenture Estate or the security interest and other
     interests created hereby on the Indenture Estate or for taxes, assessments
     or insurance premiums as hereinafter provided or for performance of any of
     the Owner Lessor's obligations hereunder or for any other purpose provided
     herein, including advances made pursuant to Section 4.13 hereof (whether or
     not the Owner Lessor remains the owner of the Indenture Estate at the time
     of such advances); and

          (iv) Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided interest in
the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal amount
of the Lessor Notes which may be authenticated and delivered and outstanding at
any one time under this Indenture shall be limited to the principal amount of
the Initial Lessor Notes issued on the Closing Date to the Pass Through Trustees
plus the aggregate principal amount of Additional Lessor Notes issued pursuant
to Section 2.12.

                                       9
<PAGE>
     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder one series of Lessor Notes consisting of the Series A
Lessor Notes, in substantially the form set forth in Exhibit B to this Indenture
and in the aggregate principal amount, having installments payable on the dates
and in the amounts and having the final maturity date and interest rate set
forth in Schedule I to this Indenture (the "Series A Lessor Notes" or,
collectively, the "Initial Lessor Notes" or, individually, an "Initial Lessor
Note").

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate form
provided for in any supplement hereto executed pursuant to Section 2.12 hereof),
executed by the Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor signed
by the Lessor Manager. The Indenture Trustee shall authenticate and deliver
Additional Lessor Notes, upon a written order of the Owner Lessor executed by
the Lessor Manager and satisfaction of the conditions specified in Section 2.12.
Such order shall specify the principal amount of the Additional Lessor Notes to
be authenticated and the date on which the original issue of Additional Lessor
Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)   Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

                                       10
<PAGE>
     (b)   Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments having
final payment dates set forth in Schedule I hereto. The principal of each
Initial Lessor Note shall be due and payable in installments on the dates and in
the amounts set forth in Schedule I hereto. Schedule I hereto to the contrary
notwithstanding, the last payment made under such Initial Lessor Note shall be
equal to the then unpaid balance of the principal of such Lessor Note plus all
accrued and unpaid interest on, and any other amounts due under, such Initial
Lessor Note. Each Initial Lessor Note shall bear interest on the principal from
time to time outstanding from and including the date of issuance thereof
(computed on the basis of a 360-day year of twelve 30-day months) until paid in
full at the rate set forth in such Initial Lessor Note and Schedule I hereto.
Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of each
Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)   Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)   Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the Facility
Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or (iii) the
Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have no
obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments in
accordance with the terms of Section 3 hereof; and the Owner Participant shall
not have any obligation for payments in respect of the Lessor

                                       11
<PAGE>
Notes or under this Indenture. The Indenture Trustee and each Noteholder, by
its acceptance thereof, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
the Indenture Trustee or such Noteholder, as the case may be, as herein
provided and that, except as expressly provided in this Indenture, the
Participation Agreement or any other Operative Document, none of the Owner
Participant, the Owner Lessor, the Trust Company, the Lease Indenture Company,
nor the Indenture Trustee, nor any Affiliate of any thereof, shall be
personally liable to such Noteholder or the Indenture Trustee for any amounts
payable hereunder, under such Lessor Note or for any performance to be rendered
under any Assigned Document or for any liability under any Assigned Document.
Without prejudice to the foregoing, the Owner Lessor will duly and punctually
pay or cause to be paid the principal of, Make-Whole Amount, if any, and
interest on all Lessor Notes according to their terms and the terms of this
Indenture. Nothing contained in this Section 2.5 limiting the liability of the
Owner Lessor shall derogate from the right of the Indenture Trustee and the
Noteholders to proceed against the Indenture Estate and the Calpine Guaranty to
secure and enforce all payments and obligations due hereunder and under the
Assigned Documents and the Lessor Notes.

     (a)   In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)   Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an office
or agency where Lessor Notes may be presented for payment (the "Paying Agent").
The Owner Lessor may have one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Owner Lessor initially
appoints the Indenture Trustee as Paying Agent in connection with the Lessor
Notes.

     (a)   The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest

                                       12
<PAGE>
on the Lessor Notes and shall notify the Indenture Trustee of any default by
the Owner Lessor in making any such payment.

     (b)   The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in the
Indenture Estate on the dates provided in the Lessor Notes by mailing a check
for such amount, payable in New York Clearing House funds, to each Noteholder at
the last address of each such Noteholder appearing on the Note Register, or by
whichever of the following methods shall be specified by notice from a
Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be subject
to telephonic confirmation of payment. Any payment made under any of the
foregoing methods shall be made free and clear of and without reduction for or
on account of all wire and like charges and without any presentment or surrender
of such Lessor Note, unless otherwise specified by the terms of the Lessor Note,
except that, in the case of the final payment in respect of any Lessor Note,
such Lessor Note shall be surrendered to the Indenture Trustee for cancellation
after such payment. All payments in respect of the Lessor Notes shall be made
(1) as soon as practicable prior to the close of business on the date the
amounts to be distributed by the Indenture Trustee are actually received by the
Indenture Trustee if such amounts are received by 12:00 noon New York City time,
on a Business Day, or (2) on the next succeeding Business Day if received after
such time or on any day other than a Business Day. One or more of the foregoing
methods of payment may be specified in a Lessor Note. Prior to due presentment
for registration of transfer of any Lessor Note, the Owner Lessor and the
Indenture Trustee may deem and treat the Person in whose name any Lessor Note is
registered on the Note Register as the absolute owner and holder of such Lessor
Note for the purpose of receiving payment of all amounts payable with respect to
such Lessor Note and for all other purposes, and neither the Owner Lessor nor
the Indenture Trustee shall be affected by any notice to the contrary. All
payments made on any Lessor Note in accordance with the provisions of this
Section 2.6 shall be valid and effective to satisfy and discharge the liability
on such Lessor Note to the extent of the sums so paid and (except as provided
herein) neither the Indenture Trustee nor the Owner Lessor shall have any
liability in respect of such payment.

                                       13
<PAGE>
     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any, and,
to the extent permitted by Applicable Law, overdue interest) on such Lessor Note
to the date of such payment, second, to the payment of the principal amount of,
and the Make-Whole Amount, if any, on such Lessor Note then due (including any
overdue installments of principal) thereunder and third, to the extent permitted
by Section 2.10 of this Indenture, the balance, if any, remaining thereafter, to
the payment of the principal amount of, and the Make-Whole Amount, if any, on
such Lessor Note. The order of application of payments prescribed by this
Section 2.7 shall not be deemed to supersede any provision of Section 3 hereof
regarding application of funds.

     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner Lessor
initially appoints the Indenture Trustee as Registrar in connection with the
Lessor Notes. The Indenture Trustee shall maintain at the Indenture Trustee
Office a register in which it will provide for the registration, registration of
transfer and exchange of Lessor Notes (such register being referred to herein as
the "Note Register"). If any Lessor Note is surrendered at said office for
registration of transfer or exchange (accompanied by a written instrument of
transfer duly executed by or on behalf of the holder thereof, together with the
amount of any applicable transfer taxes), the Owner Lessor will execute and the
Indenture Trustee will authenticate and deliver, in the name of the designated
transferee or transferees, if any, one or more new Lessor Notes (subject to the
limitations specified in Sections 2.3 and 2.13 hereof) in any denomination or
denominations not prohibited by this Indenture, as requested by the Person
surrendering the Lessor Note, dated the same date as the Lessor Note so
surrendered and of like tenor and aggregate unpaid principal amount. Any Lessor
Note or Lessor Notes issued in a registration of transfer or exchange shall be
valid obligations of the Owner Lessor entitled to the same security and benefits
to which the Lessor Note or Lessor Notes so transferred or exchanged were
entitled, including rights as to interest accrued but unpaid and to accrue so
that there will not be any loss or gain of interest on the Lessor Note or Lessor
Notes surrendered. Every Lessor Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Indenture Trustee
duly executed by the holder thereof or his attorney duly authorized in writing,
and the Indenture Trustee may require an

                                       14
<PAGE>
opinion of counsel as to compliance of any such transfer with the Securities
Act. The Indenture Trustee shall make a notation on each new Lessor Note of the
amount of all payments of principal previously made on the old Lessor Note or
Lessor Notes with respect to which such new Lessor Note is issued and the date
on which such new Lessor Note is issued and the date to which interest on such
old Lessor Note or Lessor Notes shall have been paid. The Indenture Trustee
shall not be required to register the transfer or exchange of any Lessor Note
during the 10 days preceding the due date of any payment on such Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor Note
and, in case of loss, theft or destruction, of indemnity satisfactory to each of
them, and upon reimbursement to the Owner Lessor and the Indenture Trustee of
all reasonable expenses incidental thereto and payment or reimbursement for any
transfer taxes, and upon surrender and cancellation of such Lessor Note, if
mutilated, the Owner Lessor will execute and the Indenture Trustee will
authenticate and deliver in lieu of such Lessor Note, a new Lessor Note, dated
the same date as such Lessor Note and of like tenor and principal amount. Any
indemnity provided by the holder of a Lessor Note pursuant to this Section 2.9
must be sufficient in the reasonable judgment of the Owner Lessor and the
Indenture Trustee to protect the Owner Lessor, the Indenture Trustee, the Paying
Agent, the Registrar and any co-registrar or co-paying agent from any loss which
any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)   Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i) if the Facility Lease is terminated pursuant to Section 10 thereof
     as a result of the occurrence of an Event of Loss (other than a Regulatory
     Event

                                       15
<PAGE>
     of Loss or an Event of Loss described in clause (v) or (vi) of the
     definition of "Event of Loss"), on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (ii) if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii) if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv) if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)   Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old

                                       16
<PAGE>
Lessor Note but indicating that the Facility Lessee is the issuer thereof. When
such assumption agreement becomes effective, the Owner Lessor shall be released
and discharged without further act from all obligations and liabilities assumed
by the Facility Lessee. All documentation in connection with any such
assumption (including an indenture supplemental to this Indenture which shall,
among other things, contain provisions appropriately amending references to the
Facility Lease in this Indenture and contain covenants by the Facility Lessee
similar to those contained in the Facility Lease (other than any covenants
which were solely for the benefit of the Owner Participant), changed as
appropriate, and amendments or supplements to the other Operative Documents,
officers' certificates, opinions of counsel and regulatory approvals) shall be
prepared by and at the expense of the Facility Lessee acceptable in form and
substance to the Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i) the Indenture Trustee shall have received an Opinion of Counsel of
     the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental Approval
     is necessary or required in connection with any Assumption Document or the
     assumption contemplated thereby (or, if any such Governmental Approval is
     necessary or required, that the same has been duly obtained and is final
     and in full force and effect and any period for the filing of notice of
     rehearing or application for judicial review of the issuance of such
     Governmental Approval has expired without any such notice or application
     having been made), (4) each Assumption Document is a legal, valid and
     binding obligation of the Facility Lessee, enforceable in accordance with
     its terms, (5)

                                       17
<PAGE>
     such assumption agreement and the assumption of the Lessor Notes
     thereunder shall not cause a Tax Event to occur as to any holder of any
     Lessor Note or any Certificateholder and (6) the lien of this Indenture
     will continue to be a first priority perfected lien on the Indenture
     Estate;

          (ii) the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder ;

          (iii) Moody's and S&P shall have confirmed that such assumption will
     not result in a downgrading of the rating on the Certificates;

          (iv) the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v) the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)   The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any, so
redeemed to the date of redemption.

     (d)   The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price upon an optional refinancing pursuant to
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to

                                       18
<PAGE>
     consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price on the Termination Date or Obsolescence
     Termination Date, as applicable, if the Facility Lease is terminated as a
     result of an event described in Section 13.2 or clause (b) of Section 14.1
     of the Facility Lease. The Owner Lessor's failure to consummate such
     redemption as a result of an event described in this clause (ii) following
     delivery of such notice shall not constitute a Lease Indenture Event of
     Default or any other default under the Operative Documents.

          (iii) The Lessor Notes shall be redeemed at such redemption price upon
     termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clause (v) or
     (vi) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be continuing,
selected by the Owner Lessor.

     (e)   If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)   At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       19
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i) the date of redemption;

          (ii) the redemption price;

          (iii) the name and address of the Paying Agent;

          (iv) that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v) that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue on
     and after the redemption date; and

          (vi) the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)   With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt by
the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)   Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture

                                       20
<PAGE>
Trustee for, or to provide funds for, the payment on an After-Tax Basis to the
Owner Lessor, the Indenture Trustee and the Owner Participant of any tax or
other governmental charge in connection therewith or any charges and expenses
connected with such tax or governmental charge paid or payable by the Owner
Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

     (a)   Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant to
an optional refinancing pursuant to Section 11.2 of the Participation Agreement
and providing funds for the payment of all reasonable costs and expenses in
connection therewith.

     (b)   Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days prior
to the proposed date of issuance of any Additional Lessor Notes, a request and
authorization to issue such Additional Lessor Notes, which request and
authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to distinguish
such Additional Lessor Notes from the Initial Lessor Notes theretofore issued,
but otherwise shall rank pari passu with any Lessor Notes then outstanding, be
entitled to the same benefits and security of this Indenture as the other Lessor
Notes issued pursuant to the terms hereof, be dated the date of original
issuance of such Additional Lessor Notes, bear interest at such rates as shall
be agreed between the Facility Lessee and the Owner Lessor and indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the final maturity date of the Initial Lessor Notes
issued on the closing date. The Additional Lessor Notes shall not be subject to
(i) purchase except as provided in Section 4.4(e) hereof or (ii) redemption or
assumption except as provided in Section 2.10 hereof.

                                       21
<PAGE>
     (c)   The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to this
Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i) a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii) an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of and
     interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii) with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f) of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and is
     continuing;

                                       22
<PAGE>
          (iv) such additional documents, certificates and opinions as shall be
     reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v) a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address set
     forth therein, and in such principal amounts as are stated therein, upon
     payment to the Indenture Trustee, but for the account of the Owner Lessor,
     of the sum or sums specified in such request and authorization;

          (vi) the consent of the Facility Lessee to such request and
     authorization; and

          (vii) an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and enforceability of the Additional Lessor Notes and that all
     conditions hereunder to the authentication and delivery of such Additional
     Lessor Notes have been complied with.

     (d)   When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

                                       23
<PAGE>
     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
     NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture, without
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.


                                   SECTION 3.
                      RECEIPT, DISTRIBUTION AND APPLICATION
                         OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)   Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent and
any payment of Supplemental Rent constituting interest on overdue installments
of Periodic Rent received by the Indenture Trustee shall be distributed by the
Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each such Lessor Note bears to
     the aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

                                       24
<PAGE>
     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)   Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue,
to the extent provided in and subject to the provisions of Section 4.3(a) and
(b) hereof.

     (c)   Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the

                                       25
<PAGE>
extent not then required to be distributed pursuant to clause "First" of
Section 3.1(a)) as part of the Indenture Estate and shall not distribute any
such payment of Periodic Rent or interest pursuant to clause "Second" of
Section 3.1(a) until such time as such Lease Indenture Event of Default shall
be cured or waived or until such time as the Indenture Trustee shall have
received written instructions from a Majority in Interest of Noteholders to
make such a distribution; provided that such amounts must be returned to the
Owner Lessor within six (6) months from the receipt thereof by the Indenture
Trustee unless (i) the Indenture Trustee has declared the unpaid principal of
all Lessor Notes due and payable (or such amounts shall have automatically
become due and payable), pursuant to Section 4.2(a) and the Indenture Trustee
is diligently pursuing any dispossessary remedies available under Section 4.3
hereof (unless such remedies are stayed or prevented by operation of law) or
(ii) any other Lease Indenture Event of Default shall have occurred during the
intervening period and be continuing, in which case, such six-month period will
be restarted from the date such other Lease Indenture Event of Default shall
have occurred. Upon the cure or waiver of such Lease Indenture Event of
Default, withheld Periodic Rent shall, subject to clause (ii) of the
immediately preceding sentence, be distributed to the Owner Lessor (to the
extent that all payments to be distributed pursuant to clause "First" of
Section 3.1(a) have been made), and no further withholding of Periodic Rent on
account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the extent
of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee

                                       26
<PAGE>
     and to the extent reimbursable and not previously reimbursed) shall be
     distributed to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     in full the applicable redemption price (as described in Section 2.10(a)
     or 2.10(d) hereof or any supplemental indenture hereto) (including,
     interest on overdue principal and, to the extent permitted by Applicable
     Law, overdue interest) upon all of the Lessor Notes which shall be
     distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder, plus the Make-Whole Amount, if any, and accrued but
     unpaid interest thereon to the scheduled date of distribution to the
     Noteholders bears to the aggregate unpaid principal amount of all such
     Lessor Notes held by all such holders, together with the Make-Whole
     Amount, if any, plus accrued but unpaid interest thereon to the date of
     scheduled distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the
     aggregate amount of such payments and amounts to which all such holders
     are so entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee

                                       27
<PAGE>
hereunder, shall, so long as such declaration shall not have been rescinded,
be distributed forthwith by the Indenture Trustee in the following
order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder and accrued but unpaid interest thereon to the scheduled
     date of distribution to the Noteholders bears to the aggregate unpaid
     principal amount of all such Lessor Notes held by all such holders and
     accrued but unpaid interest thereon to the date of scheduled distribution
     to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
    such holder is so entitled bears to the aggregate amount of such payments
    and amounts to which all such holders are so entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining
     shall be distributed to the Owner Lessor for distribution by it in
     accordance with the terms of the LLC Agreement.

                                       28
<PAGE>
     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If the
proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture Event
of Default; provided, however, that any such payment received by the Indenture
Trustee which is payable to the Facility Lessee shall not be held by the
Indenture Trustee unless a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing.

     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

                                       29
<PAGE>
     (a)   any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)   all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the Operative
Documents to the contrary, any Excepted Payments received or held by the
Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise directed
in writing by the Owner Lessor, all amounts from time to time distributable by
the Indenture Trustee to the Owner Lessor in accordance with the provisions
hereof shall be paid by the Indenture Trustee in immediately available funds to
the Owner Participant's Account. Any amounts payable to the Trust Company in
its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other disposition thereof or otherwise constituting a part of the

                                       30
<PAGE>
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)   The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)   All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a part
of the Indenture Trustee Account Collateral and shall not constitute payment of
any Indebtedness or any other obligation of the Owner Lessor until applied as
hereinafter provided.

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<PAGE>
     (c)   As collateral security for the prompt payment in full when due of
the Lessor Secured Obligations owed to the Indenture Trustee and each
Noteholder, the Owner Lessor hereby pledges, assigns, hypothecates and
transfers to the Indenture Trustee for the benefit of the Indenture Trustee and
each of the Noteholders, and hereby grants to the Indenture Trustee for the
benefit of the Indenture Trustee and each of the Noteholders, a lien on and
security interest in and to, (i) the Indenture Trustee's Account and any
successor account thereto and (ii) all cash, investments, investment property,
securities or other property at any time on deposit in or credited to the
Indenture Trustee's Account, including all income or gain earned thereon and
any proceeds thereof (the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)   The Account Bank.

          (i) Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the Indenture
     Trustee's Account as set forth in Section 3.11, (B) the Indenture Trustee's
     Account is and will be maintained as a "securities account" (within the
     meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor is the
     "entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC)
     in respect of the "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) credited to the Indenture Trustee's Account, (D)
     all property delivered to the Account Bank pursuant to this Indenture or
     any other Operative Document will be held by the Account Bank and promptly
     credited to the Indenture Trustee's Account by an appropriate entry in its
     records in accordance with this Indenture, (E) all "financial assets"
     (within the meaning of Section 8-102(a)(9) of the UCC) in registered form
     or payable to or to the order of and credited to the Indenture Trustee's
     Account shall be registered in the name of, payable to or to the order of,
     or indorsed to, the Account Bank or in blank, or credited to another
     securities account maintained in the name of the Account Bank, and in no
     case will any financial asset credited to the Indenture Trustee's Account
     be registered in the name of, payable to or to the order of, or indorsed
     to, the Owner Lessor except to the extent the foregoing have been
     subsequently indorsed by the Owner Lessor to the Account Bank or in blank,
     (F) the Account Bank shall not change the name or account number of the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee, (G) the Account Bank is acting and shall at all times
     act as and perform all of the duties of the "securities intermediary,"
     within the meaning of Article 8 of the UCC, with respect to the

                                       32
<PAGE>
     Indenture Trustee's Account and the financial assets credited thereto and
     (H) the Account Bank shall not enter into any other agreement governing,
     or with respect to, the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee.

          (ii) Financial Assets Election. The Account Bank agrees that each item
     of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated as
     a "financial asset" within the meaning of Section 8-l02(a)(9) of the UCC.

          (iii) Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC)
     or any other order from the Indenture Trustee directing the transfer or
     redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements with respect to
     the financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv) Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit of
     the Indenture Trustee's Account will not be subject to deduction, set-off,
     banker's lien, or any other right in favor

                                       33
<PAGE>
     of any Person other than the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder (except for the face amount of any
     checks which have been credited to the Indenture Trustee's Account but
     are subsequently returned unpaid because of uncollected or insufficient
     funds).

          (v) No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi) Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii) Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)   Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the

                                       34
<PAGE>
Indenture Trustee's Account as expressly provided in Section 3.7 hereof.
Except as expressly provided in this Indenture, in no event shall any amounts
or Permitted Investments deposited in or credited to the Indenture Trustee's
Account be registered in the name of the Owner Lessor, payable to the order of
the Owner Lessor or specially indorsed to the Owner Lessor except to the extent
that the foregoing have been specially indorsed to the Indenture Trustee or in
blank.

                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.   Covenants of Owner Lessor. The Owner Lessor hereby covenants
and agrees as follows:

     (a)   the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)   the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any of
the Assigned Documents, except that it may forward any payment to the Indenture
Trustee in accordance with Section 3.9, (iii) give any notice or exercise any
right or take any action under any of the Assigned Documents, or (iv) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any of the Assigned Documents to arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein, shall
mean any of the following events (whatever the reason for such Lease Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

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<PAGE>
     (a)   any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is waived by
the Owner Lessor and the Owner Participant and (ii) the insurance maintained by
the Facility Lessee still constitutes Prudent Industry Practice); or

     (b)   the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)   the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such condition
shall be extended up to 180 days, so long as such party diligently pursues such
remedy and such condition is reasonably capable of being remedied within such
extended period;

     (d)   any representation or warranty made by the Lessor Manager or the
Owner Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing

                                       36
<PAGE>
pursuant to Section 4.6 of the Participation Agreement, or any representation
or warranty made by the OP Guarantor (provided the OP Guaranty shall not have
been terminated or released) under the OP Guaranty or in the certificate
delivered by such OP Guarantor at the Closing pursuant to Section 4.6 of the
Participation Agreement, shall prove to have been incorrect in any material
respect when made and continues to be material and unremedied for a period of
30 days after receipt by such party of written notice thereof; provided,
however, that if such condition cannot be remedied within such 30-day period,
then the period within which to remedy such condition shall be extended up to
an additional 120 days, so long as such party diligently pursues such remedy
and such condition is reasonably capable of being remedied within such extended
period;

     (e)   the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)   an involuntary case or other proceeding shall be commenced against
the Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11 of
the Bankruptcy Code or any bankruptcy, insolvency or other similar law now or
hereafter in effect, or (ii) the appointment of a trustee, receiver, liquidator,
custodian or other similar official with respect to it or any substantial part
of its property or (iii) the winding-up or liquidation of the Owner Lessor; and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of written

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<PAGE>
instructions from a Majority in Interest of Noteholders shall declare, by
written notice to the Owner Lessor and the Owner Participant, the unpaid
principal amount of all Lessor Notes, with accrued interest thereon, to be
immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture Event of Default under Section 4.2(e) or (f), such
principal and interest shall automatically become due and payable immediately
without any such declaration or notice) without further act or notice of any
kind. If any Make-Whole amount is due and payable pursuant to Section 2.10 (c)
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b)   If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to the
Owner Lessor, exercise any or all of the rights and powers and pursue any or all
of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of the
remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of the
Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any agreement
or undertaking constituting a part of the Indenture Estate, by proceedings in
any court of competent jurisdiction to recover damages for the breach hereof or
for the appointment of a receiver or for sale of all or any part of the Property
Interest or for foreclosure of the Property Interest, together with the Owner
Lessor's interest in the Assigned Documents, and by any other action, suit,
remedy or proceeding authorized or permitted by this Indenture, at law or in
equity, or whether for the specific performance of any agreement contained
herein, or for an injunction against the violation of any of the terms hereof,
or in aid of the exercise of any power granted hereby or by law, and in addition
may foreclose upon, sell, assign, transfer and deliver, from time to time to the
extent permitted by Applicable Law, all or any part of the Indenture Estate or
any interest therein, at any private sale or public auction with or without
demand, advertisement or notice (except as herein required or as may be required
by law) of the date, time and place of sale and any adjournment thereof, for
cash or credit or other property, for immediate or future delivery and for

                                       38
<PAGE>
such price or prices and on such terms as the Indenture Trustee, in its
unfettered discretion, may determine, or as may be required by law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b). The Indenture Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.

     (c)   All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)   Anything herein to the contrary notwithstanding, neither the
Indenture Trustee nor any Noteholder shall at any time, including at any time
when a Lease Indenture Event of Default shall have occurred and be continuing
and there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-

                                       39
<PAGE>
day period following the date of commencement of a stay or other prevention or
(b) the date of repossession of the Facility under the applicable Facility
Lease.

     (e)   Any provisions of the Facility Lease or this Indenture to the
contrary notwithstanding, if the Facility Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a Lease
Event of Default under Section 16 of the Facility Lease solely to enforce such
obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of Default
hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)   If the Facility Lessee shall fail to make any payment of Periodic
Rent due on any Rent Payment Date when the same shall have become due, and if
such failure of the Facility Lessee to make such payment of Periodic Rent shall
not constitute the fourth consecutive such failure or the eighth cumulative
failure of the Facility Lessee, then the Owner Lessor may (but need not) pay to
the Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received notice
from the Indenture Trustee or have Actual Knowledge of the failure of the
Facility Lessee to make such payment of Periodic Rent, an amount equal to the
principal of, Make-Whole Amount, if any, and interest on the Lessor Notes, then
due (otherwise than by declaration of acceleration) on such Rent Payment Date,
together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)   If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the

                                       40
<PAGE>
Owner Lessor shall be deemed to have cured any Lease Indenture Event of Default
which arose or would have arisen from such failure of the Facility Lessee.

     (c)   The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would impair
the prior right and security interest of the Indenture Trustee in and to the
Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic Rent
payment or Supplemental Rent payment being overdue in the manner set forth in
the next two sentences. If the Indenture Trustee shall thereafter receive such
payment of Periodic Rent, Supplemental Rent or such interest, the Indenture
Trustee shall, notwithstanding the requirements of Section 3.1 hereof,
forthwith, remit such payment of Periodic Rent or Supplemental Rent, as the case
may be (to the extent of the payment made by the Owner Lessor pursuant to this
Section 4.4) and such interest to the Owner Lessor in reimbursement for the
funds so advanced by it, provided that if (A) any event which, with the passing
of time or giving of notice or both, would become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f) hereof, or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing or (B) any payment of
principal, interest, or Make-Whole Amount, if any, on any Lessor Note then shall
be overdue, such payment shall not be remitted to the Owner Lessor but shall be
held by the Indenture Trustee as security for the obligations secured hereby and
distributed in accordance with Section 3.1 hereof. The Owner Lessor shall not
attempt to recover any amount paid by it on behalf of the Facility Lessee
pursuant to this Section 4.4 except by demanding of the Facility Lessee payment
of such amount or by commencing an action against the Facility Lessee for the
payment of such amount, and except where a Lease Indenture Event of Default
(other than a Lease Event of Default) has occurred and is continuing, the Owner
Lessor shall be entitled to receive the amount of such payment and the costs

                                       41
<PAGE>
and expenses incurred in connection with such payments and performance thereof
together with interest thereon from the Facility Lessee (but neither the Owner
Lessor nor the Owner Participant shall have any right to collect such amounts
by exercise of any of the remedies under Section 17 of the Facility Lease) or,
if paid by the Facility Lessee to the Indenture Trustee, from the Indenture
Trustee to the extent of funds actually received by the Indenture Trustee.

     (d)   Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall take
or commence any action it would otherwise be entitled to take or commence as a
result of such failure by the Facility Lessee, whether under this Section 4 or
Section 17 of the Facility Leases or otherwise.

     (e)   Each Noteholder agrees, by acceptance thereof, that if (i) (x) a
Lease Indenture Event of Default, which also constitutes a Lease Event of
Default, shall have occurred and be continuing for a period of at least 90 days
without the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the previous 30
days, (ii) no Lease Indenture Event of Default of the nature described in any of
clauses (b) through (f) of Section 4.2 hereof shall have occurred and be
continuing and (iii) the Owner Lessor shall give written notice to the Indenture
Trustee of the Owner Lessor's intention to purchase all of the Lessor Notes in
accordance with this paragraph, then, upon receipt within 10 Business Days after
such notice from the Owner Lessor of an amount equal to the sum of (x) the
aggregate unpaid principal amount of any unpaid Lessor Notes then held by the
Noteholders, together with accrued but unpaid interest thereon to the date of
such receipt (as well as any interest on overdue principal and, to the extent
permitted by Applicable Law, overdue interest), plus (y) the aggregate amount,
if any, of all sums which, if Section 3.3 were then applicable, such Noteholder
would be entitled to be paid before any payments were to be made to the Owner
Lessor but excluding any Make-Whole Amount, such Noteholder will forthwith (and
upon its receipt of the payment referred to in clause (1) below, will be deemed
to) sell, assign, transfer and convey to the Owner Lessor (without recourse or
warranty of any kind other than of title to the Lessor Notes so conveyed) all of
the right, title and interest of such Noteholder in and to the Indenture Estate,
this Indenture, all Lessor Notes held by such Noteholder and the

                                       42
<PAGE>
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law. All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor.  Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a Majority
in Interest of Noteholders may, by written notice or notices to the Owner
Lessor, the Indenture Trustee and the Facility Lessee, rescind and annul such
acceleration and any related declaration of default under the Facility Lease and
their respective consequences, but no such rescission and annulment shall extend
to or affect any subsequent Lease Indenture Event of Default or impair any right
consequent thereon, and no such rescission and annulment shall require any
Noteholder to repay any principal or interest actually paid as a result of such
acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)   If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the

                                       43
<PAGE>
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry
of which judgment the Owner Lessor hereby specifically consents, and (ii)
pursue all or any part of the Indenture Estate wherever it may be found and
enter any of the premises wherever all or part of the Indenture Estate may be
or is supposed to be and search for all or part of the Indenture Estate and
take possession of and remove all or part of the Indenture Estate.

     (b)   Upon every such taking of possession, the Indenture Trustee may,
from time to time, as a charge against proceeds of the Indenture Estate, make
all such expenditures with respect to the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee shall have the right to deal
with the Indenture Estate and to carry on the business and exercise all rights
and powers of the Owner Lessor relating to the Indenture Estate, as the
Indenture Trustee shall deem best, and, the Indenture Trustee shall be entitled
to collect and receive all rents (including Periodic Rent and Supplemental
Rent), revenues, issues, income, products and profits of the Indenture Estate
and every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required to be deposited with, the Indenture Trustee hereunder) and to apply the
same to the management of or otherwise dealing with the Indenture Estate and of
conducting the business thereof, and of all expenditures with respect to the
Indenture Estate and the making of all payments which the Indenture Trustee may
be required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any part thereof (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Lessor and the Facility
Lessee relating to the Indenture Estate and the Operative Documents), or under
any provision of, this Indenture, as well as just and reasonable compensation
for the services of the Indenture Trustee and of all Persons properly engaged
and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections 4.3
and 4.4, have the

                                       44
<PAGE>
right to foreclose this Indenture and to have a judicial sale of the Indenture
Estate or any part of the Indenture Estate as the Indenture Trustee shall
determine, in its sole discretion, with any such sale(s) to be under the
judgment or decree of a court of competent jurisdiction. Further, if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee may, in addition to and not in abrogation of other rights and remedies
provided in this Section, proceed by a suit or suits in law or in equity or by
any other appropriate proceeding or remedy (i) to enforce payment of the Lessor
Notes or the performance of any term, covenant, condition or agreement of this
Indenture or any other right, and (ii) to pursue any other remedy available to
it, all as the Indenture Trustee shall determine most effectual for such
purposes. Upon any foreclosure sale, the Indenture Trustee may bid for and
purchase the Indenture Estate and shall be entitled to apply all or any part of
the Secured Indebtedness as a credit to the purchase price. In the event of a
foreclosure sale of the Indenture Estate, the proceeds of said sale shall be
applied as provided in Section 3.3 hereof. In the event of any such foreclosure
sale by the Indenture Trustee, the Owner Lessor shall be deemed a tenant
holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over. The Indenture Trustee, at the Indenture
Trustee's option, is authorized to foreclose this Indenture subject to the
rights of any tenants of the Indenture Estate, and the failure to make any such
tenants parties to any such foreclosure proceedings and to foreclose their
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal amount
of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each

                                       45
<PAGE>
and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the
Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law, that
it will never seek or derive any benefit or advantage from any of the following,
whether now existing or hereafter in effect, in connection with any proceeding
under or in respect of this Lease Indenture:

     (a)   any stay, extension, moratorium or other similar law;

     (b)   any Applicable Law providing for the valuation of or appraisal of any
portion of the Indenture Estate in connection with a sale thereof; or

     (c)   any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and 4.4
hereof. Owner Lessor agrees for itself, its successors and assigns, that the
acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any person
or party holding under Indenture

                                       46
<PAGE>
Trustee at any time or times in the future while any of the obligations secured
hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings had
taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall take
or cause to be taken any action contrary to the right of the Facility Lessee,
including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and expenses)
so incurred, together with interest thereon from the date of payment or
incurrence, shall constitute additional indebtedness secured by this Indenture
and shall be paid from the Indenture Estate to the Indenture Trustee on demand.
The Indenture Trustee shall not be liable for any damages resulting from

                                       47
<PAGE>
any such payment or action unless such damages shall be a consequence of willful
misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event
of Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                     CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.
The Indenture Trustee shall give prompt written notice to the Owner Lessor and
the Owner Participant of any Lease Indenture Event of Default with respect to
which the Indenture Trustee has Actual Knowledge and will give the Facility
Lessee and the Owner Participant not less than 30 days' prior written notice of
the date on or after which the Indenture Trustee intends to exercise remedies
under Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action, as
the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may

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<PAGE>
be specified in such instructions: (a) give such notice, direction or consent
or exercise such right, remedy or power or take such action hereunder or under
any Assigned Document, or in respect of any part of or all the Indenture
Estate, as it shall be entitled to take and as shall be specified in such
instructions; (b) take such action with respect to or to preserve or protect
the Indenture Estate (including the discharge of Liens) as it shall be entitled
to take and as shall be specified in such instructions; and (c) waive, consent
to, approve (as satisfactory to it) or disapprove all matters required by the
terms of any Operative Document to be satisfactory to the Indenture Trustee.
The Indenture Trustee may, and upon written instructions from a Majority in
Interest of Noteholders, the Indenture Trustee shall, execute and file or cause
to be executed and filed any financing statement (and any continuation
statement with respect to such financing statement) or any similar instrument
or document relating to the security interest or the assignment created by this
Indenture or granted by the Owner Lessor herein as may be necessary to protect
and preserve the security interest or assignment created by or granted pursuant
to this Indenture, to the extent otherwise entitled to do so and as shall be
specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in full
of the principal of and interest on all Lessor Notes then outstanding and all
other amounts then due all Noteholders hereunder, and all other sums secured
hereby or otherwise required to be paid hereunder, under the Participation
Agreement and under the Facility Lease, the Indenture Trustee shall execute and
deliver to, or as directed in writing by, the Owner Lessor and the Facility
Lessee an appropriate instrument in due form for recording, releasing the
Indenture Estate from the Lien of this Indenture. Nothing in this Section 5.3
shall be deemed to expand the instances in which the Owner Lessor is entitled to
prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)   The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

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<PAGE>
     (b)   The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)   The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read into
this Indenture against the Indenture Trustee.

     (b)   The Indenture Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Indenture Estate except (a) as
required by the terms of the Facility Lease, to the extent applicable to the
Indenture Trustee as assignee of the Owner Lessor, (b) in accordance with the
powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture or in accordance with the express terms hereof or
with written instructions from a Majority in Interest of Noteholders in
accordance with Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)   The Owner Lessor shall at all times, to the exclusion of the
Indenture Trustee, (i) retain all rights to demand and receive payment of, and
to commence an action for payment of, Excepted Payments but the Owner Lessor
shall have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)   The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant

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<PAGE>
to Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall
retain the right to the exclusion of the Indenture Trustee to exercise the
rights of the Owner Lessor under, and to determine compliance by the Facility
Lessee with, the provisions of Sections 10 (other than Section 10.3 thereof),
13, 14 and 15 of the Facility Lease; provided, however, that if a Lease
Indenture Event of Default shall have occurred and be continuing, the Owner
Lessor shall cease to retain such rights upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;

     (d)   Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or, if
accelerated, such acceleration has theretofore been rescinded) or the Indenture
Trustee shall not have exercised any of its rights pursuant to Section 4 hereof
to take possession of, foreclose, sell or otherwise take control of all or any
part of the Indenture Estate, the Owner Lessor shall have the right, to be
exercised jointly with the Indenture Trustee, (i) to exercise the rights with
respect to the Facility Lessee's use and operation, modification or maintenance
of the Undivided Interest, (ii) to exercise the Owner Lessor's right under
Section 13.1 of the Participation Agreement to withhold or grant its consent to
an assignment by the Facility Lessee of its rights under the Facility Lease, and
(iii) to exercise the rights of the Owner Lessor under Section 10.3 of the
Facility Lease; provided, however, that if a Lease Indenture Event of Default
shall have occurred and be continuing, the Owner Lessor shall cease to exercise
such rights under this clause (iii) upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;
provided further, however, that (A) the Owner Lessor shall have no right to
receive any Periodic Rent or other payments other than Excepted Payments payable
to the Owner Lessor, or the Owner Participant and (B) no determination by the
Owner Lessor or the Indenture Trustee that the Facility Lessee is in compliance
with the provisions of any applicable Assigned Document shall be binding upon or
otherwise affect the rights hereunder of the Indenture Trustee or any Noteholder
on the one hand or the Owner Lessor or the Owner Participant on the other hand;

     (e)   So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek specific
performance of the covenants of the

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<PAGE>
Facility Lessee under the Operative Documents relating to the protection,
insurance, maintenance, possession, use and return of the Property Interest; and

     (f)   Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture Trustee
the right to, and the Indenture Trustee shall not, release the Guarantor of its
obligations under the Calpine Guaranty in respect of payment of the Equity
Portion of Termination Value, unpaid amounts of the Equity Portion of Periodic
Rent (and all amounts of overdue interest relating to such amount) and other
amounts constituting Excepted Payments, unless such release results in payment
in full to the Owner Lessor of all such unpaid amounts as certified to the
Indenture Trustee by the Owner Lessor, and all claims of the Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture Trustee
of the exclusive right, so long as this Indenture shall be in effect, to declare
the Facility Lease to be in default under Section 16 thereof and thereafter to
exercise the remedies pursuant to Section 17 of the Facility Lease (except as
expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this Indenture,
the Owner Lessor shall not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Facility, the Facility Site, any part of
the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by this
Indenture in the Indenture Estate as may be supplied to the Indenture Trustee
by the Facility Lessee. At any time and from time to time, upon the request of
the Facility

                                       53
<PAGE>
Lessee or the Indenture Trustee, at the expense of the Facility Lessee (and
upon receipt of the form of document so to be executed), the Owner Lessor shall
promptly and duly execute and deliver any and all such further instruments and
documents as the Facility Lessee or the Indenture Trustee may request in
obtaining the full benefits of the security interest and assignment created or
intended to be created hereby and of the rights and powers herein granted. Upon
the reasonable instructions (which instructions shall be accompanied by the
form of document to be filed) at any time and from time to time of the Facility
Lessee or the Indenture Trustee, the Owner Lessor shall execute and file any
financing statement (and any continuation statement with respect to any such
financing statement), and any other document relating to the security interest
and assignment created by this Indenture as may be specified in such
instructions. In addition, the Indenture Trustee and the Owner Lessor will
execute such continuation statements with respect to financing statements and
other documents relating to the Lien created by this Indenture in the Indenture
Estate as may be specified from time to time in written instructions of any
Noteholder (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform the
same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall not
be liable under any circumstances, except (a) for its own negligence or willful
misconduct, (b) in the case of any inaccuracy of any representation or warranty
of the Indenture Trustee or the Lease Indenture Company contained in Section 3.5
of the Participation Agreement, in the certificate delivered by the Indenture
Trustee at the Closing pursuant to Section 4.6 of the Participation Agreement,
or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture

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<PAGE>
Company and the Indenture Trustee shall not be liable for any action or inaction
of the Owner Trust; provided, however, that:

          (i) Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii) The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii) The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv) The Indenture Trustee shall not be required to take notice or be
     deemed to have notice or knowledge of any default, Lease Event of Default,
     Significant Lease Default or Lease Indenture Event of Default (except for a
     Lease Indenture Event of Default resulting from an event of nonpayment)
     unless a Responsible Officer of the Indenture Trustee shall have received
     written notice thereof. In the absence of receipt of such notice, the
     Indenture Trustee may conclusively assume that there is no default or Lease
     Indenture Event of Default;

                                       55
<PAGE>
          (v) The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of any
     of its duties hereunder or the exercise of any of its rights or powers if
     there is reasonable ground for believing that the repayment of such funds
     or adequate indemnity against such risk or liability is not reasonably
     assured to it, and none of the provisions contained in this Indenture shall
     in any event require the Indenture Trustee to perform, or be responsible
     for the manner of performance of, any of the obligations of the Owner
     Lessor, under this Indenture; and

          (vi) The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Section 5.2 hereof and except as provided in
Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no duty (a) to see
to any registration, recording or filing of any Operative Document (or any
financing or continuation statements in respect thereto) or to see to the
maintenance of any such registration, recording or filing, (b) to see to any
insurance on the Facilities or the Facilities or to effect or maintain any such
insurance, (c) except as otherwise provided in Section 5.5 hereof or in Section
10 of the Participation Agreement, to see to the payment or discharge of any
Tax or any Lien of any kind owing with respect to, or assessed or levied
against, any part of the Indenture Estate, (d) to confirm or verify the
contents of any report, notice, request, demand, certificate, financial
statement or other instrument of the Facility Lessee, (e) to inspect the
Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders).  Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents

                                       56
<PAGE>
unless the Indenture Trustee shall reasonably believe that each such Noteholder,
the Owner Lessor and the Owner Participant shall have received copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)   The Owner Lessor represents and warrants that it has not assigned
or pledged any of its estate, right, title or interest subject to this
Indenture, to anyone other than the Indenture Trustee.

     (b)   NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE ESTATE, except
that the Owner Lessor represents and warrants that on the Closing Date it shall
have received whatever title or interest to the Undivided Interests and the
Facility Site as were conveyed to it by the Facility Lessee and that on the
Closing Date the Undivided Interests shall be free of Owner Lessor's Liens and
the Owner Participant's Liens; or (ii) any representation or warranty as to the
validity, legality or enforceability of this Indenture, the Lessor Notes or any
of the other Operative Documents, or as to the correctness of any statement
contained in any thereof, except that each of the Owner Lessor and the Indenture
Trustee represents and warrants that this Indenture and the Participation
Agreement have been, and, in the case of the Owner Lessor, the other Operative
Documents to which it is or is to become a party have been or will be, executed
and delivered by one of its officers who is and will be duly authorized to
execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this Indenture
for the purpose of paying, or securing the payment of, the principal of or
Make-Whole Amount or interest on the Lessor Notes shall be held in trust. Except
as specifically provided herein or in the Facility Lease, any moneys received by
the Indenture Trustee hereunder need not be segregated in any manner except to
the extent required by Applicable Law and may be deposited under such general
conditions as may be prescribed by Applicable Law, and neither the Owner Lessor
nor the Indenture Trustee shall be liable for any

                                       57
<PAGE>
interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which any
other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or matter
the manner of ascertainment of which is not specifically described herein, the
Indenture Trustee for all purposes hereof may rely on an Officer's Certificate
of the Owner Lessor or the Facility Lessee or a Noteholder as to such fact or
matter, and such certificate shall constitute full protection to the Indenture
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. The Indenture Trustee shall have the right to request
instructions from the Owner Lessor or the Majority in Interest of Noteholders
with respect to taking or refraining from taking any action in connection with
the Lease Indenture or any other Operative Document to which it is a party, and
shall be entitled to act or refrain from taking such action unless and until the
Indenture Trustee shall have received written instructions from the Owner Lessor
or the Majority in Interest of Noteholders, and the Indenture Trustee shall not
incur liability by reason of so acting (except as provided in Section 6.1) or
refraining from acting. In the administration of the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Indenture Estate (but subject to the priorities of payment
set forth in Section 3 hereof), consult with independent skilled Persons to be
selected and retained by it (other than Persons regularly in its employ) as to
matters within their particular competence, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion, within such Person's area of

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competence, of any such Person, so long as the Indenture Trustee shall have
exercised reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                              AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a)   Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time remove
the Indenture Trustee or the Account Bank with or without cause by an instrument
in writing delivered to the Owner Lessor, the Owner Participant, the Indenture
Trustee and the Account Bank, and the Owner Lessor shall give prompt written
notification thereof to each Noteholder and the Facility Lessee. Such removal
will be effective on the acceptance of appointment by the successor Indenture
Trustee or Account Bank pursuant to the provisions of subsection (b) below. In
the case of the resignation or removal of the Indenture Trustee or Account Bank,
a Majority in Interest of Noteholders may appoint a successor Indenture Trustee
or Account Bank by an instrument signed by such holders. If a successor
Indenture Trustee or Account Bank shall not have been appointed within thirty
(30) days after such resignation or removal, the Indenture Trustee, Account Bank
or any Noteholder may apply to any court of competent jurisdiction to appoint a
successor Indenture Trustee or Account Bank to act until such time, if any, as a
successor shall have been appointed by a Majority in Interest of Noteholders as
above provided. The successor Indenture Trustee or Account Bank so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee or Account Bank appointed by a Majority in Interest
of Noteholders as above provided.

     (b)   Acceptance of Appointment. Any successor Indenture Trustee or
Account Bank shall execute and deliver to the predecessor Indenture Trustee or
Account Bank, the Owner Participant, the Owner Lessor and all Noteholders an
instrument accepting such appointment and thereupon such successor Indenture
Trustee or Account Bank, without further act, shall become vested with all the
estates, properties, rights,

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<PAGE>
powers and duties of the predecessor Indenture Trustee or Account Bank
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)   Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the performance
of the obligations of such trust company or bank, and (ii) is willing, able and
legally qualified to perform the duties of Indenture Trustee or Account Bank
hereunder upon reasonable or customary terms. No successor Indenture Trustee or
Account Bank, however appointed, shall become such if such appointment would
result in the violation of any Applicable Law or create a conflict or
relationship involving a conflict of interest under the Trust Indenture Act of
1939, as amended.

     (d)   Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or

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<PAGE>
responsibilities except those expressly set forth in Sections 3.11 and 3.12 of
this Indenture. The Indenture Trustee, at the written direction of a Majority
in Interest of Noteholders, may remove and replace the Account Bank pursuant to
the terms of Section 7.1(a) and direct such Account Bank according to the terms
of this Indenture.

     (e)   Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of subsection (c) of this Section 7.1, be the Indenture Trustee under
this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)   Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative Documents,
(ii) the Indenture Trustee shall be advised by counsel, satisfactory to it, that
it is so necessary or prudent in the interest of the Noteholders or (iii) a
Majority in Interest of Noteholders deems it so necessary or prudent and shall
have requested in writing the Indenture Trustee to do so, then in any such case
the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either to
act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in such
bank, trust company or Person as such additional trustee or separate trustee, as
the case may be, any property, title, right or power of the Indenture Trustee
deemed necessary or advisable by the Indenture Trustee, subject to the remaining
provisions of this Section 7.2. The Owner Lessor hereby consents to all actions
taken by the Indenture Trustee under the provisions of this Section 7.2 and
agrees, upon the Indenture Trustee's request, to join in and execute,
acknowledge and deliver any or all such instruments or agreements; and the Owner
Lessor hereby makes, constitutes and appoints the Indenture Trustee its agent
and attorney-in-fact for it and in its name, place and stead to execute,
acknowledge and deliver any such instrument or agreement in the event that the
Owner Lessor shall not itself execute and deliver the same within fifteen (15)
days after receipt by it of such

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<PAGE>
request so to do; provided, however, that the Indenture Trustee shall exercise
due care in selecting any additional or separate trustee if such additional or
separate trustee shall not be a Person possessing trust powers under Applicable
Law. If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law or take any such action or shall be
advised by such counsel that it is no longer so necessary or prudent in the
interest of the Noteholders or in the event that the Indenture Trustee shall
have been requested to do so in writing by a Majority in Interest of
Noteholders, the Indenture Trustee shall execute and deliver all instruments
and agreements necessary or proper to remove any additional trustee or separate
trustee. In such connection, the Indenture Trustee may act on behalf of the
Owner Lessor to the same extent as is provided above. Notwithstanding anything
contained to the contrary in this Section 7.2(a), to the extent the laws of any
jurisdiction preclude the Indenture Trustee from taking any action hereunder
either alone, jointly or through a separate trustee under the direction and
control of the Indenture Trustee, the Owner Lessor, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such jurisdiction,
which separate trustee shall have full power and authority to take all action
hereunder as to matters relating to such jurisdiction without the consent of
the Indenture Trustee, but not subject to the same limitations in any exercise
of his power and authority as those to which the Indenture Trustee is subject.

     (b)   The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such additional
trustee or separate trustee, unless and until a successor is appointed in the
manner hereinbefore provided.

     (c)   Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

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<PAGE>
     (d)   Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or separate
trustee appointed pursuant to this Section 7.2 shall not in any case exceed
those of the Indenture Trustee hereunder, (ii) all powers, duties, obligations
and rights conferred upon the Indenture Trustee in respect of the receipt,
custody, investment and payment of moneys or the investment of moneys shall be
exercised solely by the Indenture Trustee and (iii) no power hereby given to, or
exercisable as provided herein by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or separate
trustee except jointly with, or with the consent of, the Indenture Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to and
as may be specified in such request, or execute and deliver such written waiver
or modification of or consent to the terms of any such agreement or document as
may be specified in such request; provided, however, that without the consent of
the Noteholders representing one hundred percent (100%) of the outstanding
principal amount of the Lessor Notes, such percentage to be determined in the
same manner as provided in the definition of the term "Majority in Interest of
Noteholders," no such supplement to or amendment of this Indenture or any
Assigned Document, or waiver or modification of or consent to the terms hereof
or thereof, shall (i) modify the definition of the terms "Majority in Interest
of Noteholders" or reduce the percentage of Noteholders required to take or
approve any action hereunder, (ii) change the amount or the time of payment of
any amount owing or payable under any Lessor Note or change the rate or manner
of calculation of interest payable on any Lessor Note, (iii) alter or modify the
provisions of Section 3 hereof with respect to the manner of payment or the
order of priorities in which distributions thereunder shall be made as

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between the Noteholders and the Owner Lessor, (iv) reduce the amount (except to
any amount as shall be sufficient to pay the aggregate principal of, Make-Whole
Amount, if any, and interest on all outstanding Lessor Notes) or extend the
time of payment of Periodic Rent or Termination Value except as expressly
provided in Section 3.5 of the Facility Lease, or change any of the
circumstances under which Periodic Rent or Termination Value is payable, (v)
consent to any assignment of the Facility Lease if in connection therewith the
Facility Lessee will be released from its obligation to pay Periodic Rent and
Termination Value, except as expressly provided in Section 13 of the
Participation Agreement, or release the Facility Lessee of its obligation to
pay Periodic Rent or Termination Value or change the absolute and unconditional
character of such obligations as set forth in Section 9 of the Facility Lease;
(vi) consent to any release of the Guarantor under Section 8.4 of the Calpine
Guaranty or (vii) deprive the Indenture Trustee of the Lien on the Indenture
Estate or permit the creation of any Lien on the Indenture Estate ranking
equally or prior to the Lien of the Indenture Trustee, except for Permitted
Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions of
Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any other
Operative Document (a) to evidence the succession of another Person as a Lessor
Manager or the appointment of a co-manager in accordance with the terms of the
LLC Agreement, or to evidence the succession of a successor as the Indenture
Trustee hereunder, the removal of the Indenture Trustee or the appointment of
any separate or additional trustee or trustees, in each case if done pursuant to
the provisions of Section 7 hereof and to define the rights, powers, duties and
obligations conferred upon any such separate trustee or trustees or co-trustee
or co-trustees, (b) to correct, confirm or amplify the description of any
property at any time subject to the Lien of this Indenture or to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee, (c) to provide for any evidence of the creation and issuance of any
Additional Lessor Notes pursuant to, and subject to the conditions of, Section
2.12 and to establish the form and the terms of such Additional Lessor Notes,
(d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner that
will not in the judgment of the Indenture Trustee materially adversely affect
the interests of the Noteholders, (e) to grant or confer upon the Indenture
Trustee for the benefit of the Noteholders any additional rights, remedies,
powers, authority or security which may

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be lawfully granted or conferred and which are not contrary or inconsistent
with this Indenture, (f) to add to the covenants or agreements to be observed
by the Facility Lessee or the Owner Lessor and which are not contrary to this
Indenture, to add Indenture Events of Defaults for the benefit of Noteholders
or surrender any right or power of the Owner Lessor, provided it has consented
thereto, (g) to effect the assumption of all or, to the extent otherwise
provided hereunder, part of the Lessor Notes by the Facility Lessee, provided
that the supplemental indenture will contain all of the covenants applicable to
the Facility Lessee contained in the Facility Lease and the Participation
Agreement for the benefit of the Indenture Trustees or the holders of such
Lessor Notes, such that the Facility Lessee's obligations contained therein, if
applicable in the event that the Facility Lease are terminated, will continue
to be in full force and effect, (h) to comply with requirements of the SEC, any
applicable law, rules or regulations of any exchange or quotation system on
which the Certificates are listed, or any regulatory body, (i) to modify,
eliminate or add to the provisions of any Operative Documents to such extent as
shall be necessary to qualify or continue the qualification of this Lease
Indenture or the Pass Through Trust Agreements (including any supplements
thereto) under the Trust Indenture Act, or similar federal statute enacted
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the

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<PAGE>
Participation Agreement, or would materially increase its administrative duties
or responsibilities hereunder or thereunder or may result in personal liability
for it (unless it shall have been provided an indemnity satisfactory to the
Indenture Trustee), the Indenture Trustee may in its discretion decline to
execute such document or the election. With every such document and election,
the Indenture Trustee shall be furnished with evidence that all necessary
consents have been obtained and with an opinion of counsel that such document
complies with the provisions of this Indenture, does not deprive the Indenture
Trustee or the holders of the Lessor Notes of the benefits of the Lien hereby
created on any property subject hereto or of the assignments contained herein
(except as otherwise consented to in accordance with Section 8.1 hereof) and
that all consents required by the terms hereof in connection with the execution
of such document or the making of such election have been obtained. The
Indenture Trustee shall be fully authorized and protected in relying on such
opinion.

                                   SECTION 9.
                                  MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

     (a)   Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and this
Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any such
surrender, cancellation, and termination, the Indenture Trustee shall pay all
moneys or other properties or proceeds constituting part of the Indenture Estate
(the distribution of which is not otherwise provided for herein) to the Owner
Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall promptly
notify the Facility Lessee and the Owner Participant of such termination.

     (b)   Release.

          (i) Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person be
     released from the Lien of this Lease Indenture and the Indenture Trustee
     shall, upon the written request of the Owner Lessor or the Facility Lessee,
     execute and deliver to, and as directed in writing by, the Facility Lessee
     or the

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<PAGE>
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the replaced Component from the Lien of this Indenture.

          (ii) Whenever the Facility Lessee is entitled to acquire the Facility
     or have the Facility transferred to it pursuant to the express terms of the
     Facility Lease, the Indenture Trustee shall release the Indenture Estate
     from the Lien of this Indenture and execute and deliver to, or as directed
     in writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the Indenture Estate from
     the Lien of this Indenture; provided that all sums secured by this
     Indenture have been paid to the Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Sublease. Sales, grants
of leases or easements and conveyances of portions of the Facility Site, rights
of way, easements or leasehold interest made by the Facility Lessee in
accordance with Article VIII of the Facility Site Sublease shall automatically,
without further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default, to
enforce compliance by the Facility Lessee with all terms and provisions of the
Facility Lease (except as otherwise provided in Sections 4.3 and 5.6 hereof),
and to file any claims or take any action or institute any proceedings which the
Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility Lessee
(with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and any
successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for the
sole and exclusive benefit of the parties

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<PAGE>
hereto, the Owner Participant, the Facility Lessee (as provided in Sections 4.12
and 8.1 hereof) and the Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

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<PAGE>
          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile: (860) 244-1889
          Attention: Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:

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<PAGE>
          Calpine Corporation
          Attention: General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c) nothing
herein contained shall be construed as creating any liability on Wells Fargo,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto or by any Person claiming by, through or under the parties hereto
and (d) under no circumstances shall Wells Fargo, be personally liable for the
payment of any indebtedness or expenses of the Owner Lessor or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

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     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall
be in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the extent
mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State of
Wisconsin (without giving effect to the conflicts of laws provisions thereof).
Regardless of any provision in any other agreement, for purposes of the Uniform
Commercial Code (as in effect from time to time in any jurisdiction including
the State of New York), the "Securities Intermediary's Jurisdiction" of the
Account Bank with respect to the Indenture Trustee's Account is the State of New
York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is required
by reason of the Owner Participant's being held to have recourse liability that
it would not otherwise have had under Section 2.5 hereof to the debtor or the
trustee of the debtor, directly or indirectly, to make payment on account of any
amount payable as principal or interest on the Lessor Notes and (c) any
Noteholder or the Indenture Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture Trustee,
as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall

                                     71
<PAGE>
set forth in detail the calculation thereof). For purposes of this Section
9.13, "Excess Amount" means the amount by which such payment exceeds the amount
which would have been received by such holder and the Indenture Trustee in
respect of such principal or interest if the Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 9.13 shall prevent the Indenture Trustee or any
Noteholder from enforcing any personal recourse obligations (and retaining the
proceeds thereof) of the Owner Participant under the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted to
be made by them under Applicable Law and will not have any adverse impact on any
Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or under
the Lessor Notes any and all withholding taxes applicable thereto as required by
law. The Indenture Trustee agrees (i) to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Lessor Notes, to withhold such amounts and timely pay the same to the
appropriate authority in the name of and on behalf of the Noteholders and to pay
to the Noteholders from amounts received by Paying Agent pursuant hereto such
additional amounts so that the net amount actually received by the Noteholders,
after reduction for such withheld amounts, shall be equal to the full amount of
principal, Make-Whole Amount, interest and other amounts otherwise due and
payable hereunder; provided, however, that, notwithstanding the foregoing, the
Paying Agent shall be required to pay such additional amounts only if and to the
extent that (a) the Facility Lessee is required to indemnify the Noteholders for
such amounts under Section 9 of the Participation Agreement and (b) the Facility
Lessee has not paid such amounts within three (3) days after notice of
nonpayment, (ii) that it will file any

                                     72
<PAGE>
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date such Noteholder becomes
a Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each taxable
year and to notify the Indenture Trustee should subsequent circumstances arise
affecting the information provided the Indenture Trustee in clauses (a) and (b)
above. The Indenture Trustee shall be fully protected in relying upon, and each
Noteholder by its acceptance of a Lessor Note hereunder agrees to indemnify and
hold the Indenture Trustee harmless against all claims or liability of any kind
arising in connection with or related to the Indenture Trustee's reliance upon
any such documents, forms or information provided by such Noteholder to the
Indenture Trustee. In addition, if the Indenture Trustee has not withheld taxes
on any payment made to any Noteholder, and the Indenture Trustee is subsequently
required to remit to any taxing authority any such amount not withheld, such
Noteholder shall return such amount to the Indenture Trustee upon written demand
by the Indenture Trustee. The Indenture Trustee shall be liable only for direct
(but not consequential) damages to any Noteholder due to the Indenture Trustee's
violation of the Code and only to the extent such liability is caused by the
Indenture Trustee's violation of the Code and only to the extent such liability
is caused by the Indenture Trustee's failure to act in accordance with its
standard of care under this Lease Indenture.

     Section 9.15.   Fixture Financing Statement. This Indenture also is
intended to serve as a fixture financing statement under the Wisconsin Uniform
Commercial Codes. In connection therewith, the following information is
provided:

     (a)   Name and address of Debtor:

           RockGen OL-2, LLC
           c/o  Wells Fargo Bank Northwest, National Association
           MAC U1254-031

                                     73
<PAGE>
           79 South Main Street
           Salt Lake City, UT 84111
           Telephone: (801) 246-5630
           Facsimile: (801) 246-5053
           Attention:  Corporate Trust Services

     (b)   Name and Address of Secured Party (from which information
concerning the security interest may be obtained):

           State Street  Bank and Trust Company of Connecticut,
           National Association,
           as Indenture Trustee
           225 Asylum Street, Goodwin Square
           Hartford, CT 06103
           Telephone: (860) 244-1822
           Facsimile:  (860) 244-1889
           Attention:  Corporate Trust Department

     (c)   The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)   Recording: This Indenture is to be recorded in the real estate
records of Dane County, Wisconsin.




                  (Remainder of Page Intentionally Left Blank)

                                     74
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.


                      ROCKGEN OL-2, LLC


                      By:   Wells Fargo Bank Northwest, National Associa-
                            tion,  not in its  individual capacity but solely as
                            the Lessor Manager

                      By:

                            Name:
                            Title:

                      STATE STREET BANK AND TRUST COMPANY OF
                      CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank

                      By:

                            Name:
                            Title:
<PAGE>
STATE OF NEW YORK          )
                           )        SS.:
COUNTY OF NEW YORK         )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by _____________________________, the________________________of
Wells Fargo Bank Northwest, National Association, not
in its individual capacity but solely as the Lessor Manager of South Point OL-2,
LLC, a Delaware limited liability company, as the Owner Lessor (the "Owner
Lessor"), to be the free act and deed on behalf of the national banking
association as the Lessor Manager of the Owner Lessor under the LLC Agreement
dated as of __________, 2001.




Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK          )
                           )        SS.:
COUNTY OF NEW YORK         )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by ___________________________, the____________________ of State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, to be the free act and deed on behalf of the corporation.




Notary Public

My Commission Expires

                                       3
<PAGE>
                                                                     EXHIBIT A
                                                            TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

     The West Half of the Northwest Quarter (W1/2NW1/4) of Section
     Twenty-Three (23), Township Six (6) North, Range Twelve (12) East, in the
     Town of Christiana, Dane County, Wisconsin.

<TABLE>
<S>                    <C>
     Tax Parcel No:    016-0612-232-8500-2
                       016-0612-232-9000-5

     Property Address: 2305 Carpenter Swain Road, Dane County, WI
</TABLE>
<PAGE>
                                                                     EXHIBIT B
                                                            TO LEASE INDENTURE

                       FORM OF ROCKGEN LESSOR NOTE

                            ROCKGEN OL-2, LLC
              NONRECOURSE PROMISSORY NOTE (ROCKGEN) DUE IN
                  A SERIES OF INSTALLMENTS OF PRINCIPAL
                         WITH FINAL PAYMENT DATE
                             OF MAY 30, 2012

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                  Issued at: New York, New York

                                                   Issue Date: October __, 2001

$[______]

     ROCKGEN OL-2, LLC, a Delaware limited liability company (herein called
the "Owner Lessor", which term includes any successor person under the
Collateral Trust Indenture hereinafter referred to), hereby promises to pay to
State Street Bank and Trust Company of Connecticut, National Association, in its
capacity as pass through trustee of the South Point, Broad River and RockGen
Series A Trust, (the "Pass Through Trustee") or its registered assigns, the
principal sum of $[_____], which is due and payable in a series of installments
of principal with a final payment date of May 30, 2012 as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such

                                      B-1-1
<PAGE>
date shall be in an aggregate amount equal to the product of the Principal
Portion set forth on Schedule I multiplied by the percentage set forth on
Schedule I under the column headed "Percentage of Principal Amount Payable" for
such date unless the Principal Portion has been prepaid; provided, that the
final installment of principal shall be equal to the then unpaid principal
balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture of Trust,
Mortgage and Security Agreement dated as of October 18, 2001 (the "Collateral
Trust Indenture"), between the Owner Lessor and State Street Bank and Trust
Company of Connecticut, National Association, as trustee (the "Indenture
Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day
months) on any overdue principal and premium, if any, and (to the extent
permitted by Applicable Law) any overdue interest shall be paid, on demand, from
the due date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not
a Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which such
payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made only
from the Indenture Estate, and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Indenture Estate to make such
payments in accordance with the terms of Section 3 of the Collateral Trust
Indenture. The holder hereof, by its acceptance of this Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as expressly
provided in the Collateral Trust Indenture or, in the case of the Owner
Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

                                      B-1-2
<PAGE>
     The principal of and premium, if any, and interest on this Note shall
be paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in the case of the final payment in respect of this Note,
this Note shall be surrendered to the Indenture Trustee, by mailing a check for
the amount then due and payable, in New York Clearing House funds, to the
Noteholder, at the last address of the Noteholder appearing on the Note
Register, or by whichever of the following methods specified by notice from the
Noteholder to the Indenture Trustee: (a) by crediting the amount to be
distributed to the Noteholder to an account maintained by the Noteholder with
the Indenture Trustee, (b) by making such payment to the Noteholder in
immediately available funds at the Indenture Trustee Office, or (c) by
transferring such amount in immediately available funds for the account of the
Noteholder to the banking institution having bank wire transfer facilities as
shall be specified by the Noteholder, such transfer to be subject to telephonic
confirmation of payment. All payments due with respect to this Note shall be
made (i) as soon as practicable prior to the close of business on the date the
amounts to be distributed by the Indenture Trustee are actually received by the
Indenture Trustee if such amounts are received by 12:00 noon, New York City
time, on a Business Day or (ii) on the next succeeding Business Day if received
after such time or if received on any day other than a Business Day. Prior to
due presentment for registration of transfer of this Note, the Owner Lessor and
the Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to this
Note and for all other purposes, and neither the Owner Lessor nor the Indenture
Trustee shall be affected by any notice to the contrary. All payments made on
this Note in accordance with the provisions of this paragraph shall be valid and
effective to satisfy and discharge the liability on this Note to the extent of
the sums so paid and neither the Indenture Trustee nor the Owner Lessor shall
have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal amount
of, and the Make Whole Amount, if any, on this Note then due (including any
overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

                                      B-1-3
<PAGE>
     This Note is the Note referred to in the Collateral Trust Indenture as
the "Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of the
Collateral Trust Indenture, and the several Notes may be for varying principal
amounts and may have different maturity dates (not later than the final maturity
date of the Initial Lessor Notes), interest rates, redemption provisions and
other terms. The properties of the Owner Lessor included in the Indenture Estate
are pledged or mortgaged to the Indenture Trustee to the extent provided in the
Collateral Trust Indenture as security for the payment of the principal of and
premium, if any, and interest on this Note and all other Notes issued and
outstanding from time to time under the Collateral Trust Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a
statement of the rights of the holder of, and the nature and extent of the
security for, this Note and of the rights of, and the nature and extent of the
security for, the holders of the other Notes and of certain rights of the Owner
Lessor and the Owner Participant, as well as for a statement of the terms and
conditions of the trust created by the Collateral Trust Indenture, to all of
which terms and conditions the holder hereof agrees by its acceptance of this
Note.

     This Note is subject to redemption, in whole but not in part as
provided in the Collateral Trust Indenture, as follows: (x) in the case of
redemptions under the circumstances set forth in Section 2.10(a) of the
Collateral Trust Indenture, at a price equal to the principal amount of this
Note being redeemed together with accrued interest on such principal amount to
the Redemption Date, and (y) in the case of redemptions under the circumstances
set forth in Sections 2.10(d) of the Collateral Trust Indenture, at a price
equal to the principal amount of this Note then outstanding together with
accrued interest on such principal amount to the Redemption Date, plus the
Make-Whole Amount, if any; provided, however, that no such redemption shall be
made until notice thereof is given by the Indenture Trustee to the holder hereof
as provided in the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an

                                      B-1-4
<PAGE>
assumption, the holder of this Note may be required to exchange this Note for a
new Note evidencing such assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and
be continuing, the unpaid balance of the principal of this Note together with
all accrued but unpaid interest thereon may, subject to certain rights of the
Owner Lessor and the Owner Participant contained or referred to in the
Collateral Trust Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register
for the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that
(a) this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor is
made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such liability,
if any, being expressly waived by the holder of this Note or by any Person
claiming by, through or under such holder, and (d) under no circumstances shall
the Lessor Manager, be personally liable for the payment of any indebtedness or
expenses of the Owner Lessor or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Owner
Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                        ROCKGEN OL-2, LLC
                        a Delaware limited liability company,

                              By:   Wells Fargo Bank Northwest, National
                                    Association, not in its individual capacity
                                    but solely as the Lessor Manager

                              By:
                                    Name:
                                    Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                     STATE STREET BANK AND TRUST
                                     COMPANY OF CONNECTICUT,
                                     NATIONAL ASSOCIATION,
                                     not in its individual capacity, but solely

                          as

                                     the Indenture Trustee




                                     Name:
                                     Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________          _______________________________________
                                (Signature of Transferor)

                                NOTE: The signature to this assignment must
                                correspond with the name as written upon the
                                face of the within-mentioned instrument in
                                every particular, without alteration or any
                                change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization

                              Series A Lessor Notes

                         Principal Portion: $45,450,000

<TABLE>
<CAPTION>

                                                              Percentage of Principal
                                                              -----------------------
Regular Distribution Date                                              Amount Payable
-------------------------                                              --------------
<S>                                                                     <C>
May 30, 2002............................................                  1.21012101%
November 30, 2002.......................................                  2.58525853%
May 30, 2003............................................                  3.02530253%
November 30, 2003.......................................                  3.24532453%
May 30, 2004............................................                  3.52035204%
November 30, 2004.......................................                  3.68536854%
May 30, 2005............................................                  3.96039604%
November 30, 2005.......................................                  4.12541254%
May 30, 2006............................................                  4.07040704%
November 30, 2006.......................................                  4.18041804%
May 30, 2007............................................                  4.73047305%
November 30, 2007.......................................                  5.00550055%
May 30, 2008............................................                  5.50055006%
November 30, 2008.......................................                  5.77557756%
May 30, 2009............................................                  6.16061606%
November 30, 2009.......................................                  6.43564356%
May 30, 2010............................................                  6.65566557%
November 30, 2010.......................................                  6.93069307%
May 30, 2011............................................                  7.20572057%
November 30, 2011.......................................                  6.60066007%
May 30, 2012............................................                  5.39053905%
                                                                          ----------

Total...................................................                100.00000000%
                                                                        ============
</TABLE>
<PAGE>
                                                                      EXHIBIT C
                                                             TO LEASE INDENTURE

                      FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned
Lease Indenture.

                             _______________________________________________,
                             not in its individual capacity but solely as the
                             Indenture Trustee

                             By: ____________________________________________
                                 Name:
                                 Title:

                                      C-1
<PAGE>
                                                                      EXHIBIT D
                                                             TO LEASE INDENTURE

                          DESCRIPTION OF THE FACILITY

     That certain approximately 520 megawatt net nameplate capacity generating
facility, (known also as the "RockGen Facility") together with all structures
or improvements, all alterations thereto or replacements thereof, and all other
fixtures, attachments, appliances, equipment, machinery and other articles
(including, but not limited to, the property set forth below (the "Included
Property")), in each case located on the land, or on the easements appurtenant
to the land, consisting of approximately 78 acres located in the Town of
Christiana near the Village of Rockdale, in Dane County, Wisconsin, described
more particularly on Exhibit A.

     Included Property

     1.   Three Combustion Turbines - General Electric Model PG7241 FA; Serial
          #: 297570, 297571 and 297572.

     2.   Three CT Generators - General Electric, Hydrogen Cooled, Model 7FH2,
          18kV, 220000 KVA, 0.85 pf; Serial #: 337X167, 337X168 and 337X169.

     3.   Three Combustion Turbine Step-up Transformers - GE Prolec, 18/138 KV,
          220 MVA FA, WYE/DELTA, Serial #: G720-01, G720-02 and G720-03 and
          other interconnection equipment associated with the RockGen Facility.

                                      D-1-1
<PAGE>
                                                                    SCHEDULE I
                                                            TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

Initial Aggregate Principal Amount:       $45,450,000
Final Maturity Date:                      May 30, 2012
Interest Rate:                            8.400%
Amortization Schedule:

<TABLE>
<CAPTION>

                                                                  Percentage of Principal
                                                                  -----------------------
Regular Distribution Date                                                  Amount Payable
-------------------------                                                  --------------
<S>                                                               <C>
May 30, 2002............................................                      1.21012101%
November 30, 2002.......................................                      2.58525853%
May 30, 2003............................................                      3.02530253%
November 30, 2003.......................................                      3.24532453%
May 30, 2004............................................                      3.52035204%
November 30, 2004.......................................                      3.68536854%
May 30, 2005............................................                      3.96039604%
November 30, 2005.......................................                      4.12541254%
May 30, 2006............................................                      4.07040704%
November 30, 2006.......................................                      4.18041804%
May 30, 2007............................................                      4.73047305%
November 30, 2007.......................................                      5.00550055%
May 30, 2008............................................                      5.50055006%
November 30, 2008.......................................                      5.77557756%
May 30, 2009............................................                      6.16061606%
November 30, 2009.......................................                      6.43564356%
May 30, 2010............................................                      6.65566557%
November 30, 2010.......................................                      6.93069307%
May 30, 2011............................................                      7.20572057%
November 30, 2011.......................................                      6.60066007%
May 30, 2012............................................                      5.39053905%
                                                                              ----------

Total...................................................                    100.00000000%
                                                                            ============
</TABLE>

                                  SCHEDULE 1-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.25
<SEQUENCE>28
<FILENAME>f80168ex4-22_25.txt
<DESCRIPTION>EXHIBIT 4.22.25
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.25


                                 Document Name:
Document Number        Indenture of Trust, Mortgage and
                       Security Agreement

                                              Recording Area

                                              Name and Return Address

                                              Sarah M. Ward, Esq.
                                              Skadden, Arps, Slate, Meagher &
                                              Flom, LLP
                                              Four Times Square
                                              New York, NY 10036

                                              Name of Preparer of the
                                              Document:
                                              Sarah M. Ward, Esq.

                                              Parcel Identification Number (PIN)

<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

                          Dated as of October 18, 2001

                                    between

                                ROCKGEN OL-3, LLC

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank

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

                                ROCKGEN FACILITY

                                      2
<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
SECTION 1.   DEFINITIONS....................................................          8

SECTION 2.   THE LESSOR NOTES...............................................          9
     Section 2.1.   Limitation on Lessor Notes..............................          9
     Section 2.2.   Initial Lessor Notes....................................          9
     Section 2.3.   Execution and Authentication of Lessor Notes............          9
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes..........         10
     Section 2.5.   Payments from Indenture Estate Only; No Personal
                    Liability of the Owner Lessor, the Owner Participant or
                    the Indenture Trustee...................................         11
     Section 2.6.   Method of Payment.......................................         12
     Section 2.7.   Application of Payments.................................         13
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes.....         13
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes.......         14
     Section 2.10.  Redemptions; Assumption.................................         15
     Section 2.11.  Payment of Expenses on Transfer.........................         20
     Section 2.12.  Additional Lessor Notes.................................         20
     Section 2.13.  Restrictions of Transfer Resulting from Federal
                    Securities Laws; Legend.................................         23
     Section 2.14.  Security for and Parity of Lessor Notes.................         23
     Section 2.15.  Acceptance of the Indenture Trustee.....................         23

SECTION 3.   RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM INDENTURE
             ESTATE.........................................................         23
     Section 3.1.   Distribution of Periodic Rent...........................         23
     Section 3.2.   Payments Following Event of Loss or Other Early
                    Termination.............................................         25
     Section 3.3.   Payments After Lease Indenture Event of Default.........         27
     Section 3.4.   Investment of Certain Payments Held by the Indenture
                    Trustee.................................................         28
     Section 3.5.   Application of Certain Other Payments...................         28
     Section 3.6.   Other Payments..........................................         29
     Section 3.7.   Excepted Payments.......................................         29
     Section 3.8.   Distributions to the Owner Lessor.......................         29
     Section 3.9.   Payments Under Assigned Documents.......................         30
     Section 3.10.  Disbursement of Amounts Received by the Indenture
                    Trustee.................................................         30
</TABLE>

                                      i
<PAGE>
<TABLE>
<S>                                                                                 <C>
SECTION 4.   COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE
             TRUSTEE.......................................................         34
     Section 4.1.   Covenants of Owner Lessor..............................         34
     Section 4.2.   Lease Indenture Events of Default......................         34
     Section 4.3.   Remedies of the Indenture Trustee......................         37
     Section 4.4.   Right to Cure Certain Lease Events of Default..........         39
     Section 4.5.   Rescission of Acceleration.............................         42
     Section 4.6.   Return of Indenture Estate, Etc........................         42
     Section 4.7.   Power of Sale and Other Remedies.......................         43
     Section 4.8.   Appointment of Receiver................................         44
     Section 4.9.   Remedies Cumulative....................................         44
     Section 4.10.  Waiver of Various Rights by the Owner Lessor...........         45
     Section 4.11.  Discontinuance of Proceedings..........................         46
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights
                    Under the Facility Lease...............................         46
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants,
                    Etc....................................................         46
     Section 4.14.  Further Assurances.....................................         47
     Section 4.15.  Waiver of Past Defaults................................         47

SECTION 5.   DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF
             OWNER LESSOR..................................................         47
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default.         47
     Section 5.2.   Actions Upon Instructions Generally....................         47
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease.........................................         48
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.         48
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions..............         49
     Section 5.6.   Certain Rights of the Owner Lessor.....................         49
     Section 5.7.   Restrictions on Dealing with Indenture Estate..........         52
     Section 5.8.   Filing of Financing Statements and Continuation
                    Statements.............................................         52

SECTION 6.   INDENTURE TRUSTEE AND OWNER LESSOR............................         53
     Section 6.1.   Acceptance of Trusts and Duties........................         53
     Section 6.2.   Absence of Certain Duties..............................         55
     Section 6.3.   Representations and Warranties.........................         55
     Section 6.4.   No Segregation of Moneys; No Interest..................         56
     Section 6.5.   Reliance; Agents; Advice of Experts....................         56
</TABLE>

                                      ii
<PAGE>
<TABLE>
<S>                                                                                 <C>
SECTION 7.   SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES............         57
     Section 7.1.   Resignation or Removal of the Indenture Trustee;
                    Appointment of Successor...............................         57
     Section 7.2.   Appointment of Additional and Separate Trustees........         60

SECTION 8.   SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER
             DOCUMENTS.....................................................         62
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations.............................         62
     Section 8.2.   Supplemental Indentures and other Amendments Without
                    Consent................................................         63
     Section 8.3.   Conditions to Action by the Indenture Trustee..........         64

SECTION 9.   MISCELLANEOUS.................................................         65
     Section 9.1.   Surrender, Defeasance and Release......................         65
     Section 9.2.   Conveyances Pursuant to the Site Sublease..............         66
     Section 9.3.   Appointment of the Indenture Trustee as Attorney;
                    Further Assurances.....................................         66
     Section 9.4.   Indenture for Benefit of Certain Persons Only..........         66
     Section 9.5.   Notices; Furnishing Documents, etc.....................         66
     Section 9.6.   Severability...........................................         68
     Section 9.7.   Limitation of Liability................................         69
     Section 9.8.   Written Changes Only...................................         69
     Section 9.9.   Counterparts...........................................         69
     Section 9.10.  Successors and Permitted Assigns.......................         69
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor
                    Estate.................................................         70
     Section 9.14.  Withholding Taxes: Information Reporting...............         71
     Section 9.15.  Fixture Financing Statement............................         72
</TABLE>

EXHIBITS

Exhibit A         Description of Facility Site
Exhibit B         Form of Lessor Note
Exhibit C         Form of Certificate of Authentication
Exhibit D         Description of the Facility

APPENDIX A  Definitions

                                       iii
<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

     This INDENTURE OF TRUST, MORTGAGE AND SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions hereof, this "Indenture"), dated as of October 18, 2001, between
ROCKGEN OL-3, LLC, a Delaware limited liability company created for the benefit
of the Owner Participant referred to below, as mortgagor (the "Owner Lessor")
and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as
mortgagee on behalf of the Noteholders (the "Indenture Trustee") and as the
Account Bank.

                                  WITNESSETH:

     WHEREAS, RockGen Energy LLC (the "Facility Lessee") has sold the Undivided
Interest to the Owner Lessor pursuant to the Bill of Sale and leased the Ground
Interest to the Owner Lessor pursuant to the Facility Site Lease, a memorandum
of which shall be recorded with this Indenture in the appropriate registry of
deeds described in Exhibit A attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has leased from the Owner
Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Sublease,
dated as of the date hereof (as amended, supplemented or otherwise modified
from time to time in accordance with the provisions thereof, the "Facility Site
Sublease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;


<PAGE>
     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Purchase Price for the Undivided
Interest purchased from the Facility Lessee (ii) grant to the Indenture Trustee
the security interests herein provided;

     WHEREAS, this Indenture is intended to be regarded as a mortgage under the
laws of the State of Wisconsin (and not intended to qualify as an indenture),
as a security agreement under the Uniform Commercial Codes of the States of New
York, Delaware and Wisconsin, and as a fixture filing under the laws of the
State of Wisconsin;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and interest on the Lessor Notes and of all other
amounts owing with respect to all Lessor Notes from time to time outstanding
hereunder, and the prompt payment when and as due of any and all other amounts
from time to time owing in respect of the Secured Indebtedness and (ii) the
performance and observance by the Owner Lessor for the benefit of the holders
of the Lessor Notes and the Indenture Trustee of all other obligations,
agreements, and covenants of the Owner Lessor set forth hereinafter and in

                                      2
<PAGE>
the Lessor Notes, the Operative Documents and the other documents, certificates
and agreements delivered in connection therewith:

                                GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns, transfers,
pledges, bargains, sells and confirms unto the Indenture Trustee and its
successors and permitted assigns, for the benefit of the holders of the Lessor
Notes from time to time, a first priority security interest in and mortgage
lien on all estate, right, title and interest of the Owner Lessor in, to and
under the following described property, rights, interests and privileges,
whether now held or hereafter acquired (which collectively, including all
property hereafter specifically subjected to the security interest created by
this Indenture by any supplement hereto, exclusive of Excepted Payments) are
included within, and are hereafter referred to as, the "Indenture Estate"):

     (1)  the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility
Lessee thereunder (including Rent); any rights of the Owner Lessor as
collateral assignee of the Facility Lessee under the Facility Lease; the
Facility Site Lease (and all rights with respect to the Ground Interest
conveyed thereby); the Facility Site Sublease and all payments of any kind by
the Facility Lessee thereunder; the Bill of Sale (and all rights with respect
to the Facility conveyed thereby); the Owner Lessor's interest in all tangible
property located on or at or attached to the Facility Site as to which an
interest in such tangible property arises under applicable real estate law
("fixtures"); the Calpine Guaranty, the Ownership and Operation Agreement and
all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or

                                      3
<PAGE>
at law or in equity or otherwise, arising out of any Lease Default or Lease
Event of Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent), royalties,
issues, profits, revenues, proceeds, damages, claims, warranties and other
income from the property described in this Granting Clause, including, without
limitation, all payments or proceeds payable to the Owner Lessor as the result
of the sale of the Property Interest or the lease or other disposition of the
Property Interest, and all estate, right, title and interest of every nature
whatsoever of the Owner Lessor in and to such rents, issues, profits, revenues
and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and
all proceeds (to the extent of the Owner Lessor's interest therein) of all
insurance maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located; and

                                      4
<PAGE>
     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the Facility Lease
(other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Further, the Owner Lessor agrees that promptly on
receipt thereof, it will transfer to the Indenture Trustee any and all moneys
from time to time received by it constituting part of the Indenture Estate,
whether or not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

                                      5
<PAGE>
     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and all
properties referred to in this Granting Clause which are hereafter acquired by
the Owner Lessor, shall, without further conveyance, assignment or act by the
Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
Wisconsin. This Indenture is also intended to be a mortgage under Wisconsin
law. The maximum principal indebtedness secured by this Indenture, including
future advances and contingent obligations but excluding protective advances,
shall not at any time exceed the total amount of One Hundred Eighty One Million
Eight Hundred Thousand Dollars ($181,800,000); provided, however, that nothing
herein contained shall limit the amount secured by this Indenture if the
Secured Indebtedness is increased by protective advances; and provided,
further, such limitation as to such future advances and contingent obligations
shall only pertain to the record priority of the amount thereof secured hereby
and does not otherwise limit the amount of total indebtedness of Owner Lessor
secured hereby or limit the liability of Owner Lessor to Indenture Trustee for
such total indebtedness, including future advances and contingent obligations.
The future advances secured hereby shall be made to or for the account of Owner
Lessor and may be made under the Additional Lessor Notes, or pursuant to
promissory notes or other instruments evidencing such future advances which may
be hereafter executed and delivered by Owner Lessor to Indenture Trustee.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall

                                      6
<PAGE>
the Indenture Trustee or the Noteholders be required or obligated in any
manner, except as herein expressly provided, to perform or fulfill any
obligation of the Owner Lessor under or pursuant to any such Assigned Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders. The
Owner Lessor hereby further covenants that with respect to its estate, right,
title and interest in, to or under the Indenture Estate, it will not, except as
provided in this Indenture and except as to Excepted Payments, (i) accept any
payment from the Facility Lessee or any sublessee or enter into any agreement
amending, modifying or supplementing any of the Assigned Documents, execute any
waiver or modification of, or consent under, the terms of any of the Assigned
Documents or revoke or terminate any of the Assigned Documents, (ii) settle or
compromise any claim arising under any of the Assigned Documents, or (iii)
submit or consent to the submission of any dispute, difference or other matter
arising under or in respect of any of the Assigned Documents to arbitration
thereunder.

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes

                                      7
<PAGE>
from time to time outstanding and to protect the security of this Indenture,
and the Indenture Trustee agrees to accept the trusts and duties hereinafter
set forth, as follows:

                                   SECTION 1.
                                  DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 520 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Christiana, Wisconsin and more fully described
in Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i) The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Lessor Notes, and principal of such Lessor Notes being due and
     payable as provided in such Lessor Notes;

          (ii) Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture

                                      8
<PAGE>
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant
     to Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with interest thereon at the rate provided in each
     Additional Lessor Note and the Make-Whole Amount thereon (if any) and
     together with any and all renewals, modifications, consolidations and
     extensions of the indebtedness evidenced by such Additional Lessor Notes,
     and principal of such Additional Lessor Notes being due and payable as
     provided in each such Additional Lessor Note.

          (iii) Any and all additional advances made by the Indenture Trustee to
     protect or preserve the Indenture Estate or the security interest and other
     interests created hereby on the Indenture Estate or for taxes, assessments
     or insurance premiums as hereinafter provided or for performance of any of
     the Owner Lessor's obligations hereunder or for any other purpose provided
     herein, including advances made pursuant to Section 4.13 hereof (whether or
     not the Owner Lessor remains the owner of the Indenture Estate at the time
     of such advances); and

          (iv) Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided interest in
the Facility.

                                   SECTION 2.
                                THE LESSOR NOTES

     Section 2.1.   Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

                                      9
<PAGE>
     Section 2.2.   Initial Lessor Notes. There are hereby created and
established hereunder one series of Lessor Notes consisting of the Series A
Lessor Notes, in substantially the form set forth in Exhibit B to this
Indenture and in the aggregate principal amount, having installments payable on
the dates and in the amounts and having the final maturity date and interest
rate set forth in Schedule I to this Indenture (the "Series A Lessor Notes" or,
collectively, the "Initial Lessor Notes" or, individually, an "Initial Lessor
Note").

     Section 2.3.   Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor
signed by the Lessor Manager. The Indenture Trustee shall authenticate and
deliver Additional Lessor Notes, upon a written order of the Owner Lessor
executed by the Lessor Manager and satisfaction of the conditions specified in
Section 2.12. Such order shall specify the principal amount of the Additional
Lessor Notes to be authenticated and the date on which the original issue of
Additional Lessor Notes is to be authenticated.

     Section 2.4.   Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date, the
Initial Lessor Notes shall be issued to the applicable Pass Through Trustee in
the amounts set forth in Schedule I hereto, and shall be dated the Closing Date.

                                      10
<PAGE>
     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto.  Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due and
payable in arrears semi-annually commencing on May 30, 2002, and on each May 30
and November 30 thereafter until paid in full. If any day on which principal,
Make-Whole Amount, if any, or interest on the Initial Lessor Notes are payable
is not a Business Day, payment thereof shall be made on the next succeeding
Business Day with the same effect as if made on the date on which such payment
was due.

     (c)  Overdue Payments. Interest (computed on the basis of a 360-day year
of twelve 30-day months) on any overdue principal, Make-Whole Amount (if any)
and, to the extent permitted by Applicable Law, interest and any other amounts
payable shall be paid on demand at the Overdue Rate.

     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.   Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor

                                      11
<PAGE>
Notes or under this Indenture. The Indenture Trustee and each Noteholder, by
its acceptance thereof, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
the Indenture Trustee or such Noteholder, as the case may be, as herein
provided and that, except as expressly provided in this Indenture, the
Participation Agreement or any other Operative Document, none of the Owner
Participant, the Owner Lessor, the Trust Company, the Lease Indenture Company,
nor the Indenture Trustee, nor any Affiliate of any thereof, shall be
personally liable to such Noteholder or the Indenture Trustee for any amounts
payable hereunder, under such Lessor Note or for any performance to be rendered
under any Assigned Document or for any liability under any Assigned Document.
Without prejudice to the foregoing, the Owner Lessor will duly and punctually
pay or cause to be paid the principal of, Make-Whole Amount, if any, and
interest on all Lessor Notes according to their terms and the terms of this
Indenture. Nothing contained in this Section 2.5 limiting the liability of the
Owner Lessor shall derogate from the right of the Indenture Trustee and the
Noteholders to proceed against the Indenture Estate and the Calpine Guaranty to
secure and enforce all payments and obligations due hereunder and under the
Assigned Documents and the Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.   Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent").  The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Owner Lessor shall
require each Paying Agent (other than the Indenture Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal of or interest

                                      12
<PAGE>
on the Lessor Notes and shall notify the Indenture Trustee of any default by
the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One or
more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any Lessor Note, the
Owner Lessor and the Indenture Trustee may deem and treat the Person in whose
name any Lessor Note is registered on the Note Register as the absolute owner
and holder of such Lessor Note for the purpose of receiving payment of all
amounts payable with respect to such Lessor Note and for all other purposes,
and neither the Owner Lessor nor the Indenture Trustee shall be affected by any
notice to the contrary. All payments made on any Lessor Note in accordance with
the provisions of this Section 2.6 shall be valid and effective to satisfy and
discharge the liability on such Lessor Note to the extent of the sums so paid
and (except as provided herein) neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

                                      13
<PAGE>
     Section 2.7.   Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.  Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar").  The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange.  The Owner Lessor may have one or more co-registrars.  The Owner
Lessor initially appoints the Indenture Trustee as Registrar in connection with
the Lessor Notes.  The Indenture Trustee shall maintain at the Indenture
Trustee Office a register in which it will provide for the registration,
registration of transfer and exchange of Lessor Notes (such register being
referred to herein as the "Note Register").  If any Lessor Note is surrendered
at said office for registration of transfer or exchange (accompanied by a
written instrument of transfer duly executed by or on behalf of the holder
thereof, together with the amount of any applicable transfer taxes), the Owner
Lessor will execute and the Indenture Trustee will authenticate and deliver, in
the name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount.  Any Lessor Note or Lessor Notes issued in a registration of transfer
or exchange shall be valid obligations of the Owner Lessor entitled to the same
security and benefits to which the Lessor Note or Lessor Notes so transferred
or exchanged were entitled, including rights as to interest accrued but unpaid
and to accrue so that there will not be any loss or gain of interest on the
Lessor Note or Lessor Notes surrendered.  Every Lessor Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Indenture Trustee duly executed by the holder thereof or his
attorney duly authorized in writing, and the Indenture Trustee may require an

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<PAGE>
opinion of counsel as to compliance of any such transfer with the Securities
Act.  The Indenture Trustee shall make a notation on each new Lessor Note of
the amount of all payments of principal previously made on the old Lessor Note
or Lessor Notes with respect to which such new Lessor Note is issued and the
date on which such new Lessor Note is issued and the date to which interest on
such old Lessor Note or Lessor Notes shall have been paid.  The Indenture
Trustee shall not be required to register the transfer or exchange of any
Lessor Note during the 10 days preceding the due date of any payment on such
Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount.  Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.   Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10 or
as provided in any indenture supplemental hereto, all Lessor Notes outstanding
under this Indenture shall be redeemed, in whole but not in part, at a price
equal to the principal amount thereof, together with accrued interest thereon,
if any, on the earliest to occur on the date of redemption, but without any
Make-Whole Amount or other premium:

          (i) if the Facility Lease is terminated pursuant to Section 10 thereof
     as a result of the occurrence of an Event of Loss (other than a Regulatory
     Event of Loss or an Event

                                      15
<PAGE>
     of Loss described in clause (v) or (vi) of the definition of "Event of
     Loss"), on the applicable Termination Date provided in Section 10.2(a) of
     the Facility Lease;

          (ii) if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii) if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv) if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing after giving effect to such assumption, the
obligations and liabilities of the Owner Lessor hereunder and under all of the
Lessor Notes may be assumed in whole (but not in part) by the Facility Lessee
in the event of the occurrence of (i) a Regulatory Event of Loss, or (ii) a
termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of the
Facility Lease, where in connection with such termination the Facility Lessee
acquires the Undivided Interest pursuant to an assumption agreement (which
assumption agreement may be combined with the indenture supplemental to this
Indenture hereinafter referred to in this Section 2.10(b), and shall provide
for the assumption by the Facility Lessee of the obligations and liabilities of
the Owner Lessor and the Owner Participant under the Operative Documents
pertaining to the Undivided Interest) which shall make such obligations and
liabilities fully recourse to the Facility Lessee and shall otherwise be in
form and substance acceptable to the Indenture Trustee and the Owner Lessor.
The Facility Lessee will execute and deliver, and the Indenture Trustee will
authenticate, to each Noteholder in exchange for such old Lessor Note a new
Lessor Note, in a principal amount equal to the outstanding principal amount of
such old Lessor Note and otherwise in substantially similar form and tenor to
such old
                                      16
<PAGE>
Lessor Note but indicating that the Facility Lessee is the issuer thereof.
When such assumption agreement becomes effective, the Owner Lessor shall be
released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee.  All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i) the Indenture Trustee shall have received an Opinion of Counsel of
     the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to the
     effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption Document
     and the assumptions contemplated thereby do not contravene (x) the Organic
     Documents of the Facility Lessee, (y) any provision of any security issued
     by the Facility Lessee or of any agreement, instrument or other undertaking
     to which the Facility Lessee is a party or by which it or any of its
     property is bound or (z) any Applicable Law, (3) no Governmental Approval
     is necessary or required in connection with any Assumption Document or the
     assumption contemplated thereby (or, if any such Governmental Approval is
     necessary or required, that the same has been duly obtained and is final
     and in full force and effect and any period for the filing of notice of
     rehearing or application for judicial review of the issuance of such
     Governmental Approval has expired without any such notice or application
     having been made), (4) each Assumption Document is a legal, valid and
     binding obligation of the Facility Lessee, enforceable in accordance with
     its terms, (5)

                                      17
<PAGE>
     such assumption agreement and the assumption of the Lessor Notes
     thereunder shall not cause a Tax Event to occur as to any holder of any
     Lessor Note or any Certificateholder and (6) the lien of this Indenture
     will continue to be a first priority perfected lien on the Indenture
     Estate;

          (ii) the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder ;

          (iii)   Moody's and S&P shall have confirmed that such assumption
     will not result in a downgrading of the rating on the Certificates;

          (iv) the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v) the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price upon an optional refinancing pursuant to
     Section 11.2 of the Participation Agreement. The Owner Lessor's failure to

                                      18
<PAGE>
     consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii) All of the Lessor Notes outstanding under this Indenture shall be
     redeemed at such redemption price on the Termination Date or Obsolescence
     Termination Date, as applicable, if the Facility Lease is terminated as a
     result of an event described in Section 13.2 or clause (b) of Section 14.1
     of the Facility Lease. The Owner Lessor's failure to consummate such
     redemption as a result of an event described in this clause (ii) following
     delivery of such notice shall not constitute a Lease Indenture Event of
     Default or any other default under the Operative Documents.

          (iii) The Lessor Notes shall be redeemed at such redemption price upon
     termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clause (v) or
     (vi) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       19
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i) the date of redemption;

          (ii) the redemption price;

          (iii) the name and address of the Paying Agent;

          (iv) that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v) that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue on
     and after the redemption date; and

          (vi) the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid at
the redemption price stated in the notice, plus accrued interest to the date of
redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.   Payment of Expenses on Transfer. Upon the issuance of a new
Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the Owner
Lessor or the Indenture Trustee may require from the party requesting such new
Lessor Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and
the Indenture
                                       20
<PAGE>
Trustee for, or to provide funds for, the payment on an After-Tax Basis to the
Owner Lessor, the Indenture Trustee and the Owner Participant of any tax or
other governmental charge in connection therewith or any charges and expenses
connected with such tax or governmental charge paid or payable by the Owner
Lessor or the Indenture Trustee.

     Section 2.12.   Additional Lessor Notes.

      (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       21
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor Notes
(which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i) a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii) an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of and
     interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii) with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f) of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and is
     continuing;

                                       22
<PAGE>
          (iv) such additional documents, certificates and opinions as shall be
     reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v) a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address set
     forth therein, and in such principal amounts as are stated therein, upon
     payment to the Indenture Trustee, but for the account of the Owner Lessor,
     of the sum or sums specified in such request and authorization;

          (vi) the consent of the Facility Lessee to such request and
     authorization; and

          (vii) an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and enforceability of the Additional Lessor Notes and that all
     conditions hereunder to the authentication and delivery of such Additional
     Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     Section 2.13.   Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in part,
to any Person, the Noteholder thereof shall furnish to the Facility Lessee, the
Indenture Trustee and the Owner Lessor an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Lessor and the Facility Lessee, to the effect that such transfer will not
violate the registration provisions of the Securities Act or require
qualification of this Indenture under the Trust Indenture Act of 1939, as
amended, and all Lessor Notes issued hereunder shall be endorsed with a legend
which shall read substantially as follows:

                                       23
<PAGE>
     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
     MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.   Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.   Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                   SECTION 3.
                      RECEIPT, DISTRIBUTION AND APPLICATION
                         OF INCOME FROM INDENTURE ESTATE

     Section 3.1.   Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic Rent received by the Indenture Trustee shall be
distributed by the Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any
     Noteholder over any other Noteholder, in the proportion that the amount
     of such payment then due and payable under each such Lessor Note bears to
     the aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

                                       24
<PAGE>
     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First." To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion of
each such payment made to the Indenture Trustee which is to be distributed by
the Indenture Trustee in payment of Lessor Notes shall be applied in accordance
with Section 2.7 hereof. Any payment received by the Indenture Trustee pursuant
to Section 4.3 hereof as a result of payment by the Owner Lessor of principal
or interest or both (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, on overdue interest) then due on all Lessor
Notes shall be distributed to the Noteholders, ratably, without priority of one
over the other, in the proportion that the amount of such payment or payments
then due and unpaid on all Lessor Notes held by each such Noteholder bears to
the aggregate amount of the payments then due and unpaid on all Lessor Notes
outstanding; and the Owner Lessor shall (to the extent of such payment made by
it) be subrogated to the rights of the Noteholders under this Section 3.1 to
receive the payment of Periodic Rent or Supplemental Rent with respect to which
its payment under Sections 4.3(a) and (b) hereof relates, and the payment of
interest on account of such Periodic Rent or Supplemental Rent being overdue,
to the extent provided in and subject to the provisions of Section 4.3(a) and
(b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the

                                       25
<PAGE>
extent not then required to be distributed pursuant to clause "First" of
Section 3.1(a)) as part of the Indenture Estate and shall not distribute any
such payment of Periodic Rent or interest pursuant to clause "Second" of
Section 3.1(a) until such time as such Lease Indenture Event of Default shall
be cured or waived or until such time as the Indenture Trustee shall have
received written instructions from a Majority in Interest of Noteholders to
make such a distribution; provided that such amounts must be returned to the
Owner Lessor within six (6) months from the receipt thereof by the Indenture
Trustee unless (i) the Indenture Trustee has declared the unpaid principal of
all Lessor Notes due and payable (or such amounts shall have automatically
become due and payable), pursuant to Section 4.2(a) and the Indenture Trustee
is diligently pursuing any dispossessary remedies available under Section 4.3
hereof (unless such remedies are stayed or prevented by operation of law) or
(ii) any other Lease Indenture Event of Default shall have occurred during the
intervening period and be continuing, in which case, such six-month period will
be restarted from the date such other Lease Indenture Event of Default shall
have occurred. Upon the cure or waiver of such Lease Indenture Event of
Default, withheld Periodic Rent shall, subject to clause (ii) of the
immediately preceding sentence, be distributed to the Owner Lessor (to the
extent that all payments to be distributed pursuant to clause "First" of
Section 3.1(a) have been made), and no further withholding of Periodic Rent on
account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.   Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee

                                       26
<PAGE>
     and to the extent reimbursable and not previously reimbursed) shall be
     distributed to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder, plus the Make-Whole Amount, if any, and accrued but unpaid
     interest thereon to the scheduled date of distribution to the Noteholders
     bears to the aggregate unpaid principal amount of all such Lessor Notes
     held by all such holders, together with the Make-Whole Amount, if any,
     plus accrued but unpaid interest thereon to the date of scheduled
     distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the
     aggregate amount of such payments and amounts to which all such holders
     are so entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.   Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee

                                       27
<PAGE>
hereunder, shall, so long as such declaration shall not have been rescinded, be
distributed forthwith by the Indenture Trustee in the following order of
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services
     under this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then
     outstanding and all accrued but unpaid interest on such Lessor Notes to
     the date of such distribution (including interest on overdue principal
     and, to the extent permitted by Applicable Law, overdue interest) shall
     be distributed to the holders of such Lessor Notes, in each case ratably,
     without priority of any Noteholder over any other, in the proportion that
     the aggregate unpaid principal amount of all such Lessor Notes held by
     each such holder and accrued but unpaid interest thereon to the scheduled
     date of distribution to the Noteholders bears to the aggregate unpaid
     principal amount of all such Lessor Notes held by all such holders and
     accrued but unpaid interest thereon to the date of scheduled distribution
     to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

                                       28
<PAGE>
     Section 3.4.   Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.   Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by the
Indenture Trustee of any payment referred to in the preceding sentence there
shall have occurred and be continuing a Lease Indenture Event of Default, the
Indenture Trustee shall hold such payment as part of the Indenture Estate, but
the Indenture Trustee shall, except as otherwise provided in Section 3.1(b) or
3.1(c) hereof, cease to hold such payment and shall apply such payment to the
purpose for which it was made in accordance with the terms of such Operative
Document if and whenever there is no longer continuing any Lease Indenture
Event of Default; provided, however, that any such payment received by the
Indenture Trustee which is payable to the Facility Lessee shall not be held by
the Indenture Trustee unless a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing.

     Section 3.6.   Other Payments. Except as otherwise provided in Section 3.5
hereof:

                                       29
<PAGE>
     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.   Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.   Distributions to the Owner Lessor. Unless otherwise directed
in writing by the Owner Lessor, all amounts from time to time distributable by
the Indenture Trustee to the Owner Lessor in accordance with the provisions
hereof shall be paid by the Indenture Trustee in immediately available funds to
the Owner Participant's Account. Any amounts payable to the Trust Company in
its individual capacity shall be paid to the Trust Company.

     Section 3.9.   Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other disposition thereof or otherwise constituting a part of the

                                       30
<PAGE>
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.   Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a)  The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture governs
and shall be the only agreement governing the Indenture Trustee's Account.

     (b)  All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a part
of the Indenture Trustee Account Collateral and shall not constitute payment of
any Indebtedness or any other obligation of the Owner Lessor until applied as
hereinafter provided.

                                       31
<PAGE>
     (c)  As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12   The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i) Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the Indenture
     Trustee's Account as set forth in Section 3.11, (B) the Indenture Trustee's
     Account is and will be maintained as a "securities account" (within the
     meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor is the
     "entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC)
     in respect of the "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) credited to the Indenture Trustee's Account, (D)
     all property delivered to the Account Bank pursuant to this Indenture or
     any other Operative Document will be held by the Account Bank and promptly
     credited to the Indenture Trustee's Account by an appropriate entry in its
     records in accordance with this Indenture, (E) all "financial assets"
     (within the meaning of Section 8-102(a)(9) of the UCC) in registered form
     or payable to or to the order of and credited to the Indenture Trustee's
     Account shall be registered in the name of, payable to or to the order of,
     or indorsed to, the Account Bank or in blank, or credited to another
     securities account maintained in the name of the Account Bank, and in no
     case will any financial asset credited to the Indenture Trustee's Account
     be registered in the name of, payable to or to the order of, or indorsed
     to, the Owner Lessor except to the extent the foregoing have been
     subsequently indorsed by the Owner Lessor to the Account Bank or in blank,
     (F) the Account Bank shall not change the name or account number of the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee, (G) the Account Bank is acting and shall at all times
     act as and perform all of the duties of the "securities intermediary,"
     within the meaning of Article 8 of the UCC, with respect to the

                                       32
<PAGE>
     Indenture Trustee's Account and the financial assets credited thereto and
     (H) the Account Bank shall not enter into any other agreement governing,
     or with respect to, the Indenture Trustee's Account without the prior
     written consent of the Indenture Trustee.

          (ii) Financial Assets Election. The Account Bank agrees that each item
     of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated as
     a "financial asset" within the meaning of Section 8-l02(a)(9) of the UCC.

          (iii) Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC)
     or any other order from the Indenture Trustee directing the transfer or
     redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements with respect to
     the financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv) Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit of
     the Indenture Trustee's Account will not be subject to deduction, set-off,
     banker's lien, or any other right in favor

                                       33
<PAGE>
     of any Person other than the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder (except for the face amount of any
     checks which have been credited to the Indenture Trustee's Account but
     are subsequently returned unpaid because of uncollected or insufficient
     funds).

          (v) No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi) Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii) Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the

                                       34
<PAGE>
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the Indenture Trustee's Account as
expressly provided in Section 3.7 hereof.  Except as expressly provided in this
Indenture, in no event shall any amounts or Permitted Investments deposited in
or credited to the Indenture Trustee's Account be registered in the name of the
Owner Lessor, payable to the order of the Owner Lessor or specially indorsed to
the Owner Lessor except to the extent that the foregoing have been specially
indorsed to the Indenture Trustee or in blank.

                                   SECTION 4.
                      COVENANTS OF OWNER LESSOR; DEFAULTS;
                          REMEDIES OF INDENTURE TRUSTEE

     Section 4.1. Covenants of Owner Lessor. The Owner Lessor hereby covenants
and agrees as follows:

     (a)  the Owner Lessor will duly and punctually pay the principal of, Make-
Whole Amount, if any, and interest on and other amounts due under the Lessor
Notes and hereunder in accordance with the terms of the Lessor Notes and this
Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b)  the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.   Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

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     (a)  any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is waived by
the Owner Lessor and the Owner Participant and (ii) the insurance maintained by
the Facility Lessee still constitutes Prudent Industry Practice); or

     (b)  the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c)  the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d)  any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing

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pursuant to Section 4.6 of the Participation Agreement, or any representation
or warranty made by the OP Guarantor (provided the OP Guaranty shall not have
been terminated or released) under the OP Guaranty or in the certificate
delivered by such OP Guarantor at the Closing pursuant to Section 4.6 of the
Participation Agreement, shall prove to have been incorrect in any material
respect when made and continues to be material and unremedied for a period of
30 days after receipt by such party of written notice thereof; provided,
however, that if such condition cannot be remedied within such 30-day period,
then the period within which to remedy such condition shall be extended up to
an additional 120 days, so long as such party diligently pursues such remedy
and such condition is reasonably capable of being remedied within such extended
period;

     (e)  the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f)  an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.   Remedies of the Indenture Trustee.

     (a)  In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written

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instructions from a Majority in Interest of Noteholders shall declare, by
written notice to the Owner Lessor and the Owner Participant, the unpaid
principal amount of all Lessor Notes, with accrued interest thereon, to be
immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture Event of Default under Section 4.2(e) or (f), such
principal and interest shall automatically become due and payable immediately
without any such declaration or notice) without further act or notice of any
kind. If any Make-Whole amount is due and payable pursuant to Section 2.10 (c)
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b)  If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture Trustee
may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for

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such price or prices and on such terms as the Indenture Trustee, in its
unfettered discretion, may determine, or as may be required by law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b). The Indenture Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.

     (c)  All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d)  Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-

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day period following the date of commencement of a stay or other prevention or
(b) the date of repossession of the Facility under the applicable Facility
Lease.

     (e)  Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

     Section 4.4.   Right to Cure Certain Lease Events of Default.

     (a)  If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b)  If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the

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Owner Lessor shall be deemed to have cured any Lease Indenture Event of Default
which arose or would have arisen from such failure of the Facility Lessee.

     (c)  The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor, the
Owner Lessor shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic
Rent payment or Supplemental Rent payment being overdue in the manner set forth
in the next two sentences. If the Indenture Trustee shall thereafter receive
such payment of Periodic Rent, Supplemental Rent or such interest, the
Indenture Trustee shall, notwithstanding the requirements of Section 3.1
hereof, forthwith, remit such payment of Periodic Rent or Supplemental Rent, as
the case may be (to the extent of the payment made by the Owner Lessor pursuant
to this Section 4.4) and such interest to the Owner Lessor in reimbursement for
the funds so advanced by it, provided that if (A) any event which, with the
passing of time or giving of notice or both, would become a Lease Indenture
Event of Default under Section 4.2(b), (e) or (f) hereof, or any Lease
Indenture Event of Default hereunder shall have occurred and be continuing or
(B) any payment of principal, interest, or Make-Whole Amount, if any, on any
Lessor Note then shall be overdue, such payment shall not be remitted to the
Owner Lessor but shall be held by the Indenture Trustee as security for the
obligations secured hereby and distributed in accordance with Section 3.1
hereof. The Owner Lessor shall not attempt to recover any amount paid by it on
behalf of the Facility Lessee pursuant to this Section 4.4 except by demanding
of the Facility Lessee payment of such amount or by commencing an action
against the Facility Lessee for the payment of such amount, and except where a
Lease Indenture Event of Default (other than a Lease Event of Default) has
occurred and is continuing, the Owner Lessor shall be entitled to receive the
amount of such payment and the costs

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and expenses incurred in connection with such payments and performance thereof
together with interest thereon from the Facility Lessee (but neither the Owner
Lessor nor the Owner Participant shall have any right to collect such amounts
by exercise of any of the remedies under Section 17 of the Facility Lease) or,
if paid by the Facility Lessee to the Indenture Trustee, from the Indenture
Trustee to the extent of funds actually received by the Indenture Trustee.

     (d)  Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e)  Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the previous 30
days, (ii) no Lease Indenture Event of Default of the nature described in any
of clauses (b) through (f) of Section 4.2 hereof shall have occurred and be
continuing and (iii) the Owner Lessor shall give written notice to the
Indenture Trustee of the Owner Lessor's intention to purchase all of the Lessor
Notes in accordance with this paragraph, then, upon receipt within 10 Business
Days after such notice from the Owner Lessor of an amount equal to the sum of
(x) the aggregate unpaid principal amount of any unpaid Lessor Notes then held
by the Noteholders, together with accrued but unpaid interest thereon to the
date of such receipt (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, overdue interest), plus (y) the aggregate
amount, if any, of all sums which, if Section 3.3 were then applicable, such
Noteholder would be entitled to be paid before any payments were to be made to
the Owner Lessor but excluding any Make-Whole Amount, such Noteholder will
forthwith (and upon its receipt of the payment referred to in clause (1) below,
will be deemed to) sell, assign, transfer and convey to the Owner Lessor
(without recourse or warranty of any kind other than of title to the Lessor
Notes so conveyed) all of the right, title and interest of such Noteholder in
and to the Indenture Estate, this Indenture, all Lessor Notes held by such
Noteholder and the

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Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law. All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor. Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.   Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in Interest of Noteholders may, by written notice or notices to the
Owner Lessor, the Indenture Trustee and the Facility Lessee, rescind and annul
such acceleration and any related declaration of default under the Facility
Lease and their respective consequences, but no such rescission and annulment
shall extend to or affect any subsequent Lease Indenture Event of Default or
impair any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.   Return of Indenture Estate, Etc.

     (a)  If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the

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Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Lessor to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry
of which judgment the Owner Lessor hereby specifically consents, and (ii)
pursue all or any part of the Indenture Estate wherever it may be found and
enter any of the premises wherever all or part of the Indenture Estate may be
or is supposed to be and search for all or part of the Indenture Estate and
take possession of and remove all or part of the Indenture Estate.

     (b)  Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee shall be entitled to
collect and receive all rents (including Periodic Rent and Supplemental Rent),
revenues, issues, income, products and profits of the Indenture Estate and
every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required to be deposited with, the Indenture Trustee hereunder) and to apply
the same to the management of or otherwise dealing with the Indenture Estate
and of conducting the business thereof, and of all expenditures with respect to
the Indenture Estate and the making of all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Indenture Estate or any part thereof
(including the employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the Owner Lessor and
the Facility Lessee relating to the Indenture Estate and the Operative
Documents), or under any provision of, this Indenture, as well as just and
reasonable compensation for the services of the Indenture Trustee and of all
Persons properly engaged and employed by the Indenture Trustee.

     Section 4.7.   Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the

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right to foreclose this Indenture and to have a judicial sale of the Indenture
Estate or any part of the Indenture Estate as the Indenture Trustee shall
determine, in its sole discretion, with any such sale(s) to be under the
judgment or decree of a court of competent jurisdiction. Further, if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee may, in addition to and not in abrogation of other rights and remedies
provided in this Section, proceed by a suit or suits in law or in equity or by
any other appropriate proceeding or remedy (i) to enforce payment of the Lessor
Notes or the performance of any term, covenant, condition or agreement of this
Indenture or any other right, and (ii) to pursue any other remedy available to
it, all as the Indenture Trustee shall determine most effectual for such
purposes. Upon any foreclosure sale, the Indenture Trustee may bid for and
purchase the Indenture Estate and shall be entitled to apply all or any part of
the Secured Indebtedness as a credit to the purchase price. In the event of a
foreclosure sale of the Indenture Estate, the proceeds of said sale shall be
applied as provided in Section 3.3 hereof. In the event of any such foreclosure
sale by the Indenture Trustee, the Owner Lessor shall be deemed a tenant
holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over. The Indenture Trustee, at the Indenture
Trustee's option, is authorized to foreclose this Indenture subject to the
rights of any tenants of the Indenture Estate, and the failure to make any such
tenants parties to any such foreclosure proceedings and to foreclose their
rights will not be, nor be asserted to be by the Owner Lessor, a defense to any
proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.   Appointment of Receiver. If the outstanding principal amount
of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.   Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each

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and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the
Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.   Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law,
that it will never seek or derive any benefit or advantage from any of the
following, whether now existing or hereafter in effect, in connection with any
proceeding under or in respect of this Lease Indenture:

     (a)  any stay, extension, moratorium or other similar law;

     (b)  any Applicable Law providing for the valuation of or appraisal of any
portion of the Indenture Estate in connection with a sale thereof; or

     (c)  any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture

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<PAGE>
Trustee at any time or times in the future while any of the obligations secured
hereby shall remain outstanding.

     Section 4.11.   Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.   No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the Operative
Documents, so long as no Lease Event of Default under the Facility Lease shall
have been declared (or deemed to have been declared), the Indenture Trustee and
the Noteholders shall be subject to the Facility Lessee's rights under the
Facility Lease, and neither the Indenture Trustee nor any Noteholders shall
take or cause to be taken any action contrary to the right of the Facility
Lessee, including its rights to quiet use and possession of the Facility.

     Section 4.13.   Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon from the date of payment
or incurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Indenture Estate to the Indenture Trustee
on demand. The Indenture Trustee shall not be liable for any damages resulting
from

                                       47
<PAGE>
any such payment or action unless such damages shall be a consequence of
willful misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.   Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.   Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                   SECTION 5.
                          DUTIES OF INDENTURE TRUSTEE;
                    CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b). The
Indenture Trustee shall take such action, or refrain from taking such action,
as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.   Actions Upon Instructions Generally. Subject to the terms of
Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may

                                       48
<PAGE>
be specified in such instructions: (a) give such notice, direction or consent
or exercise such right, remedy or power or take such action hereunder or under
any Assigned Document, or in respect of any part of or all the Indenture
Estate, as it shall be entitled to take and as shall be specified in such
instructions; (b) take such action with respect to or to preserve or protect
the Indenture Estate (including the discharge of Liens) as it shall be entitled
to take and as shall be specified in such instructions; and (c) waive, consent
to, approve (as satisfactory to it) or disapprove all matters required by the
terms of any Operative Document to be satisfactory to the Indenture Trustee.
The Indenture Trustee may, and upon written instructions from a Majority in
Interest of Noteholders, the Indenture Trustee shall, execute and file or cause
to be executed and filed any financing statement (and any continuation
statement with respect to such financing statement) or any similar instrument
or document relating to the security interest or the assignment created by this
Indenture or granted by the Owner Lessor herein as may be necessary to protect
and preserve the security interest or assignment created by or granted pursuant
to this Indenture, to the extent otherwise entitled to do so and as shall be
specified in such instructions.

     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in this
Section 5.3 shall be deemed to expand the instances in which the Owner Lessor
is entitled to prepay the Lessor Notes.

     Section 5.4.   Compensation of the Indenture Trustee; Indemnification.

     (a)  The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

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<PAGE>
     (b)  The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture Trustee
shall not be required to take any action under Section 4 or Section 5.2, 5.3 or
9.1 hereof, nor shall any other provision of this Indenture be deemed to impose
a duty on the Indenture Trustee to take any action, if it shall have been
advised by counsel (who shall not be an employee of the Indenture Trustee) that
such action is contrary to the terms hereof or is otherwise contrary to
Applicable Law or (unless it shall have been indemnified in manner and form
satisfactory to the Indenture Trustee) may result in personal liability to the
Indenture Trustee.

     Section 5.5.   No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with any part of the Indenture
Estate or otherwise take or refrain from taking any action under or in
connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b)  The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the terms of the Facility Lease, to the extent applicable to the Indenture
Trustee as assignee of the Owner Lessor, (b) in accordance with the powers
granted to, or the authority conferred upon, the Indenture Trustee pursuant to
this Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.   Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the Indenture
Trustee, (i) retain all rights to demand and receive payment of, and to
commence an action for payment of, Excepted Payments but the Owner Lessor shall
have no remedy

                                      50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant

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<PAGE>
to Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall
retain the right to the exclusion of the Indenture Trustee to exercise the
rights of the Owner Lessor under, and to determine compliance by the Facility
Lessee with, the provisions of Sections 10 (other than Section 10.3 thereof),
13, 14 and 15 of the Facility Lease; provided, however, that if a Lease
Indenture Event of Default shall have occurred and be continuing, the Owner
Lessor shall cease to retain such rights upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;

     (d)  Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the

                                       52
<PAGE>
Facility Lessee under the Operative Documents relating to the protection,
insurance, maintenance, possession, use and return of the Property Interest;
and

     (f)  Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture
Trustee of the exclusive right, so long as this Indenture shall be in effect,
to declare the Facility Lease to be in default under Section 16 thereof and
thereafter to exercise the remedies pursuant to Section 17 of the Facility
Lease (except as expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.   Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.   Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by this
Indenture in the Indenture Estate as may be supplied to the Indenture Trustee
by the Facility Lessee. At any time and from time to time, upon the request of
the Facility

                                       53
<PAGE>
Lessee or the Indenture Trustee, at the expense of the Facility Lessee (and
upon receipt of the form of document so to be executed), the Owner Lessor shall
promptly and duly execute and deliver any and all such further instruments and
documents as the Facility Lessee or the Indenture Trustee may request in
obtaining the full benefits of the security interest and assignment created or
intended to be created hereby and of the rights and powers herein granted.
Upon the reasonable instructions (which instructions shall be accompanied by
the form of document to be filed) at any time and from time to time of the
Facility Lessee or the Indenture Trustee, the Owner Lessor shall execute and
file any financing statement (and any continuation statement with respect to
any such financing statement), and any other document relating to the security
interest and assignment created by this Indenture as may be specified in such
instructions. In addition, the Indenture Trustee and the Owner Lessor will
execute such continuation statements with respect to financing statements and
other documents relating to the Lien created by this Indenture in the Indenture
Estate as may be specified from time to time in written instructions of any
Noteholder (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                   SECTION 6.
                       INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.   Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture

                                       54
<PAGE>
Company and the Indenture Trustee shall not be liable for any action or
inaction of the Owner Trust; provided, however, that:

          (i) Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii) The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii) The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv) The Indenture Trustee shall not be required to take notice or be
     deemed to have notice or knowledge of any default, Lease Event of Default,
     Significant Lease Default or Lease Indenture Event of Default (except for a
     Lease Indenture Event of Default resulting from an event of nonpayment)
     unless a Responsible Officer of the Indenture Trustee shall have received
     written notice thereof. In the absence of receipt of such notice, the
     Indenture Trustee may conclusively assume that there is no default or Lease
     Indenture Event of Default;

                                       55
<PAGE>
          (v) The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of any
     of its duties hereunder or the exercise of any of its rights or powers if
     there is reasonable ground for believing that the repayment of such funds
     or adequate indemnity against such risk or liability is not reasonably
     assured to it, and none of the provisions contained in this Indenture shall
     in any event require the Indenture Trustee to perform, or be responsible
     for the manner of performance of, any of the obligations of the Owner
     Lessor, under this Indenture; and

          (vi) The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.   Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no
duty (a) to see to any registration, recording or filing of any Operative
Document (or any financing or continuation statements in respect thereto) or to
see to the maintenance of any such registration, recording or filing, (b) to
see to any insurance on the Facilities or the Facilities or to effect or
maintain any such insurance, (c) except as otherwise provided in Section 5.5
hereof or in Section 10 of the Participation Agreement, to see to the payment
or discharge of any Tax or any Lien of any kind owing with respect to, or
assessed or levied against, any part of the Indenture Estate, (d) to confirm or
verify the contents of any report, notice, request, demand, certificate,
financial statement or other instrument of the Facility Lessee, (e) to inspect
the Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders). Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents

                                       56
<PAGE>
unless the Indenture Trustee shall reasonably believe that each such
Noteholder, the Owner Lessor and the Owner Participant shall have received
copies thereof.

     Section 6.3.   Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL
BE DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.   No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any

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interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

     Section 6.5.   Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The Indenture
Trustee may accept in good faith a certified copy of a resolution of the
managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of

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competence, of any such Person, so long as the Indenture Trustee shall have
exercised reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                             AND SEPARATE TRUSTEES

     Section 7.1.   Resignation or Removal of the Indenture Trustee;
Appointment of Successor.

     (a)  Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If a
successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b)  Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights,

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<PAGE>
powers and duties of the predecessor Indenture Trustee or Account Bank
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c)  Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d)  Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or

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<PAGE>
responsibilities except those expressly set forth in Sections 3.11 and 3.12
of this Indenture. The Indenture Trustee, at the written direction of a
Majority in Interest of Noteholders, may remove and replace the Account Bank
pursuant to the terms of Section 7.1(a) and direct such Account Bank according
to the terms of this Indenture.

     (e)  Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.   Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such

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<PAGE>
request so to do; provided, however, that the Indenture Trustee shall exercise
due care in selecting any additional or separate trustee if such additional or
separate trustee shall not be a Person possessing trust powers under Applicable
Law. If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law or take any such action or shall be
advised by such counsel that it is no longer so necessary or prudent in the
interest of the Noteholders or in the event that the Indenture Trustee shall
have been requested to do so in writing by a Majority in Interest of
Noteholders, the Indenture Trustee shall execute and deliver all instruments
and agreements necessary or proper to remove any additional trustee or separate
trustee. In such connection, the Indenture Trustee may act on behalf of the
Owner Lessor to the same extent as is provided above. Notwithstanding anything
contained to the contrary in this Section 7.2(a), to the extent the laws of any
jurisdiction preclude the Indenture Trustee from taking any action hereunder
either alone, jointly or through a separate trustee under the direction and
control of the Indenture Trustee, the Owner Lessor, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such jurisdiction,
which separate trustee shall have full power and authority to take all action
hereunder as to matters relating to such jurisdiction without the consent of
the Indenture Trustee, but not subject to the same limitations in any exercise
of his power and authority as those to which the Indenture Trustee is subject.

     (b)  The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c)  Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

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<PAGE>
     (d)  Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2, (i)
the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                   SECTION 8.
                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                              AND OTHER DOCUMENTS

     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as

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<PAGE>
between the Noteholders and the Owner Lessor, (iv) reduce the amount (except to
any amount as shall be sufficient to pay the aggregate principal of, Make-Whole
Amount, if any, and interest on all outstanding Lessor Notes) or extend the
time of payment of Periodic Rent or Termination Value except as expressly
provided in Section 3.5 of the Facility Lease, or change any of the
circumstances under which Periodic Rent or Termination Value is payable, (v)
consent to any assignment of the Facility Lease if in connection therewith the
Facility Lessee will be released from its obligation to pay Periodic Rent and
Termination Value, except as expressly provided in Section 13 of the
Participation Agreement, or release the Facility Lessee of its obligation to
pay Periodic Rent or Termination Value or change the absolute and unconditional
character of such obligations as set forth in Section 9 of the Facility Lease;
(vi) consent to any release of the Guarantor under Section 8.4 of the Calpine
Guaranty or (vii) deprive the Indenture Trustee of the Lien on the Indenture
Estate or permit the creation of any Lien on the Indenture Estate ranking
equally or prior to the Lien of the Indenture Trustee, except for Permitted
Liens.

     Section 8.2.   Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any
other Operative Document (a) to evidence the succession of another Person as a
Lessor Manager or the appointment of a co-manager in accordance with the terms
of the LLC Agreement, or to evidence the succession of a successor as the
Indenture Trustee hereunder, the removal of the Indenture Trustee or the
appointment of any separate or additional trustee or trustees, in each case if
done pursuant to the provisions of Section 7 hereof and to define the rights,
powers, duties and obligations conferred upon any such separate trustee or
trustees or co-trustee or co-trustees, (b) to correct, confirm or amplify the
description of any property at any time subject to the Lien of this Indenture
or to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee, (c) to provide for any evidence of the creation and issuance
of any Additional Lessor Notes pursuant to, and subject to the conditions of,
Section 2.12 and to establish the form and the terms of such Additional Lessor
Notes, (d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may

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<PAGE>
be lawfully granted or conferred and which are not contrary or inconsistent
with this Indenture, (f) to add to the covenants or agreements to be observed
by the Facility Lessee or the Owner Lessor and which are not contrary to this
Indenture, to add Indenture Events of Defaults for the benefit of Noteholders
or surrender any right or power of the Owner Lessor, provided it has consented
thereto, (g) to effect the assumption of all or, to the extent otherwise
provided hereunder, part of the Lessor Notes by the Facility Lessee, provided
that the supplemental indenture will contain all of the covenants applicable to
the Facility Lessee contained in the Facility Lease and the Participation
Agreement for the benefit of the Indenture Trustees or the holders of such
Lessor Notes, such that the Facility Lessee's obligations contained therein, if
applicable in the event that the Facility Lease are terminated, will continue
to be in full force and effect, (h) to comply with requirements of the SEC, any
applicable law, rules or regulations of any exchange or quotation system on
which the Certificates are listed, or any regulatory body, (i) to modify,
eliminate or add to the provisions of any Operative Documents to such extent as
shall be necessary to qualify or continue the qualification of this Lease
Indenture or the Pass Through Trust Agreements (including any supplements
thereto) under the Trust Indenture Act, or similar federal statute enacted
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.   Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the

                                       65
<PAGE>
Participation Agreement, or would materially increase its administrative duties
or responsibilities hereunder or thereunder or may result in personal liability
for it (unless it shall have been provided an indemnity satisfactory to the
Indenture Trustee), the Indenture Trustee may in its discretion decline to
execute such document or the election. With every such document and election,
the Indenture Trustee shall be furnished with evidence that all necessary
consents have been obtained and with an opinion of counsel that such document
complies with the provisions of this Indenture, does not deprive the Indenture
Trustee or the holders of the Lessor Notes of the benefits of the Lien hereby
created on any property subject hereto or of the assignments contained herein
(except as otherwise consented to in accordance with Section 8.1 hereof) and
that all consents required by the terms hereof in connection with the execution
of such document or the making of such election have been obtained. The
Indenture Trustee shall be fully authorized and protected in relying on such
opinion.

                                   SECTION 9.
                                 MISCELLANEOUS

     Section 9.1.   Surrender, Defeasance and Release.

     (a)  Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b)  Release.

          (i) Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person be
     released from the Lien of this Lease Indenture and the Indenture Trustee
     shall, upon the written request of the Owner Lessor or the Facility Lessee,
     execute and deliver to, and as directed in writing by, the Facility Lessee
     or the

                                       66
<PAGE>
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the replaced Component from the Lien of this Indenture.

          (ii) Whenever the Facility Lessee is entitled to acquire the Facility
     or have the Facility transferred to it pursuant to the express terms of the
     Facility Lease, the Indenture Trustee shall release the Indenture Estate
     from the Lien of this Indenture and execute and deliver to, or as directed
     in writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the Indenture Estate from
     the Lien of this Indenture; provided that all sums secured by this
     Indenture have been paid to the Persons entitled to such sums.

     Section 9.2.   Conveyances Pursuant to the Site Sublease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Sublease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.   Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties

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hereto, the Owner Participant, the Facility Lessee (as provided in Sections
4.12 and 8.1 hereof) and the Noteholders.

     Section 9.5.   Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

          Wells Fargo Bank Northwest, National Association
          MAC U1254-031
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

          and

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<PAGE>
          Newcourt Capital USA Inc.
          1211 Avenue of the Americas - 22nd Floor
          New York, NY 10036
          Telephone: (212) 382-7255
          Facsimile: (212) 382-9033
          Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

          State Street Bank and Trust Company of Connecticut,
          National Association
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

          with a copy to:

          State Street Bank and Trust Company of California,
          National Association
          633 West 5th Street, 12th Floor
          Los Angeles, CA 90071
          Telephone: (213) 362-7373
          Facsimile:  (213) 362-7357
          Attention:  Corporate Trust Department

     If to the Facility Lessee:

          RockGen Energy LLC
          c/o Calpine Center Northbrook Office
          Attention:  Senior Counsel
          650 Dundee Road, Suite 350
          Northbrook, IL 60062
          Telephone: (847) 559-9800
          Facsimile: (847) 559-1805

          with a copy to:


                                       69
<PAGE>
          Calpine Corporation
          Attention:  General Counsel
          50 West San Fernando Street, 5th Floor
          San Jose, CA 95113

     Section 9.6.   Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.   Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall Wells Fargo, be personally liable
for the payment of any indebtedness or expenses of the Owner Lessor or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Owner Lessor under this Indenture.

     Section 9.8.   Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.   Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

                                       70
<PAGE>
     Section 9.10.   Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.   Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.   Governing Law. This Indenture and the Lessor Notes shall
be in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of Wisconsin (without giving effect to the conflicts of laws provisions
thereof). Regardless of any provision in any other agreement, for purposes of
the Uniform Commercial Code (as in effect from time to time in any jurisdiction
including the State of New York), the "Securities Intermediary's Jurisdiction"
of the Account Bank with respect to the Indenture Trustee's Account is the
State of New York.

     Section 9.13.   Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the reorganization
provisions of Title 11 of the United States Code, or any successor provisions,
(b) pursuant to such reorganization provisions the Owner Participant is
required by reason of the Owner Participant's being held to have recourse
liability that it would not otherwise have had under Section 2.5 hereof to the
debtor or the trustee of the debtor, directly or indirectly, to make payment on
account of any amount payable as principal or interest on the Lessor Notes and
(c) any Noteholder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Participant on
account of clause (b) above, then such Noteholder or the Indenture Trustee, as
the case may be, shall promptly refund such Excess Amount, without interest, to
the Owner Participant after receipt by such Noteholder or the Indenture
Trustee, as the case may be, of a written request for such refund by the Owner
Participant (which request shall specify the amount of such Excess Amount and
shall

                                       71
<PAGE>
set forth in detail the calculation thereof). For purposes of this Section
9.13, "Excess Amount" means the amount by which such payment exceeds the amount
which would have been received by such holder and the Indenture Trustee in
respect of such principal or interest if the Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 9.13 shall prevent the Indenture Trustee or any
Noteholder from enforcing any personal recourse obligations (and retaining the
proceeds thereof) of the Owner Participant under the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.   Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any

                                       72
<PAGE>
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture Trustee
has not withheld taxes on any payment made to any Noteholder, and the Indenture
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Indenture
Trustee upon written demand by the Indenture Trustee. The Indenture Trustee
shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.   Fixture Financing Statement. This Indenture also is
intended to serve as a fixture financing statement under the Wisconsin Uniform
Commercial Codes. In connection therewith, the following information is
provided:

     (a)  Name and address of Debtor:

          RockGen OL-3, LLC
          c/o  Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       73
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention:  Corporate Trust Services

     (b)  Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile:  (860) 244-1889
          Attention:  Corporate Trust Department

     (c)  The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d)  Recording: This Indenture is to be recorded in the real estate
          records of Dane County, Wisconsin.

                  (Remainder of Page Intentionally Left Blank)

                                       74
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                         ROCKGEN OL-3, LLC

                         By:   Wells Fargo Bank Northwest, National
                               Association, not in its individual capacity but
                               solely as the Lessor Manager

                         By:
                               Name:
                               Title:

                         STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                         NATIONAL ASSOCIATION, as Indenture Trustee and Account
                         Bank

                         By:
                               Name:
                               Title:
<PAGE>
STATE OF NEW YORK         )
                          )   SS.:
COUNTY OF NEW YORK        )

     The foregoing instrument was acknowledged before me this ___ day of
October 2001, by ____________________________, the _________________________ of
Wells Fargo Bank Northwest, National Association, not in its individual
capacity but solely as the Lessor Manager of South Point OL-3, LLC, a Delaware
limited liability company, as the Owner Lessor (the "Owner Lessor"), to be the
free act and deed on behalf of the national banking association as the Lessor
Manager of the Owner Lessor under the LLC Agreement dated as of _____________,
2001.

Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK         )
                          )   SS.:
COUNTY OF NEW YORK        )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by ____________________________, the _________________________ of
State Street Bank and Trust Company of Connecticut, National Association, a
national banking association, to be the free act and deed on behalf of the
corporation.

Notary Public

My Commission Expires
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF FACILITY SITE

The West Half of the Northwest Quarter (W1/2NW1/4) of Section Twenty-Three
(23), Township Six (6) North, Range Twelve (12) East, in the Town of
Christiana, Dane County, Wisconsin.

<TABLE>
<S>                 <C>
Tax Parcel No:      016-0612-232-8500-2
                    016-0612-232-9000-5

Property Address:   2305 Carpenter Swain Road, Dane County, WI
</TABLE>
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                          FORM OF ROCKGEN LESSOR NOTE

                               ROCKGEN OL-3, LLC
                  NONRECOURSE PROMISSORY NOTE (ROCKGEN) DUE IN
                     A SERIES OF INSTALLMENTS OF PRINCIPAL
                            WITH FINAL PAYMENT DATE
                                OF MAY 30, 2012

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
                SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                   Issued at: New York, New York

                                                    Issue Date: October __, 2001

$[______]

     ROCKGEN OL-3, LLC, a Delaware limited liability company (herein called the
"Owner Lessor", which term includes any successor person under the Collateral
Trust Indenture hereinafter referred to), hereby promises to pay to State
Street Bank and Trust Company of Connecticut, National Association, in its
capacity as pass through trustee of the South Point, Broad River and RockGen
Series A Trust, (the "Pass Through Trustee") or its registered assigns, the
principal sum of $[_____], which is due and payable in a series of installments
of principal with a final payment date of May 30, 2012 as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such

                                      B-1-1
<PAGE>
date shall be in an aggregate amount equal to the product of the Principal
Portion set forth on Schedule I multiplied by the percentage set forth on
Schedule I under the column headed "Percentage of Principal Amount Payable" for
such date unless the Principal Portion has been prepaid; provided, that the
final installment of principal shall be equal to the then unpaid principal
balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the holder hereof, as herein provided, and
that, none of the Owner Participant, the Owner Lessor or the Indenture Trustee
is or shall be personally liable to the holder hereof for any amounts payable
under this Note or under the Collateral Trust Indenture, or, except as
expressly provided in the Collateral Trust Indenture or, in the case of the
Owner Participant and the Owner Lessor, the Participation Agreement for any
performance to be rendered under the Collateral Trust Indenture or any Assigned
Document or for any liability under the Collateral Trust Indenture or any
Assigned Document.

                                      B-1-2
<PAGE>
     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in the case of the final payment in respect of this Note,
this Note shall be surrendered to the Indenture Trustee, by mailing a check for
the amount then due and payable, in New York Clearing House funds, to the
Noteholder, at the last address of the Noteholder appearing on the Note
Register, or by whichever of the following methods specified by notice from the
Noteholder to the Indenture Trustee: (a) by crediting the amount to be
distributed to the Noteholder to an account maintained by the Noteholder with
the Indenture Trustee, (b) by making such payment to the Noteholder in
immediately available funds at the Indenture Trustee Office, or (c) by
transferring such amount in immediately available funds for the account of the
Noteholder to the banking institution having bank wire transfer facilities as
shall be specified by the Noteholder, such transfer to be subject to telephonic
confirmation of payment. All payments due with respect to this Note shall be
made (i) as soon as practicable prior to the close of business on the date the
amounts to be distributed by the Indenture Trustee are actually received by the
Indenture Trustee if such amounts are received by 12:00 noon, New York City
time, on a Business Day or (ii) on the next succeeding Business Day if received
after such time or if received on any day other than a Business Day. Prior to
due presentment for registration of transfer of this Note, the Owner Lessor and
the Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All payments
made on this Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Note to the
extent of the sums so paid and neither the Indenture Trustee nor the Owner
Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

                                      B-1-3
<PAGE>
     This Note is the Note referred to in the Collateral Trust Indenture as the
"Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust Indenture, and the several Notes may be for varying
principal amounts and may have different maturity dates (not later than the
final maturity date of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an

                                      B-1-4
<PAGE>
assumption, the holder of this Note may be required to exchange this Note for a
new Note evidencing such assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                    ROCKGEN OL-3, LLC
                    a Delaware limited liability company,

                         By:   Wells Fargo Bank Northwest, National
                               Association, not in its individual capacity but
                               solely as the Lessor Manager

                         By:
                               Name:
                               Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                               STATE STREET BANK AND TRUST
                               COMPANY OF CONNECTICUT,
                               NATIONAL ASSOCIATION,
                               not in its individual capacity, but solely
                    as
                               the Indenture Trustee

                               Name:
                               Title:
<PAGE>
                            FORM OF TRANSFER NOTICE

                    FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s) assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

_________________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ____________________     _________________________________________________
                               (Signature of Transferor)

                               NOTE: The signature to this assignment must
                               correspond with the name as written upon the
                               face of the within-mentioned instrument in every
                               particular, without alteration or any change
                               whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                       Schedule Of Principal Amortization
                             Series A Lessor Notes
                         Principal Portion: $45,450,000

<TABLE>
<CAPTION>
                                                                          Percentage of Principal
                                                                          -----------------------
Regular Distribution Date                                                          Amount Payable
-------------------------                                                          --------------
<S>                                                                       <C>
May 30, 2002........................................................             1.21012101%
November 30, 2002...................................................             2.58525853%
May 30, 2003........................................................             3.02530253%
November 30, 2003...................................................             3.24532453%
May 30, 2004........................................................             3.52035204%
November 30, 2004...................................................             3.68536854%
May 30, 2005........................................................             3.96039604%
November 30, 2005...................................................             4.12541254%
May 30, 2006........................................................             4.07040704%
November 30, 2006...................................................             4.18041804%
May 30, 2007........................................................             4.73047305%
November 30, 2007...................................................             5.00550055%
May 30, 2008........................................................             5.50055006%
November 30, 2008...................................................             5.77557756%
May 30, 2009........................................................             6.16061606%
November 30, 2009...................................................             6.43564356%
May 30, 2010........................................................             6.65566557%
November 30, 2010...................................................             6.93069307%
May 30, 2011........................................................             7.20572057%
November 30, 2011...................................................             6.60066007%
May 30, 2012........................................................             5.39053905%
                                                                               ------------

Total...............................................................           100.00000000%
                                                                               ============
</TABLE>
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                     FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                         ______________________________________,
                                         not in its individual capacity
                                         but solely as the Indenture Trustee

                                         By:____________________________________
                                            Name:
                                            Title:

                                       C-1

<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE

                          DESCRIPTION OF THE FACILITY

     That certain approximately 520 megawatt net nameplate capacity generating
facility, (known also as the "RockGen Facility") together with all structures
or improvements, all alterations thereto or replacements thereof, and all other
fixtures, attachments, appliances, equipment, machinery and other articles
(including, but not limited to, the property set forth below (the "Included
Property")), in each case located on the land, or on the easements appurtenant
to the land, consisting of approximately 78 acres located in the Town of
Christiana near the Village of Rockdale, in Dane County, Wisconsin, described
more particularly on Exhibit A.

     Included Property

     1.   Three Combustion Turbines - General Electric Model PG7241 FA; Serial
          #: 297570, 297571 and 297572.

     2.   Three CT Generators - General Electric, Hydrogen Cooled, Model 7FH2,
          18kV, 220000 KVA, 0.85 pf; Serial #: 337X167, 337X168 and 337X169.

     3.   Three Combustion Turbine Step-up Transformers - GE Prolec, 18/138 KV,
          220 MVA FA, WYE/DELTA, Serial #: G720-01, G720-02 and G720-03 and
          other interconnection equipment associated with the RockGen Facility.

                                      D-1-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                              SERIES A LESSOR NOTE

<TABLE>
<S>                                     <C>
Initial Aggregate Principal Amount:     $45,450,000
Final Maturity Date:                    May 30, 2012
Interest Rate:                          8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                              Percentage of Principal
                                                                              -----------------------
Regular Distribution Date                                                              Amount Payable
-------------------------                                                              --------------
<S>                                                                           <C>
May 30, 2002..........................................................                   1.21012101%
November 30, 2002.....................................................                   2.58525853%
May 30, 2003..........................................................                   3.02530253%
November 30, 2003.....................................................                   3.24532453%
May 30, 2004..........................................................                   3.52035204%
November 30, 2004.....................................................                   3.68536854%
May 30, 2005..........................................................                   3.96039604%
November 30, 2005.....................................................                   4.12541254%
May 30, 2006..........................................................                   4.07040704%
November 30, 2006.....................................................                   4.18041804%
May 30, 2007..........................................................                   4.73047305%
November 30, 2007.....................................................                   5.00550055%
May 30, 2008..........................................................                   5.50055006%
November 30, 2008.....................................................                   5.77557756%
May 30, 2009..........................................................                   6.16061606%
November 30, 2009.....................................................                   6.43564356%
May 30, 2010..........................................................                   6.65566557%
November 30, 2010.....................................................                   6.93069307%
May 30, 2011..........................................................                   7.20572057%
November 30, 2011.....................................................                   6.60066007%
May 30, 2012..........................................................                   5.39053905%
                                                                                         ----------

Total.................................................................                 100.00000000%
                                                                                       ============
</TABLE>

                                  SCHEDULE 1-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.26
<SEQUENCE>29
<FILENAME>f80168ex4-22_26.txt
<DESCRIPTION>EXHIBIT 4.22.26
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.26


                           Document Name:
Document Number  Indenture of Trust, Mortgage and
                 Security Agreement
===================================================================

                                              Recording Area
                                              ==================================

                                              Name and Return Address

                                              Sarah M. Ward, Esq.
                                              Skadden, Arps, Slate, Meagher &
                                              Flom, LLP
                                              Four Times Square
                                              New York, NY 10036

                                              Name of Preparer of the
                                              Document:
                                              Sarah M. Ward, Esq.

                                              ==================================

                                              Parcel Identification Number (PIN)
================================================================================

<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

                          Dated as of October 18, 2001


                                    between


                                ROCKGEN OL-4, LLC

                                      and

                          STATE STREET BANK AND TRUST
                  COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
                      as Indenture Trustee and Account Bank


                     ______________________________________

                                ROCKGEN FACILITY

                                      2
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                Page
<S>                                                                             <C>
SECTION 1.     DEFINITIONS...................................................     8

SECTION 2.     THE LESSOR NOTES..............................................     9
     Section 2.1.   Limitation on Lessor Notes...............................     9
     Section 2.2.   Initial Lessor Notes.....................................     9
     Section 2.3.   Execution and Authentication of Lessor Notes.............     9
     Section 2.4.   Issuance and Terms of the Initial Lessor Notes...........    10
     Section 2.5.   Payments from Indenture Estate Only; No Personal
                    Liability of the Owner Lessor, the Owner Participant or
                    the Indenture Trustee ...................................    11
     Section 2.6.   Method of Payment........................................    12
     Section 2.7.   Application of Payments..................................    13
     Section 2.8.   Registration, Transfer and Exchange of Lessor Notes......    13
     Section 2.9.   Mutilated, Destroyed, Lost or Stolen Lessor Notes........    14
     Section 2.10.  Redemptions; Assumption..................................    15
     Section 2.11.  Payment of Expenses on Transfer..........................    20
     Section 2.12.  Additional Lessor Notes..................................    20
     Section 2.13.  Restrictions of Transfer Resulting from Federal
                    Securities Laws; Legend..................................    23
     Section 2.14.  Security for and Parity of Lessor Notes..................    23
     Section 2.15.  Acceptance of the Indenture Trustee......................    23

SECTION 3.     RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
               INDENTURE ESTATE..............................................    23
     Section 3.1.   Distribution of Periodic Rent............................    23
     Section 3.2.   Payments Following Event of Loss or Other Early
                    Termination..............................................    25
     Section 3.3.   Payments After Lease Indenture Event of Default..........    27
     Section 3.4.   Investment of Certain Payments Held by the Indenture
                    Trustee..................................................    28
     Section 3.5.   Application of Certain Other Payments....................    28
     Section 3.6.   Other Payments...........................................    29
     Section 3.7.   Excepted Payments........................................    29
     Section 3.8.   Distributions to the Owner Lessor........................    29
     Section 3.9.   Payments Under Assigned Documents........................    30
     Section 3.10.  Disbursement of Amounts Received by the
                    Indenture Trustee........................................    30
</TABLE>
                                        i

<PAGE>

<TABLE>
<S>                                                                              <C>
SECTION 4.      COVENANTS OF OWNER LESSOR; DEFAULTS; REMEDIES OF INDENTURE
                TRUSTEE......................................................    34
     Section 4.1.   Covenants of Owner Lessor................................    34
     Section 4.2.   Lease Indenture Events of Default........................    34
     Section 4.3.   Remedies of the Indenture Trustee........................    37
     Section 4.4.   Right to Cure Certain Lease Events of Default............    39
     Section 4.5.   Rescission of Acceleration...............................    42
     Section 4.6.   Return of Indenture Estate, Etc..........................    42
     Section 4.7.   Power of Sale and Other Remedies.........................    43
     Section 4.8.   Appointment of Receiver..................................    44
     Section 4.9.   Remedies Cumulative......................................    44
     Section 4.10.  Waiver of Various Rights by the Owner Lessor.............    45
     Section 4.11.  Discontinuance of Proceedings............................    46
     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
                    the Facility Lease.......................................    46
     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc.    46
     Section 4.14.  Further Assurances.......................................    47
     Section 4.15.  Waiver of Past Defaults..................................    47

SECTION 5.     DUTIES OF INDENTURE TRUSTEE; CERTAIN RIGHTS AND DUTIES OF
               OWNER LESSOR..................................................    47
     Section 5.1.   Notice of Action Upon Lease Indenture Event of Default...    47
     Section 5.2.   Actions Upon Instructions Generally......................    47
     Section 5.3.   Action Upon Payment of Lessor Notes or Termination of
                    Facility Lease...........................................    48
     Section 5.4.   Compensation of the Indenture Trustee; Indemnification...    48
     Section 5.5.   No Duties Except as Specified; No Action Except Under
                    Facility Lease, Indenture or Instructions................    49
     Section 5.6.   Certain Rights of the Owner Lessor.......................    49
     Section 5.7.   Restrictions on Dealing with Indenture Estate............    52
     Section 5.8.   Filing of Financing Statements and Continuation
                    Statements...............................................    52

SECTION 6.     INDENTURE TRUSTEE AND OWNER LESSOR............................    53
     Section 6.1.   Acceptance of Trusts and Duties..........................    53
     Section 6.2.   Absence of Certain Duties................................    55
     Section 6.3.   Representations and Warranties...........................    55
     Section 6.4.   No Segregation of Moneys; No Interest....................    56
     Section 6.5.   Reliance; Agents; Advice of Experts......................    56
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                              <C>
SECTION 7.     SUCCESSOR INDENTURE TRUSTEES AND SEPARATE TRUSTEES............    57
     Section 7.1.   Resignation or Removal of the Indenture Trustee;
                    Appointment of Successor.................................    57
     Section 7.2.   Appointment of Additional and Separate Trustees..........    60

SECTION 8.     SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER
               DOCUMENTS.....................................................    62
     Section 8.1.   Supplemental Indenture and Other Amendment With Consent;
                    Conditions and Limitations...............................    62
     Section 8.2.   Supplemental Indentures and other Amendments Without
                    Consent..................................................    63
     Section 8.3.   Conditions to Action by the Indenture Trustee............    64

SECTION 9.     MISCELLANEOUS.................................................    65
     Section 9.1.   Surrender, Defeasance and Release........................    65
     Section 9.2.   Conveyances Pursuant to the Site Sublease................    66
     Section 9.3.   Appointment of the Indenture Trustee as Attorney; Further
                    Assurances...............................................    66
     Section 9.4.   Indenture for Benefit of Certain Persons Only............    66
     Section 9.5.   Notices; Furnishing Documents, etc.......................    66
     Section 9.6.   Severability.............................................    68
     Section 9.7.   Limitation of Liability..................................    69
     Section 9.8.   Written Changes Only.....................................    69
     Section 9.9.   Counterparts.............................................    69
     Section 9.10.  Successors and Permitted Assigns.........................    69
     Section 9.13.  Reorganization Proceedings with Respect to the Lessor
                    Estate...................................................    70
     Section 9.14.  Withholding Taxes: Information Reporting.................    71
     Section 9.15.  Fixture Financing Statement..............................    72
</TABLE>

<TABLE>
<CAPTION>
EXHIBITS

<S>                 <C>
Exhibit A           Description of Facility Site
Exhibit B           Form of Lessor Note
Exhibit C           Form of Certificate of Authentication
Exhibit D           Description of the Facility
</TABLE>

APPENDIX A Definitions

                                       iii
<PAGE>
                          INDENTURE OF TRUST, MORTGAGE
                             AND SECURITY AGREEMENT

     This INDENTURE OF TRUST, MORTGAGE AND SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions hereof, this "Indenture"), dated as of October 18, 2001, between
ROCKGEN OL-4, LLC, a Delaware limited liability company created for the benefit
of the Owner Participant referred to below, as mortgagor (the "Owner Lessor")
and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as
mortgagee on behalf of the Noteholders (the "Indenture Trustee") and as the
Account Bank.

                                WITNESSETH:

     WHEREAS, RockGen Energy LLC (the "Facility Lessee") has sold the Undivided
Interest to the Owner Lessor pursuant to the Bill of Sale and leased the Ground
Interest to the Owner Lessor pursuant to the Facility Site Lease, a memorandum
of which shall be recorded with this Indenture in the appropriate registry of
deeds described in Exhibit A attached hereto;

     WHEREAS, the Owner Lessor has entered into the Facility Lease, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof, the "Facility Lease"), with the
Facility Lessee pursuant to which the Facility Lessee has leased from the Owner
Lessor for a term of years the Owner Lessor's Undivided Interest in the
Facility;

     WHEREAS, the Owner Lessor has entered into the Facility Site Sublease,
dated as of the date hereof (as amended, supplemented or otherwise modified
from time to time in accordance with the provisions thereof, the "Facility Site
Sublease"), with the Facility Lessee pursuant to which the Facility Lessee has
subleased the Ground Interest from the Owner Lessor for a term of years;

     WHEREAS, the Facility is more particularly described on Exhibit D hereto
and made a part hereof and the Facility Site is more particularly described on
Exhibit A hereto and made a part hereof;
<PAGE>
     WHEREAS, in accordance with this Indenture, the Owner Lessor will (i)
execute and deliver the Lessor Notes, the proceeds of which will be used by the
Owner Lessor to finance a portion of the Purchase Price for the Undivided
Interest purchased from the Facility Lessee (ii) grant to the Indenture Trustee
the security interests herein provided;

     WHEREAS, this Indenture is intended to be regarded as a mortgage under the
laws of the State of Wisconsin (and not intended to qualify as an indenture),
as a security agreement under the Uniform Commercial Codes of the States of New
York, Delaware and Wisconsin, and as a fixture filing under the laws of the
State of Wisconsin;

     WHEREAS, the Owner Lessor and the Indenture Trustee desire to enter into
this Indenture, to, among other things, provide for (a) the issuance by the
Owner Lessor of the Lessor Notes to be issued on the Closing Date, and
Additional Lessor Notes from time to time and (b) the conveyance and assignment
to the Indenture Trustee on the Closing Date of the Undivided Interests
conveyed to the Owner Lessor and the Owner Lessor's right, title and interest
in and under the Operative Documents executed in connection therewith and all
payments and other amounts received hereunder or thereunder in accordance
herewith (excluding Excepted Payments);

     WHEREAS, all things have been done to make the Lessor Notes, when executed
by the Owner Lessor, authenticated and delivered hereunder and issued, the
valid obligations of the Owner Lessor; and

     WHEREAS, all things necessary to make this Indenture the valid, binding
and legal obligation of the Owner Lessor, for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
secure (i) the prompt payment when and as due of the principal of and the
Make-Whole Amount, if any, and interest on the Lessor Notes and of all other
amounts owing with respect to all Lessor Notes from time to time outstanding
hereunder, and the prompt payment when and as due of any and all other amounts
from time to time owing in respect of the Secured Indebtedness and (ii) the
performance and observance by the Owner Lessor for the benefit of the holders
of the Lessor Notes and the Indenture Trustee of all other obligations,
agreements, and covenants of the Owner Lessor set forth hereinafter and in

                                       2
<PAGE>
the Lessor Notes, the Operative Documents and the other documents, certificates
and agreements delivered in connection therewith:

                               GRANTING CLAUSE:

     The Owner Lessor hereby irrevocably grants, conveys, assigns, transfers,
pledges, bargains, sells and confirms unto the Indenture Trustee and its
successors and permitted assigns, for the benefit of the holders of the Lessor
Notes from time to time, a first priority security interest in and mortgage
lien on all estate, right, title and interest of the Owner Lessor in, to and
under the following described property, rights, interests and privileges,
whether now held or hereafter acquired (which collectively, including all
property hereafter specifically subjected to the security interest created by
this Indenture by any supplement hereto, exclusive of Excepted Payments) are
included within, and are hereafter referred to as, the "Indenture Estate"):

     (1)  the Undivided Interest, the Owner Lessor's interest in any
Components; the Owner Lessor's interest in any Improvements; the Ground
Interest; the Facility Lease and all payments of any kind by the Facility
Lessee thereunder (including Rent); any rights of the Owner Lessor as
collateral assignee of the Facility Lessee under the Facility Lease; the
Facility Site Lease (and all rights with respect to the Ground Interest
conveyed thereby); the Facility Site Sublease and all payments of any kind by
the Facility Lessee thereunder; the Bill of Sale (and all rights with respect
to the Facility conveyed thereby); the Owner Lessor's interest in all tangible
property located on or at or attached to the Facility Site as to which an
interest in such tangible property arises under applicable real estate law
("fixtures"); the Calpine Guaranty, the Ownership and Operation Agreement and
all and any interest in any property now or hereafter granted to the Owner
Lessor pursuant to any provision of the Facility Lease; and each other
Operative Document to which the Owner Lessor is a party other than the Tax
Indemnity Agreement and the LLC Agreement (the Undivided Interest, the Owner
Lessor's interest in any Components, the Owner Lessor's interest in any
fixtures, Improvements and the Ground Interest are collectively referred to as
the "Property Interest" and the documents specifically referred to above in
this paragraph (1) are collectively referred to as the "Assigned Documents"),
including, without limitation, (x) all rights of the Owner Lessor to receive
any payments or other amounts or, subject to Section 5.6 hereof, to exercise
any election or option or to make any decision or determination or to give or
receive any notice, consent, waiver or approval or to make any demand or to
take any other action under or in respect of any such document, to accept
surrender or redelivery of the Property Interest or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Lessor, whether
acting under any such document or by statute or

                                       3
<PAGE>
at law or in equity or otherwise, arising out of any Lease Default or Lease
Event of Default and (y) any right to restitution from the Facility Lessee, any
sublessee or any other person in respect of any determination of invalidity of
any such document;

     (2)  all rents (including Periodic Rent and Supplemental Rent),
royalties, issues, profits, revenues, proceeds, damages, claims, warranties and
other income from the property described in this Granting Clause, including,
without limitation, all payments or proceeds payable to the Owner Lessor as the
result of the sale of the Property Interest or the lease or other disposition
of the Property Interest, and all estate, right, title and interest of every
nature whatsoever of the Owner Lessor in and to such rents, issues, profits,
revenues and other income and every part thereof (the "Revenues");

     (3)  any sublease of the Facility and any assignment thereof now or
hereafter in effect, including, without limitation, (i) all rents or other
amounts or payments of any kind paid or payable by the obligor(s) thereunder or
in respect thereof and all collateral security or credit support with respect
thereto (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) for the
obligations of the sublessee thereunder as well as all rights of the Owner
Lessor to enforce payment of any such rents, amounts or payments, (ii) all
rights of the Owner Lessor to exercise any election or option or to make any
decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of any sublease of the
Facility and any assignment thereof or to accept surrender or redelivery of the
Facility or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Lessor, whether acting under any sublease of the Facility
or any assignment thereof or by statute or at law or in equity, or otherwise,
arising out of any default under such sublease or any assignment thereof, and
(iii) any right to restitution from the Facility Lessee, the applicable
sublessee or any guarantor of such sublessee in respect of any determination of
invalidity of any sublease of the Facility or any assignment thereof;

     (4)  all condemnation proceeds with respect to the Property Interest or
any part thereof (to the extent of the Owner Lessor's interest therein), and
all proceeds (to the extent of the Owner Lessor's interest therein) of all
insurance maintained pursuant to Section 11 of the Facility Lease or otherwise;

     (5)  all other property of every kind and description and interests
therein now held or hereafter acquired by the Owner Lessor pursuant to the
terms of any Assigned Document, wherever located; and

                                       4
<PAGE>
     (6)  all proceeds of the foregoing;

     BUT EXCLUDING from such property, rights and privileges all Excepted
Payments and SUBJECT TO the rights of the Owner Lessor and the Owner
Participant hereunder, including under Sections 4.3(d), 4.4 and 5.6 hereof;

     TO HAVE AND TO HOLD the Indenture Estate and all parts, rights, members
and appurtenances thereof, unto the Indenture Trustee and the successors and
permitted assigns of the Indenture Trustee, for the benefit and security of the
Noteholders from time to time;

     PROVIDED, HOWEVER, that if the principal of and the Make-Whole Amount, if
any, and interest on the Lessor Notes, and all other Secured Indebtedness
hereunder shall have been paid and the Owner Lessor shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
this Indenture and the rights hereby granted shall terminate and cease.

     Subject to the terms and conditions hereof, the Owner Lessor does hereby
irrevocably constitute and appoint the Indenture Trustee the true and lawful
attorney of the Owner Lessor (which appointment is coupled with an interest)
with full power (in the name of the Owner Lessor or otherwise) to ask, require,
demand and receive any and all moneys an claims for moneys (in each case,
including, without limitation, insurance and requisition proceeds to the extent
of the Owner Lessor's interest therein but excluding in all cases Excepted
Payments) due and to become due under or arising out of the Assigned Documents
and all other property which now or hereafter constitutes part of the Indenture
Estate and, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings (other than in connection with the enforcement or collection of
Excepted Payments) which the Indenture Trustee may deem to be necessary or
advisable. Pursuant to the Facility Lease, the Facility Lessee is directed to
make all payments of Rent required to be paid or deposited with the Owner
Lessor (other than Excepted Payments) and all other amounts which are required
to be paid to or deposited with the Owner Lessor pursuant to the Facility Lease
(other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Further, the Owner Lessor agrees that promptly on
receipt thereof, it will transfer to the Indenture Trustee any and all moneys
from time to time received by it constituting part of the Indenture Estate,
whether or not expressly referred to in the immediately preceding sentence, for
distribution pursuant to this Indenture.

                                       5
<PAGE>
     Concurrently with the delivery of this Indenture, the Owner Lessor is
delivering to the Indenture Trustee the chattel paper originally-executed
counterpart of the Facility Lease. All property referred to in this Granting
Clause, whenever acquired by the Owner Lessor, shall secure all obligations
under and with respect to the Lessor Notes at any time outstanding. Any and
all properties referred to in this Granting Clause which are hereafter acquired
by the Owner Lessor, shall, without further conveyance, assignment or act by
the Owner Lessor or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.

     This Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Codes of the States of New York, Delaware and
Wisconsin. This Indenture is also intended to be a mortgage under Wisconsin
law. The maximum principal indebtedness secured by this Indenture, including
future advances and contingent obligations but excluding protective advances,
shall not at any time exceed the total amount of One Hundred Eighty One Million
Eight Hundred Thousand Dollars ($181,800,000); provided, however, that nothing
herein contained shall limit the amount secured by this Indenture if the
Secured Indebtedness is increased by protective advances; and provided,
further, such limitation as to such future advances and contingent obligations
shall only pertain to the record priority of the amount thereof secured hereby
and does not otherwise limit the amount of total indebtedness of Owner Lessor
secured hereby or limit the liability of Owner Lessor to Indenture Trustee for
such total indebtedness, including future advances and contingent obligations.
The future advances secured hereby shall be made to or for the account of Owner
Lessor and may be made under the Additional Lessor Notes, or pursuant to
promissory notes or other instruments evidencing such future advances which may
be hereafter executed and delivered by Owner Lessor to Indenture Trustee.

     The Indenture Trustee, for itself and its successors and permitted
assigns, hereby agrees that it shall hold the Indenture Estate, in trust for
the benefit and security of (i) the holders from time to time of the Lessor
Notes from time to time outstanding, without any priority of any one Lessor
Note over any other except as herein otherwise expressly provided and (ii) the
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Indenture. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Owner Lessor shall remain
liable under the Assigned Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any Assigned Document by reason of or arising out
of the assignment hereunder, nor shall

                                       6
<PAGE>
the Indenture Trustee or the Noteholders be required or obligated in any
manner, except as herein expressly provided, to perform or fulfill any
obligation of the Owner Lessor under or pursuant to any such Assigned Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

     The Owner Lessor does hereby warrant and represent that it has not
assigned, pledged or granted a lien or security interest in, to or under, and
hereby covenants that, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 9.1 hereof, it
will not assign, pledge or grant a lien or security interest in any of its
estate, right, title or interest in, to or under, the Indenture Estate to
anyone other than the Indenture Trustee for the benefit of the Noteholders.
The Owner Lessor hereby further covenants that with respect to its estate,
right, title and interest in, to or under the Indenture Estate, it will not,
except as provided in this Indenture and except as to Excepted Payments, (i)
accept any payment from the Facility Lessee or any sublessee or enter into any
agreement amending, modifying or supplementing any of the Assigned Documents,
execute any waiver or modification of, or consent under, the terms of any of
the Assigned Documents or revoke or terminate any of the Assigned Documents,
(ii) settle or compromise any claim arising under any of the Assigned
Documents, or (iii) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Assigned
Documents to arbitration thereunder.

     Except as provided herein, the Owner Lessor hereby ratifies and confirms
its obligations under the Assigned Documents and does hereby agree that it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of any of the Assigned Documents or of
any of the rights created by any such Assigned Document or the assignment
(subject to the previous) paragraph hereunder.

     Accordingly, the Owner Lessor, for itself and its successors and permitted
assigns, agrees that all Lessor Notes are to be issued and delivered and that
all property subject or to become subject hereto is to be held subject to the
further covenants, conditions, uses and trusts hereinafter set forth, and the
Owner Lessor, for itself and its successors and permitted assigns, hereby
covenants and agrees with the Indenture Trustee, for the benefit and security
of the holders from time to time of the Lessor Notes

                                       7
<PAGE>
from time to time outstanding and to protect the security of this Indenture,
and the Indenture Trustee agrees to accept the trusts and duties hereinafter
set forth, as follows:

                                SECTION 1.
                               DEFINITIONS

     (a)  Unless the context hereof shall otherwise require, capitalized
terms used, including those in the recitals, and not otherwise defined herein
shall have the respective meanings set forth in Appendix A to the Participation
Agreement (a copy of which is attached hereto for reference), dated as of the
date hereof, among the Facility Lessee, the Owner Lessor the Lessor Manager,
the Guarantor, the Indenture Trustee and the Pass Through Trustee (as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof, the "Participation Agreement"). The general provisions of
such Appendix A to the Participation Agreement shall apply to the terms used in
this Indenture and specifically defined herein.

     (b)  In addition, the following terms shall have the following meanings.

     "Assumption Documents" has the meaning set forth in Section 2.10(b).

     "Facility" means the 520 MW nameplate capacity gas-fired simple cycle
merchant power plant located in Christiana, Wisconsin and more fully described
in Exhibit D to this Indenture. The Facility does not include the Facility Site.

     "Secured Indebtedness" means principal of and the Make-Whole Amount, if
any, and interest on and other amounts due under all Lessor Notes and all other
sums payable to the Indenture Trustee or the Noteholders from time to time
hereunder and under the Participation Agreement and the other Operative
Documents by the Facility Lessee, the Owner Participant and the Owner Lessor,
including:

          (i) The indebtedness evidenced by the Lessor Notes, together with
     interest thereon at the rate provided in each Lessor Note and the
     Make-Whole Amount thereon and together with any and all renewals,
     modifications, consolidations and extensions of the indebtedness evidenced
     by such Lessor Notes, and principal of such Lessor Notes being due and
     payable as provided in such Lessor Notes;

          (ii) Any and all other indebtedness now owing or which may hereafter
     be owing by the Owner Lessor to or for the benefit of the Indenture

                                       8
<PAGE>
     Trustee under the Operative Documents including indemnities and other
     Supplemental Rent payable by the Facility Lessee under the Operative
     Documents, whether evidenced by Additional Lessor Notes issued pursuant to
     Section 2.12 hereof or otherwise, however and whenever incurred or
     evidenced, whether direct or indirect, absolute or contingent, due or to
     become due, together with interest thereon at the rate provided in each
     Additional Lessor Note and the Make-Whole Amount thereon (if any) and
     together with any and all renewals, modifications, consolidations and
     extensions of the indebtedness evidenced by such Additional Lessor Notes,
     and principal of such Additional Lessor Notes being due and payable as
     provided in each such Additional Lessor Note.

          (iii) Any and all additional advances made by the Indenture Trustee to
     protect or preserve the Indenture Estate or the security interest and other
     interests created hereby on the Indenture Estate or for taxes, assessments
     or insurance premiums as hereinafter provided or for performance of any of
     the Owner Lessor's obligations hereunder or for any other purpose provided
     herein, including advances made pursuant to Section 4.13 hereof (whether or
     not the Owner Lessor remains the owner of the Indenture Estate at the time
     of such advances); and

          (iv) Any and all expenses incident to the collection of the Secured
     Indebtedness and the foreclosure hereof by action in any court or by
     exercise of the power of sale herein contained.

     "Undivided Interest" means the Owner Lessor's 25% undivided interest in
the Facility.

                                 SECTION 2.
                              THE LESSOR NOTES

     Section 2.1.  Limitation on Lessor Notes. No Lessor Notes may be issued
under the provisions of, or become secured by, this Indenture except in
accordance with the provisions of this Section 2. The aggregate principal
amount of the Lessor Notes which may be authenticated and delivered and
outstanding at any one time under this Indenture shall be limited to the
principal amount of the Initial Lessor Notes issued on the Closing Date to the
Pass Through Trustees plus the aggregate principal amount of Additional Lessor
Notes issued pursuant to Section 2.12.

                                       9
<PAGE>
     Section 2.2.  Initial Lessor Notes. There are hereby created and
established hereunder one series of Lessor Notes consisting of the Series A
Lessor Notes, in substantially the form set forth in Exhibit B to this
Indenture and in the aggregate principal amount, having installments payable on
the dates and in the amounts and having the final maturity date and interest
rate set forth in Schedule I to this Indenture (the "Series A Lessor Notes" or,
collectively, the "Initial Lessor Notes" or, individually, an "Initial Lessor
Note").

     Section 2.3.  Execution and Authentication of Lessor Notes. Each Lessor
Note issued hereunder shall be executed and delivered on behalf of the Owner
Lessor by one of its authorized signatories, be in fully registered form, be
dated the date of original issuance of such Lessor Note and be in denominations
of not less than $1,000. Any Lessor Note may be signed by a Person who, at the
actual date of the execution of such Lessor Note, is an authorized signatory of
the Owner Lessor although at the nominal date of such Lessor Note such Person
may not have been an authorized signatory of the Owner Lessor. No Lessor Note
shall be secured by or be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears thereon a certificate
of authentication in the form contained in Exhibit C (or in the appropriate
form provided for in any supplement hereto executed pursuant to Section 2.12
hereof), executed by the Indenture Trustee by the manual signature of one of
its authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Indenture Trustee shall authenticate and deliver the
Initial Lessor Notes for original issue on the Closing Date in the principal
amount specified in Section 2.2, upon a written order of the Owner Lessor
signed by the Lessor Manager. The Indenture Trustee shall authenticate and
deliver Additional Lessor Notes, upon a written order of the Owner Lessor
executed by the Lessor Manager and satisfaction of the conditions specified in
Section 2.12. Such order shall specify the principal amount of the Additional
Lessor Notes to be authenticated and the date on which the original issue of
Additional Lessor Notes is to be authenticated.

     Section 2.4.  Issuance and Terms of the Initial Lessor Notes.

     (a)  Issuance of the Lessor Notes at the Closing. On the Closing Date,
the Initial Lessor Notes shall be issued to the applicable Pass Through Trustee
in the amounts set forth in Schedule I hereto, and shall be dated the Closing
Date.

                                       10
<PAGE>
     (b)  Principal and Interest. The principal amount of each series of
Initial Lessor Notes shall be due and payable in a series of installments
having final payment dates set forth in Schedule I hereto. The principal of
each Initial Lessor Note shall be due and payable in installments on the dates
and in the amounts set forth in Schedule I hereto. Schedule I hereto to the
contrary notwithstanding, the last payment made under such Initial Lessor Note
shall be equal to the then unpaid balance of the principal of such Lessor Note
plus all accrued and unpaid interest on, and any other amounts due under, such
Initial Lessor Note. Each Initial Lessor Note shall bear interest on the
principal from time to time outstanding from and including the date of issuance
thereof (computed on the basis of a 360-day year of twelve 30-day months) until
paid in full at the rate set forth in such Initial Lessor Note and Schedule I
hereto. Each Initial Lessor Note shall accrue additional interest under the
circumstances and at the rate per annum set forth in the third paragraph of
each Initial Lessor Note. Interest on each Initial Lessor Note shall be due
and payable in arrears semi-annually commencing on May 30, 2002, and on each
May 30 and November 30 thereafter until paid in full. If any day on which
principal, Make-Whole Amount, if any, or interest on the Initial Lessor Notes
are payable is not a Business Day, payment thereof shall be made on the next
succeeding Business Day with the same effect as if made on the date on which
such payment was due.

     (c)  Overdue Payments. Interest (computed on the basis of a 360-day
year of twelve 30-day months) on any overdue principal, Make-Whole Amount (if
any) and, to the extent permitted by Applicable Law, interest and any other
amounts payable shall be paid on demand at the Overdue Rate.

     (d)  Indemnity Amounts. The Owner Lessor agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.5 hereof any and all
indemnity amounts received by the Owner Lessor which are payable by the
Facility Lessee to (i) the Indenture Trustee, (ii) the Pass Through Trusts, or
(iii) the Pass Through Trustees.

     Section 2.5.  Payments from Indenture Estate Only; No Personal Liability
of the Owner Lessor, the Owner Participant or the Indenture Trustee. Except as
otherwise specifically provided in this Indenture or the Participation
Agreement, all payments in respect of the Lessor Notes or under this Indenture
shall be made only from the Indenture Estate, and the Owner Lessor shall have
no obligation for the payment thereof except to the extent that there shall be
sufficient income or proceeds from the Indenture Estate to make such payments
in accordance with the terms of Section 3 hereof; and the Owner Participant
shall not have any obligation for payments in respect of the Lessor

                                       11
<PAGE>
Notes or under this Indenture. The Indenture Trustee and each Noteholder, by
its acceptance thereof, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
the Indenture Trustee or such Noteholder, as the case may be, as herein
provided and that, except as expressly provided in this Indenture, the
Participation Agreement or any other Operative Document, none of the Owner
Participant, the Owner Lessor, the Trust Company, the Lease Indenture Company,
nor the Indenture Trustee, nor any Affiliate of any thereof, shall be
personally liable to such Noteholder or the Indenture Trustee for any amounts
payable hereunder, under such Lessor Note or for any performance to be rendered
under any Assigned Document or for any liability under any Assigned Document.
Without prejudice to the foregoing, the Owner Lessor will duly and punctually
pay or cause to be paid the principal of, Make-Whole Amount, if any, and
interest on all Lessor Notes according to their terms and the terms of this
Indenture. Nothing contained in this Section 2.5 limiting the liability of the
Owner Lessor shall derogate from the right of the Indenture Trustee and the
Noteholders to proceed against the Indenture Estate and the Calpine Guaranty to
secure and enforce all payments and obligations due hereunder and under the
Assigned Documents and the Lessor Notes.

     (a)  In furtherance of the foregoing, to the fullest extent permitted by
law, each Noteholder (and each assignee of such Person), by its acceptance
thereof, agrees that neither it nor the Indenture Trustee will exercise any
statutory right to negate the agreements set forth in this Section 2.5.

     (b)  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor set forth in the
Participation Agreement or the LLC Agreement.

     Section 2.6.  Method of Payment. The Owner Lessor shall maintain an
office or agency where Lessor Notes may be presented for payment (the "Paying
Agent"). The Owner Lessor may have one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Owner Lessor
initially appoints the Indenture Trustee as Paying Agent in connection with the
Lessor Notes.

     (a)  The Owner Lessor shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Owner
Lessor shall require each Paying Agent (other than the Indenture Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Noteholders or the Indenture Trustee all money held by the Paying Agent for
the payment of principal of or interest

                                       12
<PAGE>
on the Lessor Notes and shall notify the Indenture Trustee of any default by
the Owner Lessor in making any such payment.

     (b)  The principal of and the Make-Whole Amount, if any, and interest on
each Lessor Note shall be paid by the Paying Agent from amounts available in
the Indenture Estate on the dates provided in the Lessor Notes by mailing a
check for such amount, payable in New York Clearing House funds, to each
Noteholder at the last address of each such Noteholder appearing on the Note
Register, or by whichever of the following methods shall be specified by notice
from a Noteholder to the Indenture Trustee: (i) by crediting the amount to be
distributed to such Noteholder to an account maintained by such Noteholder with
the Indenture Trustee, (ii) by making such payment to such Noteholder in
immediately available funds at the Indenture Trustee Office, or (iii) in the
case of the Initial Lessor Notes and in the case of Additional Lessor Notes, if
such Noteholder is the Pass Through Trustee, or a bank or other institutional
investor, by transferring such amount in immediately available funds for the
account of such Noteholder to the banking institution having bank wire transfer
facilities as shall be specified by such Noteholder, such transfer to be
subject to telephonic confirmation of payment. Any payment made under any of
the foregoing methods shall be made free and clear of and without reduction for
or on account of all wire and like charges and without any presentment or
surrender of such Lessor Note, unless otherwise specified by the terms of the
Lessor Note, except that, in the case of the final payment in respect of any
Lessor Note, such Lessor Note shall be surrendered to the Indenture Trustee for
cancellation after such payment. All payments in respect of the Lessor Notes
shall be made (1) as soon as practicable prior to the close of business on the
date the amounts to be distributed by the Indenture Trustee are actually
received by the Indenture Trustee if such amounts are received by 12:00 noon
New York City time, on a Business Day, or (2) on the next succeeding Business
Day if received after such time or on any day other than a Business Day. One
or more of the foregoing methods of payment may be specified in a Lessor Note.
Prior to due presentment for registration of transfer of any Lessor Note, the
Owner Lessor and the Indenture Trustee may deem and treat the Person in whose
name any Lessor Note is registered on the Note Register as the absolute owner
and holder of such Lessor Note for the purpose of receiving payment of all
amounts payable with respect to such Lessor Note and for all other purposes,
and neither the Owner Lessor nor the Indenture Trustee shall be affected by any
notice to the contrary. All payments made on any Lessor Note in accordance
with the provisions of this Section 2.6 shall be valid and effective to satisfy
and discharge the liability on such Lessor Note to the extent of the sums so
paid and (except as provided herein) neither the Indenture Trustee nor the
Owner Lessor shall have any liability in respect of such payment.

                                       13
<PAGE>
     Section 2.7.  Application of Payments. Each payment on any outstanding
Lessor Note shall be applied, first, to the payment of accrued interest
(including interest on overdue principal and the Make-Whole Amount, if any,
and, to the extent permitted by Applicable Law, overdue interest) on such
Lessor Note to the date of such payment, second, to the payment of the
principal amount of, and the Make-Whole Amount, if any, on such Lessor Note
then due (including any overdue installments of principal) thereunder and
third, to the extent permitted by Section 2.10 of this Indenture, the balance,
if any, remaining thereafter, to the payment of the principal amount of, and
the Make-Whole Amount, if any, on such Lessor Note. The order of application of
payments prescribed by this Section 2.7 shall not be deemed to supersede any
provision of Section 3 hereof regarding application of funds.

     Section 2.8.  Registration, Transfer and Exchange of Lessor Notes. The
Owner Lessor shall maintain an office or agency where Lessor Notes may be
presented for registration of transfer or for exchange (the "Registrar"). The
Registrar shall keep a register of the Lessor Notes and of their transfer and
exchange. The Owner Lessor may have one or more co-registrars. The Owner
Lessor initially appoints the Indenture Trustee as Registrar in connection with
the Lessor Notes. The Indenture Trustee shall maintain at the Indenture
Trustee Office a register in which it will provide for the registration,
registration of transfer and exchange of Lessor Notes (such register being
referred to herein as the "Note Register"). If any Lessor Note is surrendered
at said office for registration of transfer or exchange (accompanied by a
written instrument of transfer duly executed by or on behalf of the holder
thereof, together with the amount of any applicable transfer taxes), the Owner
Lessor will execute and the Indenture Trustee will authenticate and deliver, in
the name of the designated transferee or transferees, if any, one or more new
Lessor Notes (subject to the limitations specified in Sections 2.3 and 2.13
hereof) in any denomination or denominations not prohibited by this Indenture,
as requested by the Person surrendering the Lessor Note, dated the same date as
the Lessor Note so surrendered and of like tenor and aggregate unpaid principal
amount. Any Lessor Note or Lessor Notes issued in a registration of transfer
or exchange shall be valid obligations of the Owner Lessor entitled to the same
security and benefits to which the Lessor Note or Lessor Notes so transferred
or exchanged were entitled, including rights as to interest accrued but unpaid
and to accrue so that there will not be any loss or gain of interest on the
Lessor Note or Lessor Notes surrendered. Every Lessor Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Indenture Trustee duly executed by the holder thereof or
his attorney duly authorized in writing, and the Indenture Trustee may require
an

                                       14
<PAGE>
opinion of counsel as to compliance of any such transfer with the Securities
Act. The Indenture Trustee shall make a notation on each new Lessor Note of
the amount of all payments of principal previously made on the old Lessor Note
or Lessor Notes with respect to which such new Lessor Note is issued and the
date on which such new Lessor Note is issued and the date to which interest on
such old Lessor Note or Lessor Notes shall have been paid. The Indenture
Trustee shall not be required to register the transfer or exchange of any
Lessor Note during the 10 days preceding the due date of any payment on such
Lessor Note.

     Each Noteholder, by its acceptance of a Lessor Note, shall be deemed to
have consented to, and agreed to be bound by, the terms and conditions hereof,
of such Lessor Note (and any instrument of assignment or transfer) and of the
other Operative Documents.

     Section 2.9.  Mutilated, Destroyed, Lost or Stolen Lessor Notes. Upon
receipt by the Owner Lessor and the Indenture Trustee of evidence satisfactory
to each of them of the loss, theft, destruction or mutilation of any Lessor
Note and, in case of loss, theft or destruction, of indemnity satisfactory to
each of them, and upon reimbursement to the Owner Lessor and the Indenture
Trustee of all reasonable expenses incidental thereto and payment or
reimbursement for any transfer taxes, and upon surrender and cancellation of
such Lessor Note, if mutilated, the Owner Lessor will execute and the Indenture
Trustee will authenticate and deliver in lieu of such Lessor Note, a new Lessor
Note, dated the same date as such Lessor Note and of like tenor and principal
amount. Any indemnity provided by the holder of a Lessor Note pursuant to this
Section 2.9 must be sufficient in the reasonable judgment of the Owner Lessor
and the Indenture Trustee to protect the Owner Lessor, the Indenture Trustee,
the Paying Agent, the Registrar and any co-registrar or co-paying agent from
any loss which any of them may suffer if a Lessor Note is replaced.

     Section 2.10.  Redemptions; Assumption.

     (a)  Except as provided in paragraphs (c) and (d) of this Section 2.10
or as provided in any indenture supplemental hereto, all Lessor Notes
outstanding under this Indenture shall be redeemed, in whole but not in part,
at a price equal to the principal amount thereof, together with accrued
interest thereon, if any, on the earliest to occur on the date of redemption,
but without any Make-Whole Amount or other premium:

          (i) if the Facility Lease is terminated pursuant to Section 10 thereof
     as a result of the occurrence of an Event of Loss (other than a Regulatory
     Event

                                       15
<PAGE>
     of Loss or an Event of Loss described in clause (v) or (vi) of the
     definition of "Event of Loss"), on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (ii) if the Facility Lease is terminated pursuant to Section 10
     thereof as a result of a Regulatory Event of Loss, unless the Facility
     Lessee effects an assumption of the applicable Lessor Notes in accordance
     with paragraph (b) of this Section 2.10, on the applicable Termination Date
     provided in Section 10.2(a) of the Facility Lease;

          (iii) if the Facility Lease is terminated pursuant to Section 13.1
     thereof, unless the Facility Lessee purchases the Facility and effectuates
     an assumption of the applicable Lessor Notes in accordance with paragraph
     (b) of this Section 2.10, on the applicable Termination Date provided in
     Section 13.1 of the Facility Lease; and

          (iv) if the Facility Lease is terminated pursuant to clause (a) of
     Section 14.1 thereof, on the Obsolescence Termination Date.

Any such redemption shall be made in accordance with the applicable provisions
of Section 3 hereof.

     (b)  Unless a Significant Lease Default or a Lease Event of Default
shall have occurred and be continuing after giving effect to such assumption,
the obligations and liabilities of the Owner Lessor hereunder and under all of
the Lessor Notes may be assumed in whole (but not in part) by the Facility
Lessee in the event of the occurrence of (i) a Regulatory Event of Loss, or
(ii) a termination by the Facility Lessee pursuant to Section 13.1 or 13.2 of
the Facility Lease, where in connection with such termination the Facility
Lessee acquires the Undivided Interest pursuant to an assumption agreement
(which assumption agreement may be combined with the indenture supplemental to
this Indenture hereinafter referred to in this Section 2.10(b), and shall
provide for the assumption by the Facility Lessee of the obligations and
liabilities of the Owner Lessor and the Owner Participant under the Operative
Documents pertaining to the Undivided Interest) which shall make such
obligations and liabilities fully recourse to the Facility Lessee and shall
otherwise be in form and substance acceptable to the Indenture Trustee and the
Owner Lessor. The Facility Lessee will execute and deliver, and the Indenture
Trustee will authenticate, to each Noteholder in exchange for such old Lessor
Note a new Lessor Note, in a principal amount equal to the outstanding
principal amount of such old Lessor Note and otherwise in substantially similar
form and tenor to such old

                                       16
<PAGE>
Lessor Note but indicating that the Facility Lessee is the issuer thereof.
When such assumption agreement becomes effective, the Owner Lessor shall be
released and discharged without further act from all obligations and
liabilities assumed by the Facility Lessee. All documentation in connection
with any such assumption (including an indenture supplemental to this Indenture
which shall, among other things, contain provisions appropriately amending
references to the Facility Lease in this Indenture and contain covenants by the
Facility Lessee similar to those contained in the Facility Lease (other than
any covenants which were solely for the benefit of the Owner Participant),
changed as appropriate, and amendments or supplements to the other Operative
Documents, officers' certificates, opinions of counsel and regulatory
approvals) shall be prepared by and at the expense of the Facility Lessee
acceptable in form and substance to the Indenture Trustee.

     As a condition to the effectiveness of the assumption by the Facility
Lessee and the release of the Owner Lessor and the Indenture Estate thereby
effected:

          (i)  the Indenture Trustee shall have received an Opinion of Counsel
     of the Facility Lessee including, in the case of clause (5) below, a
     nationally recognized outside counsel selected by the Facility Lessee and
     reasonably acceptable to the Noteholders (it being acknowledged and agreed
     that the Facility Lessee's counsel on the Closing Date shall be deemed
     acceptable), addressed to the Indenture Trustee and the Noteholders, to
     the effect that (1) the assumption agreement and each other instrument,
     document or agreement executed and delivered by the Facility Lessee in
     connection with the assumption contemplated by the assumption agreement
     (collectively, the "Assumption Documents") have been duly authorized,
     executed and delivered by the Facility Lessee, (2) each Assumption
     Document and the assumptions contemplated thereby do not contravene (x)
     the Organic Documents of the Facility Lessee, (y) any provision of any
     security issued by the Facility Lessee or of any agreement, instrument or
     other undertaking to which the Facility Lessee is a party or by which it
     or any of its property is bound or (z) any Applicable Law, (3) no
     Governmental Approval is necessary or required in connection with any
     Assumption Document or the assumption contemplated thereby (or, if any
     such Governmental Approval is necessary or required, that the same has
     been duly obtained and is final and in full force and effect and any
     period for the filing of notice of rehearing or application for judicial
     review of the issuance of such Governmental Approval has expired without
     any such notice or application having been made), (4) each Assumption
     Document is a legal, valid and binding obligation of the Facility Lessee,
     enforceable in accordance with its terms, (5)

                                       17
<PAGE>
     such assumption agreement and the assumption of the Lessor Notes
     thereunder shall not cause a Tax Event to occur as to any holder of any
     Lessor Note or any Certificateholder and (6) the lien of this Indenture
     will continue to be a first priority perfected lien on the Indenture
     Estate;

          (ii) the Facility Lessee shall have provided the Indenture Trustee
     with (x) an indemnity against the risk that such assumption of the Lessor
     Notes will cause a Tax Event to occur as to any holder of any Lessor Note
     or any Certificateholder or (y) an opinion of counsel to the Facility
     Lessee, which opinion of counsel shall be reasonably acceptable to the
     Indenture Trustee, confirming that such assumption shall not cause any
     adverse tax consequence to any holder of any Lessor Note or any
     Certificateholder ;

          (iii) Moody's and S&P shall have confirmed that such assumption will
     not result in a downgrading of the rating on the Certificates;

          (iv) the Indenture Trustee shall have received copies of all
     Governmental Approvals (if any) referred to in the opinion of counsel
     referred to in clause (i) above; and

          (v) the Indenture Trustee shall have received UCC lien searches,
     supplemental title reports and such other evidence as may reasonably be
     required by the Indenture Trustee demonstrating that no impairment exists
     or will exist of the first-priority perfected lien and secured interest in
     the Undivided Interest.

     (c)  The Owner Lessor may, at its option, redeem any Additional Lessor
Notes in whole, or in part, on any date to the extent permitted by, and at the
prices set forth in, the supplemental indenture establishing the terms,
conditions and designations of such Additional Lessor Notes, together with the
accrued interest on such principal amount plus the Make Whole Amount, if any,
so redeemed to the date of redemption.

     (d)  The Lessor Notes shall be redeemed, in whole but not in part, as
provided below, at the redemption price equal to the principal amount thereof,
together with accrued and unpaid interest thereon, if any, to the date of
redemption plus the Make-Whole Amount, as follows:

          (i)  All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price upon an optional refinancing pursuant
     to Section 11.2 of the Participation Agreement. The Owner Lessor's failure
     to

                                       18
<PAGE>
     consummate such redemption as a result of an event described in this
     clause (i) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (ii)  All of the Lessor Notes outstanding under this Indenture shall
     be redeemed at such redemption price on the Termination Date or
     Obsolescence Termination Date, as applicable, if the Facility Lease is
     terminated as a result of an event described in Section 13.2 or clause (b)
     of Section 14.1 of the Facility Lease. The Owner Lessor's failure to
     consummate such redemption as a result of an event described in this
     clause (ii) following delivery of such notice shall not constitute a Lease
     Indenture Event of Default or any other default under the Operative
     Documents.

          (iii)  The Lessor Notes shall be redeemed at such redemption price
     upon termination of the Facility Lease pursuant to Section 10 thereof as a
     result of the occurrence of an Event of Loss described in clause (v) or
     (vi) of the definition of "Event of Loss".

The Make-Whole Amount, if any, payable with respect to the Lessor Notes will be
determined by an investment banking institution of national standing in the
United States (the "Investment Banker") selected by the Facility Lessee or, if
the Owner Lessor or the Indenture Trustee does not receive notice of such
selection at least ten days prior to a scheduled prepayment date or if a Lease
Event of Default under the Facility Lease shall have occurred and be
continuing, selected by the Owner Lessor.

     (e)  If the Owner Lessor elects to redeem Lessor Notes, or Lessor Notes
are otherwise required to be redeemed pursuant to this Section 2.10, the Owner
Lessor shall notify the Indenture Trustee in writing of the date of redemption,
the Section of this Indenture pursuant to which the redemption will occur. The
Owner Lessor shall give each notice to the Indenture Trustee provided for in
this Section 2.10 at least 30 days before the date of redemption unless the
Indenture Trustee consents in writing to a shorter period. Such notice shall
be accompanied by an Officers' Certificate and an opinion of counsel from the
Facility Lessee to the effect that such redemption will comply with the
conditions herein.

     (f)  At least 20 days but not more than 60 days before a date of
redemption, the Indenture Trustee shall deliver notification of such redemption
by first-class mail to each Noteholder to be redeemed at such Noteholder's
registered address; provided, that

                                       19
<PAGE>
no notice shall be required so long as the Pass Through Trustee and the
Indenture Trustee are the same entity. Each such notice shall state:

          (i) the date of redemption;

          (ii) the redemption price;

          (iii) the name and address of the Paying Agent;

          (iv) that Lessor Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

          (v) that, unless the Owner Lessor defaults in making such redemption
     payment, interest on Lessor Notes called for redemption ceases to accrue on
     and after the redemption date; and

          (vi) the paragraph of this Indenture pursuant to which the Lessor
     Notes called for redemption are being redeemed.

     (h)  With respect to any notice of redemption of the Lessor Notes such
notice shall state that such redemption shall be conditional upon the receipt
by the Indenture Trustee, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and Make-Whole Amount, if any, and
interest on such Notes and that, if such money shall not have been so received,
such notice shall be of no force or effect and the Owner Lessor shall not be
required to redeem such Lessor Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and, within a reasonable time thereafter, notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made.

     (i)  Upon surrender to the Paying Agent, such Lessor Notes shall be paid
at the redemption price stated in the notice, plus accrued interest to the date
of redemption. Failure to give notice or any defect in the notice to any
Noteholder shall not affect the validity of the notice to any other Noteholder.

     Section 2.11.  Payment of Expenses on Transfer. Upon the issuance of a
new Lessor Note or Lessor Notes pursuant to Section 2.8 or 2.9 hereof, the
Owner Lessor or the Indenture Trustee may require from the party requesting
such new Lessor Note or Lessor Notes payment of a sum to reimburse the Owner
Lessor and the Indenture

                                       20
<PAGE>
Trustee for, or to provide funds for, the payment on an After-Tax Basis to the
Owner Lessor, the Indenture Trustee and the Owner Participant of any tax or
other governmental charge in connection therewith or any charges and expenses
connected with such tax or governmental charge paid or payable by the Owner
Lessor or the Indenture Trustee.

     Section 2.12.  Additional Lessor Notes.

     (a)  Additional Lessor Notes (each, an "Additional Lessor Note") of the
Owner Lessor may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Lessor Notes and subject to the
conditions hereinafter provided in this Section 2.12, for cash in the amount
equal to the original principal amount of such Additional Lessor Notes, for the
purpose of (i) providing funds in connection with Supplemental Financing
pursuant to Section 11.1 of the Participation Agreement for the payment of all
or any portion of Modifications to the Facility pursuant to Section 8 of the
Facility Lease, or (ii) redeeming any previously issued Lessor Notes pursuant
to an optional refinancing pursuant to Section 11.2 of the Participation
Agreement and providing funds for the payment of all reasonable costs and
expenses in connection therewith.

     (b)  Before any Additional Lessor Notes shall be issued under the
provisions of this Section 2.12, the Owner Lessor shall have delivered to the
Indenture Trustee, not less than fifteen (15) (unless a shorter period shall be
satisfactory to the Indenture Trustee) days nor more than thirty (30) days
prior to the proposed date of issuance of any Additional Lessor Notes, a
request and authorization to issue such Additional Lessor Notes, which request
and authorization shall include the amount of such Additional Lessor Notes, the
proposed date of issuance thereof and (except in connection with a refinancing
of all of the Lessor Notes pursuant to Section 11.2 of the Participation
Agreement) a certification that terms thereof are not inconsistent with this
Indenture. Additional Lessor Notes shall have a designation so as to
distinguish such Additional Lessor Notes from the Initial Lessor Notes
theretofore issued, but otherwise shall rank pari passu with any Lessor Notes
then outstanding, be entitled to the same benefits and security of this
Indenture as the other Lessor Notes issued pursuant to the terms hereof, be
dated the date of original issuance of such Additional Lessor Notes, bear
interest at such rates as shall be agreed between the Facility Lessee and the
Owner Lessor and indicated in the aforementioned request and authorization, and
shall be stated to be payable by their terms not later than the final maturity
date of the Initial Lessor Notes issued on the closing date. The Additional
Lessor Notes shall not be subject to (i) purchase except as provided in Section
4.4(e) hereof or (ii) redemption or assumption except as provided in Section
2.10 hereof.

                                       21
<PAGE>
     (c)  The terms, conditions and designations of such Additional Lessor
Notes (which shall be consistent with this Indenture), except in the case of a
refinancing of all of the Lessor Notes pursuant to Section 11.2 of the
Participation Agreement) shall be set forth in an indenture supplemental to
this Indenture executed by the Owner Lessor and the Indenture Trustee. Such
Additional Lessor Notes shall be executed as provided in Section 2.3 hereof and
deposited with the Indenture Trustee for authentication, but before such
Additional Lessor Notes shall be authenticated and delivered by the Indenture
Trustee there shall be filed with the Indenture Trustee the following, all of
which shall be dated as of the date of the supplemental indenture:

          (i) a copy of such supplemental indenture (which shall include the
     form of such Additional Lessor Notes and the certificate of authentication
     in respect thereof);

          (ii) an Officer's Certificate from the Facility Lessee (1) stating
     that no Significant Lease Default or Lease Event of Default has occurred
     and is continuing under the Facility Lease, (2) stating that the conditions
     in respect of the issuance of such Additional Lessor Notes contained in
     this Section 2.12 have been satisfied, (3) specifying the amount of the
     costs and expenses relating to the issuance and sale of such Additional
     Lessor Notes, (4) stating that payments pursuant to the Facility Lease and
     all supplements thereto of Periodic Rent and Termination Value, together
     with all other amounts payable pursuant to the terms of the Facility Lease,
     are calculated to be sufficient to pay when due all of the principal of and
     interest on the outstanding Lessor Notes, after taking into account the
     issuance of such Additional Lessor Notes and any related redemption of
     Lessor Notes theretofore outstanding and (5) all conditions to the
     Supplemental Financing or refinancing contained in Section 11.1 or ll.2 of
     the Participation Agreement or in any other provision of the Operative
     Documents have been satisfied;

          (iii) with respect to any Supplemental Financing, an Officer's
     Certificate from the Owner Lessor and an Officer's Certificate from the
     Lessor Manager stating that no Indenture Default under clauses (b) through
     (f) of Section 4.2 hereof or Lease Indenture Event of Default as to the
     Owner Lessor or the Lessor Manager, as the case may be, has occurred and is
     continuing;

                                       22
<PAGE>
          (iv) such additional documents, certificates and opinions as shall be
     reasonably required by the Indenture Trustee, and as shall be reasonably
     acceptable to the Indenture Trustee;

          (v) a request and authorization to the Indenture Trustee by the Owner
     Lessor to authenticate and deliver such Additional Lessor Notes to or upon
     the order of the Person or Persons noted in such request at the address set
     forth therein, and in such principal amounts as are stated therein, upon
     payment to the Indenture Trustee, but for the account of the Owner Lessor,
     of the sum or sums specified in such request and authorization;

          (vi) the consent of the Facility Lessee to such request and
     authorization; and

          (vii) an opinion of counsel to the Owner Lessor who shall be
     reasonably satisfactory to the Indenture Trustee, as to the authorization,
     validity and enforceability of the Additional Lessor Notes and that all
     conditions hereunder to the authentication and delivery of such Additional
     Lessor Notes have been complied with.

     (d)  When the documents referred to in the foregoing clauses (i) through
(vii) above shall have been filed with the Indenture Trustee and when the
Additional Lessor Notes described in the above mentioned request and
authorization shall have been executed and authenticated as required by this
Indenture and the related supplemental indenture, the Indenture Trustee shall
deliver such Additional Lessor Notes in the manner described in clause (v)
above, but only upon payment to the Indenture Trustee of the sum or sums
specified in such request and authorization.

     Section 2.13.  Restrictions of Transfer Resulting from Federal Securities
Laws; Legend. Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Indenture under the Trust Indenture Act of 1939,
as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Indenture Trustee and the Owner Lessor an opinion of counsel, which
opinion and which counsel shall be reasonably satisfactory to the Indenture
Trustee, the Owner Lessor and the Facility Lessee, to the effect that such
transfer will not violate the registration provisions of the Securities Act or
require qualification of this Indenture under the Trust Indenture Act of 1939,
as amended, and all Lessor Notes issued hereunder shall be endorsed with a
legend which shall read substantially as follows:

                                       23
<PAGE>
     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
     NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT.

     Section 2.14.  Security for and Parity of Lessor Notes. All Lessor Notes
issued and outstanding hereunder shall rank on a parity with each other and
shall as to each other be secured equally and ratably by this Indenture,
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance or otherwise.

     Section 2.15.  Acceptance of the Indenture Trustee. Each Noteholder, by
its acceptance of a Lessor Note, shall be deemed to have consented to the
appointment of the Indenture Trustee.

                                SECTION 3.
                RECEIPT, DISTRIBUTION AND APPLICATION
                   OF INCOME FROM INDENTURE ESTATE

     Section 3.1.  Distribution of Periodic Rent.

     (a)  Periodic Rent Distribution. Except as otherwise provided in Section
3.1(c), 3.2, 3.3 or 3.7 of this Indenture, each installment of Periodic Rent
and any payment of Supplemental Rent constituting interest on overdue
installments of Periodic Rent received by the Indenture Trustee shall be
distributed by the Indenture Trustee in the following order of priority:

     First, so much of such amounts as shall be required to pay in full the
     aggregate principal and accrued interest (as well as any interest on
     overdue principal and, to the extent permitted by Applicable Law, on
     overdue interest) then due and payable under the Lessor Notes shall be
     distributed to the Noteholders ratably, without priority of any Noteholder
     over any other Noteholder, in the proportion that the amount of such
     payment then due and payable under each such Lessor Note bears to the
     aggregate amount of the payments then due and payable under all such
     Lessor Notes; and

                                       24
<PAGE>
     Second, the balance, if any, of such amounts remaining shall be
     distributed to the Owner Lessor for distribution by it in accordance with
     the terms of the LLC Agreement.

     (b)  Application of Other Amounts Held by the Indenture Trustee upon Rent
Default. If, as a result of any failure by the Facility Lessee to pay Periodic
Rent in full on any date when an installment of Periodic Rent is due, there
shall not have been distributed on any date (or within any applicable period of
grace) pursuant to Section 3.1(a) hereof the full amount then distributable
pursuant to clause "First" of Section 3.1(a) of this Indenture, the Indenture
Trustee shall distribute other payments of the character referred to in
Sections 3.5 and 3.6 hereof then held by it, or thereafter received by it, to
all Noteholders to the extent necessary to enable it to make all the
distributions then due pursuant to such clause "First."  To the extent the
Indenture Trustee thereafter receives the deficiency in Periodic Rent, the
amount so received shall, unless a Significant Lease Default or Lease Indenture
Event of Default shall have occurred and be continuing, be applied to restore
the amounts held by the Indenture Trustee under Section 3.5 or 3.6 hereof and
distributed pursuant to this Section 3.1(b), as the case may be. The portion
of each such payment made to the Indenture Trustee which is to be distributed
by the Indenture Trustee in payment of Lessor Notes shall be applied in
accordance with Section 2.7 hereof. Any payment received by the Indenture
Trustee pursuant to Section 4.3 hereof as a result of payment by the Owner
Lessor of principal or interest or both (as well as any interest on overdue
principal and, to the extent permitted by Applicable Law, on overdue interest)
then due on all Lessor Notes shall be distributed to the Noteholders, ratably,
without priority of one over the other, in the proportion that the amount of
such payment or payments then due and unpaid on all Lessor Notes held by each
such Noteholder bears to the aggregate amount of the payments then due and
unpaid on all Lessor Notes outstanding; and the Owner Lessor shall (to the
extent of such payment made by it) be subrogated to the rights of the
Noteholders under this Section 3.1 to receive the payment of Periodic Rent or
Supplemental Rent with respect to which its payment under Sections 4.3(a) and
(b) hereof relates, and the payment of interest on account of such Periodic
Rent or Supplemental Rent being overdue, to the extent provided in and subject
to the provisions of Section 4.3(a) and (b) hereof.

     (c)  Retention of Amounts by the Indenture Trustee. If at the time of
receipt by the Indenture Trustee of an installment of Periodic Rent (whether or
not then overdue) or of payment of interest on any overdue installment of
Periodic Rent, there shall have occurred and be continuing a Lease Indenture
Event of Default, the Indenture Trustee shall retain such installment of
Periodic Rent or payment of interest (to the

                                       25
<PAGE>
extent not then required to be distributed pursuant to clause "First" of
Section 3.1(a)) as part of the Indenture Estate and shall not distribute any
such payment of Periodic Rent or interest pursuant to clause "Second" of
Section 3.1(a) until such time as such Lease Indenture Event of Default shall
be cured or waived or until such time as the Indenture Trustee shall have
received written instructions from a Majority in Interest of Noteholders to
make such a distribution; provided that such amounts must be returned to the
Owner Lessor within six (6) months from the receipt thereof by the Indenture
Trustee unless (i) the Indenture Trustee has declared the unpaid principal of
all Lessor Notes due and payable (or such amounts shall have automatically
become due and payable), pursuant to Section 4.2(a) and the Indenture Trustee
is diligently pursuing any dispossessary remedies available under Section 4.3
hereof (unless such remedies are stayed or prevented by operation of law) or
(ii) any other Lease Indenture Event of Default shall have occurred during the
intervening period and be continuing, in which case, such six-month period will
be restarted from the date such other Lease Indenture Event of Default shall
have occurred. Upon the cure or waiver of such Lease Indenture Event of
Default, withheld Periodic Rent shall, subject to clause (ii) of the
immediately preceding sentence, be distributed to the Owner Lessor (to the
extent that all payments to be distributed pursuant to clause "First" of
Section 3.1(a) have been made), and no further withholding of Periodic Rent on
account of such Lease Indenture Event of Default shall be effected.

     Section 3.2.  Payments Following Event of Loss or Other Early Termination.
Any payment received by the Indenture Trustee as a result of (x) an Event of
Loss (other than a Regulatory Event of Loss in respect of which the Facility
Lessee shall, pursuant to Section 2.10(b) hereof, assume the obligations and
liabilities of the Owner Lessor hereunder, in which event only clauses "First"
and "Fourth" below shall be applicable), (y) early termination of the Facility
Lease pursuant to Section 13 thereof (other than a termination in respect of
which the Facility Lessee shall, pursuant to Section 2.10(b) hereof assume the
obligations and liabilities of the Owner Lessor hereunder, in which event only
clauses "First" and "Fourth" below shall be applicable), or (z) any early
termination of the Facility Lease, in whole or in part, pursuant to Section 14
thereof, shall be distributed on the applicable date of redemption to the
extent of available funds, in the following order of priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee

                                       26
<PAGE>
     and to the extent reimbursable and not previously reimbursed) shall be
     distributed to the Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay in
     full the applicable redemption price (as described in Section 2.10(a) or
     2.10(d) hereof or any supplemental indenture hereto) (including, interest
     on overdue principal and, to the extent permitted by Applicable Law,
     overdue interest) upon all of the Lessor Notes which shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder, plus the Make-Whole Amount, if any, and accrued but unpaid
     interest thereon to the scheduled date of distribution to the Noteholders
     bears to the aggregate unpaid principal amount of all such Lessor Notes
     held by all such holders, together with the Make-Whole Amount, if any,
     plus accrued but unpaid interest thereon to the date of scheduled
     distribution to the Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures shall be distributed to such existing or prior holders of
     Lessor Notes, ratably to each such holder, without priority of any such
     holder over any other, in the proportion that the amount of such payments
     or amounts to which each such holder is so entitled bears to the aggregate
     amount of such payments and amounts to which all such holders are so
     entitled; and

     Fourth, the balance, if any, of such payment remaining shall be
     distributed to the Owner Lessor for distribution in accordance with the
     LLC Agreement.

     Section 3.3.  Payments After Lease Indenture Event of Default. All
payments received and all amounts held or realized by the Indenture Trustee
after a Lease Indenture Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Section 17 of the Facility Lease or from the
application of Section 4.3 hereof) and after either (a) the Indenture Trustee
has declared the Facility Lease to be in default pursuant to Section 17 thereof
or (b) the entire principal amount of Lessor Notes shall have been declared or
shall automatically have become due and payable, together with all payments or
amounts then held or thereafter received by the Indenture Trustee

                                       27
<PAGE>
hereunder, shall, so long as such declaration shall not have been rescinded, be
distributed forthwith by the Indenture Trustee in the following order of
priority:

     First, so much of such payments and amounts as shall be required to
     reimburse the Indenture Trustee for any unpaid fees for its services under
     this Indenture and any expense (including any legal fees and
     disbursements) or loss incurred by it (to the extent incurred in
     connection with its duties as the Indenture Trustee and to the extent
     reimbursable and not previously reimbursed) shall be distributed to the
     Indenture Trustee for application to itself;

     Second, so much of such payments or amounts as shall be required to pay
     the aggregate unpaid principal amount of all Lessor Notes then outstanding
     and all accrued but unpaid interest on such Lessor Notes to the date of
     such distribution (including interest on overdue principal and, to the
     extent permitted by Applicable Law, overdue interest) shall be distributed
     to the holders of such Lessor Notes, in each case ratably, without
     priority of any Noteholder over any other, in the proportion that the
     aggregate unpaid principal amount of all such Lessor Notes held by each
     such holder and accrued but unpaid interest thereon to the scheduled date
     of distribution to the Noteholders bears to the aggregate unpaid principal
     amount of all such Lessor Notes held by all such holders and accrued but
     unpaid interest thereon to the date of scheduled distribution to the
     Noteholders;

     Third, so much of such payments and amounts as shall be required to pay
     the then existing or prior Noteholders all other amounts then payable and
     unpaid to them as holders of the Lessor Notes which this Indenture by its
     terms secures, including the Make-Whole Amount, if any, required to be
     paid pursuant to Section 2.10(d) hereof, in respect of such Lessor Notes
     required to be paid pursuant to Section 4.3(a) hereof, shall be
     distributed to such existing or prior holders of Lessor Notes, ratably to
     each such holder, without priority of any such holder over any other, in
     the proportion that the amount of such payments or amounts to which each
     such holder is so entitled bears to the aggregate amount of such payments
     and amounts to which all such holders are so entitled; and

     Fourth, the balance, if any, of such payments and amounts remaining shall
     be distributed to the Owner Lessor for distribution by it in accordance
     with the terms of the LLC Agreement.

                                       28
<PAGE>
     Section 3.4.  Investment of Certain Payments Held by the Indenture
Trustee. Upon the written direction and at the risk and expense of the Owner
Lessor, the Indenture Trustee shall invest and reinvest any moneys held by the
Indenture Trustee pursuant to Section 3.1(c), 3.5 or 3.6 hereof in such
Permitted Investments as may be specified in such direction. The proceeds
received upon the sale or at maturity of any Permitted Investment and any
interest received on such Permitted Investment and any payment in respect of a
deficiency contemplated by the following sentence shall be held as part of the
Indenture Estate and applied by the Indenture Trustee in the same manner as the
moneys used to buy such Permitted Investment, and any Permitted Investment may
be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any payment or distribution required by this Section 3. If
the proceeds received upon the sale or at maturity of any Permitted Investment
(including interest received on such Permitted Investment) shall be less than
the cost thereof (including accrued interest), the Owner Lessor will pay or
cause to be paid to the Indenture Trustee an amount equal to such deficiency.

     Section 3.5.  Application of Certain Other Payments. Except as otherwise
provided in Section 3.1(b) or 3.1(c) hereof, any payment received by the
Indenture Trustee for which provision as to the application thereof is made in
an Operative Document, but not elsewhere in this Indenture (including payments
received by the Indenture Trustee under the Calpine Guaranty), shall, unless a
Lease Indenture Event of Default shall have occurred and be continuing, be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such Operative Document. If at the time of the receipt by
the Indenture Trustee of any payment referred to in the preceding sentence
there shall have occurred and be continuing a Lease Indenture Event of Default,
the Indenture Trustee shall hold such payment as part of the Indenture Estate,
but the Indenture Trustee shall, except as otherwise provided in Section 3.1(b)
or 3.1(c) hereof, cease to hold such payment and shall apply such payment to
the purpose for which it was made in accordance with the terms of such
Operative Document if and whenever there is no longer continuing any Lease
Indenture Event of Default; provided, however, that any such payment received
by the Indenture Trustee which is payable to the Facility Lessee shall not be
held by the Indenture Trustee unless a Significant Lease Default or Lease Event
of Default shall have occurred and be continuing.

     Section 3.6.  Other Payments. Except as otherwise provided in Section 3.5
hereof:

                                       29
<PAGE>
     (a)  any payment received by the Indenture Trustee for which no provision
as to the application thereof is made in the Participation Agreement, the
Facility Lease or elsewhere in this Section 3; and

     (b)  all payments received and amounts realized by the Indenture Trustee
with respect to the Indenture Estate (including all amounts realized after the
termination of the Facility Lease), to the extent received or realized at any
time after payment in full of the principal of and, Make-Whole Amount, if any,
and interest on all Lessor Notes then outstanding and all other amounts due the
Indenture Trustee or the Noteholders, as well as any other amounts remaining as
part of the Indenture Estate after such payment in full of the principal of,
Make-Whole Amount, if any, and interest on all Lessor Notes outstanding;

     shall be distributed forthwith by the Indenture Trustee in the order of
priority set forth in Section 3.3 hereof, omitting clause "Third" thereof.

     Section 3.7.  Excepted Payments. Notwithstanding any other provision of
this Indenture including this Section 3 or any provision of any of the
Operative Documents to the contrary, any Excepted Payments received or held by
the Indenture Trustee at any time shall promptly be paid or distributed by the
Indenture Trustee to the Person or Persons entitled thereto.

     Section 3.8.  Distributions to the Owner Lessor. Unless otherwise
directed in writing by the Owner Lessor, all amounts from time to time
distributable by the Indenture Trustee to the Owner Lessor in accordance with
the provisions hereof shall be paid by the Indenture Trustee in immediately
available funds to the Owner Participant's Account. Any amounts payable to the
Trust Company in its individual capacity shall be paid to the Trust Company.

     Section 3.9.  Payments Under Assigned Documents. Notwithstanding anything
to the contrary contained in this Indenture, until the discharge and
satisfaction of the Lien of this Indenture, all payments due or to become due
under any Assigned Document to the Owner Lessor (except so much of such
payments as constitute Excepted Payments) shall be made directly to the
Indenture Trustee's Account and the Owner Lessor shall give all notices as
shall be required under the Assigned Documents to direct payment of all such
amounts to the Indenture Trustee hereunder. The Owner Lessor agrees that if it
should receive any such payments directed to be made to the Indenture Trustee
or any proceeds for or with respect to the Indenture Estate or as the result of
the sale or other disposition thereof or otherwise constituting a part of the

                                       30
<PAGE>
Indenture Estate to which the Owner Lessor is not entitled hereunder, it will
promptly forward such payments to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions. The Indenture Trustee agrees to apply
payments from time to time received by it (from the Facility Lessee, the Owner
Lessor or otherwise) with respect to the Facility Lease, any other Assigned
Document or the Facility in the manner provided in Section 2.7 hereof, and this
Section 3.

     Section 3.10.  Disbursement of Amounts Received by the Indenture Trustee.
Subject to the last sentence of this Section 3.10 and Section 3.2, amounts to
be distributed by the Indenture Trustee pursuant to this Section 3 shall be
distributed on the date such amounts are actually received by the Indenture
Trustee. Notwithstanding anything to the contrary contained in this Section 3,
in the event the Indenture Trustee shall be required or directed to make a
payment under this Section 3 on the same date on which such payment is
received, any amounts received by the Indenture Trustee after 12:00 noon, New
York City time, or on a day other than a Business Day, may be distributed on
the next succeeding Business Day.

     Section 3.11   Establishment of the Indenture Trustee's Account; and Lien
and Security Interest; Etc.

     (a) The Account Bank hereby confirms that it has established a securities
account entitled the "Indenture Trustee's Account" (the "Indenture Trustee's
Account"), which Indenture Trustee's Account shall be maintained by the Account
Bank until the date this Indenture is terminated pursuant to Section 7.1
hereof. The account number of the Indenture Trustee's Account established
hereunder is specified in Schedule II hereto. The Indenture Trustee's Account
shall not be evidenced by passbooks or similar writings. This Indenture
governs and shall be the only agreement governing the Indenture Trustee's
Account.

     (b) All amounts from time to time held in the Indenture Trustee's Account
shall be maintained (i) in the name of the Owner Lessor subject to the lien and
security interest of the Indenture Trustee for the benefit of the Indenture
Trustee and each of the Noteholders as set forth herein and (ii) in the custody
of the Account Bank for and on behalf of the Indenture Trustee for the benefit
of the Indenture Trustee and each of the Noteholders for the purposes and on
the terms set forth in this Indenture. All such amounts shall constitute a
part of the Indenture Trustee Account Collateral and shall not constitute
payment of any Indebtedness or any other obligation of the Owner Lessor until
applied as hereinafter provided.

                                       31
<PAGE>
     (c) As collateral security for the prompt payment in full when due of the
Lessor Secured Obligations owed to the Indenture Trustee and each Noteholder,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Indenture Trustee for the benefit of the Indenture Trustee and each of the
Noteholders, and hereby grants to the Indenture Trustee for the benefit of the
Indenture Trustee and each of the Noteholders, a lien on and security interest
in and to, (i) the Indenture Trustee's Account and any successor account
thereto and (ii) all cash, investments, investment property, securities or
other property at any time on deposit in or credited to the Indenture Trustee's
Account, including all income or gain earned thereon and any proceeds thereof
(the "Indenture Trustee Account Collateral").

     Section 3.12 The Account Bank; Limited Rights of the Owner Lessor

     (a)  The Account Bank.

          (i) Establishment of Securities Account. The Account Bank hereby
     agrees and confirms that (A) the Account Bank has established the Indenture
     Trustee's Account as set forth in Section 3.11, (B) the Indenture Trustee's
     Account is and will be maintained as a "securities account" (within the
     meaning of Section 8-501(a) of the UCC), (C) the Owner Lessor is the
     "entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC)
     in respect of the "financial assets" (within the meaning of Section
     8-102(a)(9) of the UCC) credited to the Indenture Trustee's Account, (D)
     all property delivered to the Account Bank pursuant to this Indenture or
     any other Operative Document will be held by the Account Bank and promptly
     credited to the Indenture Trustee's Account by an appropriate entry in its
     records in accordance with this Indenture, (E) all "financial assets"
     (within the meaning of Section 8-102(a)(9) of the UCC) in registered form
     or payable to or to the order of and credited to the Indenture Trustee's
     Account shall be registered in the name of, payable to or to the order of,
     or indorsed to, the Account Bank or in blank, or credited to another
     securities account maintained in the name of the Account Bank, and in no
     case will any financial asset credited to the Indenture Trustee's Account
     be registered in the name of, payable to or to the order of, or indorsed
     to, the Owner Lessor except to the extent the foregoing have been
     subsequently indorsed by the Owner Lessor to the Account Bank or in blank,
     (F) the Account Bank shall not change the name or account number of the
     Indenture Trustee's Account without the prior written consent of the
     Indenture Trustee, (G) the Account Bank is acting and shall at all times
     act as and perform all of the duties of the "securities intermediary,"
     within the meaning of Article 8 of the UCC, with respect to the

                                       32
<PAGE>
     Indenture Trustee's Account and the financial assets credited thereto
     and (H) the Account Bank shall not enter into any other agreement
     governing, or with respect to, the Indenture Trustee's Account without the
     prior written consent of the Indenture Trustee.

          (ii) Financial Assets Election. The Account Bank agrees that each item
     of property (including any security, instrument or obligation, share,
     participation, interest, cash or cash equivalent or other property
     whatsoever) credited to the Indenture Trustee's Account shall be treated as
     a "financial asset" within the meaning of Section 8-l02(a)(9) of the UCC.

          (iii) Entitlement Orders. Notwithstanding anything in this Indenture
     to the contrary, if at any time the Account Bank shall receive any
     "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC)
     or any other order from the Indenture Trustee directing the transfer or
     redemption of any financial asset relating to the Indenture Trustee's
     Account or with respect to any "security entitlements" (within the meaning
     of Section 8-102(a)(17) of the UCC) carried or to be carried in the
     Indenture Trustee's Account, the Account Bank shall comply with such
     entitlement order or other order without further consent by the Owner
     Lessor or any other Person. The parties hereto hereby agree that the
     Indenture Trustee shall have "control" (within the meaning of Section
     8-106(d) of the UCC) of (A) the Indenture Trustee's Account, (B) all
     security entitlements carried or to be carried in the Indenture Trustee's
     Account and (C) the Owner Lessor's security entitlements with respect to
     the financial assets credited to the Indenture Trustee's Account and the
     Owner Lessor hereby disclaims any entitlement to claim "control" of such
     "security entitlements". Unless a Lease Indenture Event of Default shall
     have occurred and is continuing, the Indenture Trustee shall not deliver
     any entitlement order directing the transfer or redemption of any financial
     asset relating to the Indenture Trustee's Account.

          (iv) Subordination of Lien; Waiver of Set-Off. In the event that the
     Account Bank has or subsequently obtains by agreement, operation of law or
     otherwise a lien or security interest in the Indenture Trustee's Account or
     any security entitlement credited thereto, the Account Bank agrees that
     such lien or security interest shall be subordinate to the lien and
     security interest of the Indenture Trustee for the benefit of the Indenture
     Trustee and each Noteholder. The financial assets standing to the credit of
     the Indenture Trustee's Account will not be subject to deduction, set-off,
     banker's lien, or any other right in favor

                                       33
<PAGE>
     of any Person other than the Indenture Trustee for the benefit of the
     Indenture Trustee and each Noteholder (except for the face amount of any
     checks which have been credited to the Indenture Trustee's Account but are
     subsequently returned unpaid because of uncollected or insufficient funds).

          (v) No Other Agreements. The Account Bank and the Owner Lessor have
     not entered into any agreement governing or with respect to the Indenture
     Trustee's Account or any financial assets credited to the Indenture
     Trustee's Account other than this Indenture. The Account Bank has not
     entered into any agreement with the Owner Lessor or any other Person
     purporting to limit or condition the obligation of the Account Bank to
     comply with entitlement orders originated by the Indenture Trustee in
     accordance with Section 3.12(a)(iii) hereof. In the event of any conflict
     between this Section 3.12 or any other agreement now existing or hereafter
     entered into, the terms of this Section 3.12 shall prevail.

          (vi) Notice of Adverse Claims. Except for the claims and interest of
     the Indenture Trustee for the benefit of the Indenture Trustee and each
     Noteholder and the Owner Lessor in the Indenture Trustee's Account, the
     Account Bank does not know of any claim to, or interest in, the Indenture
     Trustee's Account or in any financial asset credited thereto. If any Person
     asserts any lien, encumbrance or adverse claim (including any writ,
     garnishment, judgment, warrant of attachment, execution or similar process)
     against the Indenture Trustee's Account or in any financial asset credited
     thereto, the Account Bank will promptly notify the Indenture Trustee and
     the Owner Lessor in writing thereof.

          (vii) Rights and Powers of the Indenture Trustee. The rights and
     powers granted by the Indenture Trustee to the Account Bank have been
     granted in order to perfect its lien and security interests in the
     Indenture Trustee's Account, are powers coupled with an interest and will
     neither be affected by the bankruptcy of the Owner Lessor nor the lapse of
     time.

     (b)  Limited Rights of the Owner Lessor. The Owner Lessor shall not have
any rights against or to monies held in the Indenture Trustee's Account, as
third party beneficiary or otherwise, or any right to direct the Account Bank
or the Indenture Trustee to apply or transfer monies in the Indenture Trustee's
Account, except the right to receive or make requisitions of monies held in the
Indenture Trustee's Account, as expressly provided in this Indenture, and to
direct the investment of monies held in the

                                       34
<PAGE>
Indenture Trustee's Account as expressly provided in Section 3.7 hereof.
Except as expressly provided in this Indenture, in no event shall any amounts
or Permitted Investments deposited in or credited to the Indenture Trustee's
Account be registered in the name of the Owner Lessor, payable to the order of
the Owner Lessor or specially indorsed to the Owner Lessor except to the extent
that the foregoing have been specially indorsed to the Indenture Trustee or in
blank.

                                  SECTION 4.
                    COVENANTS OF OWNER LESSOR; DEFAULTS;
                       REMEDIES OF INDENTURE TRUSTEE

     Section 4.1.  Covenants of Owner Lessor. The Owner Lessor hereby
covenants and agrees as follows:

     (a) the Owner Lessor will duly and punctually pay the principal of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Lessor Notes and hereunder in accordance with the terms of the Lessor Notes and
this Indenture and all amounts payable by it to the Noteholders under the
Participation Agreement; and

     (b) the Owner Lessor will not, except as provided in this Indenture
(including Sections 4.4, 5.6, 8.1 and 8.2) and except as to Excepted Payments
(i) enter into any agreement amending, modifying or supplementing any of the
Assigned Documents, or exercise any election or option, or make any decision or
determination, or give any notice, consent, waiver or approval, or take any
other action, under or in respect of any Assigned Document, (ii) accept and
retain any payment from, or settle or compromise any claim arising under, any
of the Assigned Documents, except that it may forward any payment to the
Indenture Trustee in accordance with Section 3.9, (iii) give any notice or
exercise any right or take any action under any of the Assigned Documents, or
(iv) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any of the Assigned Documents to
arbitration thereunder.

     Section 4.2.  Lease Indenture Events of Default. Subject to Section 4.4
hereof, the term "Lease Indenture Event of Default," wherever used herein,
shall mean any of the following events (whatever the reason for such Lease
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

                                       35
<PAGE>
     (a) any Lease Event of Default (other than the failure of the Facility
Lessee to pay any amount which shall constitute an Excepted Payment unless the
Facility Lessee has been declared in default pursuant to Section 17 thereof by
the Owner Lessor and the Indenture Trustee has consented to such event
constituting a Lease Indenture Event of Default pursuant to Section 4.3(e)
hereof) and other than a Lease Event of Default in consequence of the Facility
Lessee's failure to maintain the insurance required by Section 11 of the
Facility Lease if, and so long as, (i) such Lease Event of Default is waived by
the Owner Lessor and the Owner Participant and (ii) the insurance maintained by
the Facility Lessee still constitutes Prudent Industry Practice); or

     (b) the Owner Lessor shall fail to make any payment in respect of the
principal of, or Make-Whole Amount, if any, or interest on, or any scheduled
fees due and payable under or with respect to any Lessor Note within five
Business Days after the same shall have become due or any other amounts due and
payable under or with respect to any Lessor Note within ten Business Days after
the Owner Lessor receives notice that such amount is due and payable; or

     (c) the Owner Lessor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under this Indenture
(other than any covenant, obligation or agreement contained in clause (b) of
this Section 4.2), the Owner Lessor or the Lessor Manager shall fail to perform
or observe any covenant, obligation or agreement to be performed by it under
Section 6 of the Participation Agreement, the Owner Participant shall fail to
perform or observe any covenant, obligation or agreement to be performed by it
under Section 7 of the Participation Agreement, or the OP Guarantor shall fail
to perform or observe any covenant, obligation or agreement to be performed by
it under the OP Guaranty in each case, in any material respect, which failure
shall continue unremedied for 30 days after receipt by such party of written
notice thereof; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to 180 days, so long as such party diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such extended period;

     (d) any representation or warranty made by the Lessor Manager or the Owner
Lessor in Section 3.2 or 3.3 of the Participation Agreement or in the
certificate delivered by the Lessor Manager or the Owner Lessor at the Closing
pursuant to Section 4.6 of the Participation Agreement or any representation or
warranty made by the Owner Participant in Section 3.4 of the Participation
Agreement (other than Section 3.4(i)) or the certificate delivered by the Owner
Participant at the Closing

                                       36
<PAGE>
pursuant to Section 4.6 of the Participation Agreement, or any representation
or warranty made by the OP Guarantor (provided the OP Guaranty shall not have
been terminated or released) under the OP Guaranty or in the certificate
delivered by such OP Guarantor at the Closing pursuant to Section 4.6 of the
Participation Agreement, shall prove to have been incorrect in any material
respect when made and continues to be material and unremedied for a period of
30 days after receipt by such party of written notice thereof; provided,
however, that if such condition cannot be remedied within such 30-day period,
then the period within which to remedy such condition shall be extended up to
an additional 120 days, so long as such party diligently pursues such remedy
and such condition is reasonably capable of being remedied within such extended
period;

     (e) the Owner Participant, the Owner Lessor or the OP Guarantor (provided
the OP Guaranty shall not have been terminated or released) shall (i) commence
a voluntary case or other proceeding seeking relief under Title 11 of the
Bankruptcy Code or liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert in
a timely manner, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding; or (iv) make a general assignment for
the benefit of creditors; or (v) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or (vi) take corporate
action for the purpose of effecting any of the foregoing; or

     (f) an involuntary case or other proceeding shall be commenced against the
Owner Participant, the Owner Lessor or the OP Guarantor (provided the OP
Guaranty shall not have been terminated or released) seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Owner Lessor; and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days.

     Section 4.3.  Remedies of the Indenture Trustee.

     (a) In the event that a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or
upon receipt of written

                                       37
<PAGE>
instructions from a Majority in Interest of Noteholders shall declare, by
written notice to the Owner Lessor and the Owner Participant, the unpaid
principal amount of all Lessor Notes, with accrued interest thereon, to be
immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable (except in the
case of a Lease Indenture Event of Default under Section 4.2(e) or (f), such
principal and interest shall automatically become due and payable immediately
without any such declaration or notice) without further act or notice of any
kind. If any Make-Whole amount is due and payable pursuant to Section 2.10 (c)
or (d) at the time of any such acceleration, such Make-Whole Amount shall also
be due and payable in connection with such acceleration.

     (b) If a Lease Indenture Event of Default shall have occurred and be
continuing, then and in every such case, the Indenture Trustee, as assignee
under the Facility Lease or hereunder or otherwise, may, and where required
pursuant to the provisions of Section 5 hereof shall, upon written notice to
the Owner Lessor, exercise any or all of the rights and powers and pursue any
or all of the remedies pursuant to this Section 4 and, in the event such Lease
Indenture Event of Default shall be a Lease Event of Default, any and all of
the remedies provided pursuant to this Section 4 and Section 17 of the Facility
Lease and, subject to Section 4.4, may take possession of all or any part of
the Indenture Estate and may exclude therefrom the Owner Participant, the Owner
Lessor and, in the event such Lease Indenture Event of Default shall be a Lease
Event of Default, the Facility Lessee and all persons claiming under them, and
may exercise all remedies available to a secured party under the Uniform
Commercial Code or any other provision of Applicable Law. The Indenture
Trustee may proceed to enforce the rights of the Indenture Trustee and of the
Noteholders by directing payment to it of all moneys payable under any
agreement or undertaking constituting a part of the Indenture Estate, by
proceedings in any court of competent jurisdiction to recover damages for the
breach hereof or for the appointment of a receiver or for sale of all or any
part of the Property Interest or for foreclosure of the Property Interest,
together with the Owner Lessor's interest in the Assigned Documents, and by any
other action, suit, remedy or proceeding authorized or permitted by this
Indenture, at law or in equity, or whether for the specific performance of any
agreement contained herein, or for an injunction against the violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or
by law, and in addition may foreclose upon, sell, assign, transfer and deliver,
from time to time to the extent permitted by Applicable Law, all or any part of
the Indenture Estate or any interest therein, at any private sale or public
auction with or without demand, advertisement or notice (except as herein
required or as may be required by law) of the date, time and place of sale and
any adjournment thereof, for cash or credit or other property, for immediate or
future delivery and for

                                       38
<PAGE>
such price or prices and on such terms as the Indenture Trustee, in its
unfettered discretion, may determine, or as may be required by law, so long as
the Owner Participant and the Owner Lessor are afforded a commercially
reasonable opportunity to bid for all or such part of the Indenture Estate in
connection therewith unless Section 4.7 shall otherwise be applicable; provided
that 20 days shall be deemed to be a commercially reasonable opportunity to bid
for purposes of this Section 4.3(b). The Indenture Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee and of the Noteholders
asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.

     (c) All rights of action and rights to assert claims under this Indenture
or under any of the Lessor Notes may be enforced by the Indenture Trustee
without the possession of the Lessor Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as mortgagee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Noteholders as
herein provided. In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any such Persons parties to
such proceedings.

     (d) Anything herein to the contrary notwithstanding, neither the Indenture
Trustee nor any Noteholder shall at any time, including at any time when a
Lease Indenture Event of Default shall have occurred and be continuing and
there shall have occurred and be continuing a Lease Event of Default, be
entitled to exercise any remedy under or in respect of this Indenture which
could or would divest the Owner Lessor of title to, or its ownership interest
in, any portion of the Indenture Estate unless, in the case of a Lease
Indenture Event of Default as a consequence of a Lease Event of Default under
Section 16 of the Facility Lease, the Indenture Trustee shall have, to the
extent it is then entitled to do so hereunder and is not then stayed or
otherwise prevented from doing so by operation of law, commenced the exercise
of one or more remedies under the Facility Lease intending to dispossess the
Facility Lessee of its leasehold interest in the Undivided Interest and is
using good faith efforts in the exercise of such remedies (and not merely
asserting a right or claim to do so); provided that during any period that the
Indenture Trustee is stayed or otherwise prevented by operation of law from
exercising such remedies, the Indenture Trustee will not divest the Owner
Lessor of title to any portion of the Indenture Estate until the earlier of (a)
the expiration of the 180-

                                       39
<PAGE>
day period following the date of commencement of a stay or other prevention
or (b) the date of repossession of the Facility under the applicable Facility
Lease.

     (e) Any provisions of the Facility Lease or this Indenture to the contrary
notwithstanding, if the Facility Lessee shall fail to pay any Excepted Payment
to any Person entitled thereto as and when due, such Person shall have the
right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment or to declare a
Lease Event of Default under Section 16 of the Facility Lease solely to enforce
such obligations in respect of any Excepted Payments (provided that any such
declaration shall not be deemed to constitute a Lease Indenture Event of
Default hereunder without the consent of the Indenture Trustee).

     Section 4.4.  Right to Cure Certain Lease Events of Default.

     (a) If the Facility Lessee shall fail to make any payment of Periodic Rent
due on any Rent Payment Date when the same shall have become due, and if such
failure of the Facility Lessee to make such payment of Periodic Rent shall not
constitute the fourth consecutive such failure or the eighth cumulative failure
of the Facility Lessee, then the Owner Lessor may (but need not) pay to the
Indenture Trustee, at any time prior to the expiration of ten (10) Business
Days after the Owner Lessor and the Owner Participant shall have received
notice from the Indenture Trustee or have Actual Knowledge of the failure of
the Facility Lessee to make such payment of Periodic Rent, an amount equal to
the principal of, Make-Whole Amount, if any, and interest on the Lessor Notes,
then due (otherwise than by declaration of acceleration) on such Rent Payment
Date, together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Lessor shall be deemed (for purposes of
this Indenture) to have cured any Lease Indenture Event of Default which arose
or would have arisen from such failure of the Facility Lessee.

     (b) If the Facility Lessee shall fail to make any payment of Supplemental
Rent when the same shall become due or otherwise fail to perform any obligation
under the Facility Lease or any other Operative Document, then the Owner Lessor
may (but need not) make such payment on the date such Supplemental Rent was
payable, together with any interest due thereon on account of the delayed
payment thereof, or perform such obligation at any time prior to the expiration
of ten (10) Business Days after the Owner Lessor or the Owner Participant shall
have received notice or have Actual Knowledge of the occurrence of such
failure, and such payment or performance by the

                                       40
<PAGE>
Owner Lessor shall be deemed to have cured any Lease Indenture Event of Default
which arose or would have arisen from such failure of the Facility Lessee.

     (c) The Owner Lessor, upon exercising its rights under paragraph (a) or
(b) of this Section 4.4 to cure the Facility Lessee's failure to pay Periodic
Rent or Supplemental Rent or to perform any other obligation under the Facility
Lease or any other Operative Document, shall not obtain any Lien on any part of
the Indenture Estate on account of such payment or performance nor, except as
expressly provided in the next sentence, pursue any claims against the Facility
Lessee or any other party, for the repayment thereof if such claims would
impair the prior right and security interest of the Indenture Trustee in and to
the Indenture Estate. Upon such payment or performance by the Owner Lessor,
the Owner Lessor shall (to the extent of such payment made by it and the costs
and expenses incurred in connection with such payments and performance thereof
together with interest thereon and so long as no event which would, with the
passing of time or giving of notice or both, become a Lease Indenture Event of
Default under Section 4.2(b), (e) or (f), or any Lease Indenture Event of
Default hereunder shall have occurred and be continuing) be subrogated to the
rights of the Indenture Trustee and the Noteholders to receive the payment of
Periodic Rent or Supplemental Rent, as the case may be, with respect to which
the Owner Lessor made such payment and interest on account of such Periodic
Rent payment or Supplemental Rent payment being overdue in the manner set forth
in the next two sentences. If the Indenture Trustee shall thereafter receive
such payment of Periodic Rent, Supplemental Rent or such interest, the
Indenture Trustee shall, notwithstanding the requirements of Section 3.1
hereof, forthwith, remit such payment of Periodic Rent or Supplemental Rent, as
the case may be (to the extent of the payment made by the Owner Lessor pursuant
to this Section 4.4) and such interest to the Owner Lessor in reimbursement for
the funds so advanced by it, provided that if (A) any event which, with the
passing of time or giving of notice or both, would become a Lease Indenture
Event of Default under Section 4.2(b), (e) or (f) hereof, or any Lease
Indenture Event of Default hereunder shall have occurred and be continuing or
(B) any payment of principal, interest, or Make-Whole Amount, if any, on any
Lessor Note then shall be overdue, such payment shall not be remitted to the
Owner Lessor but shall be held by the Indenture Trustee as security for the
obligations secured hereby and distributed in accordance with Section 3.1
hereof. The Owner Lessor shall not attempt to recover any amount paid by it on
behalf of the Facility Lessee pursuant to this Section 4.4 except by demanding
of the Facility Lessee payment of such amount or by commencing an action
against the Facility Lessee for the payment of such amount, and except where a
Lease Indenture Event of Default (other than a Lease Event of Default) has
occurred and is continuing, the Owner Lessor shall be entitled to receive the
amount of such payment and the costs

                                       41
<PAGE>
and expenses incurred in connection with such payments and performance thereof
together with interest thereon from the Facility Lessee (but neither the Owner
Lessor nor the Owner Participant shall have any right to collect such amounts
by exercise of any of the remedies under Section 17 of the Facility Lease) or,
if paid by the Facility Lessee to the Indenture Trustee, from the Indenture
Trustee to the extent of funds actually received by the Indenture Trustee.

     (d) Until the expiration of the period during which the Owner Lessor or
the Owner Participant shall be entitled to exercise rights under paragraph (a)
or (b) of this Section 4.4 with respect to any failure by the Facility Lessee
referred to therein, neither the Indenture Trustee nor any Noteholder shall
take or commence any action it would otherwise be entitled to take or commence
as a result of such failure by the Facility Lessee, whether under this Section
4 or Section 17 of the Facility Leases or otherwise.

     (e) Each Noteholder agrees, by acceptance thereof, that if (i) (x) a Lease
Indenture Event of Default, which also constitutes a Lease Event of Default,
shall have occurred and be continuing for a period of at least 90 days without
the Lessor Notes having been accelerated or the Indenture Trustee having
exercised any remedy under the Facility Lease intended to dispossess the
Facility Lessee of the Facility, (y) the Lessor Notes have been accelerated
pursuant to Section 4.3(a) and such acceleration has not theretofore been
rescinded, or (z) an Enforcement Notice giving notice of the intent of the
Indenture Trustee to dispossess the Facility Lessee of the Facility under the
Facility Lease has been given pursuant to Section 5.1 within the previous 30
days, (ii) no Lease Indenture Event of Default of the nature described in any
of clauses (b) through (f) of Section 4.2 hereof shall have occurred and be
continuing and (iii) the Owner Lessor shall give written notice to the
Indenture Trustee of the Owner Lessor's intention to purchase all of the Lessor
Notes in accordance with this paragraph, then, upon receipt within 10 Business
Days after such notice from the Owner Lessor of an amount equal to the sum of
(x) the aggregate unpaid principal amount of any unpaid Lessor Notes then held
by the Noteholders, together with accrued but unpaid interest thereon to the
date of such receipt (as well as any interest on overdue principal and, to the
extent permitted by Applicable Law, overdue interest), plus (y) the aggregate
amount, if any, of all sums which, if Section 3.3 were then applicable, such
Noteholder would be entitled to be paid before any payments were to be made to
the Owner Lessor but excluding any Make-Whole Amount, such Noteholder will
forthwith (and upon its receipt of the payment referred to in clause (1) below,
will be deemed to) sell, assign, transfer and convey to the Owner Lessor
(without recourse or warranty of any kind other than of title to the Lessor
Notes so conveyed) all of the right, title and interest of such Noteholder in
and to the Indenture Estate, this Indenture, all Lessor Notes held by such
Noteholder and the

                                       42
<PAGE>
Assigned Documents, and the Owner Lessor shall thereupon assume all such
Noteholder's rights and obligations in such documents; provided, that no such
holder shall be required to so convey unless (1) the Owner Lessor shall have
simultaneously tendered payment on all other Lessor Notes issued by the Owner
Lessor at the time outstanding pursuant to this paragraph and (2) such
conveyance is not in violation of any Applicable Law. All charges and expenses
required to be paid in connection with the issuance of any new Lessor Note or
Lessor Notes in connection with this paragraph shall be borne by the Owner
Lessor. Notwithstanding the foregoing, the Owner Lessor may exercise the right
set forth in this clause (e) prior to the end of the 90 day period set forth
above but, in such case, the Make-Whole Amount, if any, shall also be payable.

     Section 4.5.  Rescission of Acceleration. If at any time after the
outstanding principal amount of the Lessor Notes shall have become due and
payable by acceleration pursuant to Section 4.3 hereof, (a) all amounts of
principal, Make-Whole Amount, if any, and interest which are then due and
payable in respect of all the Lessor Notes other than pursuant to Section 4.3
hereof shall have been paid in full, together with interest on all such overdue
principal and (to the extent permitted by Applicable Law) overdue interest at
the rate or rates specified in the Lessor Notes, and an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf of the
holders of the Lessor Notes (including counsel fees and expenses and all
expenses and reasonable compensation of the Indenture Trustee) and (b) every
other Lease Indenture Event of Default shall have been remedied, then a
Majority in Interest of Noteholders may, by written notice or notices to the
Owner Lessor, the Indenture Trustee and the Facility Lessee, rescind and annul
such acceleration and any related declaration of default under the Facility
Lease and their respective consequences, but no such rescission and annulment
shall extend to or affect any subsequent Lease Indenture Event of Default or
impair any right consequent thereon, and no such rescission and annulment shall
require any Noteholder to repay any principal or interest actually paid as a
result of such acceleration.

     Section 4.6.  Return of Indenture Estate, Etc.

     (a) If at any time the Indenture Trustee has the right to take possession
of the Indenture Estate pursuant to Section 4.3 hereof, at the request of the
Indenture Trustee, the Owner Lessor promptly shall (i) execute and deliver to
the Indenture Trustee such instruments of title and other documents and (ii)
make all such demands and give all such notices as are permitted by the terms
of the Facility Lease to be made or given by the Owner Lessor upon the
occurrence and continuance of a Lease Event of Default, in each case as the
Indenture Trustee may deem necessary or advisable to enable the

                                       43
<PAGE>
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Indenture Estate the
possession of which the Indenture Trustee shall at the time be entitled to
hereunder. If the Owner Lessor shall for any reason fail to execute and
deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Lessor to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Lessor hereby specifically
consents, and (ii) pursue all or any part of the Indenture Estate wherever it
may be found and enter any of the premises wherever all or part of the
Indenture Estate may be or is supposed to be and search for all or part of the
Indenture Estate and take possession of and remove all or part of the Indenture
Estate.

     (b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, as a charge against proceeds of the Indenture Estate, make all
such expenditures with respect to the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to deal with the
Indenture Estate and to carry on the business and exercise all rights and
powers of the Owner Lessor relating to the Indenture Estate, as the Indenture
Trustee shall deem best, and, the Indenture Trustee shall be entitled to
collect and receive all rents (including Periodic Rent and Supplemental Rent),
revenues, issues, income, products and profits of the Indenture Estate and
every part thereof (without prejudice to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive cash held by, or
required to be deposited with, the Indenture Trustee hereunder) and to apply
the same to the management of or otherwise dealing with the Indenture Estate
and of conducting the business thereof, and of all expenditures with respect to
the Indenture Estate and the making of all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Indenture Estate or any part thereof
(including the employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the Owner Lessor and
the Facility Lessee relating to the Indenture Estate and the Operative
Documents), or under any provision of, this Indenture, as well as just and
reasonable compensation for the services of the Indenture Trustee and of all
Persons properly engaged and employed by the Indenture Trustee.

     Section 4.7.  Power of Sale and Other Remedies. In addition to all other
remedies provided for herein if a Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to Sections
4.3 and 4.4, have the

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<PAGE>
right to foreclose this Indenture and to have a judicial sale of the Indenture
Estate or any part of the Indenture Estate as the Indenture Trustee shall
determine, in its sole discretion, with any such sale(s) to be under the
judgment or decree of a court of competent jurisdiction. Further, if a Lease
Indenture Event of Default shall have occurred and be continuing, the Indenture
Trustee may, in addition to and not in abrogation of other rights and remedies
provided in this Section, proceed by a suit or suits in law or in equity or by
any other appropriate proceeding or remedy (i) to enforce payment of the Lessor
Notes or the performance of any term, covenant, condition or agreement of this
Indenture or any other right, and (ii) to pursue any other remedy available to
it, all as the Indenture Trustee shall determine most effectual for such
purposes. Upon any foreclosure sale, the Indenture Trustee may bid for and
purchase the Indenture Estate and shall be entitled to apply all or any part of
the Secured Indebtedness as a credit to the purchase price. In the event of a
foreclosure sale of the Indenture Estate, the proceeds of said sale shall be
applied as provided in Section 3.3 hereof. In the event of any such
foreclosure sale by the Indenture Trustee, the Owner Lessor shall be deemed a
tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over. The Indenture Trustee, at the
Indenture Trustee's option, is authorized to foreclose this Indenture subject
to the rights of any tenants of the Indenture Estate, and the failure to make
any such tenants parties to any such foreclosure proceedings and to foreclose
their rights will not be, nor be asserted to be by the Owner Lessor, a defense
to any proceedings instituted by the Indenture Trustee to collect the Secured
Indebtedness.

     Section 4.8.  Appointment of Receiver. If the outstanding principal
amount of the Lessor Notes shall have been declared due and payable pursuant to
Section 4.3 hereof, as a matter of right, the Indenture Trustee shall be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee thereof) for all or any part of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Lessor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment. Any receiver appointed for all or any part of the Indenture
Estate shall be entitled to exercise all the rights and powers with respect to
the Indenture Estate to the extent instructed to do so by the Indenture Trustee.

     Section 4.9.  Remedies Cumulative. Each and every right, power and remedy
herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each

                                       45
<PAGE>
and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the
Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Participant,
the Owner Lessor or the Facility Lessee or to be an acquiescence therein.

     Section 4.10.  Waiver of Various Rights by the Owner Lessor. The Owner
Lessor hereby waives and agrees, to the extent permitted by Applicable Law,
that it will never seek or derive any benefit or advantage from any of the
following, whether now existing or hereafter in effect, in connection with any
proceeding under or in respect of this Lease Indenture:

     (a) any stay, extension, moratorium or other similar law;

     (b) any Applicable Law providing for the valuation of or appraisal of any
portion of the Indenture Estate in connection with a sale thereof; or

     (c) any right to have any portion of the Indenture Estate or other
security for the Lessor Notes marshaled.

The Owner Lessor covenants not to hinder, delay or impede the exercise of any
right or remedy under or in respect of this Lease Indenture, and agrees, to the
extent permitted by Applicable Law, to suffer and permit its exercise as though
no laws or rights of the character listed above were in effect; provided that
this shall not affect or reduce Owner Lessor's rights under Sections 4.3 and
4.4 hereof. Owner Lessor agrees for itself, its successors and assigns, that
the acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Indenture, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Indebtedness by Indenture Trustee or any person or party
holding under it shall not constitute a waiver of such foreclosure. This
agreement by Owner Lessor is intended to apply to the acceptance and such
application of any such proceeds, awards, rents and other sums or anything else
of value whether the same shall be accepted from, or for the account of, Owner
Lessor or from any other source whatsoever by Indenture Trustee or by any
person or party holding under Indenture

                                       46
<PAGE>
Trustee at any time or times in the future while any of the obligations secured
hereby shall remain outstanding.

     Section 4.11.  Discontinuance of Proceedings. In case the Indenture
Trustee or any Noteholder shall have proceeded to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee or the Noteholder, then
and in every such case the Owner Lessor, the Indenture Trustee and the Facility
Lessee shall be restored to their former positions and rights hereunder with
respect to the Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee or the Noteholder shall continue as if no such proceedings
had taken place.

     Section 4.12.  No Action Contrary to the Facility Lessee's Rights Under
the Facility Lease. Notwithstanding any other provision of any of the
Operative Documents, so long as no Lease Event of Default under the Facility
Lease shall have been declared (or deemed to have been declared), the Indenture
Trustee and the Noteholders shall be subject to the Facility Lessee's rights
under the Facility Lease, and neither the Indenture Trustee nor any Noteholders
shall take or cause to be taken any action contrary to the right of the
Facility Lessee, including its rights to quiet use and possession of the
Facility.

     Section 4.13.  Right of the Indenture Trustee to Perform Covenants, Etc.
If the Owner Lessor shall fail to make any payment or perform any act required
to be made or performed by it hereunder or under the Assigned Documents, or if
the Owner Lessor shall fail to release any Lien affecting the Indenture Estate
which it is required to release by the terms of this Indenture or the
Participation Agreement or the LLC Agreement, the Indenture Trustee, without
notice to or demand upon the Owner Lessor and without waiving or releasing any
obligation or defaults may (but shall be under no obligation to, and, except as
provided in the last sentence hereof, shall incur no liability in connection
therewith) at any time thereafter make such payment or perform such act for the
account and at the expense of the Indenture Estate and may take all such action
with respect thereto (including entering upon the Facility Site or any part
thereof, or the Facility for such purpose) as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction. All sums so paid by the
Indenture Trustee and all costs and expenses (including legal fees and
expenses) so incurred, together with interest thereon from the date of payment
or incurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Indenture Estate to the Indenture Trustee
on demand. The Indenture Trustee shall not be liable for any damages resulting
from

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<PAGE>
any such payment or action unless such damages shall be a consequence of
willful misconduct or gross negligence on the part of the Indenture Trustee.

     Section 4.14.  Further Assurances. The Owner Lessor covenants and agrees
from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the
intent hereof.

     Section 4.15.  Waiver of Past Defaults. Any past Lease Indenture Event of
Default and its consequences may be waived by the Indenture Trustee or a
Majority in Interest of Noteholders, except a Lease Indenture Event of Default
(i) in the payment of the principal of, Make-Whole Amount, if any, and or
interest on any Lessor Note, subject to the provisions of Sections 5.1 and 8.1
hereof, or (ii) in respect of a covenant or provision hereof which, under
Section 8.1 hereof, cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver and subject to the terms of such waiver, such
Lease Indenture Event of Default shall cease to exist, and any other Lease
Indenture Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Lease Indenture Event of Default or impair any right
consequent thereon.

                                SECTION 5.
                      DUTIES OF INDENTURE TRUSTEE;
                CERTAIN RIGHTS AND DUTIES OF OWNER LESSOR

     Section 5.1.  Notice of Action Upon Lease Indenture Event of Default. The
Indenture Trustee shall give prompt written notice to the Owner Lessor and the
Owner Participant of any Lease Indenture Event of Default with respect to which
the Indenture Trustee has Actual Knowledge and will give the Facility Lessee
and the Owner Participant not less than 30 days' prior written notice of the
date on or after which the Indenture Trustee intends to exercise remedies under
Section 4.3 (an "Enforcement Notice"), which notice may be given
contemporaneously with any notice contemplated by Section 4.3(a) or 4.3(b).
The Indenture Trustee shall take such action, or refrain from taking such
action, as the Majority in Interest of Noteholders shall instruct in writing.

     Section 5.2.  Actions Upon Instructions Generally. Subject to the terms
of Sections 5.4, 5.5 and 5.6 hereof, upon written instructions at any time and
from time to time of a Majority in Interest of Noteholders, the Indenture
Trustee shall take such action, or refrain from taking such action, including
any of the following actions as may

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<PAGE>
be specified in such instructions: (a) give such notice, direction or consent
or exercise such right, remedy or power or take such action hereunder or under
any Assigned Document, or in respect of any part of or all the Indenture
Estate, as it shall be entitled to take and as shall be specified in such
instructions; (b) take such action with respect to or to preserve or protect
the Indenture Estate (including the discharge of Liens) as it shall be entitled
to take and as shall be specified in such instructions; and (c) waive, consent
to, approve (as satisfactory to it) or disapprove all matters required by the
terms of any Operative Document to be satisfactory to the Indenture Trustee.
The Indenture Trustee may, and upon written instructions from a Majority in
Interest of Noteholders, the Indenture Trustee shall, execute and file or cause
to be executed and filed any financing statement (and any continuation
statement with respect to such financing statement) or any similar instrument
or document relating to the security interest or the assignment created by this
Indenture or granted by the Owner Lessor herein as may be necessary to protect
and preserve the security interest or assignment created by or granted pursuant
to this Indenture, to the extent otherwise entitled to do so and as shall be
specified in such instructions.

     Section 5.3.  Action Upon Payment of Lessor Notes or Termination of
Facility Lease. Subject to the terms of Section 5.4 hereof, upon payment in
full of the principal of and interest on all Lessor Notes then outstanding and
all other amounts then due all Noteholders hereunder, and all other sums
secured hereby or otherwise required to be paid hereunder, under the
Participation Agreement and under the Facility Lease, the Indenture Trustee
shall execute and deliver to, or as directed in writing by, the Owner Lessor
and the Facility Lessee an appropriate instrument in due form for recording,
releasing the Indenture Estate from the Lien of this Indenture. Nothing in
this Section 5.3 shall be deemed to expand the instances in which the Owner
Lessor is entitled to prepay the Lessor Notes.

     Section 5.4.  Compensation of the Indenture Trustee; Indemnification.

     (a) The Owner Lessor will from time to time, on demand, pay to the
Indenture Trustee such compensation for its services hereunder as shall be
agreed to by the Owner Lessor and the Indenture Trustee, or, in the absence of
agreement, reasonable compensation for such services (which compensation shall
include reasonable fees and expenses of its outside counsel and shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Indenture Trustee agrees that it shall have no right
against the Noteholders or, except as provided in Section 3 and Section 4.3
hereof or this Section 5, the Indenture Estate, for any fee as compensation for
its services hereunder.

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<PAGE>
     (b) The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 4, 5.2 or 9.1 hereof unless it and
any of its directors, officers, employees or agents shall have been indemnified
in manner and form satisfactory to the Indenture Trustee. The Indenture
Trustee shall not be required to take any action under Section 4 or Section
5.2, 5.3 or 9.1 hereof, nor shall any other provision of this Indenture be
deemed to impose a duty on the Indenture Trustee to take any action, if it
shall have been advised by counsel (who shall not be an employee of the
Indenture Trustee) that such action is contrary to the terms hereof or is
otherwise contrary to Applicable Law or (unless it shall have been indemnified
in manner and form satisfactory to the Indenture Trustee) may result in
personal liability to the Indenture Trustee.

     Section 5.5.  No Duties Except as Specified; No Action Except Under
Facility Lease, Indenture or Instructions.

     (a)  The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any part of the
Indenture Estate or otherwise take or refrain from taking any action under or
in connection with this Indenture or the other Assigned Documents except as
expressly provided by the terms of this Indenture or as expressly provided in
written instructions from a Majority in Interest of Noteholders in accordance
with Section 5.2 hereof; and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee.

     (b) The Indenture Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Indenture Estate except (a) as required
by the terms of the Facility Lease, to the extent applicable to the Indenture
Trustee as assignee of the Owner Lessor, (b) in accordance with the powers
granted to, or the authority conferred upon, the Indenture Trustee pursuant to
this Indenture or in accordance with the express terms hereof or with written
instructions from a Majority in Interest of Noteholders in accordance with
Section 5.2 hereof.

     Section 5.6.  Certain Rights of the Owner Lessor. Notwithstanding any
other provision of this Indenture or any provision of any Operative Document to
the contrary, and in addition to any rights conferred on the Owner Lessor
hereby:

     (a)  The Owner Lessor shall at all times, to the exclusion of the Indenture
Trustee, (i) retain all rights to demand and receive payment of, and to
commence an action for payment of, Excepted Payments but the Owner Lessor shall
have no remedy

                                       50
<PAGE>
or right with respect to any such payment against the Indenture Estate nor any
right to collect any such payment by the exercise of any of the remedies under
Section 17 of the Facility Lease except as expressly provided in this Section
5.6; (ii) retain all rights with respect to insurance that Section 11 of the
Facility Lease and Schedule 5.31 of the Participation Agreement specifically
confers upon the Owner Lessor and to waive any failure by the Facility Lessee
to maintain the insurance required by Section 11 of the Facility Lease before
or after the fact so long as the insurance maintained by the Facility Lessee
still conforms to Prudent Industry Practice; (iii) retain all rights to adjust
Periodic Rent and Termination Value as provided in Section 3.4 of the Facility
Lease, Section 12 of the Participation Agreement or the Tax Indemnity
Agreement; provided, however, that after giving effect to any such adjustment
(x) the amount of Periodic Rent payable on each Rent Payment Date shall be at
least equal to the aggregate amount of all principal and accrued interest
payable on such Rent Payment Date on all Lessor Notes then outstanding and (y)
Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Facility Lessee in respect of any early termination
of the Facility Lease) than an amount sufficient, as of the date of payment, to
pay in full the principal of, and interest on all Lessor Notes outstanding on
and as of such date of payment; (iv) except in connection with the exercise of
remedies pursuant to the Facility Lease, retain all rights to exercise the
Owner Lessor's rights relating to the Appraisal Procedure and to confer and
agree with the Facility Lessee on Fair Market Rental Value, or any Renewal
Lease Term; and (v) retain the right to declare the Facility Lease to be in
default with respect to any Excepted Payment pursuant to Section 17 of the
Facility Lease.

     (b)  The Owner Lessor shall have the right, together with or independently
of the Indenture Trustee, (i) to receive from the Facility Lessee and the
Guarantor all notices, certificates, reports, filings, opinions of counsel and
other documents and all information that the Facility Lessee is permitted or
required to give or furnish to the Owner Lessor or the Owner Participant, as
the case may be, pursuant to the Facility Lease or any other Operative
Document; (ii) to inspect the Facility and the records relating thereto
pursuant to Section 12 of the Facility Lease; (iii) to provide such insurance
as may be permitted by Section 11 of the Facility Lease; (iv) to provide
notices to the Facility Lessee or the Guarantor to the extent otherwise
permitted by the Operative Documents; and (v) to perform for the Facility
Lessee as provided in Section 20 of the Facility Lease.

     (c)  So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof (or, if accelerated, such acceleration has theretofore
been rescinded) or the Indenture Trustee shall not have exercised any of its
rights pursuant

                                       51
<PAGE>
to Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall
retain the right to the exclusion of the Indenture Trustee to exercise the
rights of the Owner Lessor under, and to determine compliance by the Facility
Lessee with, the provisions of Sections 10 (other than Section 10.3 thereof),
13, 14 and 15 of the Facility Lease; provided, however, that if a Lease
Indenture Event of Default shall have occurred and be continuing, the Owner
Lessor shall cease to retain such rights upon notice from the Indenture Trustee
stating that such rights shall no longer be retained by the Owner Lessor;

     (d) Except as expressly provided in this Section 5.6, so long as the
Lessor Notes have not been accelerated pursuant to Section 4.3(a) hereof (or,
if accelerated, such acceleration has theretofore been rescinded) or the
Indenture Trustee shall not have exercised any of its rights pursuant to
Section 4 hereof to take possession of, foreclose, sell or otherwise take
control of all or any part of the Indenture Estate, the Owner Lessor shall have
the right, to be exercised jointly with the Indenture Trustee, (i) to exercise
the rights with respect to the Facility Lessee's use and operation,
modification or maintenance of the Undivided Interest, (ii) to exercise the
Owner Lessor's right under Section 13.1 of the Participation Agreement to
withhold or grant its consent to an assignment by the Facility Lessee of its
rights under the Facility Lease, and (iii) to exercise the rights of the Owner
Lessor under Section 10.3 of the Facility Lease; provided, however, that if a
Lease Indenture Event of Default shall have occurred and be continuing, the
Owner Lessor shall cease to exercise such rights under this clause (iii) upon
notice from the Indenture Trustee stating that such rights shall no longer be
retained by the Owner Lessor; provided further, however, that (A) the Owner
Lessor shall have no right to receive any Periodic Rent or other payments other
than Excepted Payments payable to the Owner Lessor, or the Owner Participant
and (B) no determination by the Owner Lessor or the Indenture Trustee that the
Facility Lessee is in compliance with the provisions of any applicable Assigned
Document shall be binding upon or otherwise affect the rights hereunder of the
Indenture Trustee or any Noteholder on the one hand or the Owner Lessor or the
Owner Participant on the other hand;

     (e) So long as the Lessor Notes have not been accelerated pursuant to
Section 4.3(a) hereof and the Indenture Trustee shall not have exercised any of
its rights pursuant to Section 4 hereof to take possession of, foreclose, sell
or otherwise take control of all or any part of the Indenture Estate, the Owner
Lessor shall have the right, together with the Indenture Trustee and to the
extent permitted by the Operative Documents and Applicable Law, to seek
specific performance of the covenants of the

                                       52
<PAGE>
Facility Lessee under the Operative Documents relating to the protection,
insurance, maintenance, possession, use and return of the Property Interest;
and

     (f) Nothing in this Indenture shall give to, or create in, or otherwise
provide the benefit of to, the Indenture Trustee, any rights of the Owner
Participant under or pursuant to the Tax Indemnity Agreement or any other
Operative Document and nothing in this Section 5.6 or elsewhere in this
Indenture shall give to the Owner Lessor the right to exercise any rights
specifically given to the Indenture Trustee pursuant to any Operative Document;
and nothing in this Indenture shall give to, or create in, the Indenture
Trustee the right to, and the Indenture Trustee shall not, release the
Guarantor of its obligations under the Calpine Guaranty in respect of payment
of the Equity Portion of Termination Value, unpaid amounts of the Equity
Portion of Periodic Rent (and all amounts of overdue interest relating to such
amount) and other amounts constituting Excepted Payments, unless such release
results in payment in full to the Owner Lessor of all such unpaid amounts as
certified to the Indenture Trustee by the Owner Lessor, and all claims of the
Noteholders;

but nothing in clauses (a) through (f) above shall deprive the Indenture
Trustee of the exclusive right, so long as this Indenture shall be in effect,
to declare the Facility Lease to be in default under Section 16 thereof and
thereafter to exercise the remedies pursuant to Section 17 of the Facility
Lease (except as expressly set forth in the proviso of Section 5.6(b)).

     Section 5.7.  Restrictions on Dealing with Indenture Estate. Except as
provided in the Operative Documents, but subject to the terms of this
Indenture, the Owner Lessor shall not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Facility, the Facility
Site, any part of the Facility Site or any other part of the Indenture Estate.

     Section 5.8.  Filing of Financing Statements and Continuation Statements.
Pursuant to Section 5.10 of the Participation Agreement, the Facility Lessee
has covenanted to maintain the priority of the Lien of this Indenture on the
Indenture Estate. The Indenture Trustee shall, at the written request and
expense of the Facility Lessee, as provided in the Participation Agreement,
execute and deliver to the Facility Lessee and the Facility Lessee will file,
if not already filed, such financing statements or other documents and such
continuation statements or other documents with respect to financing statements
or other documents previously filed relating to the Lien created by this
Indenture in the Indenture Estate as may be supplied to the Indenture Trustee
by the Facility Lessee. At any time and from time to time, upon the request of
the Facility

                                       53
<PAGE>
Lessee or the Indenture Trustee, at the expense of the Facility Lessee (and
upon receipt of the form of document so to be executed), the Owner Lessor shall
promptly and duly execute and deliver any and all such further instruments and
documents as the Facility Lessee or the Indenture Trustee may request in
obtaining the full benefits of the security interest and assignment created or
intended to be created hereby and of the rights and powers herein granted.
Upon the reasonable instructions (which instructions shall be accompanied by
the form of document to be filed) at any time and from time to time of the
Facility Lessee or the Indenture Trustee, the Owner Lessor shall execute and
file any financing statement (and any continuation statement with respect to
any such financing statement), and any other document relating to the security
interest and assignment created by this Indenture as may be specified in such
instructions. In addition, the Indenture Trustee and the Owner Lessor will
execute such continuation statements with respect to financing statements and
other documents relating to the Lien created by this Indenture in the Indenture
Estate as may be specified from time to time in written instructions of any
Noteholder (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the form of such continuation
statement or other document to be filed). Neither the Indenture Trustee nor,
except as otherwise herein expressly provided, the Owner Lessor shall have
responsibility for the protection, perfection or preservation of the Lien
created by this Indenture.

                                  SECTION 6.
                     INDENTURE TRUSTEE AND OWNER LESSOR

     Section 6.1.  Acceptance of Trusts and Duties. The Indenture Trustee
accepts the trusts hereby created and applicable to it and agrees to perform
the same but only upon the terms of this Indenture, and agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance
with the provisions hereof. If any Lease Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, subject to the
provisions of Sections 4 and 5 hereof, exercise such of the rights and remedies
vested in it by this Indenture and shall at all times use the same degree of
care in their exercise as a prudent person would exercise or use in the
circumstances in the conduct of its own affairs. The Indenture Trustee shall
not be liable under any circumstances, except (a) for its own negligence or
willful misconduct, (b) in the case of any inaccuracy of any representation or
warranty of the Indenture Trustee or the Lease Indenture Company contained in
Section 3.5 of the Participation Agreement, in the certificate delivered by the
Indenture Trustee at the Closing pursuant to Section 4.6 of the Participation
Agreement, or (c) for the performance of its obligations under Section 8 of the
Participation Agreement; and the Lease Indenture

                                       54
<PAGE>
Company and the Indenture Trustee shall not be liable for any action or
inaction of the Owner Trust; provided, however, that:

          (i) Prior to the occurrence of a Lease Indenture Event of Default of
     which a Responsible Officer of the Indenture Trustee shall have Actual
     Knowledge, and after the curing of all such Indenture Events of Default
     which may have occurred, the duties and obligations of the Indenture
     Trustee shall be determined solely by the express provisions of the
     Operative Documents to which it is a party, the Indenture Trustee shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in the Operative Documents, no implied covenants or
     obligations shall be read into the Operative Documents against the
     Indenture Trustee and, in the absence of bad faith on the part of the
     Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
     truth of the statements and the correctness of the opinions expressed
     therein, upon any notes or opinions furnished to the Indenture Trustee and
     conforming to the requirements of this Indenture;

          (ii) The Indenture Trustee shall not be liable in its individual
     capacity for an error of judgment made in good faith by a Responsible
     Officer or other officers of the Indenture Trustee, unless it shall be
     proven that the Indenture Trustee was negligent in ascertaining the
     pertinent facts;

          (iii) The Indenture Trustee shall not be liable in its individual
     capacity with respect to any action taken, suffered or omitted to be taken
     by it in good faith in accordance with this Indenture or at the direction
     of the Majority in Interest of Noteholders, relating to the time, method
     and place of conducting any proceeding or remedy available to the Indenture
     Trustee, or exercising or omitting to exercise any trust or power conferred
     upon the Indenture Trustee, under this Indenture;

          (iv) The Indenture Trustee shall not be required to take notice or be
     deemed to have notice or knowledge of any default, Lease Event of Default,
     Significant Lease Default or Lease Indenture Event of Default (except for a
     Lease Indenture Event of Default resulting from an event of nonpayment)
     unless a Responsible Officer of the Indenture Trustee shall have received
     written notice thereof. In the absence of receipt of such notice, the
     Indenture Trustee may conclusively assume that there is no default or Lease
     Indenture Event of Default;

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          (v) The Indenture Trustee shall not be required to expend or risk its
     own funds or otherwise incur financial liability for the performance of any
     of its duties hereunder or the exercise of any of its rights or powers if
     there is reasonable ground for believing that the repayment of such funds
     or adequate indemnity against such risk or liability is not reasonably
     assured to it, and none of the provisions contained in this Indenture shall
     in any event require the Indenture Trustee to perform, or be responsible
     for the manner of performance of, any of the obligations of the Owner
     Lessor, under this Indenture; and

          (vi) The right of the Indenture Trustee to perform any discretionary
     act enumerated in this Indenture shall not be construed as a duty, and the
     Indenture Trustee shall not be answerable for other than its negligence or
     willful misconduct in the performance of such act.

     Section 6.2.  Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.2 hereof and except as
provided in Section 5.5 and 5.8 hereof, the Indenture Trustee shall have no
duty (a) to see to any registration, recording or filing of any Operative
Document (or any financing or continuation statements in respect thereto) or to
see to the maintenance of any such registration, recording or filing, (b) to
see to any insurance on the Facilities or the Facilities or to effect or
maintain any such insurance, (c) except as otherwise provided in Section 5.5
hereof or in Section 10 of the Participation Agreement, to see to the payment
or discharge of any Tax or any Lien of any kind owing with respect to, or
assessed or levied against, any part of the Indenture Estate, (d) to confirm or
verify the contents of any report, notice, request, demand, certificate,
financial statement or other instrument of the Facility Lessee, (e) to inspect
the Facility at any time or ascertain or inquire as to the performance or
observance of any of the Facility Lessee's covenants with respect to the
Facility or (f) to exercise any of the trusts or powers vested in it by this
Indenture or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby
(which in the case of the Majority in Interest of Noteholders will be deemed to
be satisfied by a letter agreement with respect to such costs from such
Majority in Interest of Noteholders). Notwithstanding the foregoing, the
Indenture Trustee shall furnish to each Noteholder and to the Owner Lessor and
the Owner Participant promptly upon receipt thereof duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee hereunder or under any of
the Operative Documents

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unless the Indenture Trustee shall reasonably believe that each such
Noteholder, the Owner Lessor and the Owner Participant shall have received
copies thereof.

     Section 6.3.  Representations and Warranties.

     (a)  The Owner Lessor represents and warrants that it has not assigned or
pledged any of its estate, right, title or interest subject to this Indenture,
to anyone other than the Indenture Trustee.

     (b)  NEITHER THE OWNER LESSOR NOR THE INDENTURE TRUSTEE MAKES, NOR SHALL BE
DEEMED TO HAVE MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH PLANS OR SPECIFICATIONS, QUALITY,
DURABILITY, SUITABILITY, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE FACILITY, OR ANY PART
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE FACILITIES OR ANY OTHER PART OF THE INDENTURE
ESTATE, except that the Owner Lessor represents and warrants that on the
Closing Date it shall have received whatever title or interest to the Undivided
Interests and the Facility Site as were conveyed to it by the Facility Lessee
and that on the Closing Date the Undivided Interests shall be free of Owner
Lessor's Liens and the Owner Participant's Liens; or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Lessor Notes or any of the other Operative Documents, or as to the correctness
of any statement contained in any thereof, except that each of the Owner Lessor
and the Indenture Trustee represents and warrants that this Indenture and the
Participation Agreement have been, and, in the case of the Owner Lessor, the
other Operative Documents to which it is or is to become a party have been or
will be, executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf.

     Section 6.4.  No Segregation of Moneys; No Interest. All moneys and
securities deposited with and held by the Indenture Trustee under this
Indenture for the purpose of paying, or securing the payment of, the principal
of or Make-Whole Amount or interest on the Lessor Notes shall be held in trust.
Except as specifically provided herein or in the Facility Lease, any moneys
received by the Indenture Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law and may be deposited
under such general conditions as may be prescribed by Applicable Law, and
neither the Owner Lessor nor the Indenture Trustee shall be liable for any

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interest thereon; provided, however, subject to Section 6.5 hereof, that any
payments received or applied hereunder by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof to the
extent known to the Indenture Trustee.

     Section 6.5.  Reliance; Agents; Advice of Experts. The Indenture Trustee
shall be authorized and protected and incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed to be
genuine and believed to be signed by the proper party or parties. The
Indenture Trustee may accept in good faith a certified copy of a resolution of
the managing member (or equivalent body) of the Facility Lessee as conclusive
evidence that such resolution has been duly adopted by such Board and that the
same is in full force and effect. As to the amount of any payment to which any
Noteholder is entitled pursuant to clause "Third" of Section 3.2 or clause
"Fourth" of Section 3.3 hereof, and as to the amount of any payment to which
any other Person is entitled pursuant to Section 3.5 or Section 3.7 hereof, the
Indenture Trustee for all purposes hereof may rely on and shall be authorized
and protected in acting or refraining from acting upon an Officer's Certificate
of such Noteholder or other Person, as the case may be. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Indenture Trustee for all purposes hereof may rely on an Officer's
Certificate of the Owner Lessor or the Facility Lessee or a Noteholder as to
such fact or matter, and such certificate shall constitute full protection to
the Indenture Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Indenture Trustee shall have the right to
request instructions from the Owner Lessor or the Majority in Interest of
Noteholders with respect to taking or refraining from taking any action in
connection with the Lease Indenture or any other Operative Document to which it
is a party, and shall be entitled to act or refrain from taking such action
unless and until the Indenture Trustee shall have received written instructions
from the Owner Lessor or the Majority in Interest of Noteholders, and the
Indenture Trustee shall not incur liability by reason of so acting (except as
provided in Section 6.1) or refraining from acting. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Indenture Estate (but
subject to the priorities of payment set forth in Section 3 hereof), consult
with independent skilled Persons to be selected and retained by it (other than
Persons regularly in its employ) as to matters within their particular
competence, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or
opinion, within such Person's area of

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competence, of any such Person, so long as the Indenture Trustee shall have
exercised reasonable care in selecting such Person.

                                   SECTION 7.
                          SUCCESSOR INDENTURE TRUSTEES
                             AND SEPARATE TRUSTEES

     Section 7.1.  Resignation or Removal of the Indenture Trustee; Appointment
of Successor.

     (a) Resignation or Removal. Either of the Indenture Trustee or the
Account Bank or any successor thereto may resign at any time with or without
cause by giving at least thirty (30) days' prior written notice to the Owner
Lessor, the Owner Participant, the Facility Lessee and each Noteholder, such
resignation to be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In addition, a Majority in Interest of Noteholders may at any time
remove the Indenture Trustee or the Account Bank with or without cause by an
instrument in writing delivered to the Owner Lessor, the Owner Participant, the
Indenture Trustee and the Account Bank, and the Owner Lessor shall give prompt
written notification thereof to each Noteholder and the Facility Lessee. Such
removal will be effective on the acceptance of appointment by the successor
Indenture Trustee or Account Bank pursuant to the provisions of subsection (b)
below. In the case of the resignation or removal of the Indenture Trustee or
Account Bank, a Majority in Interest of Noteholders may appoint a successor
Indenture Trustee or Account Bank by an instrument signed by such holders. If
a successor Indenture Trustee or Account Bank shall not have been appointed
within thirty (30) days after such resignation or removal, the Indenture
Trustee, Account Bank or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee or Account Bank to act
until such time, if any, as a successor shall have been appointed by a Majority
in Interest of Noteholders as above provided. The successor Indenture Trustee
or Account Bank so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee or Account Bank
appointed by a Majority in Interest of Noteholders as above provided.

     (b) Acceptance of Appointment. Any successor Indenture Trustee or Account
Bank shall execute and deliver to the predecessor Indenture Trustee or Account
Bank, the Owner Participant, the Owner Lessor and all Noteholders an instrument
accepting such appointment and thereupon such successor Indenture Trustee or
Account Bank, without further act, shall become vested with all the estates,
properties, rights,

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powers and duties of the predecessor Indenture Trustee or Account Bank
hereunder in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee or Account Bank herein; but
nevertheless, upon the written request of such successor Indenture Trustee or
Account Bank or a Majority in Interest of Noteholders, such predecessor
Indenture Trustee or Account Bank shall execute and deliver an instrument
transferring to such successor Indenture Trustee or Account Bank, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Indenture Trustee or Account Bank, and such
predecessor Indenture Trustee or Account Bank shall duly assign, transfer
deliver and pay over to such successor Indenture Trustee all moneys or other
property then held by such predecessor Indenture Trustee or Account Bank
hereunder. To the extent required by Applicable Law or upon request of the
successor Indenture Trustee or Account Bank, the Owner Lessor shall execute any
and all documents confirming the vesting of such estates, properties, rights
and powers in the successor Indenture Trustee or Account Bank.

     (c) Qualifications. Any successor Indenture Trustee or Account Bank,
however appointed, shall be a trust company or bank with trust powers (i) which
(A) has a combined capital and surplus of at least $150,000,000, or (B) is a
direct or indirect subsidiary of a corporation which has a combined capital and
surplus of at least $150,000,000 provided such corporation guarantees the
performance of the obligations of such trust company or bank as Indenture
Trustee or Account Bank, or (C) is a member of a bank holding company group
having a combined capital and surplus of at least $150,000,000 provided the
parent of such bank holding company group or a member which itself has a
combined capital and surplus of at least $150,000,000 guarantees the
performance of the obligations of such trust company or bank, and (ii) is
willing, able and legally qualified to perform the duties of Indenture Trustee
or Account Bank hereunder upon reasonable or customary terms. No successor
Indenture Trustee or Account Bank, however appointed, shall become such if such
appointment would result in the violation of any Applicable Law or create a
conflict or relationship involving a conflict of interest under the Trust
Indenture Act of 1939, as amended.

     (d) Appointment of Account Bank. The Indenture Trustee and each
Noteholder hereby irrevocably designate and appoint State Street Trust Bank and
Trust Company of Connecticut, National Association as the Account Bank under
this Indenture (the "Account Bank"). The Account Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Indenture Trustee's Account. The Owner Lessor hereby
acknowledges that the Account Bank shall act as securities intermediary with
respect to the Indenture Trustee's Account pursuant to this Indenture. The
Account Bank shall not have duties or

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responsibilities except those expressly set forth in Sections 3.11 and 3.12 of
this Indenture. The Indenture Trustee, at the written direction of a Majority
in Interest of Noteholders, may remove and replace the Account Bank pursuant to
the terms of Section 7.1(a) and direct such Account Bank according to the terms
of this Indenture.

     (e) Merger, etc. Any Person into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of subsection (c) of this Section 7.1, be the Indenture
Trustee under this Indenture without further act.

     Section 7.2.  Appointment of Additional and Separate Trustees.

     (a)  Appointment. Whenever (i) the Indenture Trustee shall deem it
necessary or prudent in order to conform to any law of any applicable
jurisdiction or to make any claim or bring any suit with respect to or in
connection with the Indenture Estate, this Indenture, the Facility Lease, the
Lessor Notes or any of the transactions contemplated by the Operative
Documents, (ii) the Indenture Trustee shall be advised by counsel, satisfactory
to it, that it is so necessary or prudent in the interest of the Noteholders or
(iii) a Majority in Interest of Noteholders deems it so necessary or prudent
and shall have requested in writing the Indenture Trustee to do so, then in any
such case the Indenture Trustee shall execute and deliver from time to time all
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee either
to act as additional trustee or trustees of all or any part of the Indenture
Estate, jointly with the Indenture Trustee, or to act as separate trustee or
trustees of all or any part of the Indenture Estate, in any such case with such
powers as may be provided in such instruments or agreements, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the
Indenture Trustee deemed necessary or advisable by the Indenture Trustee,
subject to the remaining provisions of this Section 7.2. The Owner Lessor
hereby consents to all actions taken by the Indenture Trustee under the
provisions of this Section 7.2 and agrees, upon the Indenture Trustee's
request, to join in and execute, acknowledge and deliver any or all such
instruments or agreements; and the Owner Lessor hereby makes, constitutes and
appoints the Indenture Trustee its agent and attorney-in-fact for it and in its
name, place and stead to execute, acknowledge and deliver any such instrument
or agreement in the event that the Owner Lessor shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such

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request so to do; provided, however, that the Indenture Trustee shall exercise
due care in selecting any additional or separate trustee if such additional or
separate trustee shall not be a Person possessing trust powers under Applicable
Law. If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law or take any such action or shall be
advised by such counsel that it is no longer so necessary or prudent in the
interest of the Noteholders or in the event that the Indenture Trustee shall
have been requested to do so in writing by a Majority in Interest of
Noteholders, the Indenture Trustee shall execute and deliver all instruments
and agreements necessary or proper to remove any additional trustee or separate
trustee. In such connection, the Indenture Trustee may act on behalf of the
Owner Lessor to the same extent as is provided above. Notwithstanding anything
contained to the contrary in this Section 7.2(a), to the extent the laws of any
jurisdiction preclude the Indenture Trustee from taking any action hereunder
either alone, jointly or through a separate trustee under the direction and
control of the Indenture Trustee, the Owner Lessor, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such jurisdiction,
which separate trustee shall have full power and authority to take all action
hereunder as to matters relating to such jurisdiction without the consent of
the Indenture Trustee, but not subject to the same limitations in any exercise
of his power and authority as those to which the Indenture Trustee is subject.

     (b) The Indenture Trustee as Agent. Any additional trustee or separate
trustee at any time by an instrument in writing may constitute the Indenture
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by Applicable Law, to do all acts and things and exercise
all discretions which it is authorized or permitted to do or exercise, for and
in its behalf and in its name. In case any such additional trustee or separate
trustee shall become incapable of acting or cease to be such additional trustee
or separate trustee, the property, rights, powers, trusts, duties and
obligations of such additional trustee or separate trustee, as the case may be,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Indenture Trustee, without the appointment of a new successor to such
additional trustee or separate trustee, unless and until a successor is
appointed in the manner hereinbefore provided.

     (c) Requests, etc. Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient to warrant such additional trustee or separate trustee, as the case
may be, to take the requested, approved or consented to action.

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<PAGE>
     (d) Subject to Indenture, etc. Each additional trustee and separate
trustee appointed pursuant to this Section 7.2 shall be subject to, and shall
have the benefit of Sections 3 through 9 hereof insofar as they apply to the
Indenture Trustee. Notwithstanding any other provision of this Section 7.2,
(i) the powers, duties, obligations and rights of any additional trustee or
separate trustee appointed pursuant to this Section 7.2 shall not in any case
exceed those of the Indenture Trustee hereunder, (ii) all powers, duties,
obligations and rights conferred upon the Indenture Trustee in respect of the
receipt, custody, investment and payment of moneys or the investment of moneys
shall be exercised solely by the Indenture Trustee and (iii) no power hereby
given to, or exercisable as provided herein by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Indenture
Trustee.

                                  SECTION 8.
                 SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                             AND OTHER DOCUMENTS

     Section 8.1.  Supplemental Indenture and Other Amendment With Consent;
Conditions and Limitations. At any time and from time to time, subject to
Sections 8.2 and 8.3 hereof, but only upon the written direction of a Majority
in Interest of Noteholders and the written consent of the Owner Lessor, (a) the
Indenture Trustee shall execute an amendment or supplement hereto for the
purpose of adding provisions to, or changing or eliminating provisions of, this
Indenture as specified in such request, and (b) the Indenture Trustee, as the
case may be, shall enter into or consent to such written amendment of or
supplement to any Assigned Document as each other party thereto may agree to
and as may be specified in such request, or execute and deliver such written
waiver or modification of or consent to the terms of any such agreement or
document as may be specified in such request; provided, however, that without
the consent of the Noteholders representing one hundred percent (100%) of the
outstanding principal amount of the Lessor Notes, such percentage to be
determined in the same manner as provided in the definition of the term
"Majority in Interest of Noteholders," no such supplement to or amendment of
this Indenture or any Assigned Document, or waiver or modification of or
consent to the terms hereof or thereof, shall (i) modify the definition of the
terms "Majority in Interest of Noteholders" or reduce the percentage of
Noteholders required to take or approve any action hereunder, (ii) change the
amount or the time of payment of any amount owing or payable under any Lessor
Note or change the rate or manner of calculation of interest payable on any
Lessor Note, (iii) alter or modify the provisions of Section 3 hereof with
respect to the manner of payment or the order of priorities in which
distributions thereunder shall be made as

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between the Noteholders and the Owner Lessor, (iv) reduce the amount (except to
any amount as shall be sufficient to pay the aggregate principal of, Make-Whole
Amount, if any, and interest on all outstanding Lessor Notes) or extend the
time of payment of Periodic Rent or Termination Value except as expressly
provided in Section 3.5 of the Facility Lease, or change any of the
circumstances under which Periodic Rent or Termination Value is payable, (v)
consent to any assignment of the Facility Lease if in connection therewith the
Facility Lessee will be released from its obligation to pay Periodic Rent and
Termination Value, except as expressly provided in Section 13 of the
Participation Agreement, or release the Facility Lessee of its obligation to
pay Periodic Rent or Termination Value or change the absolute and unconditional
character of such obligations as set forth in Section 9 of the Facility Lease;
(vi) consent to any release of the Guarantor under Section 8.4 of the Calpine
Guaranty or (vii) deprive the Indenture Trustee of the Lien on the Indenture
Estate or permit the creation of any Lien on the Indenture Estate ranking
equally or prior to the Lien of the Indenture Trustee, except for Permitted
Liens.

     Section 8.2.  Supplemental Indentures and other Amendments Without
Consent. Without the consent of any Noteholders but subject to the provisions
of Section 8.3, and only after notice thereof shall have been sent to the
Noteholders and with the consent of the Owner Lessor, the Indenture Trustee
shall enter into any indenture or indentures supplemental hereto or execute any
amendment, modification, supplement, waiver or consent with respect to any
other Operative Document (a) to evidence the succession of another Person as a
Lessor Manager or the appointment of a co-manager in accordance with the terms
of the LLC Agreement, or to evidence the succession of a successor as the
Indenture Trustee hereunder, the removal of the Indenture Trustee or the
appointment of any separate or additional trustee or trustees, in each case if
done pursuant to the provisions of Section 7 hereof and to define the rights,
powers, duties and obligations conferred upon any such separate trustee or
trustees or co-trustee or co-trustees, (b) to correct, confirm or amplify the
description of any property at any time subject to the Lien of this Indenture
or to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee, (c) to provide for any evidence of the creation and issuance
of any Additional Lessor Notes pursuant to, and subject to the conditions of,
Section 2.12 and to establish the form and the terms of such Additional Lessor
Notes, (d) to cure any ambiguity in, to correct or supplement any defective or
inconsistent provision of, or to add to or modify any other provisions and
agreements in, this Indenture or any other Operative Document in any manner
that will not in the judgment of the Indenture Trustee materially adversely
affect the interests of the Noteholders, (e) to grant or confer upon the
Indenture Trustee for the benefit of the Noteholders any additional rights,
remedies, powers, authority or security which may

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be lawfully granted or conferred and which are not contrary or inconsistent
with this Indenture, (f) to add to the covenants or agreements to be observed
by the Facility Lessee or the Owner Lessor and which are not contrary to this
Indenture, to add Indenture Events of Defaults for the benefit of Noteholders
or surrender any right or power of the Owner Lessor, provided it has consented
thereto, (g) to effect the assumption of all or, to the extent otherwise
provided hereunder, part of the Lessor Notes by the Facility Lessee, provided
that the supplemental indenture will contain all of the covenants applicable to
the Facility Lessee contained in the Facility Lease and the Participation
Agreement for the benefit of the Indenture Trustees or the holders of such
Lessor Notes, such that the Facility Lessee's obligations contained therein, if
applicable in the event that the Facility Lease are terminated, will continue
to be in full force and effect, (h) to comply with requirements of the SEC, any
applicable law, rules or regulations of any exchange or quotation system on
which the Certificates are listed, or any regulatory body, (i) to modify,
eliminate or add to the provisions of any Operative Documents to such extent as
shall be necessary to qualify or continue the qualification of this Lease
Indenture or the Pass Through Trust Agreements (including any supplements
thereto) under the Trust Indenture Act, or similar federal statute enacted
after the Closing Date, and to add to this Indenture such other provisions as
may be expressly required or permitted by the Trust Indenture Act of 1939 (if
such qualification is required), and (j) to effect any indenture or indentures
supplemental hereto or any amendment, modification, supplement, waiver or
consent with respect to any other Operative Document, provided such
supplemental indenture, amendment, modification, supplement, waiver or consent
shall not reasonably be expected to materially and adversely affect the
interest of the Noteholders; provided, however, that no such amendment,
modification, supplement, waiver or consent contemplated by this Section 8.2
shall, without the consent of the holder of each then outstanding Lessor Note,
cause any of the events specified in clauses (i) through (v) of the first
sentence of Section 8.1 hereof to occur; and provided, further, that no such
amendment, modification, supplement, waiver or consent contemplated by this
Section 8.2 shall, without the consent of the holder of a Majority in Interest
of Noteholders, modify the provisions of Sections 5.1, 5.2, 5.6, 5.14, 5.31, 6,
or 13.1 of the Participation Agreement or Section 19 of the Lease, or modify in
any material respect the provisions of the Calpine Guaranty (other than, in
each case, any amendment, modification, supplement, waiver or consent having no
adverse affect on the interest of the Noteholders).

     Section 8.3.  Conditions to Action by the Indenture Trustee. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 8.1 or 8.2 or the election referred to in Section 9.13
hereof adversely affects any immunity or indemnity in favor of the Indenture
Trustee under this Indenture or the

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Participation Agreement, or would materially increase its administrative duties
or responsibilities hereunder or thereunder or may result in personal liability
for it (unless it shall have been provided an indemnity satisfactory to the
Indenture Trustee), the Indenture Trustee may in its discretion decline to
execute such document or the election. With every such document and election,
the Indenture Trustee shall be furnished with evidence that all necessary
consents have been obtained and with an opinion of counsel that such document
complies with the provisions of this Indenture, does not deprive the Indenture
Trustee or the holders of the Lessor Notes of the benefits of the Lien hereby
created on any property subject hereto or of the assignments contained herein
(except as otherwise consented to in accordance with Section 8.1 hereof) and
that all consents required by the terms hereof in connection with the execution
of such document or the making of such election have been obtained. The
Indenture Trustee shall be fully authorized and protected in relying on such
opinion.

                                  SECTION 9.
                                MISCELLANEOUS

     Section 9.1.  Surrender, Defeasance and Release.

     (a) Surrender and Cancellation of Indenture. This Indenture shall be
surrendered and cancelled and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect upon satisfaction of the
conditions set forth in the proviso to the Granting Clause hereof. Upon any
such surrender, cancellation, and termination, the Indenture Trustee shall pay
all moneys or other properties or proceeds constituting part of the Indenture
Estate (the distribution of which is not otherwise provided for herein) to the
Owner Lessor, and the Indenture Trustee shall, upon request and at the cost and
expense of the Owner Lessor, execute and deliver proper instruments
acknowledging such cancellation and termination and evidencing the release of
the security, rights and interests created hereby. If this Indenture is
terminated pursuant to this Section 9.1(a), the Indenture Trustee shall
promptly notify the Facility Lessee and the Owner Participant of such
termination.

     (b) Release.

          (i) Whenever a Component is replaced pursuant to the Facility Lease,
     such component shall automatically and without further act of any Person be
     released from the Lien of this Lease Indenture and the Indenture Trustee
     shall, upon the written request of the Owner Lessor or the Facility Lessee,
     execute and deliver to, and as directed in writing by, the Facility Lessee
     or the

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<PAGE>
     Owner Lessor an appropriate instrument (in due form for recording)
     releasing the replaced Component from the Lien of this Indenture.

          (ii) Whenever the Facility Lessee is entitled to acquire the Facility
     or have the Facility transferred to it pursuant to the express terms of the
     Facility Lease, the Indenture Trustee shall release the Indenture Estate
     from the Lien of this Indenture and execute and deliver to, or as directed
     in writing by, the Facility Lessee or the Owner Lessor an appropriate
     instrument (in due form for recording) releasing the Indenture Estate from
     the Lien of this Indenture; provided that all sums secured by this
     Indenture have been paid to the Persons entitled to such sums.

     Section 9.2.  Conveyances Pursuant to the Site Sublease. Sales, grants of
leases or easements and conveyances of portions of the Facility Site, rights of
way, easements or leasehold interest made by the Facility Lessee in accordance
with Article VIII of the Facility Site Sublease shall automatically, without
further act of any Person, be released from this Lease Indenture.

     Section 9.3.  Appointment of the Indenture Trustee as Attorney; Further
Assurances. The Owner Lessor hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Lessor irrevocably with full power as long as
the Lease Indenture is in effect (in the name of the Owner Lessor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
Assigned Documents (except to the extent that such moneys and claims constitute
Excepted Payments), to endorse any checks or other instruments or orders in
connection therewith, to make all such demands and to give all such notices as
are permitted by the terms of the Facility Lease to be made or given by the
Owner Lessor upon the occurrence and continuance of a Lease Event of Default,
to enforce compliance by the Facility Lessee with all terms and provisions of
the Facility Lease (except as otherwise provided in Sections 4.3 and 5.6
hereof), and to file any claims or take any action or institute any proceedings
which the Indenture Trustee may request in the premises.

     Section 9.4.  Indenture for Benefit of Certain Persons Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the parties hereto, the Owner Participant, the Facility
Lessee (with respect to Sections 4.12 and 8.1 hereof) and the Noteholders (and
any successor or assign of any thereof) any legal or equitable right, remedy or
claim under or in respect of this Indenture, and this Indenture shall be for
the sole and exclusive benefit of the parties

                                       67
<PAGE>
hereto, the Owner Participant, the Facility Lessee (as provided in Sections
4.12 and 8.1 hereof) and the Noteholders.

     Section 9.5.  Notices; Furnishing Documents, etc. Unless otherwise
expressly specified or permitted by the terms hereof, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) and (b) above, in
each case addressed to such party and copy party at its address set forth below
or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

     If to the Owner Lessor:

               Wells Fargo Bank Northwest, National Association
               MAC U1254-031
               79 South Main Street
               Salt Lake City, UT 84111
               Telephone: (801) 246-5630
               Facsimile: (801) 246-5053
               Attention:  Corporate Trust Services

     with a copy to the Owner Participant:

               Wells Fargo Bank Northwest, National Association
               MAC U1254-031
               79 South Main Street
               Salt Lake City, UT 84111
               Telephone: (801) 246-5630
               Facsimile: (801) 246-5053
               Attention:  Corporate Trust Services

               and

                                       68
<PAGE>
               Newcourt Capital USA Inc.
               1211 Avenue of the Americas - 22nd Floor
               New York, NY 10036
               Telephone: (212) 382-7255
               Facsimile: (212) 382-9033
               Attention:  Karen Scrowcroft, Esq.

     If to the Indenture Trustee:

               State Street Bank and Trust Company of Connecticut,
               National Association
               225 Asylum Street, Goodwin Square
               Hartford, CT 06103
               Telephone: (860) 244-1822
               Facsimile:  (860) 244-1889
               Attention:  Corporate Trust Department

               with a copy to:

               State Street Bank and Trust Company of California,
               National Association
               633 West 5th Street, 12th Floor
               Los Angeles, CA 90071
               Telephone: (213) 362-7373
               Facsimile:  (213) 362-7357
               Attention:  Corporate Trust Department

     If to the Facility Lessee:

               RockGen Energy LLC
               c/o Calpine Center Northbrook Office
               Attention:  Senior Counsel
               650 Dundee Road, Suite 350
               Northbrook, IL 60062
               Telephone: (847) 559-9800
               Facsimile: (847) 559-1805

               with a copy to:

                                       69
<PAGE>
               Calpine Corporation
               Attention:  General Counsel
               50 West San Fernando Street, 5th Floor
               San Jose, CA 95113

     Section 9.6.  Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 9.7.  Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wells Fargo Bank Northwest, National Association ("Wells Fargo"), not
individually or personally but solely as trustee of the Owner Lessor under the
LLC Agreement, in the exercise of the powers and authority conferred and vested
in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Lessor is made and intended not
as personal representations, undertakings and agreements by Wells Fargo, but is
made and intended for the purpose for binding only the Owner Lessor, (c)
nothing herein contained shall be construed as creating any liability on Wells
Fargo, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall Wells Fargo, be personally liable
for the payment of any indebtedness or expenses of the Owner Lessor or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Owner Lessor under this Indenture.

     Section 9.8.  Written Changes Only. Subject to Sections 8.1 and 8.2
hereof, no term or provision of this Indenture or any Lessor Note may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto; and any waiver of the terms hereof or of
any Lessor Note shall be effective only in the specific instance and for the
specific purpose given.

     Section 9.9.  Counterparts. This Indenture may be executed in separate
counterparts, each of which, when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

                                       70
<PAGE>
     Section 9.10.  Successors and Permitted Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns and
each Noteholder. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successor and assigns
thereof.

     Section 9.11.  Headings and Table of Contents. The headings of the
sections of this Indenture and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

     Section 9.12.  Governing Law. This Indenture and the Lessor Notes shall
be in all respects governed by and construed in accordance with the laws of the
State of New York, including all matters of construction, validity and
performance (without giving effect to the conflicts of laws provisions thereof,
other than New York General Obligation Law Section 5-1401), except to the
extent mandatory choice of law rules require the application of laws of another
jurisdiction and except with respect to matters related to the enforcement of
any Lien related to the real property covered hereby or the foreclosure on any
real property covered hereby which shall be governed by the laws of the State
of Wisconsin (without giving effect to the conflicts of laws provisions
thereof). Regardless of any provision in any other agreement, for purposes of
the Uniform Commercial Code (as in effect from time to time in any jurisdiction
including the State of New York), the "Securities Intermediary's Jurisdiction"
of the Account Bank with respect to the Indenture Trustee's Account is the
State of New York.

     Section 9.13.  Reorganization Proceedings with Respect to the Lessor
Estate. If (a) the Lessor Estate becomes a debtor subject to the
reorganization provisions of Title 11 of the United States Code, or any
successor provisions, (b) pursuant to such reorganization provisions the Owner
Participant is required by reason of the Owner Participant's being held to have
recourse liability that it would not otherwise have had under Section 2.5
hereof to the debtor or the trustee of the debtor, directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Notes and (c) any Noteholder or the Indenture Trustee actually receives
any Excess Amount (as hereinafter defined) which reflects any payment by the
Owner Participant on account of clause (b) above, then such Noteholder or the
Indenture Trustee, as the case may be, shall promptly refund such Excess
Amount, without interest, to the Owner Participant after receipt by such
Noteholder or the Indenture Trustee, as the case may be, of a written request
for such refund by the Owner Participant (which request shall specify the
amount of such Excess Amount and shall

                                       71
<PAGE>
set forth in detail the calculation thereof). For purposes of this Section
9.13, "Excess Amount" means the amount by which such payment exceeds the amount
which would have been received by such holder and the Indenture Trustee in
respect of such principal or interest if the Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 9.13 shall prevent the Indenture Trustee or any
Noteholder from enforcing any personal recourse obligations (and retaining the
proceeds thereof) of the Owner Participant under the Participation Agreement.

     The Noteholders and the Indenture Trustee agree that should the Lessor
Estate become a debtor subject to the reorganization provisions of the
Bankruptcy Code, they shall upon the request of the Owner Participant, and
provided that the making of the election hereinafter referred to is permitted
to be made by them under Applicable Law and will not have any adverse impact on
any Noteholder, the Indenture Trustee or the Indenture Estate other than as
contemplated by the preceding paragraph, make the election referred to in
Section 1111(b)(1)(A)(i) of Title 11 of the Bankruptcy Code or any successor
provision if, in the absence of such election, the Noteholders would have
recourse against the Owner Participant for the payment of the indebtedness
represented by the Lessor Notes in circumstance in which such Noteholders would
not have recourse under this Indenture if the Lessor Estate had not become a
debtor under the Bankruptcy Code.

     Section 9.14.  Withholding Taxes: Information Reporting. The Indenture
Trustee shall exclude and withhold from each distribution of principal,
Make-Whole Amount, if any, and interest and other amounts due hereunder or
under the Lessor Notes any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees (i) to act as such withholding
agent and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Lessor Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Noteholders and to pay to the Noteholders from amounts received by Paying Agent
pursuant hereto such additional amounts so that the net amount actually
received by the Noteholders, after reduction for such withheld amounts, shall
be equal to the full amount of principal, Make-Whole Amount, interest and other
amounts otherwise due and payable hereunder; provided, however, that,
notwithstanding the foregoing, the Paying Agent shall be required to pay such
additional amounts only if and to the extent that (a) the Facility Lessee is
required to indemnify the Noteholders for such amounts under Section 9 of the
Participation Agreement and (b) the Facility Lessee has not paid such amounts
within three (3) days after notice of nonpayment, (ii) that it will file any

                                       72
<PAGE>
necessary withholding tax returns or statements when due, and (iii) that, as
promptly as possible after the payment thereof, it will deliver to each
Noteholder appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Noteholders may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
as it may be required to file under United States law.

     Any Noteholder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Noteholder becomes a
Noteholder, (a) so notify the Indenture Trustee, (b) (i) provide the Indenture
Trustee with Internal Revenue Service form W-8 BEN, W-8 ECI or W-9, as
appropriate, or (ii) notify the Indenture Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate thereof
on payments of interest. Any such Noteholder agrees by its acceptance of a
Lessor Note, on an ongoing basis, to provide like certification for each
taxable year and to notify the Indenture Trustee should subsequent
circumstances arise affecting the information provided the Indenture Trustee in
clauses (a) and (b) above. The Indenture Trustee shall be fully protected in
relying upon, and each Noteholder by its acceptance of a Lessor Note hereunder
agrees to indemnify and hold the Indenture Trustee harmless against all claims
or liability of any kind arising in connection with or related to the Indenture
Trustee's reliance upon any such documents, forms or information provided by
such Noteholder to the Indenture Trustee. In addition, if the Indenture
Trustee has not withheld taxes on any payment made to any Noteholder, and the
Indenture Trustee is subsequently required to remit to any taxing authority any
such amount not withheld, such Noteholder shall return such amount to the
Indenture Trustee upon written demand by the Indenture Trustee. The Indenture
Trustee shall be liable only for direct (but not consequential) damages to any
Noteholder due to the Indenture Trustee's violation of the Code and only to the
extent such liability is caused by the Indenture Trustee's violation of the
Code and only to the extent such liability is caused by the Indenture Trustee's
failure to act in accordance with its standard of care under this Lease
Indenture.

     Section 9.15.  Fixture Financing Statement. This Indenture also is
intended to serve as a fixture financing statement under the Wisconsin Uniform
Commercial Codes. In connection therewith, the following information is
provided:

     (a)  Name and address of Debtor:

          RockGen OL-4, LLC
          c/o  Wells Fargo Bank Northwest, National Association
          MAC U1254-031

                                       73
<PAGE>
          79 South Main Street
          Salt Lake City, UT 84111
          Telephone: (801) 246-5630
          Facsimile: (801) 246-5053
          Attention: Corporate Trust Services

     (b)  Name and Address of Secured Party (from which information concerning
the security interest may be obtained):

          State Street  Bank and Trust Company of Connecticut,
          National Association,
          as Indenture Trustee
          225 Asylum Street, Goodwin Square
          Hartford, CT 06103
          Telephone: (860) 244-1822
          Facsimile: (860) 244-1889
          Attention: Corporate Trust Department

     (c) The personal property covered by the security interest granted
hereunder includes goods which are or are to become fixtures upon the real
property described in Exhibit A hereto.

     (d) Recording: This Indenture is to be recorded in the real estate records
of Dane County, Wisconsin.

                  (Remainder of Page Intentionally Left Blank)

                                       74
<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed on the day and year first above written.

                              ROCKGEN OL-4, LLC

                              By:  Wells Fargo Bank Northwest, National
                                   Association, not in its individual capacity
                                   but solely as the Lessor Manager

                              By:
                                   Name:
                                   Title:

                              STATE STREET BANK AND TRUST COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION, as Indenture
                              Trustee and Account Bank

                              By:

                                   Name:
                                   Title:
<PAGE>
STATE OF NEW YORK        )
                         )    SS.:
COUNTY OF NEW YORK       )

The foregoing instrument was acknowledged before me this ___ day of October
2001, by _______________________, the _______________________ of Wells Fargo
Bank Northwest, National Association, not in its individual capacity but solely
as the Lessor Manager of South Point OL-4, LLC, a Delaware limited liability
company, as the Owner Lessor (the "Owner Lessor"), to be the free act and deed
on behalf of the national banking association as the Lessor Manager of the
Owner Lessor under the LLC Agreement dated as of , 2001.

Notary Public

My Commission Expires
<PAGE>
STATE OF NEW YORK        )
                         )    SS.:
COUNTY OF NEW YORK       )

     The foregoing instrument was acknowledged before me this the ___ day of
October 2001, by _______________________, the _______________________ of State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, to be the free act and deed on behalf of the corporation.

Notary Public

My Commission Expires

                                       3
<PAGE>
                                                                       EXHIBIT A
                                                              TO LEASE INDENTURE

                         DESCRIPTION OF FACILITY SITE

The West Half of the Northwest Quarter (W1/2NW1/4) of Section Twenty-Three
(23), Township Six (6) North, Range Twelve (12) East, in the Town of
Christiana, Dane County, Wisconsin.

<TABLE>
<S>               <C>
Tax Parcel No:    016-0612-232-8500-2
                  016-0612-232-9000-5

Property Address: 2305 Carpenter Swain Road, Dane County, WI
</TABLE>
<PAGE>
                                                                       EXHIBIT B
                                                              TO LEASE INDENTURE

                         FORM OF ROCKGEN LESSOR NOTE

                              ROCKGEN OL-4, LLC
                 NONRECOURSE PROMISSORY NOTE (ROCKGEN) DUE IN
                     A SERIES OF INSTALLMENTS OF PRINCIPAL
                          WITH FINAL PAYMENT DATE
                              OF MAY 30, 2012

                 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
              SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                                                   Issued at: New York, New York

                                                    Issue Date: October __, 2001

$[______]

     ROCKGEN OL-4, LLC, a Delaware limited liability company (herein called the
"Owner Lessor", which term includes any successor person under the Collateral
Trust Indenture hereinafter referred to), hereby promises to pay to State
Street Bank and Trust Company of Connecticut, National Association, in its
capacity as pass through trustee of the South Point, Broad River and RockGen
Series A Trust, (the "Pass Through Trustee") or its registered assigns, the
principal sum of $[_____], which is due and payable in a series of installments
of principal with a final payment date of May 30, 2012 as provided below,
together with interest at the rate of [___]% per annum on the principal
remaining unpaid from time to time from and including the Issue Date until paid
in full. Interest on the outstanding principal amount under this Note shall be
due and payable in arrears semiannually at the rate specified above, commencing
on May 30, 2002, and on each May 30 and November 30 thereafter until the
principal of this Note is paid in full or made available for payment. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

     The principal of this Note shall be due and payable in installments on
each of the dates set forth on Schedule I hereto. The installment of principal
payable on any such

                                      B-1-1
<PAGE>
date shall be in an aggregate amount equal to the product of the Principal
Portion set forth on Schedule I multiplied by the percentage set forth on
Schedule I under the column headed "Percentage of Principal Amount Payable" for
such date unless the Principal Portion has been prepaid; provided, that the
final installment of principal shall be equal to the then unpaid principal
balance of this Note.

     Capitalized terms used in this Note that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture of Trust, Mortgage
and Security Agreement dated as of October 18, 2001 (the "Collateral Trust
Indenture"), between the Owner Lessor and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the "Indenture Trustee").

     Interest (computed on the basis of a 360-day year of twelve 30-day months)
on any overdue principal and premium, if any, and (to the extent permitted by
Applicable Law) any overdue interest shall be paid, on demand, from the due
date thereof at the Overdue Rate for the period during which any such
principal, premium or interest shall be overdue.

     In the event any date on which a payment is due under this Note is not a
Business Day, then payment thereof shall be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
such payment was due.

     Except as otherwise specifically provided in the Collateral Trust
Indenture and in the Participation Agreement, all payments of principal,
premium, if any, and interest on this Note, and all payments of any other
amounts due hereunder or under the Collateral Trust Indenture shall be made
only from the Indenture Estate, and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Indenture Estate to
make such payments in accordance with the terms of Section 3 of the Collateral
Trust Indenture. The holder hereof, by its acceptance of this Note, agrees
that it will look solely to the income and proceeds from the Indenture Estate
to the extent available for distribution to the holder hereof, as herein
provided, and that, none of the Owner Participant, the Owner Lessor or the
Indenture Trustee is or shall be personally liable to the holder hereof for any
amounts payable under this Note or under the Collateral Trust Indenture, or,
except as expressly provided in the Collateral Trust Indenture or, in the case
of the Owner Participant and the Owner Lessor, the Participation Agreement for
any performance to be rendered under the Collateral Trust Indenture or any
Assigned Document or for any liability under the Collateral Trust Indenture or
any Assigned Document.

                                      B-1-2
<PAGE>
     The principal of and premium, if any, and interest on this Note shall be
paid by the Indenture Trustee, without any presentment or surrender of this
Note, except that, in the case of the final payment in respect of this Note,
this Note shall be surrendered to the Indenture Trustee, by mailing a check for
the amount then due and payable, in New York Clearing House funds, to the
Noteholder, at the last address of the Noteholder appearing on the Note
Register, or by whichever of the following methods specified by notice from the
Noteholder to the Indenture Trustee: (a) by crediting the amount to be
distributed to the Noteholder to an account maintained by the Noteholder with
the Indenture Trustee, (b) by making such payment to the Noteholder in
immediately available funds at the Indenture Trustee Office, or (c) by
transferring such amount in immediately available funds for the account of the
Noteholder to the banking institution having bank wire transfer facilities as
shall be specified by the Noteholder, such transfer to be subject to telephonic
confirmation of payment. All payments due with respect to this Note shall be
made (i) as soon as practicable prior to the close of business on the date the
amounts to be distributed by the Indenture Trustee are actually received by the
Indenture Trustee if such amounts are received by 12:00 noon, New York City
time, on a Business Day or (ii) on the next succeeding Business Day if received
after such time or if received on any day other than a Business Day. Prior to
due presentment for registration of transfer of this Note, the Owner Lessor and
the Indenture Trustee may deem and treat the Person in whose name this Note is
registered on the Note Register as the absolute owner and holder of this Note
for the purpose of receiving payment of all amounts payable with respect to
this Note and for all other purposes, and neither the Owner Lessor nor the
Indenture Trustee shall be affected by any notice to the contrary. All
payments made on this Note in accordance with the provisions of this paragraph
shall be valid and effective to satisfy and discharge the liability on this
Note to the extent of the sums so paid and neither the Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

     The holder hereof, by its acceptance of this Note, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.7 of the Collateral Trust Indenture, which provides that each payment
on the Note shall be applied as follows: first, to the payment of accrued
interest (including interest on overdue principal and the Make Whole Amount, if
any, and, to the extent permitted by Applicable Law, overdue interest) on this
Note to the date of such payment; second, to the payment of the principal
amount of, and the Make Whole Amount, if any, on this Note then due (including
any overdue installments of principal) thereunder; and third, to the extent
permitted by Section 2.10 of the Collateral Trust Indenture, the balance, if
any, remaining thereafter, to the payment of the principal amount of, and the
Make Whole Amount, if any, on this Note.

                                      B-1-3
<PAGE>
     This Note is the Note referred to in the Collateral Trust Indenture as the
"Lessor Note". The Collateral Trust Indenture permits the issuance of
additional notes ("Additional Lessor Notes"), as provided in Section 2.12 of
the Collateral Trust Indenture, and the several Notes may be for varying
principal amounts and may have different maturity dates (not later than the
final maturity date of the Initial Lessor Notes), interest rates, redemption
provisions and other terms. The properties of the Owner Lessor included in the
Indenture Estate are pledged or mortgaged to the Indenture Trustee to the
extent provided in the Collateral Trust Indenture as security for the payment
of the principal of and premium, if any, and interest on this Note and all
other Notes issued and outstanding from time to time under the Collateral Trust
Indenture.

     Reference is hereby made to the Collateral Trust Indenture for a statement
of the rights of the holder of, and the nature and extent of the security for,
this Note and of the rights of, and the nature and extent of the security for,
the holders of the other Notes and of certain rights of the Owner Lessor and
the Owner Participant, as well as for a statement of the terms and conditions
of the trust created by the Collateral Trust Indenture, to all of which terms
and conditions the holder hereof agrees by its acceptance of this Note.

     This Note is subject to redemption, in whole but not in part as provided
in the Collateral Trust Indenture, as follows: (x) in the case of redemptions
under the circumstances set forth in Section 2.10(a) of the Collateral Trust
Indenture, at a price equal to the principal amount of this Note being redeemed
together with accrued interest on such principal amount to the Redemption Date,
and (y) in the case of redemptions under the circumstances set forth in
Sections 2.10(d) of the Collateral Trust Indenture, at a price equal to the
principal amount of this Note then outstanding together with accrued interest
on such principal amount to the Redemption Date, plus the Make-Whole Amount, if
any; provided, however, that no such redemption shall be made until notice
thereof is given by the Indenture Trustee to the holder hereof as provided in
the Collateral Trust Indenture.

     In case either (i) a Regulatory Event of Loss under the Facility Lease
shall occur or (ii) the Facility Lease shall have been terminated pursuant to
Section 13.1 or 13.2 thereof where the Facility Lessee purchases the Undivided
Interest from the Owner Lessor, the obligations of the Owner Lessor under this
Note may, subject to the conditions set forth in Section 2.10(b) of the
Collateral Trust Indenture, be assumed in whole (but not in part) by the
Facility Lessee in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an

                                      B-1-4
<PAGE>
assumption, the holder of this Note may be required to exchange this Note for a
new Note evidencing such assumption.

     In case a Collateral Trust Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Note together with all
accrued but unpaid interest thereon may, subject to certain rights of the Owner
Lessor and the Owner Participant contained or referred to in the Collateral
Trust Indenture, be declared or may become due and payable in the manner and
with the effect provided in the Collateral Trust Indenture.

     There shall be maintained at the Indenture Trustee Office a register for
the purpose of registering transfers and exchanges of Notes in the manner
provided in the Collateral Trust Indenture. The transfer of this Note is
registrable, as provided in the Collateral Trust Indenture, upon surrender of
this Note for registration of transfer duly accompanied by a written instrument
of transfer duly executed by or on behalf of the registered holder hereof,
together with the amount of any applicable transfer taxes.

     It is expressly understood and agreed by the holder of this Note that (a)
this Note is executed and delivered by Wells Fargo Bank Northwest, National
Association, not individually or personally but solely as the lessor manager
(the "Lessor Manager"), of the Owner Lessor, in the exercise of the powers and
authority conferred and vested in it pursuant thereto, (b) each of the
undertakings and agreements in this Note made on the part of the Owner Lessor
is made and intended not as personal undertakings and agreements by the Lessor
Manager but is made and intended for the purpose for binding only the Owner
Lessor, (c) nothing contained in this Note shall be construed as creating any
liability on the Lessor Manager individually or personally, to perform any
covenant either expressed or implied contained in this Note, all such
liability, if any, being expressly waived by the holder of this Note or by any
Person claiming by, through or under such holder, and (d) under no
circumstances shall the Lessor Manager, be personally liable for the payment of
any indebtedness or expenses of the Owner Lessor or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Owner Lessor under this Note.

     This Note shall be governed by the laws of the State of New York.

                                      B-1-5
<PAGE>
     IN WITNESS WHEREOF, the Owner Lessor has caused this Note to be duly
executed as of the date hereof.

                                      ROCKGEN OL-4, LLC
                                      a Delaware limited liability company,

                                         By: Wells Fargo Bank Northwest,
                                             National Association, not in its
                                             individual capacity but solely as
                                             the Lessor Manager

                                         By:
                                             Name:
                                             Title:
<PAGE>
     This is the Lessor Note referred to in the within-mentioned Collateral
Trust Indenture duly executed as of the date hereof.

                                             STATE STREET BANK AND TRUST
                                             COMPANY OF CONNECTICUT,
                                             NATIONAL ASSOCIATION,
                                             not in its individual capacity, but
                                             solely
                                   as
                                             the Indenture Trustee

                                             Name:
                                             Title:

                                      B-1-1
<PAGE>
                              FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s)
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

___________________________

________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing

________________________________________________________________________________
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.

Date: ________________  ____________________________________________
                        (Signature of Transferor)

                        NOTE: The signature to this assignment must correspond
                        with the name as written upon the face of the
                        within-mentioned instrument in every particular,
                        without alteration or any change whatsoever.
<PAGE>
                                   SCHEDULE I
                                    TO NOTE

                        Schedule Of Principal Amortization

                               Series A Lessor Notes

                          Principal Portion: $45,450,000

<TABLE>
<CAPTION>
                                                               Percentage of Principal
                                                               -----------------------
Regular Distribution Date                                               Amount Payable
-------------------------                                               --------------
<S>                                                            <C>
May 30, 2002.............................................                  1.21012101%
November 30, 2002........................................                  2.58525853%
May 30, 2003............................................                   3.02530253%
November 30, 2003........................................                  3.24532453%
May 30, 2004.............................................                  3.52035204%
November 30, 2004........................................                  3.68536854%
May 30, 2005.............................................                  3.96039604%
November 30, 2005........................................                  4.12541254%
May 30, 2006.............................................                  4.07040704%
November 30, 2006........................................                  4.18041804%
May 30, 2007.............................................                  4.73047305%
November 30, 2007........................................                  5.00550055%
May 30, 2008.............................................                  5.50055006%
November 30, 2008........................................                  5.77557756%
May 30, 2009.............................................                  6.16061606%
November 30, 2009........................................                  6.43564356%
May 30, 2010.............................................                  6.65566557%
November 30, 2010........................................                  6.93069307%
May 30, 2011.............................................                  7.20572057%
November 30, 2011........................................                  6.60066007%
May 30, 2012.............................................                  5.39053905%
                                                                         ------------

Total....................................................                100.00000000%
                                                                         ============
</TABLE>
<PAGE>
                                                                       EXHIBIT C
                                                              TO LEASE INDENTURE

                    FORM OF CERTIFICATE OF AUTHENTICATION

     This is one of the Lessor Notes referred to in the within-mentioned Lease
Indenture.

                                            ______________________________,
                                            not in its individual capacity but
                                            solely as the Indenture Trustee

                                            By: _________________________
                                                Name:
                                                Title:

                                       C-1
<PAGE>
                                                                       EXHIBIT D
                                                              TO LEASE INDENTURE

                        DESCRIPTION OF THE FACILITY

     That certain approximately 520 megawatt net nameplate capacity generating
facility, (known also as the "RockGen Facility") together with all structures
or improvements, all alterations thereto or replacements thereof, and all other
fixtures, attachments, appliances, equipment, machinery and other articles
(including, but not limited to, the property set forth below (the "Included
Property")), in each case located on the land, or on the easements appurtenant
to the land, consisting of approximately 78 acres located in the Town of
Christiana near the Village of Rockdale, in Dane County, Wisconsin, described
more particularly on Exhibit A.

Included Property

     1.   Three Combustion Turbines - General Electric Model PG7241 FA; Serial
          #: 297570, 297571 and 297572.

     2.   Three CT Generators - General Electric, Hydrogen Cooled, Model 7FH2,
          18kV, 220000 KVA, 0.85 pf; Serial #: 337X167, 337X168 and 337X169.

     3.   Three Combustion Turbine Step-up Transformers - GE Prolec, 18/138 KV,
          220 MVA FA, WYE/DELTA, Serial #: G720-01, G720-02 and G720-03 and
          other interconnection equipment associated with the RockGen Facility.

                                      D-1-1
<PAGE>
                                                                      SCHEDULE I
                                                              TO LEASE INDENTURE

                               SERIES A LESSOR NOTE

<TABLE>
<S>                                     <C>
Initial Aggregate Principal Amount:     $45,450,000
Final Maturity Date:                    May 30, 2012
Interest Rate:                          8.400%
Amortization Schedule:
</TABLE>

<TABLE>
<CAPTION>
                                                                      Percentage of Principal
                                                                      -----------------------
Regular Distribution Date                                                      Amount Payable
-------------------------                                                      --------------
<S>                                                                   <C>
May 30, 2002..............................................                        1.21012101%
November 30, 2002.........................................                        2.58525853%
May 30, 2003..............................................                        3.02530253%
November 30, 2003.........................................                        3.24532453%
May 30, 2004..............................................                        3.52035204%
November 30, 2004.........................................                        3.68536854%
May 30, 2005..............................................                        3.96039604%
November 30, 2005.........................................                        4.12541254%
May 30, 2006..............................................                        4.07040704%
November 30, 2006.........................................                        4.18041804%
May 30, 2007..............................................                        4.73047305%
November 30, 2007.........................................                        5.00550055%
May 30, 2008..............................................                        5.50055006%
November 30, 2008.........................................                        5.77557756%
May 30, 2009..............................................                        6.16061606%
November 30, 2009.........................................                        6.43564356%
May 30, 2010..............................................                        6.65566557%
November 30, 2010.........................................                        6.93069307%
May 30, 2011..............................................                        7.20572057%
November 30, 2011.........................................                        6.60066007%
May 30, 2012..............................................                        5.39053905%
                                                                                ------------
Total.....................................................                      100.00000000%
                                                                                ============
</TABLE>

                               SCHDULE 1-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.27
<SEQUENCE>30
<FILENAME>f80168ex4-22_27.txt
<DESCRIPTION>EXHIBIT 4.22.27
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.27


================================================================================

            CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-1)


                          Dated as of October 18, 2001


                                      among

                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    SOUTH POINT OL-1, LLC, as Owner Lessor,


                      SBR OP-1, LLC, as Owner Participant,

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              SOUTH POINT PROJECT

================================================================================
<PAGE>
           CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-1)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-1),
dated as of October 18, 2001 (the "Guaranty"), is entered into by and among
Calpine Corporation, a Delaware corporation, as guarantor (the "Guarantor"),
SOUTH POINT OL-1, LLC, a Delaware limited liability company, as Owner Lessor,
SBR OP-1, LLC, a Delaware limited liability company, as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity but solely as Indenture Trustee and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Pass Through Trustee, and is issued by the
Guarantor in favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, South Point Energy Center, LLC (the "South Point Lessee")
is an indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the South Point Lessee is a party to the Participation
Agreement (SP-1) dated as of October 18, 2001 (the "Participation Agreement"),
among the South Point Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, South Point OL-1, LLC,
as Owner Lessor, the Guarantor, SBR OP-1, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-1) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the South Point Facility to the
South Point Lessee as contemplated therein;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-1) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the South Point Lessee as contemplated therein;

                                       1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the
South Point Lessee entering into the Facility Lease, the Facility Site Lease
and the other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                       2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                       3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the South Point Lessee of all of
the South Point Lessee's obligations under the Operative Documents to which it
is a party and with respect to the South Point Ground Lease if the same shall
not be performed when due pursuant to the Operative Documents, including,
without limitation, but without duplication, (1) the South Point Lessee's
obligation to make Periodic Rent, Supplemental Rent and other payments (in
accordance with the terms of the Operative Documents) to the Owner Lessor, (2)
the South Point Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents and the South Point Ground Lease under and in
accordance with the Facility Lease, (3) without duplication of the preceding
clause (2), the South Point Lessee's obligation to pay the Equity Portion of
Periodic Rent and the Equity Portion of Termination Value to the Owner Lessor,
(4) the South Point Lessee's obligation to make indemnity payments when due in
accordance with the terms of the Participation Agreement and the Tax Indemnity
Agreement, (5) the South Point Lessee's obligation, pursuant to Section 3.3 of
the Facility Lease, to pay as Supplemental Rent an amount equal to (A) interest
at the applicable Overdue Rate on any amount under clauses (1), (2), (3), (4)
and 5(B) of this Section 2.1(a), not paid when due and (B) any Make-Whole
Amount to the extent then due and payable by the Owner Lessor to the
Certificateholders pursuant to the Participation Agreement, the Facility Lease
or any other Operative Document to which the South Point Lessee is a party and
(6) the South Point Lessee's obligation to make any and all other payments, and
perform all other covenants and agreements, when due under and in accordance
with the terms of the Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the South Point Lessee's obligations under the Facility Lease or any other
Operative Documents or the South Point Ground Lease. The Guarantor agrees that
it shall make such payment notwithstanding the fact that the South Point Lessee
may have a defense to the payment of any such amounts. The Guarantor's
obligations in this Section 2.1(b) are direct and primary obligations (and not
obligations of a guarantor or surety) of the Guarantor to the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor), which shall not be
affected in any way by the provisions of Section 2.1(a) above or any payments
under any other Operative Documents of any amounts until the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor) have received full
payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                       4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the South Point Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the South Point Ground
Lease, the Guarantor agrees to cause such performance or observance to be done,
and in the case of any failure by the South Point Lessee to make such payment
as and when the same shall become due and payable (by acceleration or
otherwise), the Guarantor hereby agrees to make such payment (and, in addition,
such further amounts, if any, as shall be sufficient to cover the costs and
expenses of collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the South Point Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the South Point Ground Lease) or the lack of power or authority of
the South Point Lessee to enter into any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document and the South Point Ground Lease) to which the
South Point Lessee is a party, or any substitution, release or exchange of any
other guaranty of, or agreement with respect to, or any other security for, any
of the Obligations (including any settlement, compromise or other adjustment
with respect to the Obligations) or any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor and shall not be subject to any right of set-off,
recoupment or counterclaim and is in no way conditioned or

                                       5
<PAGE>
contingent upon any attempt to collect from the South Point Lessee or any other
entity or to perfect or enforce any security or upon any other condition or
contingency or upon any other action, occurrence or circumstance whatsoever.
Without limiting the generality of the foregoing, the Guarantor shall have no
right to terminate this Guaranty, or to be released, relieved or discharged
from its obligations hereunder, other than upon full payment and satisfaction
and performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
South Point Lessee is a party, any release, extension or renewal of the South
Point Lessee's obligations under any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document) to which the South Point Lessee is a party or by
which it is bound, including, without limitation, any actions taken by the
Indenture Trustee pursuant to the Collateral Trust Indenture, or any
subletting, assignment or transfer of the South Point Lessee's or any
Beneficiary's interest in the Participation Agreement, the Facility Lease or
any other Operative Document in accordance with the terms thereof, (ii) any
bankruptcy, insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the South Point Lessee, Owner Lessor, Owner
Participant or any other Person, including, without limitation, termination of
the Facility Lease and the operation of Section 502(b)(6) of the Bankruptcy
Code in connection therewith, (iii) any furnishing or acceptance of additional
security or any exchange, substitution, surrender or release of any security,
(iv) any waiver, consent or other action or inaction or any exercise or
nonexercise of any right, remedy or power with respect to the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any Operative Document)
to which the South Point Lessee is a party, (v) without limiting Section 3.6(b)
hereof, any merger or consolidation of the South Point Lessee or the Guarantor
into or with any other Person, or any sale, assignment, conveyance, lease,
transfer or other disposition of all or substantially all of the assets or
properties of the South Point Lessee or the Guarantor, or any change in the
structure of the South Point Lessee or in the ownership of the South Point
Lessee by the Guarantor, (vi) any default, misrepresentation, negligence,
misconduct or other action or inaction of any kind by any Beneficiary, the
Indenture Trustee or any other Person under or in connection with any Operative
Document or any other agreement relating to this Guaranty, (vii) any action or
inaction by any Beneficiary as contemplated in Section 5 of this Guaranty;
(viii) any invalidity, irregularity or unenforceability of all or part of the
Obligations or of any security therefor; (ix) any change in the manner, place,
timing or schedule of payment or performance of, or in any other term of, all
or any of the Obligations; (x) whether the Guarantor is related or unrelated to
the South Point Lessee, (xi) the assignment by the Owner Lessor of its rights
and interests hereunder, under the Facility Lease or under any other Operative
Document or the South Point Ground Lease in accordance with the Operative
Documents and the South Point Ground Lease (or the genuineness, validity,
legality or enforceability of the obligations of the Owner Lessor under the
Collateral Trust Indenture) and (xii) any other circumstance whatsoever.

                                       6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i)   The Guarantor is duly organized, validly existing and in
     good standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party
     (together, the "Calpine Documents").

          (ii)   The execution, delivery and performance by the Guarantor
     of the Calpine Documents have been duly authorized by all necessary
     corporate action. The Calpine Documents constitute legal, valid and
     binding obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other
     similar laws affecting creditors' rights generally and by general
     principles of equity.

          (iii)   The execution, delivery and performance of the Calpine
     Documents will not (a) contravene any provision of law, rule or
     regulation to which the Guarantor is subject or any judgment, decree or
     order applicable to the Guarantor, (b) conflict or be inconsistent with or
     result in any breach of any terms, covenants, conditions or provisions of,
     or constitute a default under, or result in the creation or imposition of
     (or the obligation to create or impose) any Lien or other encumbrance upon
     any of the property or assets of the Guarantor pursuant to the terms of
     any agreement or other instrument to which the Guarantor is a party or by
     which it or its property is bound or to which it or its property may be
     subject, in each case the violation of which would have a material adverse
     effect on the business, operations, prospects, properties or assets, or in
     the condition, financial or otherwise, of the Guarantor, or (c) violate or
     contravene any provision of the articles of incorporation or by-laws of
     the Guarantor.

          (iv)   No pending or, to the knowledge of the Guarantor,
     threatened action, suit, investigation or proceedings against the
     Guarantor before any Governmental Entity exists which, if determined
     adversely to the Guarantor, would materially adversely affect the
     business, operations, prospects, properties or assets, or in its
     condition, financial or otherwise, or the Guarantor's ability to perform
     its obligations under the Calpine Documents.

          (v)   No consent from, authorization or approval or other action
     by, and no notice to or filing with, any Person is required for the
     execution, delivery and performance by the Guarantor of the Calpine
     Documents except those which have been given and remain in full force and
     effect.

                                       7
<PAGE>
          (vi)   The South Point Lessee is an indirect, wholly-owned
     subsidiary of the Guarantor.

          (vii)   The Guarantor is not an "investment company" or a
     company controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

          (viii)   The Guarantor is not in default with respect to any
     judgment, order, writ, injunction, decree, award, rule or regulation of
     any court, arbitrator or governmental department, commission, board,
     bureau, agency or instrumentality, domestic or foreign, which, either,
     separately or in the aggregate, would result in any material adverse
     change in any of its businesses, operations, prospects or assets, or in
     its condition, financial or otherwise, or its ability to perform its
     obligations under the Calpine Documents.

          (ix)   The Guarantor is not a party to any agreement or
     instrument, or subject to any corporate restriction or any judgment,
     order, writ, injunction, decree, award, rule or regulation, which
     materially adversely affects, or in the future may materially adversely
     affect, its business, operations, prospects, properties or assets, or
     conditions, financial or otherwise, or its ability to perform its
     obligations under the Calpine Documents.

          (x)   The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture
     Trustee, the Pass Through Trustee, the Certificateholders and the Owner
     Participant, are true, complete and correct and fairly present the
     financial condition of the Guarantor and its Consolidated Subsidiaries as
     of the date thereof. The financial statements have been prepared in
     accordance with GAAP. The Guarantor and its Consolidated Subsidiaries do
     not have any material liabilities, direct or contingent, except (a) as are
     disclosed in such financial statements or (b) as arise under the Operative
     Documents or the South Point Ground Lease. There has been no material
     adverse change in the financial condition of the Guarantor and its
     Consolidated Subsidiaries since the date of the audited financial
     statements referred to above.

          (xi)   All factual information relating to the Guarantor (taken
     as a whole) heretofore or contemporaneously furnished by or on behalf of
     the Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified
     and not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect

                                       8
<PAGE>
     at such time in light of the circumstances under which such information
     was provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements provided
     by or on behalf of the Guarantor, or (ii) the descriptions of the
     Operative Documents or the South Point Ground Lease or the tax
     consequences to beneficial owners of Certificates; provided, however, each
     of the Beneficiaries acknowledges and agrees that (i) Calpine has
     heretofore provided to the Appraiser, solely in order to assist the
     Appraiser in connection with the preparation of the appraisal to be
     delivered by the Appraiser to certain of the Transaction Parties at the
     Closing, certain (1) general market information, (2) information about the
     Arizona energy market and (3) information passed along from other Persons
     and (ii) that the South Point Lessee does not make any representation or
     warranty whatsoever with respect to the information described in clause
     (i) above except to the extent expressly set forth in Section 4(b) of the
     Tax Indemnity Agreement.

          (xii)   The Guarantor is in compliance with all applicable
     statutes, regulations and orders of, and all applicable restrictions
     imposed by, all governmental bodies, domestic or foreign, in respect of
     the conduct of its business and the ownership of its property (including
     applicable statutes, regulations, orders and restrictions relating to
     environmental standards and controls), except such noncompliance as would
     not, in the aggregate, have a material adverse effect on the business,
     operations, property, assets or condition (financial or otherwise) of the
     Guarantor, or the Guarantor's ability to perform its obligations under the
     Calpine Documents.

          (xiii)   The Guarantor has filed all tax returns and reports
     required by law to have been filed by it and has paid all taxes and
     governmental charges thereby shown to be owing (other than any such taxes
     or charges which are being diligently contested in good faith by
     appropriate proceedings and for which adequate reserves in accordance with
     GAAP shall have been set aside on its books), except such non-filing or
     non-payment, as the case may be, as would not, in the aggregate, have a
     material adverse effect on the business, operations, property, assets or
     condition (financial or otherwise) of the Guarantor.

          (xiv)   No default has occurred under this Guaranty, which
     default would reasonably be expected to result in a material adverse
     effect on the business, operations, assets or condition (financial or
     otherwise) of the Guarantor.

          (xv)   In accordance with Section 8.12 hereof and Section 14.14
     of the Participation Agreement, the Guarantor has validly submitted to
     the jurisdiction of the Supreme Court of the State of New York, New York
     County and the United States District Court for the Southern District of
     New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                       9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                       10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the South Point Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the South Point Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the South Point Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the South Point Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i)   the Owner Lessor, the Owner Participant and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Opinion of Counsel to the effect that all regulatory
     approvals required in connection with such transfer have been obtained;

          (ii)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and effect, the Guarantor shall reaffirm in writing all of its
     obligations hereunder in a manner reasonably satisfactory to the Owner
     Participant, such obligations of the Guarantor shall remain in full force
     and effect;

          (iii)   no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing at the time of or immediately
     following such transfer;

          (iv)   the transfer shall not subject the South Point Lessee,
     the Owner Participant, the Owner Lessor, the Indenture Trustee, the Pass
     Through Trustee or

                                       11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v)   the South Point Lessee shall have paid, at no after-tax
     cost to such parties, all reasonable and documented out-of-pocket
     expenses (including reasonable attorneys' fees and expenses) of the Owner
     Lessor, the Owner Participant, the Indenture Trustee, the Lease Indenture
     Company and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction
or purchase of or by, or repairs, improvements or additions to, property or
assets of the Guarantor or such Restricted Subsidiary, as the case may be,
which Liens may include Liens on the Capital Stock of such Restricted
Subsidiary or (2) Liens

                                       12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                       13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liensotherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i)   no Significant Lease Default or Lease Event of Default
     shall have occurred and be continuing;

          (ii)   either (A) the Guarantor shall be the continuing Person,
     or (B) the Person (if other than the Guarantor) formed by such
     consolidation or into which the Guarantor is merged or to which the
     properties and assets of the Guarantor are sold, assigned, conveyed,
     transferred, disposed of or leased as aforesaid shall be an entity
     organized and existing under the laws of the United States or any State
     thereof or the District of Columbia and shall execute and deliver to the
     Owner Participant, the Owner Lessor and, so long as the Lien of the
     Collateral Trust Indenture shall not have been terminated or discharged,
     the Indenture Trustee and the Pass Through Trustee, a Guarantor Assignment
     and Assumption Agreement; and

          (iii)   each of the Owner Participant, the Owner Lessor and, so
     long as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee shall have received an Officer's Certificate of the Guarantor, the
     surviving entity or the transferee, as the case may be, in form and
     substance reasonably satisfactory to each of such parties, stating that
     the proposed merger, consolidation, assignment, conveyance, transfer,
     disposition, lease or sale, and the Guarantor Assignment and Assumption
     Agreement complies with the terms of this Section 3(a) and, as to legal
     matters, an Opinion of Counsel; and

          (iv)   In addition to the conditions set forth in clauses (i)
     through (iii) above, the Guarantor, subject to Section 4, will not
     consummate any such consolidation, merger or sale of all or substantially
     all of its properties or assets unless the long-term unsecured debt of the
     resulting, surviving or succeeding entity shall have a credit rating
     assigned by the Rating Agencies that is not less than the lower of (x) the
     credit rating of the long-term unsecured debt of the Guarantor assigned by
     the Rating Agencies immediately prior to such transaction and (y) a credit
     rating of the long-term unsecured debt of the resulting, surviving

                                       14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

           (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4. BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but
only to the extent indemnified under the Participation Agreement) and, so long
as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the South Point Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the South Point Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the South Point Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                       15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
South Point Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                       16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
South Point Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the South Point Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the South Point Lessee to such Beneficiary
regardless of what liabilities or liabilities of the South Point Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the South
Point Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the South Point Ground Lease, or the failure of any Beneficiary to exercise any
rights or remedies hereunder in accordance with the provisions hereof or under
any other Operative Document or the South Point Ground Lease, shall not in any
way adversely affect the ability of any other Beneficiary to exercise its
rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT (SP-1))

          Notwithstanding anything to the contrary herein, this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any of the amounts paid to any of the Beneficiaries, in whole or in part,
is required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the South Point Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the South Point Lessee or any other Person or any
substantial part of the property of the Guarantor or the South Point Lessee or
such other Person, all as if such payments had not been made.

                                       17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the South Point Lessee under the Facility
Lease shall fail to make any payment with respect to Periodic Rent or the
Termination Value (including the Equity Portion of Termination Value and Debt
Portion of Termination Value) when due and payable under such Facility Lease or
this Guaranty within five (5) days after the same shall become due thereunder;
or

          (b)   the Guarantor or the South Point Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the South Point Lessee and the Guarantor of
written notice of such failure by the South Point Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of South Point Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the South Point Lessee under any of the Operative Documents or the South Point
Ground Lease, 30 days after receipt by the Guarantor of written notice thereof
from the Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
Through Trustee; provided, however, if such condition cannot be remedied within
such 30-day period, then the period within which to remedy such condition shall
be extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                       18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

                (i)   commences a voluntary case;

                (ii)  consents to the entry of an order for relief against it in
                      an involuntary case;

                (iii) consents to the appointment of a Custodian of it or for
                      all or substantially all of its property;

                (iv)  makes a general assignment for the benefit of its
                      creditors; or

                (v)   admits in writing its inability to generally pay its debts
                      as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

          The grace periods set forth in Section 7.1(a) and (b) above shall
not affect in any way the right hereunder of any Beneficiary entitled to a
payment of any amount payable to it, or performance of any obligation, by the
South Point Lessee under any Operative

                                       19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the South Point Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the South Point Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the South Point
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the South Point
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the South Point Lessee and the Guarantor owing to
any of the Beneficiaries (or any other party) under the Operative Documents
shall have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                       20
<PAGE>
          (a)   Without limiting the last sentence of Section 7.1, the
Guarantor hereby unconditionally waives (i) notice of any of the matters
referred to in the second sentence of Section 2.3 hereof; (ii) all notices
which may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve any rights against the Guarantor hereunder, including,
without limitation, any demand, proof or notice of non-payment of any
Obligation; (iii) any right to the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Facility Lease (or
under or in respect of any other agreement including any Operative Document);
(iv) notice of acceptance of this Guaranty, demand, protest, presentment,
notice of default and any requirement of diligence; (v) any requirement to
exhaust any remedies or to mitigate any damages resulting from default by the
South Point Lessee or any Person under the Facility Lease (or under any other
agreement including any Operative Document); and (vi) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or which might otherwise limit
recourse against the Guarantor, other than satisfaction in full of the
Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the South Point Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the South Point Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the South Point Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

                                       21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the South Point Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
South Point

                                       22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i)   unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii)   the requirements set forth in Section 3.3(i), (iii), (iv)
     and (v) of this Guaranty have been satisfied and, immediately after
     giving effect to such transfer, the transferee shall own at least a
     majority of the Ownership Interest of the South Point Lessee;

          (iii)   such transfer occurs (i) subsequent to the tenth year
     of the Facility Lease Term of the South Point Lessee and (ii) when the
     aggregate principal amount of the Lessor Notes is less than $50 million;

          (iv)   neither the transferee nor any Affiliate of the
     transferee shall be involved in any material litigation with the Owner
     Participant;

          (v)   the Rating Agencies shall have confirmed that after giving
     effect to such transfer, the Certificates (if then outstanding) and the
     transferee (or a party which guarantees such transferee's obligations
     under the Operative Documents assigned to such transferee) shall be rated
     at least Investment Grade (and not be on negative credit watch) by the
     Rating Agencies;

          (vi)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and effect, the transferee shall assume all the obligations of the
     Guarantor under the Operative Documents pursuant to the Guarantor
     Assignment and Assumption Agreement and such Operative Documents as so
     assumed shall remain in full force and effect, and any guaranty of such
     transferee's obligations pursuant to this Section 8.4 shall be in a form
     satisfactory to the Owner Participant (it being acknowledged and agreed
     that any such guaranty which shall be in form and substance substantially
     similar to this Guaranty shall be deemed to be satisfactory to the Owner
     Participant); and

          (vii)   the Owner Participant, the Owner Lessor and, so long as
     the Lien on the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Opinion of Counsel as to the satisfaction of the
     conditions set forth in clause (vi) of this Section 8.4(b).

                                       23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the South
Point Ground Lease have been made available to its principal executive officers
and such officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the South Point
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other

                                       24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                       25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the South Point Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
South Point Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the South Point Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be
duly executed and delivered on the day and year first above written.

                                           CALPINE CORPORATION,
                                           as Guarantor


                                           By:_____________________________
                                              Name:
                                              Title:
<PAGE>
                                           SOUTH POINT OL-1, LLC,
                                           a Delaware limited liability company


                                           By:_____________________________
                                              Name:
                                              Title:
<PAGE>
                                           SBR OP-1, LLC,
                                           a Delaware limited liability company


                                           By:______________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Indenture Trustee


                                           By:_____________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Pass Through Trustee


                                           By:_____________________________
                                              Name:
                                              Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.28
<SEQUENCE>31
<FILENAME>f80168ex4-22_28.txt
<DESCRIPTION>EXHIBIT 4.22.28
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.28


===============================================================================

           CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-2)


                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,


                                 as Guarantor,

                                      and

                    SOUTH POINT OL-2, LLC, as Owner Lessor,


                      SBR OP-2, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              SOUTH POINT PROJECT


===============================================================================
<PAGE>
           CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-2)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-2), dated
as of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), SOUTH
POINT OL-2, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-2, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, South Point Energy Center, LLC (the "South Point Lessee") is
an indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the South Point Lessee is a party to the Participation
Agreement (SP-2) dated as of October 18, 2001 (the "Participation Agreement"),
among the South Point Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, South Point OL-2, LLC,
as Owner Lessor, the Guarantor, SBR OP-2, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-2) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the South Point Facility to the
South Point Lessee as contemplated therein;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-2) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the South Point Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the South
Point Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
Mutual agreements herein contained and other good and valuable consideration,
The receipt and sufficiency of which are hereby acknowledged, the Guarantor
Agrees as follows:

I.   DEFINITIONS

               a)   Capitalized terms used in this Guaranty, including the
                    recitals, and not otherwise defined herein shall have the
                    respective meanings set forth on Appendix A to the
                    Participation Agreement, provided that if a term that is
                    defined in this Guaranty (the "Guaranty Definition")
                    includes in such definition a term that is defined in
                    Appendix A to the Participation Agreement (the "Appendix
                    A Definition"), and the Appendix A Definition in turn
                    includes in such definition a term that is defined both
                    in this Guaranty and in Appendix A to the Participation
                    Agreement (the "Embedded Definition"), then for purposes
                    of the Appendix A Definition as it is used in the
                    Guaranty Definition and for purposes of the Guaranty
                    Definition, the Embedded Definition shall be used as
                    defined in this Guaranty and not as defined in Appendix A
                    to the Participation Agreement. Except as otherwise
                    provided in the previous sentence, the Rules of
                    Interpretation set forth in Appendix A to the
                    Participation Agreement shall apply to the terms used in
                    this Guaranty and specifically defined herein.

               b)   As used in this Guaranty, the following terms shall have
                    the respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

                                      2
<PAGE>
               "GAAP" means generally accepted accounting principals in the
United States of America as in effect and, to the extent optional, adopted by
the Guarantor, on the date of the Guaranty, consistently applied.

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

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

                                        3
<PAGE>
II.  GUARANTEED AND PAYMENT OBLIGATIONS

     A.   (a)   The Guarantor hereby unconditionally and irrevocably
                    guarantees to the Beneficiaries (except that the
                    obligations referred to in clauses (1), (2) and (5)(A)
                    (relating to clause (1) and clause (2) amounts) of this
                    Section 2.1(a) are for the benefit only of the Owner
                    Lessor and the Indenture Trustee (as assignee of the
                    Owner Lessor), as their interests may appear), as
                    primary obligor and not merely as a surety, the due,
                    punctual and full payment (when and as the same may
                    become due and payable), and, as applicable, performance
                    by the South Point Lessee of all of the South Point
                    Lessee's obligations under the Operative Documents to
                    which it is a party and with respect to the South Point
                    Ground Lease if the same shall not be performed when due
                    pursuant to the Operative Documents, including, without
                    limitation, but without duplication, (1) the South Point
                    Lessee's obligation to make Periodic Rent, Supplemental
                    Rent and other payments (in accordance with the terms of
                    the Operative Documents) to the Owner Lessor, (2) the
                    South Point Lessee's obligation to pay the Termination
                    Value (and amounts computed by reference thereto) to the
                    Owner Lessor and all other amounts owed under the
                    Operative Documents and the South Point Ground Lease
                    under and in accordance with the Facility Lease, (3)
                    without duplication of the preceding clause (2), the
                    South Point Lessee's obligation to pay the Equity
                    Portion of Periodic Rent and the Equity Portion of
                    Termination Value to the Owner Lessor, (4) the South
                    Point Lessee's obligation to make indemnity payments
                    when due in accordance with the terms of the
                    Participation Agreement and the Tax Indemnity Agreement,
                    (5) the South Point Lessee's obligation, pursuant to
                    Section 3.3 of the Facility Lease, to pay as
                    Supplemental Rent an amount equal to (A) interest at the
                    applicable Overdue Rate on any amount under clauses (1),
                    (2), (3), (4) and 5(B) of this Section 2.1(a), not paid
                    when due and (B) any Make-Whole Amount to the extent
                    then due and payable by the Owner Lessor to the
                    Certificateholders pursuant to the Participation
                    Agreement, the Facility Lease or any other Operative
                    Document to which the South Point Lessee is a party and
                    (6) the South Point Lessee's obligation to make any and
                    all other payments, and perform all other covenants and
                    agreements, when due under and in accordance with the
                    terms of the Operative Documents.

                                       4
<PAGE>
               b)   The Guarantor agrees that upon the occurrence and during
                    the continuance of a Lease Event of Default, it shall
                    pay to the Indenture Trustee (as assignee of the Owner
                    Lessor), upon written demand by the Indenture Trustee
                    (as assignee of the Owner Lessor) in accordance with the
                    applicable Operative Documents, all amounts constituting
                    the Termination Value and all accrued but unpaid
                    Periodic Rent then due and payable. Such payment
                    obligation shall be effective without reference to or
                    requirement for valuation of the Owner Lessor's Interest
                    or any other security held by any Person for performance
                    of the South Point Lessee's obligations under the
                    Facility Lease or any other Operative Documents or the
                    South Point Ground Lease. The Guarantor agrees that it
                    shall make such payment notwithstanding the fact that
                    the South Point Lessee may have a defense to the payment
                    of any such amounts. The Guarantor's obligations in this
                    Section 2.1(b) are direct and primary obligations (and
                    not obligations of a guarantor or surety) of the
                    Guarantor to the Owner Lessor and the Indenture Trustee
                    (as assignee of the Owner Lessor), which shall not be
                    affected in any way by the provisions of Section 2.1(a)
                    above or any payments under any other Operative
                    Documents of any amounts until the Owner Lessor and the
                    Indenture Trustee (as assignee of the Owner Lessor) have
                    received full payment of such amounts.

               c)   The Guarantor acknowledges that notwithstanding the
                    provisions of the second sentence of Section 8.13 hereof
                    (i) as and to the extent provided in Section 5.6 of the
                    Collateral Trust Indenture upon the occurrence and
                    during the continuation of a Lease Event of Default, the
                    Indenture Trustee and the Owner Lessor may proceed
                    against the Guarantor for the payment of the Termination
                    Value (including without limitation all amounts the
                    Guarantor is obligated to pay under Section 2.1(b)
                    hereof under the circumstances specified therein).

               d)   Notwithstanding anything herein or in the Collateral Trust
                    Indenture to the contrary, in the event that an
                    Indenture Event of Default that constitutes a Lease
                    Event of Default has occurred and is continuing and the
                    Indenture Trustee (as assignee of the Owner Lessor)
                    forecloses upon and sells, assigns or otherwise
                    transfers, its interest in this Guaranty pursuant to the
                    provisions of the Collateral Trust Indenture, the
                    Guarantor shall remain obligated hereunder

                                       5
<PAGE>
                    to pay to the Owner Lessor the amounts referred to in
                    Section 2.1(a)(3).

     B.   In the case of any failure by the South Point Lessee to perform and
          observe any term, provision or condition referred to in Section
          2.1(a) when due pursuant to the Operative Documents or the South
          Point Ground Lease, the Guarantor agrees to cause such performance
          or observance to be done, and in the case of any failure by the
          South Point Lessee to make such payment as and when the same shall
          become due and payable (by acceleration or otherwise), the Guarantor
          hereby agrees to make such payment (and, in addition, such further
          amounts, if any, as shall be sufficient to cover the costs and
          expenses of collection hereunder) as and when such payment is due
          and payable.

          All obligations and indebtedness set forth in Section 2.1 above, this
Section 2.2, and in Section 8.15 below are referred to in this Guaranty as the
"Obligations."

     C.   The obligations of the Guarantor contained herein are direct,
          independent, and primary obligations of the Guarantor and are
          absolute, present, unconditional and continuing obligations and are
          not conditioned in any way upon the institution of suit or the
          taking of any other action or any attempt to enforce performance of
          or compliance with the obligations, covenants or undertakings
          (including any payment obligations) of the South Point Lessee and
          shall constitute a guaranty of, and agreement with respect to,
          payment and performance and not a guaranty of collection, binding
          upon the Guarantor and its successors and assigns and shall remain
          in full force and effect and irrevocable without regard to the
          genuineness, validity, legality or enforceability of the
          Participation Agreement, the Facility Lease, the Tax Indemnity
          Agreement or any other agreement (including any other Operative
          Document and the South Point Ground Lease) or the lack of power or
          authority of the South Point Lessee to enter into any of the
          Participation Agreement, the Facility Lease, the Tax Indemnity
          Agreement or any other agreement (including any other Operative
          Document and the South Point Ground Lease) to which the South Point
          Lessee is a party, or any substitution, release or exchange of any
          other guaranty of, or agreement with respect to, or any other
          security for, any of the Obligations (including any settlement,
          compromise or other adjustment with respect to the Obligations) or
          any other circumstance whatsoever that might otherwise constitute a
          legal or equitable discharge or defense of a surety or guarantor and
          shall not be subject to any right of set-off, recoupment or
          counterclaim and is in no way conditioned or contingent upon any
          attempt to collect from the South Point Lessee or any other entity
          or to perfect or enforce any security or upon any other condition or
          contingency or upon any other action, occurrence or circumstance
          whatsoever. Without limiting the generality of the

                                       6
<PAGE>
          foregoing, the Guarantor shall have no right to terminate this
          Guaranty, or to be released, relieved or discharged from its
          obligations hereunder, other than upon full payment and satisfaction
          and performance of all of the Obligations (subject to Section 8.14
          hereof), and such obligations shall be neither affected nor
          diminished for any other reason whatsoever, including (i) any
          amendment or supplement to or modification of any of the
          Participation Agreement, the Facility Lease, the Tax Indemnity
          Agreement or any other agreement (including any other Operative
          Document) to which the South Point Lessee is a party, any release,
          extension or renewal of the South Point Lessee's obligations under
          any of the Participation Agreement, the Facility Lease, the Tax
          Indemnity Agreement or any other agreement (including any other
          Operative Document) to which the South Point Lessee is a party or by
          which it is bound, including, without limitation, any actions taken
          by the Indenture Trustee pursuant to the Collateral Trust Indenture,
          or any subletting, assignment or transfer of the South Point
          Lessee's or any Beneficiary's interest in the Participation
          Agreement, the Facility Lease or any other Operative Document in
          accordance with the terms thereof, (ii) any bankruptcy, insolvency,
          readjustment, composition, liquidation or similar proceeding with
          respect to the South Point Lessee, Owner Lessor, Owner Participant
          or any other Person, including, without limitation, termination of
          the Facility Lease and the operation of Section 502(b)(6) of the
          Bankruptcy Code in connection therewith, (iii) any furnishing or
          acceptance of additional security or any exchange, substitution,
          surrender or release of any security, (iv) any waiver, consent or
          other action or inaction or any exercise or nonexercise of any
          right, remedy or power with respect to the Obligations (including
          any settlement, compromise or other adjustment with respect to the
          Obligations) or any of the Participation Agreement, the Facility
          Lease, the Tax Indemnity Agreement or any other agreement (including
          any Operative Document) to which the South Point Lessee is a party,
          (v) without limiting Section 3.6(b) hereof, any merger or
          consolidation of the South Point Lessee or the Guarantor into or
          with any other Person, or any sale, assignment, conveyance, lease,
          transfer or other disposition of all or substantially all of the
          assets or properties of the South Point Lessee or the Guarantor, or
          any change in the structure of the South Point Lessee or in the
          ownership of the South Point Lessee by the Guarantor, (vi) any
          default, misrepresentation, negligence, misconduct or other action
          or inaction of any kind by any Beneficiary, the Indenture Trustee or
          any other Person under or in connection with any Operative Document
          or any other agreement relating to this Guaranty, (vii) any action
          or inaction by any Beneficiary as contemplated in Section 5 of this
          Guaranty; (viii) any invalidity, irregularity or unenforceability of
          all or part of the Obligations or of any security therefor; (ix) any
          change in the manner, place, timing or schedule of payment or
          performance of, or in any other term of, all or any of the
          Obligations; (x) whether the Guarantor is related or unrelated to
          the South Point Lessee, (xi) the assignment by the Owner Lessor of
          its rights

                                       7
<PAGE>
          and interests hereunder, under the Facility Lease or under any
          other Operative Document or the South Point Ground Lease in
          accordance with the Operative Documents and the South Point Ground
          Lease (or the genuineness, validity, legality or enforceability of
          the obligations of the Owner Lessor under the Collateral Trust
          Indenture) and (xii) any other circumstance whatsoever.

III. GUARANTOR'S REPRESENTATIONS, WARRANTIES AND
     COVENANTS

     A.   The Guarantor represents and warrants, as of the date hereof:

          1.   The Guarantor is duly organized, validly existing and in good
               standing under the laws of the State of Delaware and has full
               power, authority and the legal right to execute, deliver and
               perform the terms of this Guaranty and each Operative Document
               to which it is a party (together, the "Calpine Documents").

          2.   The execution, delivery and performance by the Guarantor of the
               Calpine Documents have been duly authorized by all necessary
               corporate action. The Calpine Documents constitute legal,
               valid and binding obligations of the Guarantor enforceable
               against the Guarantor in accordance with their respective
               terms, except as such enforcement may be affected by
               applicable bankruptcy, insolvency, moratorium and other
               similar laws affecting creditors' rights generally and by
               general principles of equity.

          3.   The execution, delivery and performance of the Calpine Documents
               will not (a) contravene any provision of law, rule or
               regulation to which the Guarantor is subject or any judgment,
               decree or order applicable to the Guarantor, (b) conflict or
               be inconsistent with or result in any breach of any terms,
               covenants, conditions or provisions of, or constitute a
               default under, or result in the creation or imposition of (or
               the obligation to create or impose) any Lien or other
               encumbrance upon any of the property or assets of the
               Guarantor pursuant to the terms of any agreement or other
               instrument to which the Guarantor is a party or by which it or
               its property is bound or to which it or its property may be
               subject, in each case the violation of which would have a
               material adverse effect on the business, operations,
               prospects, properties or assets, or in the condition,
               financial or otherwise, of the Guarantor, or (c) violate or
               contravene any provision of the articles of incorporation or
               by-laws of the Guarantor.

          4.   No pending or, to the knowledge of the Guarantor, threatened
               action, suit, investigation or proceedings against the
               Guarantor before any Governmental Entity exists which, if
               determined

                                       8
<PAGE>
               adversely to the Guarantor, would materially adversely affect
               the business, operations, prospects, properties or assets, or
               in its condition, financial or otherwise, or the Guarantor's
               ability to perform its obligations under the Calpine
               Documents.

          5.   No consent from, authorization or approval or other action by,
               and no notice to or filing with, any Person is required for
               the execution, delivery and performance by the Guarantor of
               the Calpine Documents except those which have been given and
               remain in full force and effect.

          6.   The South Point Lessee is an indirect, wholly-owned subsidiary
               of the Guarantor.

          7.   The Guarantor is not an "investment company" or a company
               controlled by an "investment company" within the meaning of
               the Investment Company Act of 1940.

          8.   The Guarantor is not in default with respect to any judgment,
               order, writ, injunction, decree, award, rule or regulation
               of any court, arbitrator or governmental department,
               commission, board, bureau, agency or instrumentality, domestic
               or foreign, which, either, separately or in the aggregate,
               would result in any material adverse change in any of its
               businesses, operations, prospects or assets, or in its
               condition, financial or otherwise, or its ability to perform
               its obligations under the Calpine Documents.

          9.   The Guarantor is not a party to any agreement or instrument, or
               subject to any corporate restriction or any judgment, order,
               writ, injunction, decree, award, rule or regulation, which
               materially adversely affects, or in the future may materially
               adversely affect, its business, operations, prospects,
               properties or assets, or conditions, financial or otherwise,
               or its ability to perform its obligations under the Calpine
               Documents.

          10.  The audited financial statements of the Guarantor and its
               Consolidated Subsidiaries, as of December 31, 2000, reported
               on by Arthur Andersen LLP, copies of which have been delivered
               to the Indenture Trustee, the Pass Through Trustee, the
               Certificateholders and the Owner Participant, are true,
               complete and correct and fairly present the financial
               condition of the Guarantor and its Consolidated Subsidiaries
               as of the date thereof. The financial statements have been
               prepared in accordance with GAAP. The Guarantor and its
               Consolidated Subsidiaries do not have any material
               liabilities, direct or contingent, except (a) as are disclosed
               in such financial statements or (b) as arise under the
               Operative Documents or the South Point Ground Lease. There has

                                       9
<PAGE>
               been no material adverse change in the financial condition of
               the Guarantor and its Consolidated Subsidiaries since the date
               of the audited financial statements referred to above.

          11.  All factual information relating to the Guarantor (taken as a
               whole) heretofore or contemporaneously furnished by or on
               behalf of the Guarantor in writing to the Owner Lessor, the
               Owner Participant, the Indenture Trustee, the Pass Through
               Trustee or the Certificateholders (including, without
               limitation, all such information contained herein, in the
               Participation Agreement and in any preliminary or final
               offering circular distributed in accordance with the terms of
               the Operative Documents) for purposes of or in connection with
               the Calpine Documents or any transaction contemplated therein
               is true and accurate in all material respects on the date as
               of which such information is dated or certified and not
               incomplete by omitting to state any fact necessary to make
               such information relating to the Guarantor (taken as a whole)
               not misleading in any material respect at such time in light
               of the circumstances under which such information was
               provided; provided, that no representation or warranty is made
               with regard to (i) any projections or other forward-looking
               statements provided by or on behalf of the Guarantor, or (ii)
               the descriptions of the Operative Documents or the South Point
               Ground Lease or the tax consequences to beneficial owners of
               Certificates; provided, however, each of the Beneficiaries
               acknowledges and agrees that (i) Calpine has heretofore
               provided to the Appraiser, solely in order to assist the
               Appraiser in connection with the preparation of the appraisal
               to be delivered by the Appraiser to certain of the Transaction
               Parties at the Closing, certain (1) general market
               information, (2) information about the Arizona energy market
               and (3) information passed along from other Persons and (ii)
               that the South Point Lessee does not make any representation
               or warranty whatsoever with respect to the information
               described in clause (i) above except to the extent expressly
               set forth in Section 4(b) of the Tax Indemnity Agreement.

          12.  The Guarantor is in compliance with all applicable statutes,
               regulations and orders of, and all applicable restrictions
               imposed by, all governmental bodies, domestic or foreign, in
               respect of the conduct of its business and the ownership of
               its property (including applicable statutes, regulations,
               orders and restrictions relating to environmental standards
               and controls), except such noncompliance as would not, in the
               aggregate, have a material adverse effect on the business,
               operations, property, assets or condition (financial or
               otherwise) of the Guarantor, or the Guarantor's ability to
               perform its obligations under the Calpine Documents.

                                       10
<PAGE>
          13.  The Guarantor has filed all tax returns and reports required by
               law to have been filed by it and has paid all taxes and
               governmental charges thereby shown to be owing (other than any
               such taxes or charges which are being diligently contested in
               good faith by appropriate proceedings and for which adequate
               reserves in accordance with GAAP shall have been set aside on
               its books), except such non-filing or non-payment, as the case
               may be, as would not, in the aggregate, have a material
               adverse effect on the business, operations, property, assets
               or condition (financial or otherwise) of the Guarantor. 14. No
               default has occurred under this Guaranty, which default would
               reasonably be expected to result in a material adverse effect
               on the business, operations, assets or condition (financial or
               otherwise) of the Guarantor.

          14.  No default has occurred under this Guaranty, which default would
               reasonably be expected to result in a material adverse effect on
               the business, operations, assets or condition (financial or
               otherwise) of the Guarantor.

          15.  In accordance with Section 8.12 hereof and Section 14.14 of the
               Participation Agreement, the Guarantor has validly submitted
               to the jurisdiction of the Supreme Court of the State of New
               York, New York County and the United States District Court for
               the Southern District of New York.

      B.  The Guarantor covenants and agrees that on and after the date hereof
          and until this Guaranty is terminated pursuant to the terms hereof
          the Guarantor shall:

               a)   file with the Owner Participant and the Indenture Trustee,
                    within 15 days after the filing with the SEC, copies of
                    the annual reports and of the information, documents and
                    other reports (or copies of such portions of any of the
                    foregoing as the SEC may by rules and regulations
                    prescribe) which the Guarantor is required to file with
                    the SEC pursuant to Section 13 or 15(d) of the Exchange
                    Act. In the event the Guarantor is at any time no longer
                    subject to the reporting requirements of Section 13 or
                    15(d) of the Exchange Act, it shall file with the Owner
                    Participant, and for so long as the Certificates remain
                    outstanding, the Indenture Trustee and the Pass Through
                    Trustee, within 15 days after the Guarantor would have
                    been required to file such documents with the SEC,
                    copies of the annual reports and of the information,
                    documents and other reports which the Guarantor would
                    have been required to file with the SEC if the Guarantor
                    had continued to be subject to such Sections 13 or
                    15(d). Delivery of such reports, information and
                    documents to the Owner Participant, the Indenture
                    Trustee and the Pass Through Trustee is for
                    informational purposes only and their receipt of the
                    same shall not constitute

                                       11
<PAGE>
                    constructive notice of any information contained
                    therein or determinable from information contained
                    therein, including the Guarantor's compliance with any
                    of its covenants hereunder (as to which the Owner
                    Participant, the Indenture Trustee and the Pass Through
                    Trustee are entitled to rely exclusively on Officers'
                    Certificates);

               b)   furnish to the Beneficiaries, promptly upon the Guarantor
                    obtaining Actual Knowledge of any action, suit or
                    proceeding pending or threatened against the Guarantor
                    before any court or before any governmental department,
                    commission or agency or any arbitrator, which in the
                    Guarantor's good faith opinion would reasonably be
                    likely to result in a material adverse effect on the
                    business, operations, property, assets or condition
                    (financial or otherwise) of the Guarantor, a certificate
                    of a senior officer specifying the nature of such
                    action, suit or proceeding and the proposed response of
                    the Guarantor thereto;

               c)   furnish to the Beneficiaries, as soon as possible and in
                    any event within three days after the Guarantor obtains
                    Actual Knowledge of default by the Guarantor of any of
                    its material obligations under this Guaranty, a
                    statement of an authorized officer of the Guarantor
                    setting forth details of such default and the action
                    which the Guarantor has taken and proposes to take with
                    respect thereto. Notwithstanding the foregoing provision
                    in this clause (c), the Guarantor shall, within 120 days
                    after the close of each fiscal year of the Guarantor in
                    which Certificates are outstanding hereunder, file with
                    the Owner Participant, and if the Certificates are
                    outstanding during any part of such fiscal year, the
                    Indenture Trustee and the Pass Through Trustee, an
                    Officer's Certificate, provided that one Officer
                    executing the same shall be the principal executive
                    officer, the principal financial officer or the
                    principal accounting officer of the Guarantor, covering
                    the period from the date hereof to the end of the fiscal
                    year in which this Guaranty was executed and delivered
                    by the Guarantor, in the case of the first such
                    certificate, and covering the preceding fiscal year in
                    the case of each subsequent certificate, and stating
                    whether or not, to the Actual Knowledge of each such
                    executing Officer, the Guarantor has complied with and
                    performed and fulfilled all covenants on its part
                    contained in this Guaranty and is not in Default in the
                    performance or observance of any of the terms or
                    provisions contained in this Guaranty, and, if any such
                    signer has obtained Actual Knowledge of any Default by
                    the Guarantor in the

                                       12
<PAGE>
                    performance, observance or fulfillment of any such
                    covenant, terms or provision specifying each such
                    Default and the nature thereof; and

               d)   promptly furnish to the Owner Participant, the Owner
                    Lessor, the Indenture Trustee or the Pass Through
                    Trustee such other information as the Owner Lessor,
                    Owner Participant, the Indenture Trustee and the Pass
                    Through Trustee may from time to time reasonably request
                    with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

     C.   The Guarantor covenants and agrees that it will not transfer or
          assign or cause to be transferred or assigned the Ownership
          Interest in the South Point Lessee to any other Person, without the
          prior written consent of the Owner Lessor, the Owner Participant
          and, so long as the Lien of the Collateral Trust Indenture has not
          been terminated or discharged, the Indenture Trustee and the Pass
          Through Trustee (it being agreed and understood that a consolidation
          with or merger of the Guarantor into, or a sale by the Guarantor of
          all or substantially all of its assets to, another Person in
          accordance with Section 3.6 hereof shall not be deemed to be a
          transfer or assignment of the Ownership Interest in the South Point
          Lessee for the purposes of this Section), except as permitted in
          this Section 3.3 or in Section 8.4 hereof. Notwithstanding the
          foregoing, and subject to Section 8.4 below, so long as this
          Guaranty remains in full force and effect, the Guarantor may
          transfer a portion of the Ownership Interest in the South Point
          Lessee (provided that following such transfer the Guarantor shall
          continue to own at least a majority of the Ownership Interest in the
          South Point Lessee) without the consent of the Owner Lessor, the
          Owner Participant, the Indenture Trustee, the Pass Through Trustee
          or any other Transaction Party if the following conditions have been
          satisfied:

          1.   the Owner Lessor, the Owner Participant and, so long as the Lien
               of the Collateral Trust Indenture shall not have been
               terminated or discharged, the Indenture Trustee and the Pass
               Through Trustee shall have received an Opinion of Counsel to
               the effect that all regulatory approvals required in
               connection with such transfer have been obtained;

          2.   all the obligations of the South Point Lessee under the
               Operative Documents and the South Point Ground Lease shall
               remain in full force and effect, the Guarantor shall reaffirm
               in writing all of its obligations hereunder in a manner
               reasonably satisfactory to the

                                       13
<PAGE>
               Owner Participant, such obligations of the Guarantor shall
               remain in full force and effect;

          3.   no Significant Lease Default or Lease Event of Default shall
               have occurred and be continuing at the time of or immediately
               following such transfer;

          4.   the transfer shall not subject the South Point Lessee, the Owner
               Participant, the Owner Lessor, the Indenture Trustee, the
               Pass Through Trustee or any Certificateholder to regulation
               under PUHCA or state laws and regulations regarding the rate
               and financial or organizational regulation of electric
               utilities in the affected party's reasonable opinion, nor
               result in a Regulatory Event of Loss; and

          5.   the South Point Lessee shall have paid, at no after-tax cost to
               such parties, all reasonable and documented out-of-pocket
               expenses (including reasonable attorneys' fees and expenses)
               of the Owner Lessor, the Owner Participant, the Indenture
               Trustee, the Lease Indenture Company and the Pass Through
               Trustee in connection with such assignment.

     D.   Subject to Section 4, the Guarantor shall not, and shall not permit
          any Restricted Subsidiary to, enter into any Sale/Leaseback
          Transaction unless (i) the Guarantor or such Restricted Subsidiary
          would be entitled to create a Lien on such property securing
          Indebtedness in an amount equal to the Attributable Debt with
          respect to such transaction without equally and ratably securing the
          Obligations pursuant to Section 3.5 or (ii) the net proceeds of such
          sale are at least equal to the fair value (as determined by the
          Board of Directors) of such property or asset and the Guarantor or
          such Restricted Subsidiary shall apply or cause to be applied an
          amount in cash equal to the net proceeds of such sale to the
          retirement, within 180 days of the effective date of any such
          arrangement, of Indebtedness of the Guarantor or any Restricted
          Subsidiary; provided, however, that in addition to the transactions
          permitted pursuant to the foregoing clauses (i) and (ii), the
          Guarantor or any Restricted Subsidiary may enter into a
          Sale/Leaseback Transaction as long as the sum of (x) the
          Attributable Debt with respect to such Sale/Leaseback Transaction
          and all other Sale/Leaseback Transactions entered into pursuant to
          this proviso plus (y) the amount of outstanding Indebtedness secured
          by Liens Incurred pursuant to the final proviso to Section 3.5 does
          not exceed 15% of Consolidated Net Tangible Assets as determined
          based on the consolidated balance sheet of the Guarantor as of the
          end of the most recent fiscal quarter for which financial statements
          are available; and provided, further, that a Restricted Subsidiary
          may enter into a Sale/Leaseback Transaction with respect to property
          or assets owned by such Restricted Subsidiary, the proceeds of which
          are used to explore,

                                       14
<PAGE>
          drill, develop, construct, purchase, repair, improve or add to
          property or assets of any Restricted Subsidiary, or to repay (within
          365 days of the commencement of full commercial operation of any
          such property) Indebtedness Incurred to explore, drill, develop,
          construct, purchase, repair, improve or add to property or assets of
          any Restricted Subsidiary.

     E.   Subject to Section 4, the Guarantor shall not, and shall not permit
          any Restricted Subsidiary to, directly or indirectly, incur any
          Lien on any of its properties or assets (including Capital Stock),
          whether owned at the date hereof or thereafter acquired, in each
          case to secure Indebtedness of the Guarantor or any Restricted
          Subsidiary, other than (a)(1) Liens incurred by the Guarantor or any
          Restricted Subsidiary securing Indebtedness Incurred by the
          Guarantor or such Restricted Subsidiary, as the case may be, to
          finance the exploration, drilling, development, construction or
          purchase of or by, or repairs, improvements or additions to,
          property or assets of the Guarantor or such Restricted Subsidiary,
          as the case may be, which Liens may include Liens on the Capital
          Stock of such Restricted Subsidiary or (2) Liens incurred by any
          Restricted Subsidiary that does not own, directly or indirectly, at
          the time of such original incurrence of such Lien under this clause
          (2) any operating properties or assets, securing Indebtedness
          Incurred to finance the exploration, drilling, development,
          construction or purchase of or by, or repairs, improvements or
          additions to, property or assets of any Restricted Subsidiary that
          does not, directly or indirectly, own any operating properties or
          assets at the time of such original incurrence of such Lien, which
          Liens may include Liens on the Capital Stock of one or more
          Restricted Subsidiaries that do not, directly or indirectly, own any
          operating properties or assets at the time of such original
          incurrence of such Lien, provided, however, that the Indebtedness
          secured by any such Lien may not be issued more than 365 days after
          the later of the exploration, drilling, development, completion of
          construction, purchase, repair, improvement, addition or
          commencement of full commercial operation of the property or assets
          being so financed; (b) Liens existing on the date hereof (other than
          Liens relating to Indebtedness or other obligations being repaid or
          Liens that are otherwise extinguished with the proceeds of the
          offering of the Certificates); (c) Liens on property, assets or
          shares of stock of a Person at the time such Person becomes a
          Subsidiary; provided, however, that any such Lien may not extend to
          any other property or assets owned by the Guarantor or any
          Restricted Subsidiary; (d) Liens on property or assets at the time
          the Guarantor or a Subsidiary acquires the property or asset,
          including any acquisition by means of a merger or consolidation with
          or into the Guarantor or a Subsidiary; provided, however, that such
          Liens are not incurred in connection with, or in contemplation of,
          such merger or consolidation; and provided, further, that the Lien
          may not extend to any other property or asset owned by the Guarantor
          or any Restricted Subsidiary; (e) Liens securing Indebtedness or
          other obligations of a Subsidiary owing to the Guarantor or a
          Restricted Subsidiary or of the

                                       15
<PAGE>
          Guarantor owing to a Subsidiary; (f) Liens incurred on assets that
          are the subject of a Capitalized Lease Obligation to which the
          Guarantor or a Subsidiary is a party, which shall include, Liens on
          the stock or other ownership interest in one or more Restricted
          Subsidiaries leasing such assets; (g) Liens to secure any
          refinancing, refunding, extension, renewal or replacement (or
          successive refinancings, refundings, extensions, renewals or
          replacements) as a whole, or in part, of any Indebtedness secured by
          any Lien referred to in the foregoing clauses (a), (b), (c), (d) and
          (f), provided, however, that (x) such new Lien shall be limited to
          all or part of the same property or assets that secured the original
          Lien (plus repairs, improvements or additions to such property or
          assets and Liens on the stock or other ownership interest in one or
          more Restricted Subsidiaries beneficially owning such property or
          assets) and (y) the amount of the Indebtedness secured by such Lien
          at such time (or, if the amount that may be realized in respect of
          such Lien is limited, by contract or otherwise, such limited lesser
          amount) is not increased (other than by an amount necessary to pay
          fees and expenses, including premiums, related to the refinancing,
          refunding, extension, renewal or replacement of such Indebtedness);
          (h) Liens by which the Obligations are secured equally and ratably
          with other Indebtedness pursuant to this Section 3.5; in any such
          case without effectively providing that the Obligations shall be
          secured equally and ratably with (or prior to) the obligations so
          secured for so long as such obligations are so secured; provided,
          however, that the Guarantor or a Restricted Subsidiary may Incur
          other Liens to secure outstanding Indebtedness as long as the sum of
          (x) the lesser of (A) the amount of outstanding Indebtedness secured
          by Liens Incurred pursuant to this proviso (or, if the amount that
          may be realized in respect of such Lien is limited, by contract or
          otherwise, such limited lesser amount) and (B) the fair value (as
          determined by the Board of Directors) of the property securing such
          item of Indebtedness, plus (y) the Attributable Debt with respect to
          all Sale/Leaseback Transactions entered into pursuant to the first
          proviso to Section 3.4 does not exceed 15% of Consolidated Net
          Tangible Assets as determined based on the Consolidated balance
          sheet of the Guarantor as of the end of the most recent fiscal
          quarter for which financial statements are available; and (i) Liens
          otherwise permitted under the 2000 Calpine Indenture.

     F.   (a) The Guarantor covenants and agrees that it shall not consolidate
          or merge with or into any other Person, or sell, assign, convey,
          lease, transfer or otherwise dispose of, all or substantially all of
          its properties or assets to any Person or Persons in one or a series
          of transactions, unless immediately after giving effect to such
          transaction,

          1.   no Significant Lease Default or Lease Event of Default shall
               have occurred and be continuing;

                                       16
<PAGE>
          2.   either (A) the Guarantor shall be the continuing Person, or (B)
               the Person (if other than the Guarantor) formed by such
               consolidation or into which the Guarantor is merged or to
               which the properties and assets of the Guarantor are sold,
               assigned, conveyed, transferred, disposed of or leased as
               aforesaid shall be an entity organized and existing under the
               laws of the United States or any State thereof or the District
               of Columbia and shall execute and deliver to the Owner
               Participant, the Owner Lessor and, so long as the Lien of the
               Collateral Trust Indenture shall not have been terminated or
               discharged, the Indenture Trustee and the Pass Through
               Trustee, a Guarantor Assignment and Assumption Agreement; and

          3.   each of the Owner Participant, the Owner Lessor and, so long as
               the Lien of the Collateral Trust Indenture shall not have
               been terminated or discharged, the Indenture Trustee and the
               Pass Through Trustee shall have received an Officer's
               Certificate of the Guarantor, the surviving entity or the
               transferee, as the case may be, in form and substance
               reasonably satisfactory to each of such parties, stating that
               the proposed merger, consolidation, assignment, conveyance,
               transfer, disposition, lease or sale, and the Guarantor
               Assignment and Assumption Agreement complies with the terms of
               this Section 3(a) and, as to legal matters, an Opinion of
               Counsel; and

          4.   In addition to the conditions set forth in clauses (i) through
               (iii) above, the Guarantor, subject to Section 4, will not
               consummate any such consolidation, merger or sale of all or
               substantially all of its properties or assets unless the
               long-term unsecured debt of the resulting, surviving or
               succeeding entity shall have a credit rating assigned by the
               Rating Agencies that is not less than the lower of (x) the
               credit rating of the long-term unsecured debt of the Guarantor
               assigned by the Rating Agencies immediately prior to such
               transaction and (y) a credit rating of the long-term unsecured
               debt of the resulting, surviving or succeeding entity assigned
               by the Rating Agencies that is Investment Grade; provided
               however, the foregoing credit rating condition set forth in
               this paragraph may be waived by the Owner Participant in its
               sole discretion, and provided further, that if such credit
               rating condition is not otherwise satisfied, or waived by the
               Owner Participant, the Guarantor, the surviving entity or the
               transferee, as the case may be, may provide in the
               alternative, either (A) a letter of credit from a L/C Bank
               with at least either (1) an A rating from S&P or (2) an A2
               rating from Moody's, in either case, covering the Equity
               Portion of Termination Value from time to time throughout the
               Lease Term, or (B) alternative or additional credit support
               arrangements which result in the satisfaction of the rating

                                       17
<PAGE>
               condition in either clause (x) or clause (y) above, provided
               that such arrangements contemplated in this sub-clause (B) are
               satisfactory to the Owner Participant and result in the
               satisfaction of such rating condition.

          (b) Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

     G.   The Guarantor shall, together with each payment it makes hereunder,
          provide a written notice to each Beneficiary or Beneficiaries which
          are the intended recipients of such payment of the amount payable to
          each such Beneficiary and the Operative Document(s) with respect to
          which such payment is being made.

IV.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the South Point Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the South Point Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the South Point Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and exclusive beneficiary of,
and shall have the sole right to enforce, the Guarantor's guaranty of, and
agreement with respect to, such indemnification obligation hereunder, (iii) the
Owner Lessor and Indenture Trustee (as assignee of Owner Lessor) shall be the
sole and exclusive beneficiaries of, and shall have the sole right to enforce,
the fourth sentence of Section 2.1(b) hereof, and (iv) the Indenture Trustee,
the Lease Indenture Company, the Pass Through Trustee and the Pass Through
Company shall be the sole and exclusive beneficiaries of the provisions of
Section 3.4 and Section 3.5 hereof; provided however, with respect to this
clause (iv), once the Certificates shall have been paid in full, the

                                       18
<PAGE>
covenants set forth in Section 3.4 and Section 3.5 hereof shall, subject to the
immediately following sentence, immediately and without any further action
terminate and be of no further force or effect. Any amendment, waiver or
modification of or supplement to Section 3.4 or Section 3.5 which is consented
to by the Indenture Trustee shall be binding upon the Owner Lessor and the
Owner Participant. Notwithstanding the foregoing or anything herein or in any
of the Operative Documents to the contrary, if the Owner Lessor shall have
issued additional Lease Debt at the request of the South Point Lessee in
accordance with Section 11 of the Participation Agreement prior to,
simultaneously with, or after payment in full of the Certificates and such new
Lease Debt is outstanding on or after the date the Certificates are paid in
full, the covenants set forth in Section 3.4 and Section 3.5 shall, to the
extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

V.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

               a)   change the manner, place or terms of payment of, and/or
                    change or extend the time of payment of, renew or
                    alter, any of the Obligations due to it, any security
                    therefor, or any liability incurred directly or
                    indirectly in respect thereof, and, subject to clause
                    (d) below, the guaranty and agreement herein made shall
                    apply to the Obligations due to it as so changed,
                    extended, renewed or altered;

               b)   sell, exchange, release, surrender, realize upon or
                    otherwise deal with in any manner and in any order any
                    property by whomsoever at any time pledged or mortgaged
                    to secure, or howsoever securing, the Obligations or any
                    liabilities (including any of those hereunder) incurred
                    directly or indirectly in respect thereof or hereof due
                    to it, and/or any offset thereagainst due to it;

               c)   exercise or refrain from exercising any rights against the
                    South Point Lessee or others or otherwise act or
                    refrain from acting;

                                       19
<PAGE>
               d)   settle or compromise any of the Obligations due to it, any
                    security therefor or any liability (including any of
                    those hereunder) incurred directly or indirectly in
                    respect thereof or hereof, and may subordinate the
                    payment of all or any part thereof to the payment of any
                    liability (whether due or not) of the South Point Lessee
                    to its creditors other than the Guarantor; provided that
                    any settlement or compromise with respect to, or other
                    reduction (by operation of law or negotiation) of, any
                    of the Obligations (or amounts underlying such
                    Obligations) due to it (whether occurring before or
                    after the occurrence of a Lease Event of Default) shall
                    not alter the amount of the original Obligations due to
                    it guaranteed hereby and the Guarantor acknowledges and
                    agrees that its obligations hereunder shall be for the
                    full amount of the Obligations due to it without giving
                    effect to any such settlement, compromise or other
                    reduction;

               e)   apply any sums by whomsoever paid or howsoever realized to
                    any liability or liabilities of the South Point Lessee
                    to such Beneficiary regardless of what liabilities or
                    liabilities of the South Point Lessee remain unpaid;

               f)   consent to or waive any breach of, or any act, omission or
                    default under, the Participation Agreement or the
                    Facility Lease, or otherwise amend, modify or supplement
                    the Participation Agreement or the Facility Lease or any
                    of such other instruments or agreements; and/or

               g)   act or fail to act in any manner referred to in this
                    Guaranty which may deprive the Guarantor of its right
                    to subrogation against the South Point Lessee to recover
                    full indemnity for any payments made pursuant to this
                    Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the South Point Ground Lease, or the failure of any Beneficiary to exercise any
rights or remedies hereunder in accordance with the provisions hereof or under
any other Operative Document or the South Point Ground Lease, shall not in any
way adversely affect the ability of any other Beneficiary to exercise its
rights or remedies hereunder.

VI.  SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT (SP-2))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the

                                       20
<PAGE>
Guarantor or the South Point Lessee or any other Person, or as a result of the
appointment of a custodian, interviewer, receiver, trustee, or other officer
with similar powers with respect to the Guarantor or the South Point Lessee or
any other Person or any substantial part of the property of the Guarantor or
the South Point Lessee or such other Person, all as if such payments had not
been made.

VII. DEFAULTS; REMEDIES; SUBROGATION

     A.   Defaults. The following events shall constitute an "Event of Default"
          hereunder (whether any such event shall be voluntary or involuntary
          or come about or be effected by operation of law or pursuant to or
          in compliance with any judgment, decree or order of any court or any
          order, rule or regulation of any Governmental Entity):

               a)   the Guarantor or the South Point Lessee under the Facility
                    Lease shall fail to make any payment with respect to
                    Periodic Rent or the Termination Value (including the
                    Equity Portion of Termination Value and Debt Portion of
                    Termination Value) when due and payable under such
                    Facility Lease or this Guaranty within five (5) days
                    after the same shall become due thereunder; or

               b)   the Guarantor or the South Point Lessee shall fail to make
                    any other amount payable under any Operative Document
                    after the same shall become due thereunder and such
                    failure shall have continued from a period of ten (10)
                    Business Days after receipt by the South Point Lessee
                    and the Guarantor of written notice of such failure by
                    the South Point Lessee and/or the Guarantor, as
                    applicable;

               c)   The Guarantor shall fail to comply with its covenants set
                    forth in Section 3.3 (transfer of South Point Lessee
                    ownership), 3.6 (Guarantor merger) or 8.4 (assignment of
                    Guaranty) of this Guaranty.

               d)   the Guarantor shall fail to perform or observe any
                    covenant, obligation or agreement to be performed or
                    observed by it under any Calpine Document (other than
                    any covenant, obligation or agreement referred to in
                    clauses (a) or (b) of this Section 7.1) in any material
                    respect, which shall continue unremedied for (1) with
                    respect to the Guarantor's guaranty of, and agreement
                    with respect to, any nonmonetary obligation, covenant or
                    agreement of the South Point Lessee under any of the
                    Operative Documents or the South Point Ground Lease, 30
                    days after receipt by the Guarantor of written notice
                    thereof from the Owner Participant, the Owner Lessor,
                    the Indenture Trustee or the

                                       21
<PAGE>
                    Pass Through Trustee; provided, however, if such
                    condition cannot be remedied within such 30-day period,
                    then the period within which to remedy such condition
                    shall be extended up to an additional 180 days, so long
                    as the Guarantor diligently pursues such remedy and such
                    condition is reasonably capable of being remedied within
                    such additional 180-day period, and (2) with respect to
                    any other obligation, covenant or agreement hereunder,
                    30 days after receipt by the Guarantor of written notice
                    thereof;

               e)   there shall have occurred either (i) a default by the
                    Guarantor or any Restricted Subsidiary under any
                    instrument or instruments under which there is or may be
                    secured or evidenced any Indebtedness of the Guarantor
                    or any Restricted Subsidiary of the Guarantor (other
                    than the Obligations) having an outstanding principal
                    amount of $50,000,000 (or its foreign currency
                    equivalent) or more individually or in the aggregate
                    that has caused the holders thereof to declare such
                    Indebtedness to be due and payable prior to its Stated
                    Maturity, unless such declaration has been rescinded
                    within 30 days or (ii) a default by the Guarantor or any
                    Restricted Subsidiary in the payment when due of any
                    portion of the principal under any such instrument or
                    instruments, and such unpaid portion exceeds $50,000,000
                    (or its foreign currency equivalent) individually or in
                    the aggregate and is not paid, or such default is not
                    cured or waived, within any grace period applicable
                    thereto, unless such Indebtedness is discharged within
                    30 days of the Guarantor or a Restricted Subsidiary
                    becoming aware of such default;

               f)   the Guarantor or any Significant Subsidiary pursuant to or
                    within the meaning of any Bankruptcy Law:

              (i)   commences a voluntary case;

              (ii)  consents to the entry of an
                    order for relief against it in an involuntary case;

              (iii) consents to the appointment of a Custodian of it or for all
                    or substantially all of its property;

              (iv)  makes a general assignment for the benefit of its
                    creditors; or

              (v)   admits in writing its inability to generally pay its debts
                    as such debts become due;

                                       22
<PAGE>
          or takes any comparable action under any foreign laws relating to
insolvency;

               g)   an involuntary case or other proceeding shall be commenced
                    against the Guarantor or any Significant Subsidiary
                    seeking (i) liquidation, reorganization or other relief
                    with respect to it or its debts under Title 11 of the
                    Bankruptcy Code or any bankruptcy, insolvency or other
                    similar law now or hereafter in effect, or (ii) the
                    appointment of a trustee, receiver, liquidator,
                    custodian or other similar official with respect to it
                    or any substantial part of its property or (iii) the
                    winding-up or liquidation of the Guarantor or such
                    Significant Subsidiary; and such involuntary case or
                    other proceeding shall remain undismissed and unstayed
                    for a period of 60 days;

               h)   any representation or warranty made by the Guarantor herein
                    shall prove to have been incorrect in any material
                    respect when made or misleading in any material respect
                    when made because of the omission to state a material
                    fact and such incorrect or misleading representation is
                    and continues to be material and unremedied for a period
                    of 30 days after receipt by the Guarantor of written
                    notice thereof; provided, however, that if such
                    condition cannot be remedied within such 30-day period,
                    then the period within which to remedy such condition
                    shall be extended up to an additional 60 days, so long
                    as the Guarantor diligently pursues such remedy and such
                    condition is reasonably capable of being remedied within
                    such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the South
Point Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the South
Point Lessee to pay or perform the same when it has become due (and, for the
avoidance of doubt, without regard to the existence of any cure or grace period
before such failure by the South Point Lessee becomes a Lease Event of
Default); provided, however, notwithstanding the foregoing, no Lease Event of
Default under Section 16(m) and no remedies under the Facility Lease may be
exercised until a Calpine Guaranty Event of Default has occurred and is
continuing.

     B.   Remedies. Subject to the last paragraph of Section 7.1, each
          Beneficiary shall be entitled to (a) all rights and remedies to
          which it may be entitled hereunder or at law, in equity or by
          statute and may proceed by appropriate court action to enforce the
          terms hereof and to recover damages for the breach hereof. Each and
          every remedy of the

                                       23
<PAGE>
          Beneficiaries shall, to the extent permitted by law, be cumulative
          and shall be in addition to any other remedy now or hereafter
          existing at law or in equity. At the option of each Beneficiary and
          upon notice to the Guarantor, the Guarantor may be joined in any
          action or proceeding commenced by such Beneficiary against the South
          Point Lessee in respect of any Obligations and recovery may be had
          against the Guarantor in such action or proceeding or in any
          independent action or proceeding against the Guarantor, without any
          requirement such Beneficiary first assert, prosecute or exhaust any
          remedy or claim against the South Point Lessee. Notwithstanding any
          of the foregoing, if an Event of Default specified in clause (e) or
          (f) of Section 7.1 with respect to the Guarantor occurs, all
          monetary Obligations shall ipso facto become and be immediately due
          and payable without any declaration or other act on the part of the
          Owner Participant, the Owner Lessor, the Indenture Trustee or the
          Pass Through Trustee.

     C.   Subrogation. The Guarantor will not exercise any rights that it may
          acquire by way of subrogation under this Guaranty, by any payment
          made hereunder or thereunder or otherwise, until all of the
          Obligations and all other obligations of the South Point Lessee and
          the Guarantor owing to any of the Beneficiaries (or any other party)
          under the Operative Documents shall have been paid in full. If any
          amount shall be paid to the Guarantor on account of such subrogation
          rights at any time when all of the Obligations and such other
          obligations shall not have been paid in full, such amount shall be
          held in trust for the benefit of the Beneficiary to whom such
          Obligation or other obligation is payable and shall forthwith be
          paid to such Beneficiary to be credited and applied to such
          Obligation or other obligation, whether matured or unmatured, in
          accordance with the terms of the Operative Document under which such
          Obligation or other obligation arose. If (i) the Guarantor shall
          make payment to any Beneficiary of all or any part of the
          Obligations or other obligations and (ii) all the Obligations and
          such other obligations shall be paid and performed in full, such
          Beneficiary will, at the Guarantor's request and expense, execute
          and deliver to the Guarantor appropriate documents, without
          recourse, subject to Section 6 hereof, necessary to evidence the
          transfer by subrogation to the Guarantor of an interest in the
          Obligations and such other obligations resulting from such payment
          by the Guarantor.

     D.   Waiver of Demands, Notices, Etc.

               a)   Without limiting the last sentence of Section 7.1, the
                    Guarantor hereby unconditionally waives (i) notice of
                    any of the matters referred to in the second sentence of
                    Section 2.3 hereof; (ii) all notices which may be
                    required by statute, rule of law or otherwise, now or
                    hereafter in effect, to preserve any rights against the
                    Guarantor hereunder, including, without limitation, any
                    demand, proof or notice

                                       24
<PAGE>
                    of non-payment of any Obligation; (iii) any right to the
                    enforcement, assertion or exercise of any right, remedy,
                    power or privilege under or in respect of the Facility Lease
                    (or under or in respect of any other agreement including any
                    Operative Document); (iv) notice of acceptance of this
                    Guaranty, demand, protest, presentment, notice of
                    default and any requirement of diligence; (v) any
                    requirement to exhaust any remedies or to mitigate any
                    damages resulting from default by the South Point Lessee
                    or any Person under the Facility Lease (or under any
                    other agreement including any Operative Document); and
                    (vi) any other circumstance whatsoever which might
                    otherwise constitute a legal or equitable discharge,
                    release or defense of a guarantor or surety, or which
                    might otherwise limit recourse against the Guarantor,
                    other than satisfaction in full of the Obligations.

               b)   This Guaranty is a continuing one and all of the
                    Obligations shall be conclusively presumed to have been
                    created in reliance hereon. No failure or delay on the
                    part of any Beneficiary in exercising any right, power
                    or privilege hereunder and no course of dealing among
                    the Guarantor, any Beneficiary or the South Point Lessee
                    shall operate as a waiver thereof, nor shall any single
                    or partial exercise of any right, power or privilege
                    hereunder preclude any other or further exercise thereof
                    or the exercise of any other right, power or privilege.
                    The rights, powers and remedies herein expressly
                    provided are cumulative and not exclusive of any rights,
                    powers or remedies which the Beneficiary would otherwise
                    have. No notice to or demand on the Guarantor in any
                    case shall entitle the Guarantor to any other further
                    notice or demand in similar or other circumstances or
                    constitute a waiver of the rights of any Beneficiary to
                    any other or further action in any circumstances without
                    notice or demand.

               c)   If a claim is ever made upon any Beneficiary for repayment
                    or recovery of any amount or amounts received in
                    payment or on account of any of the Obligations and any
                    of the Beneficiaries repays all or part of said amount
                    by reason of (a) any judgment, decree or order of any
                    court or administrative body having jurisdiction over
                    such Beneficiary or any of its property or (b) any
                    settlement or compromise of any such claim effected by
                    such Beneficiary with any such claimant (including the
                    South Point Lessee), then and in such event the
                    Guarantor agrees that any such judgment, decree, order,
                    settlement or compromise shall be binding upon it,
                    notwithstanding any revocation hereof or

                                       25
<PAGE>
                    the cancellation of the Facility Lease or other instrument
                    evidencing any liability of the South Point Lessee, and
                    the Guarantor shall be and remain liable to the
                    aforesaid Beneficiaries hereunder for the amount so
                    repaid by or recovered from such Beneficiary to the same
                    extent as if such amount had never originally been
                    received by any such Beneficiary.

     E.   Costs and Expenses. The Guarantor agrees to pay on an After-Tax Basis
          any and all reasonable costs and expenses (including reasonable
          legal fees) incurred by any Beneficiary in enforcing its rights
          under this Guaranty.

     F.   Survival of Remedies and Subrogation Rights. The provisions of this
          Section 7 shall survive the term of this Guaranty and the payment
          in full of the Obligations and the termination of the Operative
          Documents.

VIII.   MISCELLANEOUS

     A.   Amendments and Waivers. No term, covenant, agreement or condition of
          this Guaranty may be terminated, amended or compliance therewith
          waived (either generally or in a particular instance, retroactively
          or prospectively) except by an instrument or instruments in writing
          executed by the Guarantor and consented to by the Beneficiaries.

     B.   Notices. Unless otherwise expressly specified or permitted by the
          terms hereof, all communications and notices provided for herein
          shall be in writing or by a telecommunications device capable of
          creating a written record, and any such notice shall become
          effective (a) upon personal delivery thereof, including, without
          limitation, by overnight mail or courier service, (b) in the case of
          notice by United States mail, certified or registered, postage
          prepaid, return receipt requested, upon receipt thereof, or (c) in
          the case of notice by such a telecommunications device, upon
          transmission thereof, provided such transmission is promptly
          confirmed by either of the methods set forth in clauses (a) or (b)
          above, in each case addressed to the Guarantor hereto at its address
          set forth below or at such other address as such party may from time
          to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

                                       26
<PAGE>
     C.   Survival. Except as expressly set forth herein, the warranties and
          covenants made by the Guarantor shall not survive the expiration or
          termination of this Guaranty.

     D.   Assignment and Assumption. (a) Except as provided in clause (b)
          below, this Guaranty may not be assigned by the Guarantor to, or
          assumed by, any successor to or assign of the Guarantor (it being
          understood and agreed that a consolidation with or merger of the
          Guarantor into, or the sale of all or substantially all of its
          assets to, another Person in accordance with Section 3.6 shall not
          be deemed such an assignment or assumption for the purposes hereof)
          without the prior written consent of the Beneficiaries, nor may the
          Guarantor transfer or assign a majority (or more) of the Ownership
          Interest in the South Point Lessee.

          (b) Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
South Point Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i)   unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii)   the requirements set forth in Section 3.3(i), (iii), (iv) and
     (v) of this Guaranty have been satisfied and, immediately after giving
     effect to such transfer, the transferee shall own at least a majority of
     the Ownership Interest of the South Point Lessee;

          (iii)   such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the South Point Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv)   neither the transferee nor any Affiliate of the transferee
     shall be involved in any material litigation with the Owner Participant;

          (v)   the Rating Agencies shall have confirmed that after giving
     effect to such transfer, the Certificates (if then outstanding) and the
     transferee (or a party which guarantees such transferee's obligations
     under the Operative Documents assigned to such transferee) shall be rated
     at least Investment Grade (and not be on negative credit watch) by the
     Rating Agencies;

          (vi)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and

                                       27
<PAGE>
     effect, the transferee shall assume all the obligations of the Guarantor
     under the Operative Documents pursuant to the Guarantor Assignment and
     Assumption Agreement and such Operative Documents as so assumed shall
     remain in full force and effect, and any guaranty of such transferee's
     obligations pursuant to this Section 8.4 shall be in a form satisfactory
     to the Owner Participant (it being acknowledged and agreed that any such
     guaranty which shall be in form and substance substantially similar to
     this Guaranty shall be deemed to be satisfactory to the Owner
     Participant); and

          (vii)   the Owner Participant, the Owner Lessor and, so long as the
     Lien on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions
     set forth in clause (vi) of this Section 8.4(b).

                                       28
<PAGE>
     E.   Governing Law. This Guaranty shall be in all respects governed by and
          construed in accordance with the laws of the State of New York,
          including all matters of construction, validity and performance
          (without giving effect to the conflicts of laws provisions, other
          than New York General Obligations Law Section 5-1401).

     F.   Severability. Any provision of this Guaranty that is prohibited
          or unenforceable in any jurisdiction shall, as to such
          jurisdiction, be ineffective to the extent of such prohibition
          or unenforceability without invalidating the remaining
          provisions hereof, and any such prohibition or
          unenforceability in any jurisdiction shall not invalidate or
          render unenforceable such provision in any other jurisdiction.

     G.   Headings. The headings of the sections of this Guaranty are
          inserted for purposes of convenience only and shall not be
          construed to affect the meaning or construction of any of the
          provisions hereof.

     H.   Further Assurances. The Guarantor will promptly and duly execute
          and deliver such further documents as may be reasonably
          requested by the Owner Lessor, all as may be reasonably
          necessary to affirm the Guarantor's obligations under this
          Guaranty.

     I.   Effectiveness of Guaranty. This Guaranty has been dated as of
          the date first above written for convenience only. This
          Guaranty shall be effective on the date of execution and
          delivery by the Guarantor.

     J.   Acknowledgment by the Guarantor. The Guarantor acknowledges that
          an executed (or conformed) copy of the Participation
          Agreement, the Facility Lease, the other Operative Documents
          and the South Point Ground Lease have been made available to
          its principal executive officers and such officers are
          familiar with the contents thereof.

     K.   Tolling. Any acknowledgement or new promise, whether by payment
          of principal or interest or otherwise and whether by the
          South Point Lessee or others (including the Guarantor), with
          respect to any of the Obligations shall, if the statute of
          limitations in favor of the Guarantor against any Beneficiary
          shall have commenced to run, toll the running of such statute
          of limitations, and if the period of such statute of
          limitations shall have expired, prevent the operation of such
          statute of limitations.

     L.   Consent to Jurisdiction; Waiver of Trail by Jury; Process Agent.

               a)   The Guarantor (i) hereby irrevocably submits to the
                    nonexclusive jurisdiction of the Supreme Court of the
                    State of New York, New York County (without prejudice to
                    the right of the Guarantor to remove to the United
                    States District

                                       29
<PAGE>
                    Court for the Southern District of New York) and
                    to the nonexclusive jurisdiction of the United States
                    District Court for the Southern District of New York for
                    the purposes of any suit, action or other proceeding
                    arising out of this Guaranty, the Facility Lease, the other
                    Operative Documents, or the subject matter hereof or
                    thereof or any of the transactions contemplated hereby or
                    thereby brought by any of the Beneficiaries hereunder or
                    their successors or assigns; (ii) hereby irrevocably agrees
                    that all claims in respect of such action or proceeding may
                    be heard and determined in such New York State court, or in
                    such federal court; and (iii) to the extent permitted by
                    Applicable Law, hereby irrevocably waives, and agrees not
                    to assert, by way of motion, as a defense, or otherwise, in
                    any such suit, action or proceeding any claim that it is
                    not personally subject to the jurisdiction of the
                    above-named courts, that the suit, action or proceeding is
                    brought in an inconvenient forum, that the venue of the
                    suit, action or proceeding is improper or that this
                    Guaranty, the other Operative Documents, or the subject
                    matter hereof or thereof may not be enforced in or by such
                    court.

               b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
                    HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL
                    BY JURY, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING
                    ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
                    DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR
                    ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
                    BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR THEIR
                    SUCCESSORS OR ASSIGNS.

               c)   By the execution and delivery of this Guaranty, the
                    Guarantor designates, appoints and empowers National
                    Registered Agent, Inc., 440 9th Avenue, 5th Floor, New
                    York, NY 10001 as its authorized agent to receive for
                    and on its behalf service of any summons, complaint or
                    other legal process in any such action, suit or
                    proceeding in the State of New York for so long as any
                    obligation of the Guarantor shall remain outstanding
                    hereunder or under any of the other Operative Documents.
                    The Guarantor shall grant an irrevocable power of
                    attorney to National Registered Agent, Inc. in respect
                    of such appointment and shall maintain such power of
                    attorney in full force and effect for so long as any
                    obligation of the Guarantor shall remain outstanding
                    hereunder or under any of the Operative Documents.

                                       30
<PAGE>
     M.   Agreement for Benefit of Parties Hereto. Nothing in this
          Guaranty, express or implied, is intended or shall be
          construed to confer upon, or to give to, any person
          other than the parties hereto and their respective
          successors and assigns, any right, remedy or claim under
          or by reason of this Guaranty or any covenant, condition
          or stipulation hereof; and the covenants, stipulations
          and agreements contained in this Guaranty are and shall
          be for the sole and exclusive benefit of the parties
          hereto and their respective successors and assigns. The
          Guarantor acknowledges that certain of the rights of the
          Owner Lessor hereunder have been or shall be assigned to
          and may be enforced by the Indenture Trustee pursuant to
          the terms of the Collateral Trust Indenture (excluding,
          among other things, rights to Excepted Payments), the
          Guarantor hereby consents to such assignment and the
          Guarantor agrees to render performance of such assigned
          obligations directly to the Indenture Trustee (as
          assignee of the Owner Lessor). The Guarantor agrees to
          make all payments which have been so assigned owing to
          the Owner Lessor under this Guaranty directly to the
          account of the Indenture Trustee to be specified to the
          Guarantor in writing, or to such other account specified
          in writing from time to time by the Indenture Trustee.

     N.   Termination of Guaranty. Upon the full payment and
          satisfaction of the Obligations and all of the
          Guarantor's obligations hereunder, this Guaranty shall
          terminate and shall be of no further effect.
          Nevertheless, this Guaranty shall continue to be
          effective or be reinstated, as the case may be, if at
          any time, any payment, or any part thereof, of any of
          the Obligations is rescinded or must otherwise be
          returned by any Beneficiary upon the insolvency,
          bankruptcy, dissolution, liquidation or reorganization
          of the South Point Lessee or otherwise, all as though
          such payment had not been made.

     O.   Additional Obligations. Upon the assumption by the South
          Point Lessee of the Lessor Notes in connection with a
          termination of the Facility Lease, as permitted therein,
          the obligation of the South Point Lessee to pay
          principal of, and Make-Whole Amount if any, and interest
          on the Lessor Notes, and amounts payable by it to the
          Indenture Trustee under the Collateral Trust Indenture,
          shall thereupon become Obligations for all purposes of
          this Guaranty, and the Guarantor shall therefor execute
          and deliver to the Indenture Trustee such further
          guaranties, instruments and documents as the Indenture
          Trustee may reasonably request in order to more fully
          effectuate the Guarantor's unconditional guaranty of
          such additional Obligations.

     P.   Miscellaneous Provisions. The payment obligations of the
          Guarantor hereunder shall rank pari passu with all
          other senior unsecured indebtedness of the Guarantor for
          borrowed money.

                                       31
<PAGE>
                          [No more text on this page]

                                       33
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be
duly executed and delivered on the day and year first above written.

                                           CALPINE CORPORATION,
                                           as Guarantor


                                           By: _________________________________
                                               Name:
                                               Title:
<PAGE>
                                           SOUTH POINT OL-2, LLC,
                                           a Delaware limited liability company


                                           By: _________________________________
                                               Name:
                                               Title:
<PAGE>
                                           SBR OP-2, LLC,
                                           a Delaware limited liability company


                                           By: _________________________________
                                               Name:
                                               Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Indenture Trustee



                                           By: ____________________________
                                               Name:
                                               Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Pass Through Trustee



                                           By: ____________________________
                                               Name:
                                               Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.29
<SEQUENCE>32
<FILENAME>f80168ex4-22_29.txt
<DESCRIPTION>EXHIBIT 4.22.29
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.29


===============================================================================


            CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-3)


                          Dated as of October 18, 2001


                                      among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    SOUTH POINT OL-3, LLC, as Owner Lessor,


                      SBR OP-3, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              SOUTH POINT PROJECT


===============================================================================
<PAGE>
           CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-3)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-3),
dated as of October 18, 2001 (the "Guaranty"), is entered into by and among
Calpine Corporation, a Delaware corporation, as guarantor (the "Guarantor"),
SOUTH POINT OL-3, LLC, a Delaware limited liability company, as Owner Lessor,
SBR OP-3, LLC, a Delaware limited liability company, as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity but solely as Indenture Trustee and State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Pass Through Trustee, and is issued by the
Guarantor in favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, South Point Energy Center, LLC (the "South Point Lessee")
is an indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the South Point Lessee is a party to the Participation
Agreement (SP-3) dated as of October 18, 2001 (the "Participation Agreement"),
among the South Point Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, South Point OL-3, LLC,
as Owner Lessor, the Guarantor, SBR OP-3, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-3) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the South Point Facility to the
South Point Lessee as contemplated therein;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-3) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the South Point Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the South
Point Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a) Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b) As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the South Point Lessee of all of
the South Point Lessee's obligations under the Operative Documents to which it
is a party and with respect to the South Point Ground Lease if the same shall
not be performed when due pursuant to the Operative Documents, including,
without limitation, but without duplication, (1) the South Point Lessee's
obligation to make Periodic Rent, Supplemental Rent and other payments (in
accordance with the terms of the Operative Documents) to the Owner Lessor, (2)
the South Point Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents and the South Point Ground Lease under and in
accordance with the Facility Lease, (3) without duplication of the preceding
clause (2), the South Point Lessee's obligation to pay the Equity Portion of
Periodic Rent and the Equity Portion of Termination Value to the Owner Lessor,
(4) the South Point Lessee's obligation to make indemnity payments when due in
accordance with the terms of the Participation Agreement and the Tax Indemnity
Agreement, (5) the South Point Lessee's obligation, pursuant to Section 3.3 of
the Facility Lease, to pay as Supplemental Rent an amount equal to (A) interest
at the applicable Overdue Rate on any amount under clauses (1), (2), (3), (4)
and 5(B) of this Section 2.1(a), not paid when due and (B) any Make-Whole
Amount to the extent then due and payable by the Owner Lessor to the
Certificateholders pursuant to the Participation Agreement, the Facility Lease
or any other Operative Document to which the South Point Lessee is a party and
(6) the South Point Lessee's obligation to make any and all other payments, and
perform all other covenants and agreements, when due under and in accordance
with the terms of the Operative Documents.

          (b) The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the South Point Lessee's obligations under the Facility Lease or any other
Operative Documents or the South Point Ground Lease. The Guarantor agrees that
it shall make such payment notwithstanding the fact that the South Point Lessee
may have a defense to the payment of any such amounts. The Guarantor's
obligations in this Section 2.1(b) are direct and primary obligations (and not
obligations of a guarantor or surety) of the Guarantor to the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor), which shall not be
affected in any way by the provisions of Section 2.1(a) above or any payments
under any other Operative Documents of any amounts until the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor) have received full
payment of such amounts.

          (c) The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                      4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d) Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the South Point Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the South Point Ground
Lease, the Guarantor agrees to cause such performance or observance to be done,
and in the case of any failure by the South Point Lessee to make such payment
as and when the same shall become due and payable (by acceleration or
otherwise), the Guarantor hereby agrees to make such payment (and, in addition,
such further amounts, if any, as shall be sufficient to cover the costs and
expenses of collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the South Point Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the South Point Ground Lease) or the lack of power or authority of
the South Point Lessee to enter into any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document and the South Point Ground Lease) to which the
South Point Lessee is a party, or any substitution, release or exchange of any
other guaranty of, or agreement with respect to, or any other security for, any
of the Obligations (including any settlement, compromise or other adjustment
with respect to the Obligations) or any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor and shall not be subject to any right of set-off,
recoupment or counterclaim and is in no way conditioned or

                                      5
<PAGE>
contingent upon any attempt to collect from the South Point Lessee or any other
entity or to perfect or enforce any security or upon any other condition or
contingency or upon any other action, occurrence or circumstance whatsoever.
Without limiting the generality of the foregoing, the Guarantor shall have no
right to terminate this Guaranty, or to be released, relieved or discharged
from its obligations hereunder, other than upon full payment and satisfaction
and performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
South Point Lessee is a party, any release, extension or renewal of the South
Point Lessee's obligations under any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document) to which the South Point Lessee is a party or by
which it is bound, including, without limitation, any actions taken by the
Indenture Trustee pursuant to the Collateral Trust Indenture, or any
subletting, assignment or transfer of the South Point Lessee's or any
Beneficiary's interest in the Participation Agreement, the Facility Lease or
any other Operative Document in accordance with the terms thereof, (ii) any
bankruptcy, insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the South Point Lessee, Owner Lessor, Owner
Participant or any other Person, including, without limitation, termination of
the Facility Lease and the operation of Section 502(b)(6) of the Bankruptcy
Code in connection therewith, (iii) any furnishing or acceptance of additional
security or any exchange, substitution, surrender or release of any security,
(iv) any waiver, consent or other action or inaction or any exercise or
nonexercise of any right, remedy or power with respect to the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any Operative Document)
to which the South Point Lessee is a party, (v) without limiting Section 3.6(b)
hereof, any merger or consolidation of the South Point Lessee or the Guarantor
into or with any other Person, or any sale, assignment, conveyance, lease,
transfer or other disposition of all or substantially all of the assets or
properties of the South Point Lessee or the Guarantor, or any change in the
structure of the South Point Lessee or in the ownership of the South Point
Lessee by the Guarantor, (vi) any default, misrepresentation, negligence,
misconduct or other action or inaction of any kind by any Beneficiary, the
Indenture Trustee or any other Person under or in connection with any Operative
Document or any other agreement relating to this Guaranty, (vii) any action or
inaction by any Beneficiary as contemplated in Section 5 of this Guaranty;
(viii) any invalidity, irregularity or unenforceability of all or part of the
Obligations or of any security therefor; (ix) any change in the manner, place,
timing or schedule of payment or performance of, or in any other term of, all
or any of the Obligations; (x) whether the Guarantor is related or unrelated to
the South Point Lessee, (xi) the assignment by the Owner Lessor of its rights
and interests hereunder, under the Facility Lease or under any other Operative
Document or the South Point Ground Lease in accordance with the Operative
Documents and the South Point Ground Lease (or the genuineness, validity,
legality or enforceability of the obligations of the Owner Lessor under the
Collateral Trust Indenture) and (xii) any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND
             COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i)   The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party
     (together, the "Calpine Documents").

          (ii)   The execution, delivery and performance by the Guarantor of
     the Calpine Documents have been duly authorized by all necessary
     corporate action. The Calpine Documents constitute legal, valid and
     binding obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other
     similar laws affecting creditors' rights generally and by general
     principles of equity.

          (iii)   The execution, delivery and performance of the Calpine
     Documents will not (a) contravene any provision of law, rule or
     regulation to which the Guarantor is subject or any judgment, decree or
     order applicable to the Guarantor, (b) conflict or be inconsistent with or
     result in any breach of any terms, covenants, conditions or provisions of,
     or constitute a default under, or result in the creation or imposition of
     (or the obligation to create or impose) any Lien or other encumbrance upon
     any of the property or assets of the Guarantor pursuant to the terms of
     any agreement or other instrument to which the Guarantor is a party or by
     which it or its property is bound or to which it or its property may be
     subject, in each case the violation of which would have a material adverse
     effect on the business, operations, prospects, properties or assets, or in
     the condition, financial or otherwise, of the Guarantor, or (c) violate or
     contravene any provision of the articles of incorporation or by-laws of
     the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v)   No consent from, authorization or approval or other action by,
     and no notice to or filing with, any Person is required for the
     execution, delivery and performance by the Guarantor of the Calpine
     Documents except those which have been given and remain in full force and
     effect.

                                      7
<PAGE>
          (vi)   The South Point Lessee is an indirect, wholly-owned subsidiary
     of the Guarantor.

          (vii)   The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii)   The Guarantor is not in default with respect to any
     judgment, order, writ, injunction, decree, award, rule or regulation of
     any court, arbitrator or governmental department, commission, board,
     bureau, agency or instrumentality, domestic or foreign, which, either,
     separately or in the aggregate, would result in any material adverse
     change in any of its businesses, operations, prospects or assets, or in
     its condition, financial or otherwise, or its ability to perform its
     obligations under the Calpine Documents.

          (ix)   The Guarantor is not a party to any agreement or instrument,
     or subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x)   The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture
     Trustee, the Pass Through Trustee, the Certificateholders and the Owner
     Participant, are true, complete and correct and fairly present the
     financial condition of the Guarantor and its Consolidated Subsidiaries as
     of the date thereof. The financial statements have been prepared in
     accordance with GAAP. The Guarantor and its Consolidated Subsidiaries do
     not have any material liabilities, direct or contingent, except (a) as are
     disclosed in such financial statements or (b) as arise under the Operative
     Documents or the South Point Ground Lease. There has been no material
     adverse change in the financial condition of the Guarantor and its
     Consolidated Subsidiaries since the date of the audited financial
     statements referred to above.

          (xi)   All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified
     and not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect

                                      8
<PAGE>
     at such time in light of the circumstances under which such information
     was provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements provided
     by or on behalf of the Guarantor, or (ii) the descriptions of the
     Operative Documents or the South Point Ground Lease or the tax
     consequences to beneficial owners of Certificates; provided, however, each
     of the Beneficiaries acknowledges and agrees that (i) Calpine has
     heretofore provided to the Appraiser, solely in order to assist the
     Appraiser in connection with the preparation of the appraisal to be
     delivered by the Appraiser to certain of the Transaction Parties at the
     Closing, certain (1) general market information, (2) information about the
     Arizona energy market and (3) information passed along from other Persons
     and (ii) that the South Point Lessee does not make any representation or
     warranty whatsoever with respect to the information described in clause
     (i) above except to the extent expressly set forth in Section 4(b) of the
     Tax Indemnity Agreement.

          (xii)   The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by,
     all governmental bodies, domestic or foreign, in respect of the conduct of
     its business and the ownership of its property (including applicable
     statutes, regulations, orders and restrictions relating to environmental
     standards and controls), except such noncompliance as would not, in the
     aggregate, have a material adverse effect on the business, operations,
     property, assets or condition (financial or otherwise) of the Guarantor,
     or the Guarantor's ability to perform its obligations under the Calpine
     Documents.

          (xiii)   The Guarantor has filed all tax returns and reports required
     by law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material
     adverse effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv)   No default has occurred under this Guaranty, which default
     would reasonably be expected to result in a material adverse effect on
     the business, operations, assets or condition (financial or otherwise) of
     the Guarantor.

          (xv)   In accordance with Section 8.12 hereof and Section 14.14 of
     the Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York
     County and the United States District Court for the Southern District of
     New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                      9
<PAGE>
          (a) file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b) furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c) furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d) promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the South Point Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the South Point Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the South Point Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the South Point Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i)   the Owner Lessor, the Owner Participant and, so long as the
     Lien of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and effect, the Guarantor shall reaffirm in writing all of its
     obligations hereunder in a manner reasonably satisfactory to the Owner
     Participant, such obligations of the Guarantor shall remain in full force
     and effect;

          (iii)   no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv)   the transfer shall not subject the South Point Lessee, the
     Owner Participant, the Owner Lessor, the Indenture Trustee, the Pass
     Through Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v)   the South Point Lessee shall have paid, at no after-tax cost
     to such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly,
incur any Lien on any of its properties or assets (including Capital Stock),
whether owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                      12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                      13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i)   no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing;

          (ii)   either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets
     of the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii)   each of the Owner Participant, the Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee shall have received an Officer's Certificate of the Guarantor, the
     surviving entity or the transferee, as the case may be, in form and
     substance reasonably satisfactory to each of such parties, stating that
     the proposed merger, consolidation, assignment, conveyance, transfer,
     disposition, lease or sale, and the Guarantor Assignment and Assumption
     Agreement complies with the terms of this Section 3(a) and, as to legal
     matters, an Opinion of Counsel; and

          (iv)   In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating
     of the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                      14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the South Point Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the South Point Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the South Point Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                      15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
South Point Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                      16
<PAGE>
          (c) exercise or refrain from exercising any rights against the
South Point Lessee or others or otherwise act or refrain from acting;

          (d) settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the South Point Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the South Point Lessee to such Beneficiary
regardless of what liabilities or liabilities of the South Point Lessee remain
unpaid;

          (f) consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g) act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the South
Point Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the South Point Ground Lease, or the failure of any Beneficiary to exercise any
rights or remedies hereunder in accordance with the provisions hereof or under
any other Operative Document or the South Point Ground Lease, shall not in any
way adversely affect the ability of any other Beneficiary to exercise its
rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT
             (SOUTH POINT (SP-3))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the South Point Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the South Point Lessee or any other Person or any
substantial part of the property of the Guarantor or the South Point Lessee or
such other Person, all as if such payments had not been made.

                                      17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a) the Guarantor or the South Point Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b) the Guarantor or the South Point Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the South Point Lessee and the Guarantor of
written notice of such failure by the South Point Lessee and/or the Guarantor,
as applicable;

          (c) The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of South Point Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d) the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the South Point Lessee under any of the Operative Documents or the South Point
Ground Lease, 30 days after receipt by the Guarantor of written notice thereof
from the Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
Through Trustee; provided, however, if such condition cannot be remedied within
such 30-day period, then the period within which to remedy such condition shall
be extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e) there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                      18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f) the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)    commences a voluntary case;

               (ii)   consents to the entry of an order for relief against it in
                      an involuntary case;

               (iii)  consents to the appointment of a Custodian of it or for
                      all or substantially all of its property;

               (iv)   makes a general assignment for the benefit of its
                      creditors; or

               (v)    admits in writing its inability to generally pay its debts
                      as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g) an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h) any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the South
Point Lessee under any Operative

                                      19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the South Point Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the South Point Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section 7.1,
each Beneficiary shall be entitled to (a) all rights and remedies to which it
may be entitled hereunder or at law, in equity or by statute and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the South Point
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the South Point
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or thereunder or otherwise, until all of the Obligations and all
other obligations of the South Point Lessee and the Guarantor owing to any of
the Beneficiaries (or any other party) under the Operative Documents shall have
been paid in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations and such other
obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Obligation or other
obligation is payable and shall forthwith be paid to such Beneficiary to be
credited and applied to such Obligation or other obligation, whether matured or
unmatured, in accordance with the terms of the Operative Document under which
such Obligation or other obligation arose. If (i) the Guarantor shall make
payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                      20
<PAGE>
          (a) Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or otherwise, now or hereafter in effect, to
preserve any rights against the Guarantor hereunder, including, without
limitation, any demand, proof or notice of non-payment of any Obligation; (iii)
any right to the enforcement, assertion or exercise of any right, remedy, power
or privilege under or in respect of the Facility Lease (or under or in respect
of any other agreement including any Operative Document); (iv) notice of
acceptance of this Guaranty, demand, protest, presentment, notice of default
and any requirement of diligence; (v) any requirement to exhaust any remedies
or to mitigate any damages resulting from default by the South Point Lessee or
any Person under the Facility Lease (or under any other agreement including any
Operative Document); and (vi) any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse against the
Guarantor, other than satisfaction in full of the Obligations.

          (b) This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the South Point Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c) If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the South Point Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the South Point Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

                                      21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided
in clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the South Point Lessee.

          (b) Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
South Point

                                      22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i)   unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the South Point Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the South Point Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the South Point Lessee under the Operative
     Documents and the South Point Ground Lease shall remain in full force and
     effect, the transferee shall assume all the obligations of the Guarantor
     under the Operative Documents pursuant to the Guarantor Assignment and
     Assumption Agreement and such Operative Documents as so assumed shall
     remain in full force and effect, and any guaranty of such transferee's
     obligations pursuant to this Section 8.4 shall be in a form satisfactory to
     the Owner Participant (it being acknowledged and agreed that any such
     guaranty which shall be in form and substance substantially similar to this
     Guaranty shall be deemed to be satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

                                      23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all
respects governed by and construed in accordance with the laws of the State of
New York, including all matters of construction, validity and performance
(without giving effect to the conflicts of laws provisions, other than New York
General Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the South
Point Ground Lease have been made available to its principal executive officers
and such officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise,
whether by payment of principal or interest or otherwise and whether by the
South Point Lessee or others (including the Guarantor), with respect to any of
the Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by
Jury; Process Agent.

          (a) The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other

                                      24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER
OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES
HEREUNDER OR THEIR SUCCESSORS OR ASSIGNS.

          (c) By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                      25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the South Point Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by
the South Point Lessee of the Lessor Notes in connection with a termination of
the Facility Lease, as permitted therein, the obligation of the South Point
Lessee to pay principal of, and Make-Whole Amount if any, and interest on the
Lessor Notes, and amounts payable by it to the Indenture Trustee under the
Collateral Trust Indenture, shall thereupon become Obligations for all purposes
of this Guaranty, and the Guarantor shall therefor execute and deliver to the
Indenture Trustee such further guaranties, instruments and documents as the
Indenture Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations
of the Guarantor hereunder shall rank pari passu with all other senior
unsecured indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                      26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                         CALPINE CORPORATION,
                                         as Guarantor


                                         By:______________________________
                                            Name:
                                            Title:
<PAGE>
                                         SOUTH POINT OL-3, LLC,
                                         a Delaware limited liability company


                                         By:______________________________
                                            Name:
                                            Title:
<PAGE>
                                         SBR OP-3, LLC,
                                         a Delaware limited liability company


                                         By:______________________________
                                            Name:
                                            Title:
<PAGE>
                                         STATE STREET BANK AND TRUST
                                         COMPANY, National Association, not
                                         in its individual capacity but solely
                                         as Indenture Trustee


                                         By:______________________________
                                            Name:
                                            Title:
<PAGE>
                                         STATE STREET BANK AND TRUST
                                         COMPANY, National Association, not
                                         in its individual capacity but solely
                                         as Pass Through Trustee


                                         By:______________________________
                                            Name:
                                            Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.30
<SEQUENCE>33
<FILENAME>f80168ex4-22_30.txt
<DESCRIPTION>EXHIBIT 4.22.30
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.30


===============================================================================

            CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-4)


                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    SOUTH POINT OL-4, LLC, as Owner Lessor,


                      SBR OP-4, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              SOUTH POINT PROJECT

===============================================================================
<PAGE>
            CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-4)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT SP-4), dated
as of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), SOUTH
POINT OL-4, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-4, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, South Point Energy Center, LLC (the "South Point Lessee") is
an indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the South Point Lessee is a party to the Participation
Agreement (SP-4) dated as of October 18, 2001 (the "Participation Agreement"),
among the South Point Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, South Point OL-4, LLC,
as Owner Lessor, the Guarantor, SBR OP-4, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, N.A., not in its individual
capacity, except as expressly provided in the Participation Agreement, but
solely as Indenture Trustee, and State Street Bank and Trust Company of
Connecticut, N.A., not in its individual capacity, except as expressly provided
in the Participation Agreement, but solely as Pass Through Trustee;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-4) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the South Point Facility to the
South Point Lessee as contemplated therein;

          WHEREAS, the South Point Lessee and the Owner Lessor are entering
into the South Point (SP-4) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the South Point Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the South
Point Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i) the
principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.
               "Lien" means any mortgage, lien, pledge, charge, or other
security interest or encumbrance of any kind (including any conditional sale or
other title retention agreement and any lease in the nature thereof).

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the South Point Lessee of all of
the South Point Lessee's obligations under the Operative Documents to which it
is a party and with respect to the South Point Ground Lease if the same shall
not be performed when due pursuant to the Operative Documents, including,
without limitation, but without duplication, (1) the South Point Lessee's
obligation to make Periodic Rent, Supplemental Rent and other payments (in
accordance with the terms of the Operative Documents) to the Owner Lessor, (2)
the South Point Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents and the South Point Ground Lease under and in
accordance with the Facility Lease, (3) without duplication of the preceding
clause (2), the South Point Lessee's obligation to pay the Equity Portion of
Periodic Rent and the Equity Portion of Termination Value to the Owner Lessor,
(4) the South Point Lessee's obligation to make indemnity payments when due in
accordance with the terms of the Participation Agreement and the Tax Indemnity
Agreement, (5) the South Point Lessee's obligation, pursuant to Section 3.3 of
the Facility Lease, to pay as Supplemental Rent an amount equal to (A) interest
at the applicable Overdue Rate on any amount under clauses (1), (2), (3), (4)
and 5(B) of this Section 2.1(a), not paid when due and (B) any Make-Whole
Amount to the extent then due and payable by the Owner Lessor to the
Certificateholders pursuant to the Participation Agreement, the Facility Lease
or any other Operative Document to which the South Point Lessee is a party and
(6) the South Point Lessee's obligation to make any and all other payments, and
perform all other covenants and agreements, when due under and in accordance
with the terms of the Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the South Point Lessee's obligations under the Facility Lease or any other
Operative Documents or the South Point Ground Lease. The Guarantor agrees that
it shall make such payment notwithstanding the fact that the South Point Lessee
may have a defense to the payment of any such amounts. The Guarantor's
obligations in this Section 2.1(b) are direct and primary obligations (and not
obligations of a guarantor or surety) of the Guarantor to the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor), which shall not be
affected in any way by the provisions of Section 2.1(a) above or any payments
under any other Operative Documents of any amounts until the Owner Lessor and
the Indenture Trustee (as assignee of the Owner Lessor) have received full
payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                      4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the South Point Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the South Point Ground
Lease, the Guarantor agrees to cause such performance or observance to be done,
and in the case of any failure by the South Point Lessee to make such payment
as and when the same shall become due and payable (by acceleration or
otherwise), the Guarantor hereby agrees to make such payment (and, in addition,
such further amounts, if any, as shall be sufficient to cover the costs and
expenses of collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above, this
Section 2.2, and in Section 8.15 below are referred to in this Guaranty as the
"Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the South Point Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the South Point Ground Lease) or the lack of power or authority of
the South Point Lessee to enter into any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document and the South Point Ground Lease) to which the
South Point Lessee is a party, or any substitution, release or exchange of any
other guaranty of, or agreement with respect to, or any other security for, any
of the Obligations (including any settlement, compromise or other adjustment
with respect to the Obligations) or any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor and shall not be subject to any right of set-off,
recoupment or counterclaim and is in no way conditioned or

                                      5
<PAGE>
contingent upon any attempt to collect from the South Point Lessee or any other
entity or to perfect or enforce any security or upon any other condition or
contingency or upon any other action, occurrence or circumstance whatsoever.
Without limiting the generality of the foregoing, the Guarantor shall have no
right to terminate this Guaranty, or to be released, relieved or discharged
from its obligations hereunder, other than upon full payment and satisfaction
and performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
South Point Lessee is a party, any release, extension or renewal of the South
Point Lessee's obligations under any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document) to which the South Point Lessee is a party or by
which it is bound, including, without limitation, any actions taken by the
Indenture Trustee pursuant to the Collateral Trust Indenture, or any
subletting, assignment or transfer of the South Point Lessee's or any
Beneficiary's interest in the Participation Agreement, the Facility Lease or
any other Operative Document in accordance with the terms thereof, (ii) any
bankruptcy, insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the South Point Lessee, Owner Lessor, Owner
Participant or any other Person, including, without limitation, termination of
the Facility Lease and the operation of Section 502(b)(6) of the Bankruptcy
Code in connection therewith, (iii) any furnishing or acceptance of additional
security or any exchange, substitution, surrender or release of any security,
(iv) any waiver, consent or other action or inaction or any exercise or
nonexercise of any right, remedy or power with respect to the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any Operative Document)
to which the South Point Lessee is a party, (v) without limiting Section 3.6(b)
hereof, any merger or consolidation of the South Point Lessee or the Guarantor
into or with any other Person, or any sale, assignment, conveyance, lease,
transfer or other disposition of all or substantially all of the assets or
properties of the South Point Lessee or the Guarantor, or any change in the
structure of the South Point Lessee or in the ownership of the South Point
Lessee by the Guarantor, (vi) any default, misrepresentation, negligence,
misconduct or other action or inaction of any kind by any Beneficiary, the
Indenture Trustee or any other Person under or in connection with any Operative
Document or any other agreement relating to this Guaranty, (vii) any action or
inaction by any Beneficiary as contemplated in Section 5 of this Guaranty;
(viii) any invalidity, irregularity or unenforceability of all or part of the
Obligations or of any security therefor; (ix) any change in the manner, place,
timing or schedule of payment or performance of, or in any other term of, all
or any of the Obligations; (x) whether the Guarantor is related or unrelated to
the South Point Lessee, (xi) the assignment by the Owner Lessor of its rights
and interests hereunder, under the Facility Lease or under any other Operative
Document or the South Point Ground Lease in accordance with the Operative
Documents and the South Point Ground Lease (or the genuineness, validity,
legality or enforceability of the obligations of the Owner Lessor under the
Collateral Trust Indenture) and (xii) any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i)   The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party
     (together, the "Calpine Documents").

          (ii)   The execution, delivery and performance by the Guarantor of
     the Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other
     similar laws affecting creditors' rights generally and by general
     principles of equity.

          (iii)   The execution, delivery and performance of the Calpine
     Documents will not (a) contravene any provision of law, rule or regulation
     to which the Guarantor is subject or any judgment, decree or order
     applicable to the Guarantor, (b) conflict or be inconsistent with or
     result in any breach of any terms, covenants, conditions or provisions of,
     or constitute a default under, or result in the creation or imposition of
     (or the obligation to create or impose) any Lien or other encumbrance upon
     any of the property or assets of the Guarantor pursuant to the terms of
     any agreement or other instrument to which the Guarantor is a party or by
     which it or its property is bound or to which it or its property may be
     subject, in each case the violation of which would have a material adverse
     effect on the business, operations, prospects, properties or assets, or in
     the condition, financial or otherwise, of the Guarantor, or (c) violate or
     contravene any provision of the articles of incorporation or by-laws of
     the Guarantor.

          (iv)   No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before
     any Governmental Entity exists which, if determined adversely to the
     Guarantor, would materially adversely affect the business, operations,
     prospects, properties or assets, or in its condition, financial or
     otherwise, or the Guarantor's ability to perform its obligations under the
     Calpine Documents.

          (v)   No consent from, authorization or approval or other action by,
     and no notice to or filing with, any Person is required for the
     execution, delivery and performance by the Guarantor of the Calpine
     Documents except those which have been given and remain in full force and
     effect.

                                      7
<PAGE>
          (vi)   The South Point Lessee is an indirect, wholly-owned subsidiary
     of the Guarantor.

          (vii)   The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii)   The Guarantor is not in default with respect to any
     judgment, order, writ, injunction, decree, award, rule or regulation of
     any court, arbitrator or governmental department, commission, board,
     bureau, agency or instrumentality, domestic or foreign, which, either,
     separately or in the aggregate, would result in any material adverse
     change in any of its businesses, operations, prospects or assets, or in
     its condition, financial or otherwise, or its ability to perform its
     obligations under the Calpine Documents.

          (ix)   The Guarantor is not a party to any agreement or instrument,
     or subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x)   The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture
     Trustee, the Pass Through Trustee, the Certificateholders and the Owner
     Participant, are true, complete and correct and fairly present the
     financial condition of the Guarantor and its Consolidated Subsidiaries as
     of the date thereof. The financial statements have been prepared in
     accordance with GAAP. The Guarantor and its Consolidated Subsidiaries do
     not have any material liabilities, direct or contingent, except (a) as are
     disclosed in such financial statements or (b) as arise under the Operative
     Documents or the South Point Ground Lease. There has been no material
     adverse change in the financial condition of the Guarantor and its
     Consolidated Subsidiaries since the date of the audited financial
     statements referred to above.

          (xi)   All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified
     and not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect

                                      8
<PAGE>
     at such time in light of the circumstances under which such information
     was provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements provided
     by or on behalf of the Guarantor, or (ii) the descriptions of the
     Operative Documents or the South Point Ground Lease or the tax
     consequences to beneficial owners of Certificates;  provided, however,
     each of the Beneficiaries acknowledges and agrees that (i) Calpine has
     heretofore provided to the Appraiser, solely in order to assist the
     Appraiser in connection with the preparation of the appraisal to be
     delivered by the Appraiser to certain of the Transaction Parties at the
     Closing, certain (1) general market information, (2) information about the
     Arizona energy market and (3) information passed along from other Persons
     and (ii) that the South Point Lessee does not make any representation or
     warranty whatsoever with respect to the information described in clause
     (i) above except to the extent expressly set forth in Section 4(b) of the
     Tax Indemnity Agreement.

          (xii)   The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii)   The Guarantor has filed all tax returns and reports required
     by law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material
     adverse effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv)   No default has occurred under this Guaranty, which default
     would reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv)   In accordance with Section 8.12 hereof and Section 14.14 of
     the Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York
     County and the United States District Court for the Southern District of
     New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
     the date hereof and until this Guaranty is terminated pursuant to the
     terms hereof the Guarantor shall:

                                      9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the South Point Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the South Point Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the South Point Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the South Point Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i)   the Owner Lessor, the Owner Participant and, so long as the
     Lien of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and effect, the Guarantor shall reaffirm in writing all of its
     obligations hereunder in a manner reasonably satisfactory to the Owner
     Participant, such obligations of the Guarantor shall remain in full force
     and effect;

          (iii)   no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv)   the transfer shall not subject the South Point Lessee, the
     Owner Participant, the Owner Lessor, the Indenture Trustee, the Pass
     Through Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v)   the South Point Lessee shall have paid, at no after-tax cost to
     such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                      12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                      13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4  does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a)   The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i)   no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing;

          (ii)   either (A) the Guarantor shall be the continuing Person, or
     (B) the Person (if other than the Guarantor) formed by such consolidation
     or into which the Guarantor is merged or to which the properties and
     assets of the Guarantor are sold, assigned, conveyed, transferred,
     disposed of or leased as aforesaid  shall be an entity organized and
     existing under the laws of the United States or any State thereof or the
     District of Columbia and shall execute and deliver to the Owner
     Participant, the Owner Lessor and, so long as the Lien of the Collateral
     Trust Indenture shall not have been terminated or discharged, the
     Indenture Trustee and the Pass Through Trustee, a Guarantor Assignment and
     Assumption Agreement; and

          (iii)   each of the Owner Participant, the Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee shall have received an Officer's Certificate of the Guarantor, the
     surviving entity or the transferee, as the case may be, in form and
     substance reasonably satisfactory to each of such parties, stating that
     the proposed merger, consolidation, assignment, conveyance, transfer,
     disposition, lease or sale, and the Guarantor Assignment and Assumption
     Agreement complies with the terms of this Section 3(a) and, as to legal
     matters, an Opinion of Counsel; and

          (iv)   In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating
     of the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                      14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B)  alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the South Point Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the South Point Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the South Point Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                      15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
South Point Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the
terms thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                      16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
South Point Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the South Point Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the South Point Lessee to such Beneficiary
regardless of what liabilities or liabilities of the South Point Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the South
Point Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the South Point Ground Lease, or the failure of any Beneficiary to exercise any
rights or remedies hereunder in accordance with the provisions hereof or under
any other Operative Document or the South Point Ground Lease, shall not in any
way adversely affect the ability of any other Beneficiary to exercise its
rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (SOUTH POINT (SP-4))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the South Point Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the South Point Lessee or any other Person or any
substantial part of the property of the Guarantor or the South Point Lessee or
such other Person, all as if such payments had not been made.

                                      17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the South Point Lessee under the Facility
Lease shall fail to make any payment with respect to Periodic Rent or the
Termination Value (including the Equity Portion of Termination Value and Debt
Portion of Termination Value) when due and payable under such Facility Lease or
this Guaranty within five (5) days after the same shall become due thereunder;
or

          (b)   the Guarantor or the South Point Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the South Point Lessee and the Guarantor of
written notice of such failure by the South Point Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of South Point Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the South Point Lessee under any of the Operative Documents or the South Point
Ground Lease, 30 days after receipt by the Guarantor of written notice thereof
from the Owner Participant, the Owner Lessor, the Indenture Trustee or the Pass
Through Trustee; provided, however, if such condition cannot be remedied within
such 30-day period, then the period within which to remedy such condition shall
be extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of
                                      18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)      commences a voluntary case;

               (ii)     consents to the entry of an order for relief against it
                        in an involuntary case;

               (iii)    consents to the appointment of a Custodian of it or for
                        all or substantially all of its property;

               (iv)     makes a general assignment for the benefit of its
                        creditors; or

               (v)      admits in writing its inability to generally pay its
                        debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the South
Point Lessee under any Operative

                                      19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the South Point Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the South Point Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof. Each and every remedy of the Beneficiaries shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy now or hereafter existing at law or in equity. At the option of
each Beneficiary and upon notice to the Guarantor, the Guarantor may be joined
in any action or proceeding commenced by such Beneficiary against the South
Point Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the South Point
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the South Point Lessee and the Guarantor owing to
any of the Beneficiaries (or any other party) under the Operative Documents
shall have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                      20
<PAGE>
          (a)   Without limiting the last sentence of Section 7.1, the
Guarantor hereby unconditionally waives (i) notice of any of the matters
referred to in the second sentence of Section 2.3 hereof; (ii) all notices
which may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve any rights against the Guarantor hereunder, including,
without limitation, any demand, proof or notice of non-payment of any
Obligation; (iii) any right to the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Facility Lease (or
under or in respect of any other agreement including any Operative Document);
(iv) notice of acceptance of this Guaranty, demand, protest, presentment,
notice of default and any requirement of diligence; (v) any requirement to
exhaust any remedies or to mitigate any damages resulting from default by the
South Point Lessee or any Person under the Facility Lease (or under any other
agreement including any Operative Document); and (vi) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or which might otherwise limit
recourse against the Guarantor, other than satisfaction in full of the
Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the South Point Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the South Point Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the South Point Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

                                      21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA  95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the South Point Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
South Point

                                      22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i)   unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii)   the requirements set forth in Section 3.3(i), (iii), (iv) and
     (v) of this  Guaranty have been satisfied and, immediately after giving
     effect to such transfer, the transferee shall own at least a majority of
     the Ownership Interest of the South Point Lessee;

          (iii)   such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the South Point Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv)   neither the transferee nor any Affiliate of the transferee
     shall be involved in any material litigation with the Owner Participant;

          (v)   the Rating Agencies shall have confirmed that after giving
     effect to such transfer, the Certificates (if then outstanding) and the
     transferee (or a party which guarantees such transferee's obligations
     under the Operative Documents assigned to such transferee) shall be rated
     at least Investment Grade (and not be on negative credit watch) by the
     Rating Agencies;

          (vi)   all the obligations of the South Point Lessee under the
     Operative Documents and the South Point Ground Lease shall remain in full
     force and effect, the transferee shall assume all the obligations of the
     Guarantor under the Operative Documents pursuant to the Guarantor
     Assignment and Assumption Agreement and such Operative Documents as so
     assumed shall remain in full force and effect, and any guaranty of such
     transferee's obligations pursuant to this Section 8.4 shall be in a form
     satisfactory to the Owner Participant (it being acknowledged and agreed
     that any such guaranty which shall be in form and substance substantially
     similar to this Guaranty shall be deemed to be satisfactory to the Owner
     Participant); and

          (vii)   the Owner Participant, the Owner Lessor and, so long as the
     Lien on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions
     set forth in clause (vi) of this Section 8.4(b).

                                      23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the South
Point Ground Lease have been made available to its principal executive officers
and such officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the South Point
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other

                                      24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                      25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the South Point Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
South Point Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the South Point Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                      26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                           CALPINE CORPORATION,
                                           as Guarantor


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           SOUTH POINT OL-4, LLC,
                                           a Delaware limited liability company


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           SBR OP-4, LLC,
                                           a Delaware limited liability company


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST
                                           COMPANY, N.A., not in its individual
                                           capacity but solely as Indenture
                                           Trustee


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST
                                           COMPANY, N.A., not in its individual
                                           capacity but solely as Pass Through
                                           Trustee


                                           By:__________________________________
                                              Name:
                                              Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.31
<SEQUENCE>34
<FILENAME>f80168ex4-22_31.txt
<DESCRIPTION>EXHIBIT 4.22.31
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.31


===============================================================================

            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-1)


                          Dated as of October 18, 2001


                                      among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    BROAD RIVER OL-1, LLC, as Owner Lessor,


                      SBR OP-1, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              BROAD RIVER PROJECT
<PAGE>
            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-1)

          This CALPINE GUARANTY AND PAYMENT (BROAD RIVER BR-1), dated as of
October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), BROAD
RIVER OL-1, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-1, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, Broad River Energy LLC (the "Broad River Lessee") is an
indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the Broad River Lessee is a party to the Participation
Agreement (BR-1) dated as of October 18, 2001 (the "Participation Agreement"),
among the Broad River Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, Broad River OL-1, LLC,
as Owner Lessor, the Guarantor, SBR OP-1, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-1) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the Broad River Facility to the
Broad River Lessee as contemplated therein;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-1) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the Broad River Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the Broad
River Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any
corporation, partnership, trust, association or other business entity of which
an aggregate of at least 50% of the outstanding Voting Shares or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the Broad River Lessee of all of
the Broad River Lessee's obligations under the Operative Documents to which it
is a party and with respect to the FILOT Lease if the same shall not be
performed when due pursuant to the Operative Documents, including, without
limitation, but without duplication, (1) the Broad River Lessee's obligation to
make Periodic Rent, Supplemental Rent and other payments (in accordance with
the terms of the Operative Documents) to the Owner Lessor, (2) the Broad River
Lessee's obligation to pay the Termination Value (and amounts computed by
reference thereto) to the Owner Lessor and all other amounts owed under the
Operative Documents and the FILOT Lease under and in accordance with the
Facility Lease, (3) without duplication of the preceding clause (2), the Broad
River Lessee's obligation to pay the Equity Portion of Periodic Rent and the
Equity Portion of Termination Value to the Owner Lessor, (4) the Broad River
Lessee's obligation to make indemnity payments when due in accordance with the
terms of the Participation Agreement and the Tax Indemnity Agreement, (5) the
Broad River Lessee's obligation, pursuant to Section 3.3 of the Facility Lease,
to pay as Supplemental Rent an amount equal to (A) interest at the applicable
Overdue Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this
Section 2.1(a), not paid when due and (B) any Make-Whole Amount to the extent
then due and payable by the Owner Lessor to the Certificateholders pursuant to
the Participation Agreement, the Facility Lease or any other Operative Document
to which the Broad River Lessee is a party and (6) the Broad River Lessee's
obligation to make any and all other payments, and perform all other covenants
and agreements, when due under and in accordance with the terms of the
Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the Broad River Lessee's obligations under the Facility Lease or any other
Operative Documents or the FILOT Lease. The Guarantor agrees that it shall make
such payment notwithstanding the fact that the Broad River Lessee may have a
defense to the payment of any such amounts. The Guarantor's obligations in this
Section 2.1(b) are direct and primary obligations (and not obligations of a
guarantor or surety) of the Guarantor to the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor), which shall not be affected in any
way by the provisions of Section 2.1(a) above or any payments under any other
Operative Documents of any amounts until the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor) have received full payment of such
amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                      4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the Broad River Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the FILOT Lease, the
Guarantor agrees to cause such performance or observance to be done, and in the
case of any failure by the Broad River Lessee to make such payment as and when
the same shall become due and payable (by acceleration or otherwise), the
Guarantor hereby agrees to make such payment (and, in addition, such further
amounts, if any, as shall be sufficient to cover the costs and expenses of
collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the Broad River Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the FILOT Lease) or the lack of power or authority of the Broad
River Lessee to enter into any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document and the FILOT Lease) to which the Broad River Lessee is a
party, or any substitution, release or exchange of any other guaranty of, or
agreement with respect to, or any other security for, any of the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor
and shall not be subject to any right of set-off, recoupment or counterclaim
and is in no way conditioned or contingent upon any

                                      5
<PAGE>
attempt to collect from the Broad River Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without limiting
the generality of the foregoing, the Guarantor shall have no right to terminate
this Guaranty, or to be released, relieved or discharged from its obligations
hereunder, other than upon full payment and satisfaction and performance of all
of the Obligations (subject to Section 8.14 hereof), and such obligations shall
be neither affected nor diminished for any other reason whatsoever, including
(i) any amendment or supplement to or modification of any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any other Operative Document) to which the Broad River
Lessee is a party, any release, extension or renewal of the Broad River
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the Broad River Lessee is a party or by which it
is bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the Broad River Lessee's or any Beneficiary's
interest in the Participation Agreement, the Facility Lease or any other
Operative Document in accordance with the terms thereof, (ii) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar proceeding with
respect to the Broad River Lessee, Owner Lessor, Owner Participant or any other
Person, including, without limitation, termination of the Facility Lease and
the operation of Section 502(b)(6) of the Bankruptcy Code in connection
therewith, (iii) any furnishing or acceptance of additional security or any
exchange, substitution, surrender or release of any security, (iv) any waiver,
consent or other action or inaction or any exercise or nonexercise of any
right, remedy or power with respect to the Obligations (including any
settlement, compromise or other adjustment with respect to the Obligations) or
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any Operative Document) to which
the Broad River Lessee is a party, (v) without limiting Section 3.6(b) hereof,
any merger or consolidation of the Broad River Lessee or the Guarantor into or
with any other Person, or any sale, assignment, conveyance, lease, transfer or
other disposition of all or substantially all of the assets or properties of
the Broad River Lessee or the Guarantor, or any change in the structure of the
Broad River Lessee or in the ownership of the Broad River Lessee by the
Guarantor, (vi) any default, misrepresentation, negligence, misconduct or other
action or inaction of any kind by any Beneficiary, the Indenture Trustee or any
other Person under or in connection with any Operative Document or any other
agreement relating to this Guaranty, (vii) any action or inaction by any
Beneficiary as contemplated in Section 5 of this Guaranty; (viii) any
invalidity, irregularity or unenforceability of all or part of the Obligations
or of any security therefor; (ix) any change in the manner, place, timing or
schedule of payment or performance of, or in any other term of, all or any of
the Obligations; (x) whether the Guarantor is related or unrelated to the Broad
River Lessee, (xi) the assignment by the Owner Lessor of its rights and
interests hereunder, under the Facility Lease or under any other Operative
Document or the FILOT Lease in accordance with the Operative Documents and the
FILOT Lease (or the genuineness, validity, legality or enforceability of the
obligations of the Owner Lessor under the Collateral Trust Indenture) and (xii)
any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND
             COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i)   The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party
     (together, the "Calpine Documents").

          (ii)   The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other
     similar laws affecting creditors' rights generally and by general
     principles of equity.

          (iii)   The execution, delivery and performance of the Calpine
     Documents will not (a) contravene any provision of law, rule or
     regulation to which the Guarantor is subject or any judgment, decree or
     order applicable to the Guarantor, (b) conflict or be inconsistent with or
     result in any breach of any terms, covenants, conditions or provisions of,
     or constitute a default under, or result in the creation or imposition of
     (or the obligation to create or impose) any Lien or other encumbrance upon
     any of the property or assets of the Guarantor pursuant to the terms of
     any agreement or other instrument to which the Guarantor is a party or by
     which it or its property is bound or to which it or its property may be
     subject, in each case the violation of which would have a material adverse
     effect on the business, operations, prospects, properties or assets, or in
     the condition, financial or otherwise, of the Guarantor, or (c) violate or
     contravene any provision of the articles of incorporation or by-laws of
     the Guarantor.

          (iv)  No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before
     any Governmental Entity exists which, if determined adversely to the
     Guarantor, would materially adversely affect the business, operations,
     prospects, properties or assets, or in its condition, financial or
     otherwise, or the Guarantor's ability to perform its obligations under the
     Calpine Documents.

          (v)   No consent from, authorization or approval or other action by,
     and no notice to or filing with, any Person is required for the
     execution, delivery and performance by the Guarantor of the Calpine
     Documents except those which have been given and remain in full force and
     effect.

                                      7
<PAGE>
          (vi)   The Broad River Lessee is an indirect, wholly-owned subsidiary
     of the Guarantor.

          (vii)   The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the
     Investment Company Act of 1940.

          (viii)   The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency
     or instrumentality, domestic or foreign, which, either, separately or in
     the aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition,
     financial or otherwise, or its ability to perform its obligations under
     the Calpine Documents.

          (ix)   The Guarantor is not a party to any agreement or instrument,
     or subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x)   The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture
     Trustee, the Pass Through Trustee, the Certificateholders and the Owner
     Participant, are true, complete and correct and fairly present the
     financial condition of the Guarantor and its Consolidated Subsidiaries as
     of the date thereof. The financial statements have been prepared in
     accordance with GAAP. The Guarantor and its Consolidated Subsidiaries do
     not have any material liabilities, direct or contingent, except (a) as are
     disclosed in such financial statements or (b) as arise under the Operative
     Documents or the FILOT Lease. There has been no material adverse change in
     the financial condition of the Guarantor and its Consolidated Subsidiaries
     since the date of the audited financial statements referred to above.

          (xi)   All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified
     and not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under
     which such information was

                                      8
<PAGE>
     provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements provided
     by or on behalf of the Guarantor, or (ii) the descriptions of the
     Operative Documents or the FILOT Lease or the tax consequences to
     beneficial owners of Certificates; provided, however, each of the
     Beneficiaries acknowledges and agrees that (i) Calpine has heretofore
     provided to the Appraiser, solely in order to assist the Appraiser in
     connection with the preparation of the appraisal to be delivered by the
     Appraiser to certain of the Transaction Parties at the Closing, certain
     (1) general market information, (2) information about the Arizona energy
     market and (3) information passed along from other Persons and (ii) that
     the Broad River Lessee does not make any representation or warranty
     whatsoever with respect to the information described in clause (i) above
     except to the extent expressly set forth in Section 4(b) of the Tax
     Indemnity Agreement.

          (xii)   The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by,
     all governmental bodies, domestic or foreign, in respect of the conduct of
     its business and the ownership of its property (including applicable
     statutes, regulations, orders and restrictions relating to environmental
     standards and controls), except such noncompliance as would not, in the
     aggregate, have a material adverse effect on the business, operations,
     property, assets or condition (financial or otherwise) of the Guarantor,
     or the Guarantor's ability to perform its obligations under the Calpine
     Documents.

          (xiii)   The Guarantor has filed all tax returns and reports required
     by law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material
     adverse effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv)   No default has occurred under this Guaranty, which default
     would reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv)   In accordance with Section 8.12 hereof and Section 14.14 of
     the Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York
     County and the United States District Court for the Southern District of
     New York.

          Section 3.2.   The Guarantor covenants and agrees that on and
after the date hereof and until this Guaranty is terminated pursuant to the
terms hereof the Guarantor shall:

                                      9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor, the
Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the Broad River Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the Broad River Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the Broad River Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the Broad River Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     Guarantor shall reaffirm in writing all of its obligations hereunder in a
     manner reasonably satisfactory to the Owner Participant, such obligations
     of the Guarantor shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the Broad River Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v)   the Broad River Lessee shall have paid, at no after-tax cost to
     such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                      12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                      13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i)   no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing;

          (ii)   either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets
     of the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii)   each of the Owner Participant, the Owner Lessor and, so long
     as the Lien of the Collateral Trust Indenture shall not have been
     terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee shall have received an Officer's Certificate of the Guarantor, the
     surviving entity or the transferee, as the case may be, in form and
     substance reasonably satisfactory to each of such parties, stating that
     the proposed merger, consolidation, assignment, conveyance, transfer,
     disposition, lease or sale, and the Guarantor Assignment and Assumption
     Agreement complies with the terms of this Section 3(a) and, as to legal
     matters, an Opinion of Counsel; and

          (iv)   In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating
     of the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                      14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the Broad River Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the Broad River Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the Broad River Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                      15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
Broad River Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                      16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the Broad
River Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Broad River Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Broad River Lessee to such Beneficiary
regardless of what liabilities or liabilities of the Broad River Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the Broad
River Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the FILOT Lease, or the failure of any Beneficiary to exercise any rights or
remedies hereunder in accordance with the provisions hereof or under any other
Operative Document or the FILOT Lease, shall not in any way adversely affect
the ability of any other Beneficiary to exercise its rights or remedies
hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT
             (BROAD RIVER (BR-1))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the Broad River Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the Broad River Lessee or any other Person or any
substantial part of the property of the Guarantor or the Broad River Lessee or
such other Person, all as if such payments had not been made.

                                      17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the Broad River Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b)   the Guarantor or the Broad River Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the Broad River Lessee and the Guarantor of
written notice of such failure by the Broad River Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of Broad River Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the Broad River Lessee under any of the Operative Documents or the FILOT Lease,
30 days after receipt by the Guarantor of written notice thereof from the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee; provided, however, if such condition cannot be remedied within such
30-day period, then the period within which to remedy such condition shall be
extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                      18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the Broad
River Lessee under any Operative

                                      19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the Broad River Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the Broad River Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section 7.1,
each Beneficiary shall be entitled to (a) all rights and remedies to which it
may be entitled hereunder or at law, in equity or by statute and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the Broad River
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the Broad River
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or thereunder or otherwise, until all of the Obligations and all
other obligations of the Broad River Lessee and the Guarantor owing to any of
the Beneficiaries (or any other party) under the Operative Documents shall have
been paid in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations and such other
obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Obligation or other
obligation is payable and shall forthwith be paid to such Beneficiary to be
credited and applied to such Obligation or other obligation, whether matured or
unmatured, in accordance with the terms of the Operative Document under which
such Obligation or other obligation arose. If (i) the Guarantor shall make
payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                      20
<PAGE>
          (a)   Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or otherwise, now or hereafter in effect, to
preserve any rights against the Guarantor hereunder, including, without
limitation, any demand, proof or notice of non-payment of any Obligation; (iii)
any right to the enforcement, assertion or exercise of any right, remedy, power
or privilege under or in respect of the Facility Lease (or under or in respect
of any other agreement including any Operative Document); (iv) notice of
acceptance of this Guaranty, demand, protest, presentment, notice of default
and any requirement of diligence; (v) any requirement to exhaust any remedies
or to mitigate any damages resulting from default by the Broad River Lessee or
any Person under the Facility Lease (or under any other agreement including any
Operative Document); and (vi) any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse against the
Guarantor, other than satisfaction in full of the Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the Broad River Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the Broad River Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the Broad River Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

                                      21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed
by the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the Broad River Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
Broad River

                                      22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the Broad River Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the Broad River Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     transferee shall assume all the obligations of the Guarantor under the
     Operative Documents pursuant to the Guarantor Assignment and Assumption
     Agreement and such Operative Documents as so assumed shall remain in full
     force and effect, and any guaranty of such transferee's obligations
     pursuant to this Section 8.4 shall be in a form satisfactory to the Owner
     Participant (it being acknowledged and agreed that any such guaranty which
     shall be in form and substance substantially similar to this Guaranty shall
     be deemed to be satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

                                      23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this Guaranty
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been dated
as of the date first above written for convenience only. This Guaranty shall be
effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the FILOT
Lease have been made available to its principal executive officers and such
officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the Broad River
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other

                                      24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                      25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Broad River Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
Broad River Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the Broad River Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                      26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be
duly executed and delivered on the day and year first above written.

                                           CALPINE CORPORATION,
                                           as Guarantor


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           BROAD RIVER OL-1, LLC,
                                           a Delaware limited liability company


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           SBR OP-1, LLC,
                                           a Delaware limited liability company


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Indenture Trustee


                                           By:__________________________________
                                              Name:
                                              Title:
<PAGE>
                                           STATE STREET BANK AND TRUST COMPANY,
                                           National Association, not in its
                                           individual capacity but solely as
                                           Pass Through Trustee


                                           By:__________________________________
                                              Name:
                                              Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.32
<SEQUENCE>35
<FILENAME>f80168ex4-22_32.txt
<DESCRIPTION>EXHIBIT 4.22.32
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.32


==========================================================================

            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-2)

                          Dated as of October 18, 2001

                                     among

                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    BROAD RIVER OL-2, LLC, as Owner Lessor,

                      SBR OP-2, LLC, as Owner Participant,

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries

                              BROAD RIVER PROJECT

==========================================================================
<PAGE>
            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-2)

          This CALPINE GUARANTY AND PAYMENT (BROAD RIVER BR-2), dated as of
October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), BROAD
RIVER OL-2, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-2, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, Broad River Energy LLC (the "Broad River Lessee") is an
indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the Broad River Lessee is a party to the Participation
Agreement (BR-2) dated as of October 18, 2001 (the "Participation Agreement"),
among the Broad River Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, Broad River OL-2, LLC,
as Owner Lessor, the Guarantor, SBR OP-2, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-2) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the Broad River Facility to the
Broad River Lessee as contemplated therein;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-2) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the Broad River Lessee as contemplated therein;

                                        1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the Broad
River Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the recitals,
and not otherwise defined herein shall have the respective meanings set forth
on Appendix A to the Participation Agreement, provided that if a term that is
defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                        2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any
corporation, partnership, trust, association or other business entity of which
an aggregate of at least 50% of the outstanding Voting Shares or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                        3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the Broad River Lessee of all of
the Broad River Lessee's obligations under the Operative Documents to which it
is a party and with respect to the FILOT Lease if the same shall not be
performed when due pursuant to the Operative Documents, including, without
limitation, but without duplication, (1) the Broad River Lessee's obligation to
make Periodic Rent, Supplemental Rent and other payments (in accordance with
the terms of the Operative Documents) to the Owner Lessor, (2) the Broad River
Lessee's obligation to pay the Termination Value (and amounts computed by
reference thereto) to the Owner Lessor and all other amounts owed under the
Operative Documents and the FILOT Lease under and in accordance with the
Facility Lease, (3) without duplication of the preceding clause (2), the Broad
River Lessee's obligation to pay the Equity Portion of Periodic Rent and the
Equity Portion of Termination Value to the Owner Lessor, (4) the Broad River
Lessee's obligation to make indemnity payments when due in accordance with the
terms of the Participation Agreement and the Tax Indemnity Agreement, (5) the
Broad River Lessee's obligation, pursuant to Section 3.3 of the Facility Lease,
to pay as Supplemental Rent an amount equal to (A) interest at the applicable
Overdue Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this
Section 2.1(a), not paid when due and (B) any Make-Whole Amount to the extent
then due and payable by the Owner Lessor to the Certificateholders pursuant to
the Participation Agreement, the Facility Lease or any other Operative Document
to which the Broad River Lessee is a party and (6) the Broad River Lessee's
obligation to make any and all other payments, and perform all other covenants
and agreements, when due under and in accordance with the terms of the
Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the Broad River Lessee's obligations under the Facility Lease or any other
Operative Documents or the FILOT Lease. The Guarantor agrees that it shall make
such payment notwithstanding the fact that the Broad River Lessee may have a
defense to the payment of any such amounts. The Guarantor's obligations in this
Section 2.1(b) are direct and primary obligations (and not obligations of a
guarantor or surety) of the Guarantor to the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor), which shall not be affected in any
way by the provisions of Section 2.1(a) above or any payments under any other
Operative Documents of any amounts until the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor) have received full payment of such
amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                        4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).


          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the Broad River
Lessee to perform and observe any term, provision or condition referred to in
Section 2.1(a) when due pursuant to the Operative Documents or the FILOT Lease,
the Guarantor agrees to cause such performance or observance to be done, and in
the case of any failure by the Broad River Lessee to make such payment as and
when the same shall become due and payable (by acceleration or otherwise), the
Guarantor hereby agrees to make such payment (and, in addition, such further
amounts, if any, as shall be sufficient to cover the costs and expenses of
collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein
are direct, independent, and primary obligations of the Guarantor and are
absolute, present, unconditional and continuing obligations and are not
conditioned in any way upon the institution of suit or the taking of any other
action or any attempt to enforce performance of or compliance with the
obligations, covenants or undertakings (including any payment obligations) of
the Broad River Lessee and shall constitute a guaranty of, and agreement with
respect to, payment and performance and not a guaranty of collection, binding
upon the Guarantor and its successors and assigns and shall remain in full
force and effect and irrevocable without regard to the genuineness, validity,
legality or enforceability of the Participation Agreement, the Facility Lease,
the Tax Indemnity Agreement or any other agreement (including any other
Operative Document and the FILOT Lease) or the lack of power or authority of
the Broad River Lessee to enter into any of the Participation Agreement, the
Facility Lease, the Tax Indemnity Agreement or any other agreement (including
any other Operative Document and the FILOT Lease) to which the Broad River
Lessee is a party, or any substitution, release or exchange of any other
guaranty of, or agreement with respect to, or any other security for, any of
the Obligations (including any settlement, compromise or other adjustment with
respect to the Obligations) or any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor and shall not be subject to any right of set-off, recoupment or
counterclaim and is in no way conditioned or contingent upon any

                                        5
<PAGE>
attempt to collect from the Broad River Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without limiting
the generality of the foregoing, the Guarantor shall have no right to terminate
this Guaranty, or to be released, relieved or discharged from its obligations
hereunder, other than upon full payment and satisfaction and performance of all
of the Obligations (subject to Section 8.14 hereof), and such obligations shall
be neither affected nor diminished for any other reason whatsoever, including
(i) any amendment or supplement to or modification of any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any other Operative Document) to which the Broad River
Lessee is a party, any release, extension or renewal of the Broad River
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the Broad River Lessee is a party or by which it
is bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the Broad River Lessee's or any Beneficiary's
interest in the Participation Agreement, the Facility Lease or any other
Operative Document in accordance with the terms thereof, (ii) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar proceeding with
respect to the Broad River Lessee, Owner Lessor, Owner Participant or any other
Person, including, without limitation, termination of the Facility Lease and
the operation of Section 502(b)(6) of the Bankruptcy Code in connection
therewith, (iii) any furnishing or acceptance of additional security or any
exchange, substitution, surrender or release of any security, (iv) any waiver,
consent or other action or inaction or any exercise or nonexercise of any
right, remedy or power with respect to the Obligations (including any
settlement, compromise or other adjustment with respect to the Obligations) or
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any Operative Document) to which
the Broad River Lessee is a party, (v) without limiting Section 3.6(b) hereof,
any merger or consolidation of the Broad River Lessee or the Guarantor into or
with any other Person, or any sale, assignment, conveyance, lease, transfer or
other disposition of all or substantially all of the assets or properties of
the Broad River Lessee or the Guarantor, or any change in the structure of the
Broad River Lessee or in the ownership of the Broad River Lessee by the
Guarantor, (vi) any default, misrepresentation, negligence, misconduct or other
action or inaction of any kind by any Beneficiary, the Indenture Trustee or any
other Person under or in connection with any Operative Document or any other
agreement relating to this Guaranty, (vii) any action or inaction by any
Beneficiary as contemplated in Section 5 of this Guaranty; (viii) any
invalidity, irregularity or unenforceability of all or part of the Obligations
or of any security therefor; (ix) any change in the manner, place, timing or
schedule of payment or performance of, or in any other term of, all or any of
the Obligations; (x) whether the Guarantor is related or unrelated to the Broad
River Lessee, (xi) the assignment by the Owner Lessor of its rights and
interests hereunder, under the Facility Lease or under any other Operative
Document or the FILOT Lease in accordance with the Operative Documents and the
FILOT Lease (or the genuineness, validity, legality or enforceability of the
obligations of the Owner Lessor under the Collateral Trust Indenture) and (xii)
any other circumstance whatsoever.

                                        6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                        7
<PAGE>
          (vi) The Broad River Lessee is an indirect, wholly-owned subsidiary of
     the Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents or the
     FILOT Lease. There has been no material adverse change in the financial
     condition of the Guarantor and its Consolidated Subsidiaries since the date
     of the audited financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                        8
<PAGE>
     provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Guarantor, or (ii) the descriptions of
     the Operative Documents or the FILOT Lease or the tax consequences to
     beneficial owners of Certificates; provided, however, each of the
     Beneficiaries acknowledges and agrees that (i) Calpine has heretofore
     provided to the Appraiser, solely in order to assist the Appraiser in
     connection with the preparation of the appraisal to be delivered by the
     Appraiser to certain of the Transaction Parties at the Closing, certain
     (1) general market information, (2) information about the Arizona energy
     market and (3) information passed along from other Persons and (ii) that
     the Broad River Lessee does not make any representation or warranty
     whatsoever with respect to the information described in clause (i) above
     except to the extent expressly set forth in Section 4(b) of the Tax
     Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii)   The Guarantor has filed all tax returns and reports
     required by law to have been filed by it and has paid all taxes and
     governmental charges thereby shown to be owing (other than any such taxes
     or charges which are being diligently contested in good faith by
     appropriate proceedings and for which adequate reserves in accordance
     with GAAP shall have been set aside on its books), except such non-filing
     or non-payment, as the case may be, as would not, in the aggregate, have
     a material adverse effect on the business, operations, property, assets
     or condition (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and
after the date hereof and until this Guaranty is terminated pursuant to the
terms hereof the Guarantor shall:

                                        9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                       10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor, the
Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.


     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the Broad River Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the Broad River Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the Broad River Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the Broad River Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     Guarantor shall reaffirm in writing all of its obligations hereunder in a
     manner reasonably satisfactory to the Owner Participant, such obligations
     of the Guarantor shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the Broad River Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                       11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the Broad River Lessee shall have paid, at no after-tax cost to
     such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                       12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or indirectly,
at the time of such original incurrence of such Lien under this clause (2) any
operating properties or assets, securing Indebtedness Incurred to finance the
exploration, drilling, development, construction or purchase of or by, or
repairs, improvements or additions to, property or assets of any Restricted
Subsidiary that does not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, which Liens may
include Liens on the Capital Stock of one or more Restricted Subsidiaries that
do not, directly or indirectly, own any operating properties or assets at the
time of such original incurrence of such Lien, provided, however, that the
Indebtedness secured by any such Lien may not be issued more than 365 days after
the later of the exploration, drilling, development, completion of construction,
purchase, repair, improvement, addition or commencement of full commercial
operation of the property or assets being so financed; (b) Liens existing on the
date hereof (other than Liens relating to Indebtedness or other obligations
being repaid or Liens that are otherwise extinguished with the proceeds of the
offering of the Certificates); (c) Liens on property, assets or shares of stock
of a Person at the time such Person becomes a Subsidiary; provided, however,
that any such Lien may not extend to any other property or assets owned by the
Guarantor or any Restricted Subsidiary; (d) Liens on property or assets at the
time the Guarantor or a Subsidiary acquires the property or asset, including any
acquisition by means of a merger or consolidation with or into the Guarantor or
a Subsidiary; provided, however, that such Liens are not incurred in connection
with, or in contemplation of, such merger or consolidation; and provided,
further, that the Lien may not extend to any other property or asset owned by
the Guarantor or any Restricted Subsidiary; (e) Liens securing Indebtedness or
other obligations of a Subsidiary owing to the Guarantor or a Restricted
Subsidiary or of the Guarantor owing to a Subsidiary; (f) Liens incurred on
assets that are the subject of a Capitalized Lease Obligation to which the
Guarantor or a Subsidiary is a party, which shall include, Liens on the stock or
other ownership interest in one or more Restricted Subsidiaries leasing such
assets; (g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements or
additions to such property or assets and Liens on the stock or other ownership
interest in one or more Restricted Subsidiaries beneficially owning such
property or assets) and (y) the amount of the Indebtedness secured by such Lien
at such time (or, if the

                                       13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) is not increased (other than by an
amount necessary to pay fees and expenses, including premiums, related to the
refinancing, refunding, extension, renewal or replacement of such
Indebtedness); (h) Liens by which the Obligations are secured equally and
ratably with other Indebtedness pursuant to this Section 3.5; in any such case
without effectively providing that the Obligations shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured; provided, however, that the Guarantor or a
Restricted Subsidiary may Incur other Liens to secure outstanding Indebtedness
as long as the sum of (x) the lesser of (A) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to this proviso (or, if the
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving

                                       14
<PAGE>
     or succeeding entity shall have a credit rating assigned by the Rating
     Agencies that is not less than the lower of (x) the credit rating of the
     long-term unsecured debt of the Guarantor assigned by the Rating Agencies
     immediately prior to such transaction and (y) a credit rating of the
     long-term unsecured debt of the resulting, surviving or succeeding entity
     assigned by the Rating Agencies that is Investment Grade; provided
     however, the foregoing credit rating condition set forth in this
     paragraph may be waived by the Owner Participant in its sole discretion,
     and provided further, that if such credit rating condition is not
     otherwise satisfied, or waived by the Owner Participant, the Guarantor,
     the surviving entity or the transferee, as the case may be, may provide
     in the alternative, either (A) a letter of credit from a L/C Bank with at
     least either (1) an A rating from S&P or (2) an A2 rating from Moody's,
     in either case, covering the Equity Portion of Termination Value from
     time to time throughout the Lease Term, or (B) alternative or additional
     credit support arrangements which result in the satisfaction of the
     rating condition in either clause (x) or clause (y) above, provided that
     such arrangements contemplated in this sub-clause (B) are satisfactory to
     the Owner Participant and result in the satisfaction of such rating
     condition.

          (b)   Upon the consummation of such transaction described in
Section 3.6(a), the resulting, surviving or succeeding entity, if other than
the Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but
only to the extent indemnified under the Participation Agreement) and, so long
as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the Broad River Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the Broad River Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the Broad River Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                       15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
Broad River Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                       16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the Broad
River Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Broad River Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Broad River Lessee to such Beneficiary
regardless of what liabilities or liabilities of the Broad River Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the Broad
River Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the FILOT Lease, or the failure of any Beneficiary to exercise any rights or
remedies hereunder in accordance with the provisions hereof or under any other
Operative Document or the FILOT Lease, shall not in any way adversely affect
the ability of any other Beneficiary to exercise its rights or remedies
hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER (BR-2))

          Notwithstanding anything to the contrary herein, this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any of the amounts paid to any of the Beneficiaries, in whole or in part,
is required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the Broad River Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the Broad River Lessee or any other Person or any
substantial part of the property of the Guarantor or the Broad River Lessee or
such other Person, all as if such payments had not been made.

                                       17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the Broad River Lessee under the Facility
Lease shall fail to make any payment with respect to Periodic Rent or the
Termination Value (including the Equity Portion of Termination Value and Debt
Portion of Termination Value) when due and payable under such Facility Lease or
this Guaranty within five (5) days after the same shall become due thereunder;
or

          (b)   the Guarantor or the Broad River Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the Broad River Lessee and the Guarantor of
written notice of such failure by the Broad River Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set
forth in Section 3.3 (transfer of Broad River Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the Broad River Lessee under any of the Operative Documents or the FILOT Lease,
30 days after receipt by the Guarantor of written notice thereof from the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee; provided, however, if such condition cannot be remedied within such
30-day period, then the period within which to remedy such condition shall be
extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                       18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)      commences a voluntary case;

               (ii)     consents to the entry of an order for relief against it
                        in an involuntary case;

               (iii)    consents to the appointment of a Custodian of it or for
                        all or substantially all of its property;

               (iv)     makes a general assignment for the benefit of its
                        creditors; or

               (v)      admits in writing its inability to generally pay its
                        debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the Broad
River Lessee under any Operative

                                       19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the Broad River Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the Broad River Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to
which it may be entitled hereunder or at law, in equity or by statute and may
proceed by appropriate court action to enforce the terms hereof and to recover
damages for the breach hereof. Each and every remedy of the Beneficiaries
shall, to the extent permitted by law, be cumulative and shall be in addition
to any other remedy now or hereafter existing at law or in equity. At the
option of each Beneficiary and upon notice to the Guarantor, the Guarantor may
be joined in any action or proceeding commenced by such Beneficiary against the
Broad River Lessee in respect of any Obligations and recovery may be had
against the Guarantor in such action or proceeding or in any independent action
or proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the Broad River
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the Broad River Lessee and the Guarantor owing to
any of the Beneficiaries (or any other party) under the Operative Documents
shall have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                       20
<PAGE>
          (a)   Without limiting the last sentence of Section 7.1, the
Guarantor hereby unconditionally waives (i) notice of any of the matters
referred to in the second sentence of Section 2.3 hereof; (ii) all notices
which may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve any rights against the Guarantor hereunder, including,
without limitation, any demand, proof or notice of non-payment of any
Obligation; (iii) any right to the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Facility Lease (or
under or in respect of any other agreement including any Operative Document);
(iv) notice of acceptance of this Guaranty, demand, protest, presentment,
notice of default and any requirement of diligence; (v) any requirement to
exhaust any remedies or to mitigate any damages resulting from default by the
Broad River Lessee or any Person under the Facility Lease (or under any other
agreement including any Operative Document); and (vi) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or which might otherwise limit
recourse against the Guarantor, other than satisfaction in full of the
Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the Broad River Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the Broad River Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the Broad River Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on
an After-Tax Basis any and all reasonable costs and expenses (including
reasonable legal fees) incurred by any Beneficiary in enforcing its rights
under this Guaranty.

                                       21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the Broad River Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
Broad River

                                       22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the Broad River Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the Broad River Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     transferee shall assume all the obligations of the Guarantor under the
     Operative Documents pursuant to the Guarantor Assignment and Assumption
     Agreement and such Operative Documents as so assumed shall remain in full
     force and effect, and any guaranty of such transferee's obligations
     pursuant to this Section 8.4 shall be in a form satisfactory to the Owner
     Participant (it being acknowledged and agreed that any such guaranty which
     shall be in form and substance substantially similar to this Guaranty shall
     be deemed to be satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

                                       23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the FILOT
Lease have been made available to its principal executive officers and such
officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the Broad River
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other

                                       24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER
OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES
HEREUNDER OR THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing
in this Guaranty, express or implied, is intended or shall be construed to
confer upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                       25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Broad River Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
Broad River Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the Broad River Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be
duly executed and delivered on the day and year first above written.

                                     CALPINE CORPORATION,
                                     as Guarantor


                                     By:________________________________________
                                        Name:
                                        Title:

<PAGE>

                                     BROAD RIVER OL-2, LLC,
                                     a Delaware limited liability company


                                     By:________________________________________
                                        Name:
                                        Title:

<PAGE>

                                     SBR OP-2, LLC,
                                     a Delaware limited liability company


                                     By:________________________________________
                                        Name:
                                        Title:

<PAGE>

                                     STATE STREET BANK AND TRUST
                                     COMPANY, National Association, not in its
                                     individual capacity but solely as Indenture
                                     Trustee


                                     By:________________________________________
                                        Name:
                                        Title:

<PAGE>

                                     STATE STREET BANK AND TRUST
                                     COMPANY, National Association, not in its
                                     individual capacity but solely as Pass
                                     Through Trustee


                                     By:________________________________________
                                        Name:
                                        Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.33
<SEQUENCE>36
<FILENAME>f80168ex4-22_33.txt
<DESCRIPTION>EXHIBIT 4.22.33
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.33


===============================================================================

            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-3)



                          Dated as of October 18, 2001


                                     among



                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    BROAD RIVER OL-3, LLC, as Owner Lessor,


                      SBR OP-3, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries

                              BROAD RIVER PROJECT

===============================================================================
<PAGE>
           CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-3)

          This CALPINE GUARANTY AND PAYMENT (BROAD RIVER BR-3), dated as of
October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), BROAD
RIVER OL-3, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-3, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, Broad River Energy LLC (the "Broad River Lessee") is an
indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the Broad River Lessee is a party to the Participation
Agreement (BR-3) dated as of October 18, 2001 (the "Participation Agreement"),
among the Broad River Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, Broad River OL-3, LLC,
as Owner Lessor, the Guarantor, SBR OP-3, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-3) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the Broad River Facility to the
Broad River Lessee as contemplated therein;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-3) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the Broad River Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the Broad
River Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the recitals
, and not otherwise defined herein shall have the respective meanings set forth
on Appendix A to the Participation Agreement, provided that if a term that is
defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the Broad River Lessee of all of
the Broad River Lessee's obligations under the Operative Documents to which it
is a party and with respect to the FILOT Lease if the same shall not be
performed when due pursuant to the Operative Documents, including, without
limitation, but without duplication, (1) the Broad River Lessee's obligation to
make Periodic Rent, Supplemental Rent and other payments (in accordance with
the terms of the Operative Documents) to the Owner Lessor, (2) the Broad River
Lessee's obligation to pay the Termination Value (and amounts computed by
reference thereto) to the Owner Lessor and all other amounts owed under the
Operative Documents and the FILOT Lease under and in accordance with the
Facility Lease, (3) without duplication of the preceding clause (2), the Broad
River Lessee's obligation to pay the Equity Portion of Periodic Rent and the
Equity Portion of Termination Value to the Owner Lessor, (4) the Broad River
Lessee's obligation to make indemnity payments when due in accordance with the
terms of the Participation Agreement and the Tax Indemnity Agreement, (5) the
Broad River Lessee's obligation, pursuant to Section 3.3 of the Facility Lease,
to pay as Supplemental Rent an amount equal to (A) interest at the applicable
Overdue Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this
Section 2.1(a), not paid when due and (B) any Make-Whole Amount to the extent
then due and payable by the Owner Lessor to the Certificateholders pursuant to
the Participation Agreement, the Facility Lease or any other Operative Document
to which the Broad River Lessee is a party and (6) the Broad River Lessee's
obligation to make any and all other payments, and perform all other covenants
and agreements, when due under and in accordance with the terms of the
Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the Broad River Lessee's obligations under the Facility Lease or any other
Operative Documents or the FILOT Lease. The Guarantor agrees that it shall make
such payment notwithstanding the fact that the Broad River Lessee may have a
defense to the payment of any such amounts. The Guarantor's obligations in this
Section 2.1(b) are direct and primary obligations (and not obligations of a
guarantor or surety) of the Guarantor to the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor), which shall not be affected in any
way by the provisions of Section 2.1(a) above or any payments under any other
Operative Documents of any amounts until the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor) have received full payment of such
amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                      4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the Broad River Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the FILOT Lease, the
Guarantor agrees to cause such performance or observance to be done, and in the
case of any failure by the Broad River Lessee to make such payment as and when
the same shall become due and payable (by acceleration or otherwise), the
Guarantor hereby agrees to make such payment (and, in addition, such further
amounts, if any, as shall be sufficient to cover the costs and expenses of
collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the Broad River Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the FILOT Lease) or the lack of power or authority of the Broad
River Lessee to enter into any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document and the FILOT Lease) to which the Broad River Lessee is a
party, or any substitution, release or exchange of any other guaranty of, or
agreement with respect to, or any other security for, any of the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor
and shall not be subject to any right of set-off, recoupment or counterclaim
and is in no way conditioned or contingent upon any

                                      5
<PAGE>
attempt to collect from the Broad River Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without limiting
the generality of the foregoing, the Guarantor shall have no right to terminate
this Guaranty, or to be released, relieved or discharged from its obligations
hereunder, other than upon full payment and satisfaction and performance of all
of the Obligations (subject to Section 8.14 hereof), and such obligations shall
be neither affected nor diminished for any other reason whatsoever, including
(i) any amendment or supplement to or modification of any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any other Operative Document) to which the Broad River
Lessee is a party, any release, extension or renewal of the Broad River
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the Broad River Lessee is a party or by which it
is bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the Broad River Lessee's or any Beneficiary's
interest in the Participation Agreement, the Facility Lease or any other
Operative Document in accordance with the terms thereof, (ii) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar proceeding with
respect to the Broad River Lessee, Owner Lessor, Owner Participant or any other
Person, including, without limitation, termination of the Facility Lease and
the operation of Section 502(b)(6) of the Bankruptcy Code in connection
therewith, (iii) any furnishing or acceptance of additional security or any
exchange, substitution, surrender or release of any security, (iv) any waiver,
consent or other action or inaction or any exercise or nonexercise of any
right, remedy or power with respect to the Obligations (including any
settlement, compromise or other adjustment with respect to the Obligations) or
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any Operative Document) to which
the Broad River Lessee is a party, (v) without limiting Section 3.6(b) hereof,
any merger or consolidation of the Broad River Lessee or the Guarantor into or
with any other Person, or any sale, assignment, conveyance, lease, transfer or
other disposition of all or substantially all of the assets or properties of
the Broad River Lessee or the Guarantor, or any change in the structure of the
Broad River Lessee or in the ownership of the Broad River Lessee by the
Guarantor, (vi) any default, misrepresentation, negligence, misconduct or other
action or inaction of any kind by any Beneficiary, the Indenture Trustee or any
other Person under or in connection with any Operative Document or any other
agreement relating to this Guaranty, (vii) any action or inaction by any
Beneficiary as contemplated in Section 5 of this Guaranty; (viii) any
invalidity, irregularity or unenforceability of all or part of the Obligations
or of any security therefor; (ix) any change in the manner, place, timing or
schedule of payment or performance of, or in any other term of, all or any of
the Obligations; (x) whether the Guarantor is related or unrelated to the Broad
River Lessee, (xi) the assignment by the Owner Lessor of its rights and
interests hereunder, under the Facility Lease or under any other Operative
Document or the FILOT Lease in accordance with the Operative Documents and the
FILOT Lease (or the genuineness, validity, legality or enforceability of the
obligations of the Owner Lessor under the Collateral Trust Indenture) and (xii)
any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3. GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                      7
<PAGE>
          (vi) The Broad River Lessee is an indirect, wholly-owned subsidiary of
     the Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents or the
     FILOT Lease. There has been no material adverse change in the financial
     condition of the Guarantor and its Consolidated Subsidiaries since the date
     of the audited financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                      8
<PAGE>
     provided; provided, that no representation or warranty is made with regard
     to (i) any projections or other forward-looking statements provided by or
     on behalf of the Guarantor, or (ii) the descriptions of the Operative
     Documents or the FILOT Lease or the tax consequences to beneficial owners
     of Certificates; provided, however, each of the Beneficiaries acknowledges
     and agrees that (i) Calpine has heretofore provided to the Appraiser,
     solely in order to assist the Appraiser in connection with the preparation
     of the appraisal to be delivered by the Appraiser to certain of the
     Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Arizona energy market and (3)
     information passed along from other Persons and (ii) that the Broad River
     Lessee does not make any representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                      9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the Broad River Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the Broad River Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the Broad River Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the Broad River Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     Guarantor shall reaffirm in writing all of its obligations hereunder in a
     manner reasonably satisfactory to the Owner Participant, such obligations
     of the Guarantor shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the Broad River Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the Broad River Lessee shall have paid, at no after-tax cost to
     such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                      12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                      13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction.

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                      14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be,
     may provide in the alternative, either (A) a letter of credit from a L/C
     Bank with at least either (1) an A rating from S&P or (2) an A2 rating
     from Moody's, in either case, covering the Equity Portion of Termination
     Value from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction
     of the rating condition in either clause (x) or clause (y) above,
     provided that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the Broad River Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the Broad River Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the Broad River Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                      15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
Broad River Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                      16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the Broad
River Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Broad River Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Broad River Lessee to such Beneficiary
regardless of what liabilities or liabilities of the Broad River Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the Broad
River Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the FILOT Lease, or the failure of any Beneficiary to exercise any rights or
remedies hereunder in accordance with the provisions hereof or under any other
Operative Document or the FILOT Lease, shall not in any way adversely affect
the ability of any other Beneficiary to exercise its rights or remedies
hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER (BR-3))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the Broad River Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the Broad River Lessee or any other Person or any
substantial part of the property of the Guarantor or the Broad River Lessee or
such other Person, all as if such payments had not been made.

                                      17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the Broad River Lessee under the Facility
Lease shall fail to make any payment with respect to Periodic Rent or the
Termination Value (including the Equity Portion of Termination Value and Debt
Portion of Termination Value) when due and payable under such Facility Lease or
this Guaranty within five (5) days after the same shall become due thereunder;
or
          (b)   the Guarantor or the Broad River Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the Broad River Lessee and the Guarantor of
written notice of such failure by the Broad River Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of Broad River Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the Broad River Lessee under any of the Operative Documents or the FILOT Lease,
30 days after receipt by the Guarantor of written notice thereof from the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee; provided, however, if such condition cannot be remedied within such
30-day period, then the period within which to remedy such condition shall be
extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                      18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)      commences a voluntary case;

               (ii)     consents to the entry of an order for relief against it
                        in an involuntary case;

               (iii)    consents to the appointment of a Custodian of it or for
                        all or substantially all of its property;

               (iv)     makes a general assignment for the benefit of its
                        creditors; or

               (v)      admits in writing its inability to generally pay its
                        debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the Broad
River Lessee under any Operative

                                      19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the Broad River Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the Broad River Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the Broad River
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the Broad River
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the Broad River Lessee and the Guarantor owing to
any of the Beneficiaries (or any other party) under the Operative Documents
shall have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                      20
<PAGE>
          (a)   Without limiting the last sentence of Section 7.1, the
Guarantor hereby unconditionally waives (i) notice of any of the matters
referred to in the second sentence of Section 2.3 hereof; (ii) all notices
which may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve any rights against the Guarantor hereunder, including,
without limitation, any demand, proof or notice of non-payment of any
Obligation; (iii) any right to the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Facility Lease (or
under or in respect of any other agreement including any Operative Document);
(iv) notice of acceptance of this Guaranty, demand, protest, presentment,
notice of default and any requirement of diligence; (v) any requirement to
exhaust any remedies or to mitigate any damages resulting from default by the
Broad River Lessee or any Person under the Facility Lease (or under any other
agreement including any Operative Document); and (vi) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or which might otherwise limit
recourse against the Guarantor, other than satisfaction in full of the
Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the Broad River Lessee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the Broad River Lessee), then and in such
event the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the Broad River Lessee, and the Guarantor shall be and remain
liable to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on
an After-Tax Basis any and all reasonable costs and expenses (including
reasonable legal fees) incurred by any Beneficiary in enforcing its rights
under this Guaranty.

                                      21
<PAGE>
          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA  95113

     Facsimile No.:  (408) 975-4648
     Telephone No.:  (408) 995-5115
     Attention:  General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the Broad River Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
Broad River

                                      22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the Broad River Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the Broad River Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     transferee shall assume all the obligations of the Guarantor under the
     Operative Documents pursuant to the Guarantor Assignment and Assumption
     Agreement and such Operative Documents as so assumed shall remain in full
     force and effect, and any guaranty of such transferee's obligations
     pursuant to this Section 8.4 shall be in a form satisfactory to the Owner
     Participant (it being acknowledged and agreed that any such guaranty which
     shall be in form and substance substantially similar to this Guaranty shall
     be deemed to be satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

                                      23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this Guaranty
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been dated
as of the date first above written for convenience only.  This Guaranty shall
be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the FILOT
Lease have been made available to its principal executive officers and such
officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the Broad River
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other

                                      24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents.  The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto.  Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                      25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Broad River Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
Broad River Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the Broad River Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                      26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                    CALPINE CORPORATION,
                                    as Guarantor


                                    By:_________________________________________
                                       Name:
                                       Title:
<PAGE>
                                    BROAD RIVER OL-3, LLC,
                                    a Delaware limited liability company


                                    By:_________________________________________
                                       Name:
                                       Title:
<PAGE>
                                    SBR OP-3, LLC,
                                    a Delaware limited liability company


                                    By:_________________________________________
                                       Name:
                                       Title:
<PAGE>
                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Indenture
                                    Trustee


                                    By:_________________________________________
                                       Name:
                                       Title:
<PAGE>
                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Pass
                                    Through Trustee


                                    By:_________________________________________
                                       Name:
                                       Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.34
<SEQUENCE>37
<FILENAME>f80168ex4-22_34.txt
<DESCRIPTION>EXHIBIT 4.22.34
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.34


===============================================================================


            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-4)

                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                    BROAD RIVER OL-4, LLC, as Owner Lessor,


                      SBR OP-4, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                              BROAD RIVER PROJECT


===============================================================================
<PAGE>
            CALPINE GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER BR-4)

          This CALPINE GUARANTY AND PAYMENT (BROAD RIVER BR-4), dated as of
October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), BROAD
RIVER OL-4, LLC, a Delaware limited liability company, as Owner Lessor, SBR
OP-4, LLC, a Delaware limited liability company, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, Broad River Energy LLC (the "Broad River Lessee") is an
indirect wholly-owned subsidiary of the Guarantor;

          WHEREAS, the Broad River Lessee is a party to the Participation
Agreement (BR-4) dated as of October 18, 2001 (the "Participation Agreement"),
among the Broad River Lessee, Wells Fargo Bank Northwest, National Association,
not in its individual capacity except as expressly provided in the
Participation Agreement, but solely as Lessor Manager, Broad River OL-4, LLC,
as Owner Lessor, the Guarantor, SBR OP-4, LLC, as Owner Participant, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity, except as expressly provided in the Participation
Agreement, but solely as Indenture Trustee, and State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as Pass
Through Trustee;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-4) Facility Lease, to be dated as of October 18, 2001
(as amended, modified or supplemented from time to time pursuant to Section
14.23 of the Participation Agreement, the "Facility Lease"), providing for the
Owner Lessor's leasing an undivided interest of the Broad River Facility to the
Broad River Lessee as contemplated therein;

          WHEREAS, the Broad River Lessee and the Owner Lessor are entering
into the Broad River (BR-4) Facility Site Lease, to be dated as of October 18,
2001 (as amended, modified or supplemented from time to time pursuant to
Section 14.23 of the Participation Agreement, the "Facility Site Lease"),
providing for the Owner Lessor's leasing an undivided interest in the Facility
Site to the Broad River Lessee as contemplated therein;

                                      1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the Broad
River Lessee entering into the Facility Lease, the Facility Site Lease and the
other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement.  Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

              "Indebtedness" of any Person means, without duplication, (i) the
principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured.  The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a)   The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the Broad River Lessee of all of
the Broad River Lessee's obligations under the Operative Documents to which it
is a party and with respect to the FILOT Lease if the same shall not be
performed when due pursuant to the Operative Documents, including, without
limitation, but without duplication, (1) the Broad River Lessee's obligation to
make Periodic Rent, Supplemental Rent and other payments (in accordance with
the terms of the Operative Documents) to the Owner Lessor, (2) the Broad River
Lessee's obligation to pay the Termination Value (and amounts computed by
reference thereto) to the Owner Lessor and all other amounts owed under the
Operative Documents and the FILOT Lease under and in accordance with the
Facility Lease, (3) without duplication of the preceding clause (2), the Broad
River Lessee's obligation to pay the Equity Portion of Periodic Rent and the
Equity Portion of Termination Value to the Owner Lessor, (4) the Broad River
Lessee's obligation to make indemnity payments when due in accordance with the
terms of the Participation Agreement and the Tax Indemnity Agreement, (5) the
Broad River Lessee's obligation, pursuant to Section 3.3 of the Facility Lease,
to pay as Supplemental Rent an amount equal to (A) interest at the applicable
Overdue Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this
Section 2.1(a), not paid when due and (B) any Make-Whole Amount to the extent
then due and payable by the Owner Lessor to the Certificateholders pursuant to
the Participation Agreement, the Facility Lease or any other Operative Document
to which the Broad River Lessee is a party and (6) the Broad River Lessee's
obligation to make any and all other payments, and perform all other covenants
and agreements, when due under and in accordance with the terms of the
Operative Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable.  Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the Broad River Lessee's obligations under the Facility Lease or any other
Operative Documents or the FILOT Lease.  The Guarantor agrees that it shall
make such payment notwithstanding the fact that the Broad River Lessee may have
a defense to the payment of any such amounts. The Guarantor's obligations in
this Section 2.1(b) are direct and primary obligations (and not obligations of
a guarantor or surety) of the Guarantor to the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor), which shall not be affected in any
way by the provisions of Section 2.1(a) above or any payments under any other
Operative Documents of any amounts until the Owner Lessor and the Indenture
Trustee (as assignee of the Owner Lessor) have received full payment of such
amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against

                                      4
<PAGE>
the Guarantor for the payment of the Termination Value (including without
limitation all amounts the Guarantor is obligated to pay under Section 2.1(b)
hereof under the circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the Broad River Lessee
to perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents or the FILOT Lease, the
Guarantor agrees to cause such performance or observance to be done, and in the
case of any failure by the Broad River Lessee to make such payment as and when
the same shall become due and payable (by acceleration or otherwise), the
Guarantor hereby agrees to make such payment (and, in addition, such further
amounts, if any, as shall be sufficient to cover the costs and expenses of
collection hereunder) as and when such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above, this
Section 2.2, and in Section 8.15 below are referred to in this Guaranty as the
"Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the Broad River Lessee
and shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document and the FILOT Lease) or the lack of power or authority of the Broad
River Lessee to enter into any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document and the FILOT Lease) to which the Broad River Lessee is a
party, or any substitution, release or exchange of any other guaranty of, or
agreement with respect to, or any other security for, any of the Obligations
(including any settlement, compromise or other adjustment with respect to the
Obligations) or any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor
and shall not be subject to any right of set-off, recoupment or counterclaim
and is in no way conditioned or contingent upon any

                                      5
<PAGE>
attempt to collect from the Broad River Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever.  Without limiting
the generality of the foregoing, the Guarantor shall have no right to terminate
this Guaranty, or to be released, relieved or discharged from its obligations
hereunder, other than upon full payment and satisfaction and performance of all
of the Obligations (subject to Section 8.14 hereof), and such obligations shall
be neither affected nor diminished for any other reason whatsoever, including
(i) any amendment or supplement to or modification of any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any other Operative Document) to which the Broad River
Lessee is a party, any release, extension or renewal of the Broad River
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the Broad River Lessee is a party or by which it
is bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the Broad River Lessee's or any Beneficiary's
interest in the Participation Agreement, the Facility Lease or any other
Operative Document in accordance with the terms thereof, (ii) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar proceeding with
respect to the Broad River Lessee, Owner Lessor, Owner Participant or any other
Person, including, without limitation, termination of the Facility Lease and
the operation of Section 502(b)(6) of the Bankruptcy Code in connection
therewith, (iii) any furnishing or acceptance of additional security or any
exchange, substitution, surrender or release of any security, (iv) any waiver,
consent or other action or inaction or any exercise or nonexercise of any
right, remedy or power with respect to the Obligations (including any
settlement, compromise or other adjustment with respect to the Obligations) or
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any Operative Document) to which
the Broad River Lessee is a party, (v) without limiting Section 3.6(b) hereof,
any merger or consolidation of the Broad River Lessee or the Guarantor into or
with any other Person, or any sale, assignment, conveyance, lease, transfer or
other disposition of all or substantially all of the assets or properties of
the Broad River Lessee or the Guarantor, or any change in the structure of the
Broad River Lessee or in the ownership of the Broad River Lessee by the
Guarantor, (vi) any default, misrepresentation, negligence, misconduct or other
action or inaction of any kind by any Beneficiary, the Indenture Trustee or any
other Person under or in connection with any Operative Document or any other
agreement relating to this Guaranty, (vii) any action or inaction by any
Beneficiary as contemplated in Section 5 of this Guaranty; (viii) any
invalidity, irregularity or unenforceability of all or part of the Obligations
or of any security therefor; (ix) any change in the manner, place, timing or
schedule of payment or performance of, or in any other term of, all or any of
the Obligations; (x) whether the Guarantor is related or unrelated to the Broad
River Lessee, (xi) the assignment by the Owner Lessor of its rights and
interests hereunder, under the Facility Lease or under any other Operative
Document or the FILOT Lease in accordance with the Operative Documents and the
FILOT Lease (or the genuineness, validity, legality or enforceability of the
obligations of the Owner Lessor under the Collateral Trust Indenture) and (xii)
any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                      7
<PAGE>
          (vi) The Broad River Lessee is an indirect, wholly-owned subsidiary of
     the Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents or the
     FILOT Lease. There has been no material adverse change in the financial
     condition of the Guarantor and its Consolidated Subsidiaries since the date
     of the audited financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                      8
<PAGE>
     provided; provided, that no representation or warranty is made with regard
     to (i) any projections or other forward-looking statements provided by or
     on behalf of the Guarantor, or (ii) the descriptions of the Operative
     Documents or the FILOT Lease or the tax consequences to beneficial owners
     of Certificates; provided, however, each of the Beneficiaries acknowledges
     and agrees that (i) Calpine has heretofore provided to the Appraiser,
     solely in order to assist the Appraiser in connection with the preparation
     of the appraisal to be delivered by the Appraiser to certain of the
     Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Arizona energy market and (3)
     information passed along from other Persons and (ii) that the Broad River
     Lessee does not make any representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                      9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act.  In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d).  Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto.  Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the Broad River Lessee to any other Person, without the prior
written consent of the Owner Lessor, the Owner Participant and, so long as the
Lien of the Collateral Trust Indenture has not been terminated or discharged,
the Indenture Trustee and the Pass Through Trustee (it being agreed and
understood that a consolidation with or merger of the Guarantor into, or a sale
by the Guarantor of all or substantially all of its assets to, another Person
in accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the Broad River Lessee for the purposes
of this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof.  Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the Broad River Lessee
(provided that following such transfer the Guarantor shall continue to own at
least a majority of the Ownership Interest in the Broad River Lessee) without
the consent of the Owner Lessor, the Owner Participant, the Indenture Trustee,
the Pass Through Trustee or any other Transaction Party if the following
conditions have been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     Guarantor shall reaffirm in writing all of its obligations hereunder in a
     manner reasonably satisfactory to the Owner Participant, such obligations
     of the Guarantor shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the Broad River Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the Broad River Lessee shall have paid, at no after-tax cost to
     such parties, all reasonable and documented out-of-pocket expenses
     (including reasonable attorneys' fees and expenses) of the Owner Lessor,
     the Owner Participant, the Indenture Trustee, the Lease Indenture Company
     and the Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                      12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or indirectly,
at the time of such original incurrence of such Lien under this clause (2) any
operating properties or assets, securing Indebtedness Incurred to finance the
exploration, drilling, development, construction or purchase of or by, or
repairs, improvements or additions to, property or assets of any Restricted
Subsidiary that does not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, which Liens may
include Liens on the Capital Stock of one or more Restricted Subsidiaries that
do not, directly or indirectly, own any operating properties or assets at the
time of such original incurrence of such Lien, provided, however, that the
Indebtedness secured by any such Lien may not be issued more than 365 days after
the later of the exploration, drilling, development, completion of construction,
purchase, repair, improvement, addition or commencement of full commercial
operation of the property or assets being so financed; (b) Liens existing on the
date hereof (other than Liens relating to Indebtedness or other obligations
being repaid or Liens that are otherwise extinguished with the proceeds of the
offering of the Certificates); (c) Liens on property, assets or shares of stock
of a Person at the time such Person becomes a Subsidiary; provided, however,
that any such Lien may not extend to any other property or assets owned by the
Guarantor or any Restricted Subsidiary; (d) Liens on property or assets at the
time the Guarantor or a Subsidiary acquires the property or asset, including any
acquisition by means of a merger or consolidation with or into the Guarantor or
a Subsidiary; provided, however, that such Liens are not incurred in connection
with, or in contemplation of, such merger or consolidation; and provided,
further, that the Lien may not extend to any other property or asset owned by
the Guarantor or any Restricted Subsidiary; (e) Liens securing Indebtedness or
other obligations of a Subsidiary owing to the Guarantor or a Restricted
Subsidiary or of the Guarantor owing to a Subsidiary; (f) Liens incurred on
assets that are the subject of a Capitalized Lease Obligation to which the
Guarantor or a Subsidiary is a party, which shall include, Liens on the stock or
other ownership interest in one or more Restricted Subsidiaries leasing such
assets; (g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements or
additions to such property or assets and Liens on the stock or other ownership
interest in one or more Restricted Subsidiaries beneficially owning such
property or assets) and (y) the amount of the Indebtedness secured by such Lien
at such time (or, if the amount that may be realized in respect of such Lien is
limited, by contract or otherwise, such limited lesser amount) is not increased
(other than by an amount necessary to pay fees and expenses, including premiums,
related to the refinancing, refunding, extension, renewal or replacement of such
Indebtedness); (h) Liens by which the Obligations are secured equally and
ratably with other Indebtedness pursuant to this Section 3.5; in any such case
without effectively providing that the Obligations shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured; provided, however, that the Guarantor or a
Restricted Subsidiary may Incur other Liens to secure outstanding Indebtedness
as long as the sum of (x) the lesser of (A) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to this proviso (or, if the

                                      13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                      14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b) Upon the consummation of such transaction described in Section
     3.6(a), the resulting, surviving or succeeding entity, if other than the
     Guarantor, shall succeed to, and be substituted for, and may exercise every
     right and power and shall perform every obligation of, the Guarantor under
     this Guaranty and each other Calpine Document, and from and after the
     effective date and time of the consummation of such transfer, the Guarantor
     shall be released from all obligations accruing hereunder other than those
     accruing prior to such effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the Broad River Lessee
under the Participation Agreement) the Pass Through Trustee (for the benefit of
the Certificateholders) and the Pass Through Company, in each case, together
with their respective permitted successors and assigns (and with respect to
clause (ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the Broad River Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the Broad River Lessee is
obligated to indemnify a particular Beneficiary (or any Affiliate, agent
director, officer, or employee thereof) in accordance with Section 9 of the
Participation Agreement, then such Beneficiary (or such Affiliate, agent,
director, officer or employee) shall be the sole and

                                      15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect.  Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant.  Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
Broad River Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt.  Upon repayment of such new Lease Debt, or compliance with the
terms thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect.  Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                      16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
Broad River Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Broad River Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Broad River Lessee to such Beneficiary
regardless of what liabilities or liabilities of the Broad River Lessee remain
unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the Broad
River Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document or
the FILOT Lease, or the failure of any Beneficiary to exercise any rights or
remedies hereunder in accordance with the provisions hereof or under any other
Operative Document or the FILOT Lease, shall not in any way adversely affect
the ability of any other Beneficiary to exercise its rights or remedies
hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (BROAD RIVER (BR-4))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the Broad River Lessee or
any other Person, or as a result of the appointment of a custodian,
interviewer, receiver, trustee, or other officer with similar powers with
respect to the Guarantor or the Broad River Lessee or any other Person or any
substantial part of the property of the Guarantor or the Broad River Lessee or
such other Person, all as if such payments had not been made.

                                      17
<PAGE>
SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the Broad River Lessee under the Facility
Lease shall fail to make any payment with respect to Periodic Rent or the
Termination Value (including the Equity Portion of Termination Value and Debt
Portion of Termination Value) when due and payable under such Facility Lease or
this Guaranty within five (5) days after the same shall become due thereunder;
or

          (b)   the Guarantor or the Broad River Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the Broad River Lessee and the Guarantor of
written notice of such failure by the Broad River Lessee and/or the Guarantor,
as applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of Broad River Lessee ownership), 3.6 (Guarantor
merger) or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the Broad River Lessee under any of the Operative Documents or the FILOT Lease,
30 days after receipt by the Guarantor of written notice thereof from the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee; provided, however, if such condition cannot be remedied within such
30-day period, then the period within which to remedy such condition shall be
extended up to an additional 180 days, so long as the Guarantor diligently
pursues such remedy and such condition is reasonably capable of being remedied
within such additional 180-day period, and (2) with respect to any other
obligation, covenant or agreement hereunder, 30 days after receipt by the
Guarantor of written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of

                                      18
<PAGE>
any portion of the principal under any such instrument or instruments, and such
unpaid portion exceeds $50,000,000 (or its foreign currency equivalent)
individually or in the aggregate and is not paid, or such default is not cured
or waived, within any grace period applicable thereto, unless such Indebtedness
is discharged within 30 days of the Guarantor or a Restricted Subsidiary
becoming aware of such default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the Broad
River Lessee under any Operative

                                      19
<PAGE>
Document to demand prompt payment thereof, or performance thereof, by the
Guarantor immediately upon any failure of the Broad River Lessee to pay or
perform the same when it has become due (and, for the avoidance of doubt,
without regard to the existence of any cure or grace period before such failure
by the Broad River Lessee becomes a Lease Event of Default); provided, however,
notwithstanding the foregoing, no Lease Event of Default under Section 16(m)
and no remedies under the Facility Lease may be exercised until a Calpine
Guaranty Event of Default has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof.  Each and every remedy of the Beneficiaries shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy now or hereafter existing at law or in equity.  At the option of
each Beneficiary and upon notice to the Guarantor, the Guarantor may be joined
in any action or proceeding commenced by such Beneficiary against the Broad
River Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the Broad River
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the Broad River Lessee and the Guarantor owing to
any of the Beneficiaries (or any other party) under the Operative Documents
shall have been paid in full.  If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose.  If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

                                      20
<PAGE>
          (a) Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or otherwise, now or hereafter in effect, to
preserve any rights against the Guarantor hereunder, including, without
limitation, any demand, proof or notice of non-payment of any Obligation; (iii)
any right to the enforcement, assertion or exercise of any right, remedy, power
or privilege under or in respect of the Facility Lease (or under or in respect
of any other agreement including any Operative Document); (iv) notice of
acceptance of this Guaranty, demand, protest, presentment, notice of default and
any requirement of diligence; (v) any requirement to exhaust any remedies or to
mitigate any damages resulting from default by the Broad River Lessee or any
Person under the Facility Lease (or under any other agreement including any
Operative Document); and (vi) any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse against the
Guarantor, other than satisfaction in full of the Obligations.

          (b) This Guaranty is a continuing one and all of the Obligations shall
be conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Beneficiary in exercising any right, power or privilege
hereunder and no course of dealing among the Guarantor, any Beneficiary or the
Broad River Lessee shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Beneficiary would otherwise have. No notice to or demand on the Guarantor in any
case shall entitle the Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Beneficiary to any other or further action in any circumstances without notice
or demand.

          (c) If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b) any
settlement or compromise of any such claim effected by such Beneficiary with any
such claimant (including the Broad River Lessee), then and in such event the
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon it, notwithstanding any revocation hereof or the
cancellation of the Facility Lease or other instrument evidencing any liability
of the Broad River Lessee, and the Guarantor shall be and remain liable to the
aforesaid Beneficiaries hereunder for the amount so repaid by or recovered from
such Beneficiary to the same extent as if such amount had never originally been
received by any such Beneficiary.

          Section 7.5. Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

                                      21
<PAGE>
          Section 7.6. Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

SECTION 8.   MISCELLANEOUS

          Section 8.1. Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by the
Guarantor and consented to by the Beneficiaries.

          Section 8.2. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of creating
a written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, without limitation, by overnight mail or courier
service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon transmission
thereof, provided such transmission is promptly confirmed by either of the
methods set forth in clauses (a) or (b) above, in each case addressed to the
Guarantor hereto at its address set forth below or at such other address as such
party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA  95113

     Facsimile No.:   (408) 975-4648
     Telephone No.:   (408) 995-5115
     Attention:  General Counsel

          Section 8.3. Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4. Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood and
agreed that a consolidation with or merger of the Guarantor into, or the sale of
all or substantially all of its assets to, another Person in accordance with
Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor may
the Guarantor transfer or assign a majority (or more) of the Ownership Interest
in the Broad River Lessee.

          (b) Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
Broad River

                                      22
<PAGE>
Lessee to a single third party, provided that the Guarantor assigns this
Guaranty to such third party (whereupon the Guarantor shall be released from
all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the Broad River Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the Broad River Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv)   neither the transferee nor any Affiliate of the
     transferee shall be involved in any material litigation with the Owner
     Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the Broad River Lessee under the Operative
     Documents and the FILOT Lease shall remain in full force and effect, the
     transferee shall assume all the obligations of the Guarantor under the
     Operative Documents pursuant to the Guarantor Assignment and Assumption
     Agreement and such Operative Documents as so assumed shall remain in full
     force and effect, and any guaranty of such transferee's obligations
     pursuant to this Section 8.4 shall be in a form satisfactory to the Owner
     Participant (it being acknowledged and agreed that any such guaranty which
     shall be in form and substance substantially similar to this Guaranty shall
     be deemed to be satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

                                      23
<PAGE>
          Section 8.5.   Governing Law. This Guaranty shall be in all
respects governed by and construed in accordance with the laws of the State of
New York, including all matters of construction, validity and performance
(without giving effect to the conflicts of laws provisions, other than New York
General Obligations Law Section 5-1401).

          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only.  This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents and the FILOT
Lease have been made available to its principal executive officers and such
officers are familiar with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise,
whether by payment of principal or interest or otherwise and whether by the
Broad River Lessee or others (including the Guarantor), with respect to any of
the Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other

                                      24
<PAGE>
Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the Beneficiaries
hereunder or their successors or assigns; (ii) hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court, or in such federal court; and (iii) to the extent
permitted by Applicable Law, hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction
of the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Guaranty, the other Operative Documents, or the subject
matter hereof or thereof may not be enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents.  The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

                                      25
<PAGE>
          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be returned by any Beneficiary
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Broad River Lessee or otherwise, all as though such payment had not been
made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
Broad River Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the Broad River Lessee
to pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations
of the Guarantor hereunder shall rank pari passu with all other senior
unsecured indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                      26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                     CALPINE CORPORATION,
                                     as Guarantor


                                     By:_______________________________________
                                        Name:
                                        Title:
<PAGE>
                                     BROAD RIVER OL-4, LLC,
                                     a Delaware limited liability company


                                     By:_______________________________________
                                        Name:
                                        Title:
<PAGE>
                                     SBR OP-4, LLC,
                                     a Delaware limited liability company


                                     By:_______________________________________
                                        Name:
                                        Title:
<PAGE>
                                     STATE STREET BANK AND TRUST
                                     COMPANY, National Association, not in its
                                     individual capacity but solely as Indenture
                                     Trustee


                                     By:_______________________________________
                                        Name:
                                        Title:

<PAGE>

                                     STATE STREET BANK AND TRUST
                                     COMPANY, National Association, not in its
                                     individual capacity but solely as Pass
                                     Through Trustee


                                     By:_______________________________________
                                        Name:
                                        Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.35
<SEQUENCE>38
<FILENAME>f80168ex4-22_35.txt
<DESCRIPTION>EXHIBIT 4.22.35
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.35


===============================================================================


             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-1)



                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                      ROCKGEN OL-1, LLC, as Owner Lessor,


                      SBR OP-1, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                                ROCKGEN PROJECT


===============================================================================
<PAGE>
             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-1)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-1), dated as
of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), ROCKGEN
OL-1, LLC, a Delaware limited liability company, as Owner Lessor, SBR OP-1,
LLC, a Delaware limited liability company, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, RockGen Energy LLC (the "RockGen Lessee") is an indirect
wholly-owned subsidiary of the Guarantor;

          WHEREAS, the RockGen Lessee is a party to the Participation
Agreement (RG-1) dated as of October 18, 2001 (the "Participation Agreement"),
among the RockGen Lessee, Wells Fargo Bank Northwest, National Association, not
in its individual capacity except as expressly provided in the Participation
Agreement, but solely as Lessor Manager, RockGen OL-1, LLC, as Owner Lessor,
the Guarantor, SBR OP-1, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as
Indenture Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as expressly
provided in the Participation Agreement, but solely as Pass Through Trustee;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-1) Facility Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Lease"), providing for the Owner
Lessor's leasing an undivided interest of the RockGen Facility to the RockGen
Lessee as contemplated therein;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-1) Facility Site Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Site Lease"), providing for the
Owner Lessor's leasing an undivided interest in the Facility Site to the
RockGen Lessee as contemplated therein;

                                        1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the
RockGen Lessee entering into the Facility Lease, the Facility Site Lease and
the other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                        2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                        3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the RockGen Lessee of all of the
RockGen Lessee's obligations under the Operative Documents to which it is a
party, including, without limitation, but without duplication, (1) the RockGen
Lessee's obligation to make Periodic Rent, Supplemental Rent and other payments
(in accordance with the terms of the Operative Documents) to the Owner Lessor,
(2) the RockGen Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents under and in accordance with the Facility Lease,
(3) without duplication of the preceding clause (2), the RockGen Lessee's
obligation to pay the Equity Portion of Periodic Rent and the Equity Portion of
Termination Value to the Owner Lessor, (4) the RockGen Lessee's obligation to
make indemnity payments when due in accordance with the terms of the
Participation Agreement and the Tax Indemnity Agreement, (5) the RockGen
Lessee's obligation, pursuant to Section 3.3 of the Facility Lease, to pay as
Supplemental Rent an amount equal to (A) interest at the applicable Overdue
Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this Section
2.1(a), not paid when due and (B) any Make-Whole Amount to the extent then due
and payable by the Owner Lessor to the Certificateholders pursuant to the
Participation Agreement, the Facility Lease or any other Operative Document to
which the RockGen Lessee is a party and (6) the RockGen Lessee's obligation to
make any and all other payments, and perform all other covenants and
agreements, when due under and in accordance with the terms of the Operative
Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the RockGen Lessee's obligations under the Facility Lease or any other
Operative Documents. The Guarantor agrees that it shall make such payment
notwithstanding the fact that the RockGen Lessee may have a defense to the
payment of any such amounts. The Guarantor's obligations in this Section 2.1(b)
are direct and primary obligations (and not obligations of a guarantor or
surety) of the Guarantor to the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor), which shall not be affected in any way by the
provisions of Section 2.1(a) above or any payments under any other Operative
Documents of any amounts until the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor) have received full payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against the Guarantor for the payment of the
Termination Value (including without limitation all

                                        4
<PAGE>
amounts the Guarantor is obligated to pay under Section 2.1(b) hereof under the
circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the RockGen Lessee to
perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents, the Guarantor agrees to
cause such performance or observance to be done, and in the case of any failure
by the RockGen Lessee to make such payment as and when the same shall become
due and payable (by acceleration or otherwise), the Guarantor hereby agrees to
make such payment (and, in addition, such further amounts, if any, as shall be
sufficient to cover the costs and expenses of collection hereunder) as and when
such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the RockGen Lessee and
shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document) or the lack of power or authority of the RockGen Lessee to enter into
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any other Operative Document) to
which the RockGen Lessee is a party, or any substitution, release or exchange
of any other guaranty of, or agreement with respect to, or any other security
for, any of the Obligations (including any settlement, compromise or other
adjustment with respect to the Obligations) or any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor and shall not be subject to any right of
set-off, recoupment or counterclaim and is in no way conditioned or contingent
upon any attempt to collect from the RockGen Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without

                                        5
<PAGE>
limiting the generality of the foregoing, the Guarantor shall have no right to
terminate this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, other than upon full payment and satisfaction and
performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
RockGen Lessee is a party, any release, extension or renewal of the RockGen
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the RockGen Lessee is a party or by which it is
bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the RockGen Lessee's or any Beneficiary's interest in
the Participation Agreement, the Facility Lease or any other Operative Document
in accordance with the terms thereof, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect to
the RockGen Lessee, Owner Lessor, Owner Participant or any other Person,
including, without limitation, termination of the Facility Lease and the
operation of Section 502(b)(6) of the Bankruptcy Code in connection therewith,
(iii) any furnishing or acceptance of additional security or any exchange,
substitution, surrender or release of any security, (iv) any waiver, consent or
other action or inaction or any exercise or nonexercise of any right, remedy or
power with respect to the Obligations (including any settlement, compromise or
other adjustment with respect to the Obligations) or any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any Operative Document) to which the RockGen Lessee is a
party, (v) without limiting Section 3.6(b) hereof, any merger or consolidation
of the RockGen Lessee or the Guarantor into or with any other Person, or any
sale, assignment, conveyance, lease, transfer or other disposition of all or
substantially all of the assets or properties of the RockGen Lessee or the
Guarantor, or any change in the structure of the RockGen Lessee or in the
ownership of the RockGen Lessee by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any Beneficiary, the Indenture Trustee or any other Person under or in
connection with any Operative Document or any other agreement relating to this
Guaranty, (vii) any action or inaction by any Beneficiary as contemplated in
Section 5 of this Guaranty; (viii) any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor;
(ix) any change in the manner, place, timing or schedule of payment or
performance of, or in any other term of, all or any of the Obligations; (x)
whether the Guarantor is related or unrelated to the RockGen Lessee, (xi) the
assignment by the Owner Lessor of its rights and interests hereunder, under the
Facility Lease or under any other Operative Document in accordance with the
Operative Documents (or the genuineness, validity, legality or enforceability
of the obligations of the Owner Lessor under the Collateral Trust Indenture)
and (xii) any other circumstance whatsoever.

                                        6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                        7
<PAGE>
          (vi) The RockGen Lessee is an indirect, wholly-owned subsidiary of the
     Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents. There
     has been no material adverse change in the financial condition of the
     Guarantor and its Consolidated Subsidiaries since the date of the audited
     financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                        8
<PAGE>
     provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Guarantor, or (ii) the descriptions of
     the Operative Documents or the tax consequences to beneficial owners of
     Certificates; provided, however, each of the Beneficiaries acknowledges
     and agrees that (i) Calpine has heretofore provided to the Appraiser,
     solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Arizona energy market and (3)
     information passed along from other Persons and (ii) that the RockGen
     Lessee does not make any representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                        9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                        10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor, the
Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the RockGen Lessee to any other Person, without the prior written
consent of the Owner Lessor, the Owner Participant and, so long as the Lien of
the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee (it being agreed and understood
that a consolidation with or merger of the Guarantor into, or a sale by the
Guarantor of all or substantially all of its assets to, another Person in
accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the RockGen Lessee for the purposes of
this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the RockGen Lessee (provided
that following such transfer the Guarantor shall continue to own at least a
majority of the Ownership Interest in the RockGen Lessee) without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee, the Pass
Through Trustee or any other Transaction Party if the following conditions have
been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the Guarantor shall
     reaffirm in writing all of its obligations hereunder in a manner reasonably
     satisfactory to the Owner Participant, such obligations of the Guarantor
     shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the RockGen Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                        11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the RockGen Lessee shall have paid, at no after-tax cost to such
     parties, all reasonable and documented out-of-pocket expenses (including
     reasonable attorneys' fees and expenses) of the Owner Lessor, the Owner
     Participant, the Indenture Trustee, the Lease Indenture Company and the
     Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                        12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                        13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                        14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be,
     may provide in the alternative, either (A) a letter of credit from a L/C
     Bank with at least either (1) an A rating from S&P or (2) an A2 rating
     from Moody's, in either case, covering the Equity Portion of Termination
     Value from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction
     of the rating condition in either clause (x) or clause (y) above,
     provided that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the RockGen Lessee under
the Participation Agreement) the Pass Through Trustee (for the benefit of the
Certificateholders) and the Pass Through Company, in each case, together with
their respective permitted successors and assigns (and with respect to clause
(ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the RockGen Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the RockGen Lessee is obligated to
indemnify a particular Beneficiary (or any Affiliate, agent director, officer,
or employee thereof) in accordance with Section 9 of the Participation
Agreement, then such Beneficiary (or such Affiliate, agent, director, officer
or employee) shall be the sole and

                                        15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
RockGen Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                        16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
RockGen Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the RockGen Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the RockGen Lessee to such Beneficiary regardless
of what liabilities or liabilities of the RockGen Lessee remain unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the RockGen
Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document, or
the failure of any Beneficiary to exercise any rights or remedies hereunder in
accordance with the provisions hereof or under any other Operative Document,
shall not in any way adversely affect the ability of any other Beneficiary to
exercise its rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (ROCKGEN (RG-1))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the RockGen Lessee or any
other Person, or as a result of the appointment of a custodian, interviewer,
receiver, trustee, or other officer with similar powers with respect to the
Guarantor or the RockGen Lessee or any other Person or any substantial part of
the property of the Guarantor or the RockGen Lessee or such other Person, all
as if such payments had not been made.

SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

                                        17
<PAGE>
          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the RockGen Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b)   the Guarantor or the RockGen Lessee shall fail to make any other
amount payable under any Operative Document after the same shall become due
thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the RockGen Lessee and the Guarantor of written
notice of such failure by the RockGen Lessee and/or the Guarantor, as
applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of RockGen Lessee ownership), 3.6 (Guarantor merger)
or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the RockGen Lessee under any of the Operative Documents, 30 days after receipt
by the Guarantor of written notice thereof from the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee; provided,
however, if such condition cannot be remedied within such 30-day period, then
the period within which to remedy such condition shall be extended up to an
additional 180 days, so long as the Guarantor diligently pursues such remedy
and such condition is reasonably capable of being remedied within such
additional 180-day period, and (2) with respect to any other obligation,
covenant or agreement hereunder, 30 days after receipt by the Guarantor of
written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of any portion of the principal under any such instrument or
instruments, and such unpaid portion exceeds $50,000,000 (or its foreign
currency equivalent) individually or in the

                                        18
<PAGE>
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Guarantor or a Restricted Subsidiary becoming aware of such
default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the RockGen
Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the
RockGen Lessee to pay or perform the same when it

                                        19
<PAGE>
has become due (and, for the avoidance of doubt, without regard to the
existence of any cure or grace period before such failure by the RockGen Lessee
becomes a Lease Event of Default); provided, however, notwithstanding the
foregoing, no Lease Event of Default under Section 16(m) and no remedies under
the Facility Lease may be exercised until a Calpine Guaranty Event of Default
has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section 7.1,
each Beneficiary shall be entitled to (a) all rights and remedies to which it
may be entitled hereunder or at law, in equity or by statute and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the RockGen
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the RockGen
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or thereunder or otherwise, until all of the Obligations and all
other obligations of the RockGen Lessee and the Guarantor owing to any of the
Beneficiaries (or any other party) under the Operative Documents shall have
been paid in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations and such other
obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Obligation or other
obligation is payable and shall forthwith be paid to such Beneficiary to be
credited and applied to such Obligation or other obligation, whether matured or
unmatured, in accordance with the terms of the Operative Document under which
such Obligation or other obligation arose. If (i) the Guarantor shall make
payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

          (a)   Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or

                                        20
<PAGE>
otherwise, now or hereafter in effect, to preserve any rights against the
Guarantor hereunder, including, without limitation, any demand, proof or notice
of non-payment of any Obligation; (iii) any right to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Facility Lease (or under or in respect of any other agreement including any
Operative Document); (iv) notice of acceptance of this Guaranty, demand,
protest, presentment, notice of default and any requirement of diligence; (v)
any requirement to exhaust any remedies or to mitigate any damages resulting
from default by the RockGen Lessee or any Person under the Facility Lease (or
under any other agreement including any Operative Document); and (vi) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety, or which might
otherwise limit recourse against the Guarantor, other than satisfaction in full
of the Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the RockGen Lessee shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the RockGen Lessee), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the RockGen Lessee, and the Guarantor shall be and remain liable
to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

                                        21
<PAGE>
SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.: (408) 975-4648
     Telephone No.: (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the RockGen Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
RockGen Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

                                        22
<PAGE>
          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the RockGen Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the RockGen Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the transferee shall
     assume all the obligations of the Guarantor under the Operative Documents
     pursuant to the Guarantor Assignment and Assumption Agreement and such
     Operative Documents as so assumed shall remain in full force and effect,
     and any guaranty of such transferee's obligations pursuant to this Section
     8.4 shall be in a form satisfactory to the Owner Participant (it being
     acknowledged and agreed that any such guaranty which shall be in form and
     substance substantially similar to this Guaranty shall be deemed to be
     satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

                                        23
<PAGE>
          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this Guaranty
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof. Section
8.8. Further Assurances. The Guarantor will promptly and duly execute and
deliver such further documents as may be reasonably requested by the Owner
Lessor, all as may be reasonably necessary to affirm the Guarantor's
obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been dated
as of the date first above written for convenience only. This Guaranty shall be
effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the RockGen
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other Operative Documents, or the
subject matter hereof or thereof or any of the transactions contemplated hereby
or thereby brought by any of the Beneficiaries hereunder or their successors or
assigns; (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court,
or in such federal court; and (iii) to the extent permitted by Applicable Law,
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, or

                                        24
<PAGE>
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty, the other
Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be

                                       25
<PAGE>
returned by any Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the RockGen Lessee or otherwise, all as though
such payment had not been made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
RockGen Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the RockGen Lessee to
pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                    CALPINE CORPORATION,
                                    as Guarantor


                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                    ROCKGEN OL-1, LLC,
                                    a Delaware limited liability company


                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                    SBR OP-1, LLC,
                                    a Delaware limited liability company


                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Indenture
                                    Trustee


                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Pass
                                    Through Trustee


                                    By:_________________________________________
                                       Name:
                                       Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.36
<SEQUENCE>39
<FILENAME>f80168ex4-22_36.txt
<DESCRIPTION>EXHIBIT 4.22.36
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.36


===============================================================================


             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-2)


                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,

                                 as Guarantor,

                                      and

                      ROCKGEN OL-2, LLC, as Owner Lessor,


                      SBR OP-2, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                                ROCKGEN PROJECT


===============================================================================
<PAGE>
             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-2)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-2), dated as
of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), ROCKGEN
OL-2, LLC, a Delaware limited liability company, as Owner Lessor, SBR OP-2,
LLC, a Delaware limited liability company, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, RockGen Energy LLC (the "RockGen Lessee") is an indirect
wholly-owned subsidiary of the Guarantor;

          WHEREAS, the RockGen Lessee is a party to the Participation Agreement
(RG-2) dated as of October 18, 2001 (the "Participation Agreement"), among the
RockGen Lessee, Wells Fargo Bank Northwest, National Association, not in its
individual capacity except as expressly provided in the Participation
Agreement, but solely as Lessor Manager, RockGen OL-2, LLC, as Owner Lessor,
the Guarantor, SBR OP-2, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as
Indenture Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as expressly
provided in the Participation Agreement, but solely as Pass Through Trustee;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-2) Facility Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Lease"), providing for the Owner
Lessor's leasing an undivided interest of the RockGen Facility to the RockGen
Lessee as contemplated therein;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-2) Facility Site Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Site Lease"), providing for the
Owner Lessor's leasing an undivided interest in the Facility Site to the
RockGen Lessee as contemplated therein;

                                       1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the
RockGen Lessee entering into the Facility Lease, the Facility Site Lease and
the other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i) the
principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                       2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                       3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the RockGen Lessee of all of the
RockGen Lessee's obligations under the Operative Documents to which it is a
party, including, without limitation, but without duplication, (1) the RockGen
Lessee's obligation to make Periodic Rent, Supplemental Rent and other payments
(in accordance with the terms of the Operative Documents) to the Owner Lessor,
(2) the RockGen Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents under and in accordance with the Facility Lease,
(3) without duplication of the preceding clause (2), the RockGen Lessee's
obligation to pay the Equity Portion of Periodic Rent and the Equity Portion of
Termination Value to the Owner Lessor, (4) the RockGen Lessee's obligation to
make indemnity payments when due in accordance with the terms of the
Participation Agreement and the Tax Indemnity Agreement, (5) the RockGen
Lessee's obligation, pursuant to Section 3.3 of the Facility Lease, to pay as
Supplemental Rent an amount equal to (A) interest at the applicable Overdue
Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this Section
2.1(a), not paid when due and (B) any Make-Whole Amount to the extent then due
and payable by the Owner Lessor to the Certificateholders pursuant to the
Participation Agreement, the Facility Lease or any other Operative Document to
which the RockGen Lessee is a party and (6) the RockGen Lessee's obligation to
make any and all other payments, and perform all other covenants and
agreements, when due under and in accordance with the terms of the Operative
Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the RockGen Lessee's obligations under the Facility Lease or any other
Operative Documents. The Guarantor agrees that it shall make such payment
notwithstanding the fact that the RockGen Lessee may have a defense to the
payment of any such amounts. The Guarantor's obligations in this Section 2.1(b)
are direct and primary obligations (and not obligations of a guarantor or
surety) of the Guarantor to the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor), which shall not be affected in any way by the
provisions of Section 2.1(a) above or any payments under any other Operative
Documents of any amounts until the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor) have received full payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against the Guarantor for the payment of the
Termination Value (including without limitation all

                                       4
<PAGE>
amounts the Guarantor is obligated to pay under Section 2.1(b) hereof under the
circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the RockGen Lessee to
perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents, the Guarantor agrees to
cause such performance or observance to be done, and in the case of any failure
by the RockGen Lessee to make such payment as and when the same shall become
due and payable (by acceleration or otherwise), the Guarantor hereby agrees to
make such payment (and, in addition, such further amounts, if any, as shall be
sufficient to cover the costs and expenses of collection hereunder) as and when
such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above, this
Section 2.2, and in Section 8.15 below are referred to in this Guaranty as the
"Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the RockGen Lessee and
shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document) or the lack of power or authority of the RockGen Lessee to enter into
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any other Operative Document) to
which the RockGen Lessee is a party, or any substitution, release or exchange
of any other guaranty of, or agreement with respect to, or any other security
for, any of the Obligations (including any settlement, compromise or other
adjustment with respect to the Obligations) or any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor and shall not be subject to any right of
set-off, recoupment or counterclaim and is in no way conditioned or contingent
upon any attempt to collect from the RockGen Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without

                                       5
<PAGE>
limiting the generality of the foregoing, the Guarantor shall have no right to
terminate this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, other than upon full payment and satisfaction and
performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
RockGen Lessee is a party, any release, extension or renewal of the RockGen
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the RockGen Lessee is a party or by which it is
bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the RockGen Lessee's or any Beneficiary's interest in
the Participation Agreement, the Facility Lease or any other Operative Document
in accordance with the terms thereof, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect to
the RockGen Lessee, Owner Lessor, Owner Participant or any other Person,
including, without limitation, termination of the Facility Lease and the
operation of Section 502(b)(6) of the Bankruptcy Code in connection therewith,
(iii) any furnishing or acceptance of additional security or any exchange,
substitution, surrender or release of any security, (iv) any waiver, consent or
other action or inaction or any exercise or nonexercise of any right, remedy or
power with respect to the Obligations (including any settlement, compromise or
other adjustment with respect to the Obligations) or any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any Operative Document) to which the RockGen Lessee is a
party, (v) without limiting Section 3.6(b) hereof, any merger or consolidation
of the RockGen Lessee or the Guarantor into or with any other Person, or any
sale, assignment, conveyance, lease, transfer or other disposition of all or
substantially all of the assets or properties of the RockGen Lessee or the
Guarantor, or any change in the structure of the RockGen Lessee or in the
ownership of the RockGen Lessee by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any Beneficiary, the Indenture Trustee or any other Person under or in
connection with any Operative Document or any other agreement relating to this
Guaranty, (vii) any action or inaction by any Beneficiary as contemplated in
Section 5 of this Guaranty; (viii) any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor;
(ix) any change in the manner, place, timing or schedule of payment or
performance of, or in any other term of, all or any of the Obligations; (x)
whether the Guarantor is related or unrelated to the RockGen Lessee, (xi) the
assignment by the Owner Lessor of its rights and interests hereunder, under the
Facility Lease or under any other Operative Document in accordance with the
Operative Documents (or the genuineness, validity, legality or enforceability
of the obligations of the Owner Lessor under the Collateral Trust Indenture)
and (xii) any other circumstance whatsoever.

                                       6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                       7
<PAGE>
          (vi) The RockGen Lessee is an indirect, wholly-owned subsidiary of the
     Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents. There
     has been no material adverse change in the financial condition of the
     Guarantor and its Consolidated Subsidiaries since the date of the audited
     financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                       8
<PAGE>
     provided; provided, that no representation or warranty is made with regard
     to (i) any projections or other forward-looking statements provided by or
     on behalf of the Guarantor, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, however, each of the Beneficiaries acknowledges and agrees that
     (i) Calpine has heretofore provided to the Appraiser, solely in order to
     assist the Appraiser in connection with the preparation of the appraisal
     to be delivered by the Appraiser to certain of the Transaction Parties at
     the Closing, certain (1) general market information, (2) information about
     the Arizona energy market and (3) information passed along from other
     Persons and (ii) that the RockGen Lessee does not make any representation
     or warranty whatsoever with respect to the information described in clause
     (i) above except to the extent expressly set forth in Section 4(b) of the
     Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                       9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d).  Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                       10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the RockGen Lessee to any other Person, without the prior written
consent of the Owner Lessor, the Owner Participant and, so long as the Lien of
the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee (it being agreed and understood
that a consolidation with or merger of the Guarantor into, or a sale by the
Guarantor of all or substantially all of its assets to, another Person in
accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the RockGen Lessee for the purposes of
this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the RockGen Lessee (provided
that following such transfer the Guarantor shall continue to own at least a
majority of the Ownership Interest in the RockGen Lessee) without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee, the Pass
Through Trustee or any other Transaction Party if the following conditions have
been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the Guarantor shall
     reaffirm in writing all of its obligations hereunder in a manner reasonably
     satisfactory to the Owner Participant, such obligations of the Guarantor
     shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the RockGen Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                       11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the RockGen Lessee shall have paid, at no after-tax cost to such
     parties, all reasonable and documented out-of-pocket expenses (including
     reasonable attorneys' fees and expenses) of the Owner Lessor, the Owner
     Participant, the Indenture Trustee, the Lease Indenture Company and the
     Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                       12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                       13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                       14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B)  alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the RockGen Lessee under
the Participation Agreement) the Pass Through Trustee (for the benefit of the
Certificateholders) and the Pass Through Company, in each case, together with
their respective permitted successors and assigns (and with respect to clause
(ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the RockGen Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the RockGen Lessee is obligated to
indemnify a particular Beneficiary (or any Affiliate, agent director, officer,
or employee thereof) in accordance with Section 9 of the Participation
Agreement, then such Beneficiary (or such Affiliate, agent, director, officer
or employee) shall be the sole and

                                       15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
RockGen Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the
terms thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                       16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
RockGen Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the RockGen Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the RockGen Lessee to such Beneficiary regardless
of what liabilities or liabilities of the RockGen Lessee remain unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the RockGen
Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document, or
the failure of any Beneficiary to exercise any rights or remedies hereunder in
accordance with the provisions hereof or under any other Operative Document,
shall not in any way adversely affect the ability of any other Beneficiary to
exercise its rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (ROCKGEN (RG-2))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the RockGen Lessee or any
other Person, or as a result of the appointment of a custodian, interviewer,
receiver, trustee, or other officer with similar powers with respect to the
Guarantor or the RockGen Lessee or any other Person or any substantial part of
the property of the Guarantor or the RockGen Lessee or such other Person, all
as if such payments had not been made.

SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

                                       17
<PAGE>
          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the RockGen Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b)   the Guarantor or the RockGen Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the RockGen Lessee and the Guarantor of written
notice of such failure by the RockGen Lessee and/or the Guarantor, as
applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of RockGen Lessee ownership), 3.6 (Guarantor merger)
or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the RockGen Lessee under any of the Operative Documents, 30 days after receipt
by the Guarantor of written notice thereof from the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee; provided,
however, if such condition cannot be remedied within such 30-day period, then
the period within which to remedy such condition shall be extended up to an
additional 180 days, so long as the Guarantor diligently pursues such remedy
and such condition is reasonably capable of being remedied within such
additional 180-day period, and (2) with respect to any other obligation,
covenant or agreement hereunder, 30 days after receipt by the Guarantor of
written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of any portion of the principal under any such instrument or
instruments, and such unpaid portion exceeds $50,000,000 (or its foreign
currency equivalent) individually or in the

                                       18
<PAGE>
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Guarantor or a Restricted Subsidiary becoming aware of such
default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the RockGen
Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the
RockGen Lessee to pay or perform the same when it

                                       19
<PAGE>
has become due (and, for the avoidance of doubt, without regard to the
existence of any cure or grace period before such failure by the RockGen Lessee
becomes a Lease Event of Default); provided, however, notwithstanding the
foregoing, no Lease Event of Default under Section 16(m) and no remedies under
the Facility Lease may be exercised until a Calpine Guaranty Event of Default
has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof. Each and every remedy of the Beneficiaries shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy now or hereafter existing at law or in equity. At the option of
each Beneficiary and upon notice to the Guarantor, the Guarantor may be joined
in any action or proceeding commenced by such Beneficiary against the RockGen
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the RockGen
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the RockGen Lessee and the Guarantor owing to any
of the Beneficiaries (or any other party) under the Operative Documents shall
have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

          (a)   Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or

                                       20
<PAGE>
otherwise, now or hereafter in effect, to preserve any rights against the
Guarantor hereunder, including, without limitation, any demand, proof or notice
of non-payment of any Obligation; (iii) any right to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Facility Lease (or under or in respect of any other agreement including any
Operative Document); (iv) notice of acceptance of this Guaranty, demand,
protest, presentment, notice of default and any requirement of diligence; (v)
any requirement to exhaust any remedies or to mitigate any damages resulting
from default by the RockGen Lessee or any Person under the Facility Lease (or
under any other agreement including any Operative Document); and (vi) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety, or which might
otherwise limit recourse against the Guarantor, other than satisfaction in full
of the Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the RockGen Lessee shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the RockGen Lessee), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the RockGen Lessee, and the Guarantor shall be and remain liable
to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

                                       21
<PAGE>
SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA  95113

     Facsimile No.:  (408) 975-4648
     Telephone No.:  (408) 995-5115
     Attention:  General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the RockGen Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
RockGen Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

                                       22
<PAGE>
          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the RockGen Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the RockGen Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the transferee shall
     assume all the obligations of the Guarantor under the Operative Documents
     pursuant to the Guarantor Assignment and Assumption Agreement and such
     Operative Documents as so assumed shall remain in full force and effect,
     and any guaranty of such transferee's obligations pursuant to this Section
     8.4 shall be in a form satisfactory to the Owner Participant (it being
     acknowledged and agreed that any such guaranty which shall be in form and
     substance substantially similar to this Guaranty shall be deemed to be
     satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

                                       23
<PAGE>
          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the RockGen
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other Operative
Documents, or the subject matter hereof or thereof or any of the transactions
contemplated hereby or thereby brought by any of the Beneficiaries hereunder or
their successors or assigns; (ii) hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State court, or in such federal court; and (iii) to the extent permitted
by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, or

                                       24
<PAGE>
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty, the other
Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be

                                       25
<PAGE>
returned by any Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the RockGen Lessee or otherwise, all as though
such payment had not been made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
RockGen Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the RockGen Lessee to
pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                          [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                        CALPINE CORPORATION,
                                        as Guarantor


                                        By:____________________________________
                                           Name:
                                           Title:
<PAGE>
                                        ROCKGEN OL-2, LLC,
                                        a Delaware limited liability company


                                        By:____________________________________
                                           Name:
                                           Title:
<PAGE>
                                        SBR OP-2, LLC,
                                        a Delaware limited liability company


                                        By:____________________________________
                                           Name:
                                           Title:
<PAGE>
                                        STATE STREET BANK AND TRUST
                                        COMPANY, National Association, not in
                                        its individual capacity but solely as
                                        Indenture Trustee


                                        By:____________________________________
                                           Name:
                                           Title:
<PAGE>
                                        STATE STREET BANK AND TRUST
                                        COMPANY, National Association, not in
                                        its individual capacity but solely as
                                        Pass Through Trustee


                                        By:____________________________________
                                           Name:
                                           Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.37
<SEQUENCE>40
<FILENAME>f80168ex4-22_37.txt
<DESCRIPTION>EXHIBIT 4.22.37
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.37


===============================================================================

             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-3)


                          Dated as of October 18, 2001


                                      among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                      ROCKGEN OL-3, LLC, as Owner Lessor,


                      SBR OP-3, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                                ROCKGEN PROJECT

===============================================================================
<PAGE>
             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-3)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-3), dated as
of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), ROCKGEN
OL-3, LLC, a Delaware limited liability company, as Owner Lessor, SBR OP-3,
LLC, a Delaware limited liability company, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, RockGen Energy LLC (the "RockGen Lessee") is an indirect
wholly-owned subsidiary of the Guarantor;

          WHEREAS, the RockGen Lessee is a party to the Participation Agreement
(RG-3) dated as of October 18, 2001 (the "Participation Agreement"), among the
RockGen Lessee, Wells Fargo Bank Northwest, National Association, not in its
individual capacity except as expressly provided in the Participation
Agreement, but solely as Lessor Manager, RockGen OL-3, LLC, as Owner Lessor,
the Guarantor, SBR OP-3, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as
Indenture Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as expressly
provided in the Participation Agreement, but solely as Pass Through Trustee;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-3) Facility Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Lease"), providing for the Owner
Lessor's leasing an undivided interest of the RockGen Facility to the RockGen
Lessee as contemplated therein;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-3) Facility Site Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Site Lease"), providing for the
Owner Lessor's leasing an undivided interest in the Facility Site to the
RockGen Lessee as contemplated therein;

                                        1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the
RockGen Lessee entering into the Facility Lease, the Facility Site Lease and
the other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement, this
Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1. DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth on Appendix A to the Participation Agreement, provided that if a term
that is defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                      2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a)   The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                      3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the RockGen Lessee of all of the
RockGen Lessee's obligations under the Operative Documents to which it is a
party, including, without limitation, but without duplication, (1) the RockGen
Lessee's obligation to make Periodic Rent, Supplemental Rent and other payments
(in accordance with the terms of the Operative Documents) to the Owner Lessor,
(2) the RockGen Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents under and in accordance with the Facility Lease,
(3) without duplication of the preceding clause (2), the RockGen Lessee's
obligation to pay the Equity Portion of Periodic Rent and the Equity Portion of
Termination Value to the Owner Lessor, (4) the RockGen Lessee's obligation to
make indemnity payments when due in accordance with the terms of the
Participation Agreement and the Tax Indemnity Agreement, (5) the RockGen
Lessee's obligation, pursuant to Section 3.3 of the Facility Lease, to pay as
Supplemental Rent an amount equal to (A) interest at the applicable Overdue
Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this Section
2.1(a), not paid when due and (B) any Make-Whole Amount to the extent then due
and payable by the Owner Lessor to the Certificateholders pursuant to the
Participation Agreement, the Facility Lease or any other Operative Document to
which the RockGen Lessee is a party and (6) the RockGen Lessee's obligation to
make any and all other payments, and perform all other covenants and
agreements, when due under and in accordance with the terms of the Operative
Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the RockGen Lessee's obligations under the Facility Lease or any other
Operative Documents. The Guarantor agrees that it shall make such payment
notwithstanding the fact that the RockGen Lessee may have a defense to the
payment of any such amounts. The Guarantor's obligations in this Section 2.1(b)
are direct and primary obligations (and not obligations of a guarantor or
surety) of the Guarantor to the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor), which shall not be affected in any way by the
provisions of Section 2.1(a) above or any payments under any other Operative
Documents of any amounts until the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor) have received full payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against the Guarantor for the payment of the
Termination Value (including without limitation all

                                      4
<PAGE>
amounts the Guarantor is obligated to pay under Section 2.1(b) hereof under the
circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the RockGen Lessee to
perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents, the Guarantor agrees to
cause such performance or observance to be done, and in the case of any failure
by the RockGen Lessee to make such payment as and when the same shall become
due and payable (by acceleration or otherwise), the Guarantor hereby agrees to
make such payment (and, in addition, such further amounts, if any, as shall be
sufficient to cover the costs and expenses of collection hereunder) as and when
such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above, this
Section 2.2, and in Section 8.15 below are referred to in this Guaranty as the
"Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the RockGen Lessee and
shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document) or the lack of power or authority of the RockGen Lessee to enter into
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any other Operative Document) to
which the RockGen Lessee is a party, or any substitution, release or exchange
of any other guaranty of, or agreement with respect to, or any other security
for, any of the Obligations (including any settlement, compromise or other
adjustment with respect to the Obligations) or any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor and shall not be subject to any right of
set-off, recoupment or counterclaim and is in no way conditioned or contingent
upon any attempt to collect from the RockGen Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without

                                      5
<PAGE>
limiting the generality of the foregoing, the Guarantor shall have no right to
terminate this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, other than upon full payment and satisfaction and
performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
RockGen Lessee is a party, any release, extension or renewal of the RockGen
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the RockGen Lessee is a party or by which it is
bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the RockGen Lessee's or any Beneficiary's interest in
the Participation Agreement, the Facility Lease or any other Operative Document
in accordance with the terms thereof, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect to
the RockGen Lessee, Owner Lessor, Owner Participant or any other Person,
including, without limitation, termination of the Facility Lease and the
operation of Section 502(b)(6) of the Bankruptcy Code in connection therewith,
(iii) any furnishing or acceptance of additional security or any exchange,
substitution, surrender or release of any security, (iv) any waiver, consent or
other action or inaction or any exercise or nonexercise of any right, remedy or
power with respect to the Obligations (including any settlement, compromise or
other adjustment with respect to the Obligations) or any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any Operative Document) to which the RockGen Lessee is a
party, (v) without limiting Section 3.6(b) hereof, any merger or consolidation
of the RockGen Lessee or the Guarantor into or with any other Person, or any
sale, assignment, conveyance, lease, transfer or other disposition of all or
substantially all of the assets or properties of the RockGen Lessee or the
Guarantor, or any change in the structure of the RockGen Lessee or in the
ownership of the RockGen Lessee by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any Beneficiary, the Indenture Trustee or any other Person under or in
connection with any Operative Document or any other agreement relating to this
Guaranty, (vii) any action or inaction by any Beneficiary as contemplated in
Section 5 of this Guaranty; (viii) any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor;
(ix) any change in the manner, place, timing or schedule of payment or
performance of, or in any other term of, all or any of the Obligations; (x)
whether the Guarantor is related or unrelated to the RockGen Lessee, (xi) the
assignment by the Owner Lessor of its rights and interests hereunder, under the
Facility Lease or under any other Operative Document in accordance with the
Operative Documents (or the genuineness, validity, legality or enforceability
of the obligations of the Owner Lessor under the Collateral Trust Indenture)
and (xii) any other circumstance whatsoever.

                                      6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                      7
<PAGE>
          (vi) The RockGen Lessee is an indirect, wholly-owned subsidiary of the
     Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii) The Guarantor is not in default with respect to any judgment,
     order, writ, injunction, decree, award, rule or regulation of any court,
     arbitrator or governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, which, either, separately or in the
     aggregate, would result in any material adverse change in any of its
     businesses, operations, prospects or assets, or in its condition, financial
     or otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents. There
     has been no material adverse change in the financial condition of the
     Guarantor and its Consolidated Subsidiaries since the date of the audited
     financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                      8
<PAGE>
     provided; provided, that no representation or warranty is made with regard
     to (i) any projections or other forward-looking statements provided by or
     on behalf of the Guarantor, or (ii) the descriptions of the Operative
     Documents or the tax consequences to beneficial owners of Certificates;
     provided, however, each of the Beneficiaries acknowledges and agrees that
     (i) Calpine has heretofore provided to the Appraiser, solely in order to
     assist the Appraiser in connection with the preparation of the appraisal
     to be delivered by the Appraiser to certain of the Transaction Parties at
     the Closing, certain (1) general market information, (2) information about
     the Arizona energy market and (3) information passed along from other
     Persons and (ii) that the RockGen Lessee does not make any representation
     or warranty whatsoever with respect to the information described in clause
     (i) above except to the extent expressly set forth in Section 4(b) of the
     Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and after
the date hereof and until this Guaranty is terminated pursuant to the terms
hereof the Guarantor shall:

                                      9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                      10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the RockGen Lessee to any other Person, without the prior written
consent of the Owner Lessor, the Owner Participant and, so long as the Lien of
the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee (it being agreed and understood
that a consolidation with or merger of the Guarantor into, or a sale by the
Guarantor of all or substantially all of its assets to, another Person in
accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the RockGen Lessee for the purposes of
this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the RockGen Lessee (provided
that following such transfer the Guarantor shall continue to own at least a
majority of the Ownership Interest in the RockGen Lessee) without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee, the Pass
Through Trustee or any other Transaction Party if the following conditions have
been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the Guarantor shall
     reaffirm in writing all of its obligations hereunder in a manner reasonably
     satisfactory to the Owner Participant, such obligations of the Guarantor
     shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the RockGen Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                      11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the RockGen Lessee shall have paid, at no after-tax cost to such
     parties, all reasonable and documented out-of-pocket expenses (including
     reasonable attorneys' fees and expenses) of the Owner Lessor, the Owner
     Participant, the Indenture Trustee, the Lease Indenture Company and the
     Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                       12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred
to finance the exploration, drilling, development, construction or purchase of
or by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien,
which Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date hereof (other than Liens relating to
Indebtedness or other obligations being repaid or Liens that are otherwise
extinguished with the proceeds of the offering of the Certificates); (c) Liens
on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not extend to
any other property or assets owned by the Guarantor or any Restricted
Subsidiary; (d) Liens on property or assets at the time the Guarantor or a
Subsidiary acquires the property or asset, including any acquisition by means
of a merger or consolidation with or into the Guarantor or a Subsidiary;
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such merger or consolidation; and provided, further, that the
Lien may not extend to any other property or asset owned by the Guarantor or
any Restricted Subsidiary; (e) Liens securing Indebtedness or other obligations
of a Subsidiary owing to the Guarantor or a Restricted Subsidiary or of the
Guarantor owing to a Subsidiary; (f) Liens incurred on assets that are the
subject of a Capitalized Lease Obligation to which the Guarantor or a
Subsidiary is a party, which shall include, Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements
or additions to such property or assets and Liens on the stock or other
ownership interest in one or more Restricted Subsidiaries beneficially owning
such property or assets) and (y) the amount of the Indebtedness secured by such
Lien at such time (or, if the amount that may be realized in respect of such
Lien is limited, by contract or otherwise, such limited lesser amount) is not
increased (other than by an amount necessary to pay fees and expenses,
including premiums, related to the refinancing, refunding, extension, renewal
or replacement of such Indebtedness); (h) Liens by which the Obligations are
secured equally and ratably with other Indebtedness pursuant to this Section
3.5; in any such case without effectively providing that the Obligations shall
be secured equally and ratably with (or prior to) the obligations so secured
for so long as such obligations are so secured; provided, however, that the
Guarantor or a Restricted Subsidiary may Incur other Liens to secure
outstanding Indebtedness as long as the sum of (x) the lesser of (A) the amount
of outstanding Indebtedness secured by Liens Incurred pursuant to this proviso
(or, if the

                                       13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a)   The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                       14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be, may
     provide in the alternative, either (A) a letter of credit from a L/C Bank
     with at least either (1) an A rating from S&P or (2) an A2 rating from
     Moody's, in either case, covering the Equity Portion of Termination Value
     from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction of
     the rating condition in either clause (x) or clause (y) above, provided
     that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in Section
3.6(a), the resulting, surviving or succeeding entity, if other than the
Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4. BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the RockGen Lessee under
the Participation Agreement) the Pass Through Trustee (for the benefit of the
Certificateholders) and the Pass Through Company, in each case, together with
their respective permitted successors and assigns (and with respect to clause
(ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the RockGen Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the RockGen Lessee is obligated to
indemnify a particular Beneficiary (or any Affiliate, agent director, officer,
or employee thereof) in accordance with Section 9 of the Participation
Agreement, then such Beneficiary (or such Affiliate, agent, director, officer
or employee) shall be the sole and

                                       15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
RockGen Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5. BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                       16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
RockGen Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the RockGen Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the RockGen Lessee to such Beneficiary regardless
of what liabilities or liabilities of the RockGen Lessee remain unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the RockGen
Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document, or
the failure of any Beneficiary to exercise any rights or remedies hereunder in
accordance with the provisions hereof or under any other Operative Document,
shall not in any way adversely affect the ability of any other Beneficiary to
exercise its rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (ROCKGEN (RG-3))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the RockGen Lessee or any
other Person, or as a result of the appointment of a custodian, interviewer,
receiver, trustee, or other officer with similar powers with respect to the
Guarantor or the RockGen Lessee or any other Person or any substantial part of
the property of the Guarantor or the RockGen Lessee or such other Person, all
as if such payments had not been made.

SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

                                      17
<PAGE>
          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the RockGen Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b)   the Guarantor or the RockGen Lessee shall fail to make any
other amount payable under any Operative Document after the same shall become
due thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the RockGen Lessee and the Guarantor of written
notice of such failure by the RockGen Lessee and/or the Guarantor, as
applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of RockGen Lessee ownership), 3.6 (Guarantor merger)
or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the RockGen Lessee under any of the Operative Documents, 30 days after receipt
by the Guarantor of written notice thereof from the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee; provided,
however, if such condition cannot be remedied within such 30-day period, then
the period within which to remedy such condition shall be extended up to an
additional 180 days, so long as the Guarantor diligently pursues such remedy
and such condition is reasonably capable of being remedied within such
additional 180-day period, and (2) with respect to any other obligation,
covenant or agreement hereunder, 30 days after receipt by the Guarantor of
written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of any portion of the principal under any such instrument or
instruments, and such unpaid portion exceeds $50,000,000 (or its foreign
currency equivalent) individually or in the

                                       18
<PAGE>
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Guarantor or a Restricted Subsidiary becoming aware of such
default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the RockGen
Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the
RockGen Lessee to pay or perform the same when it

                                      19
<PAGE>
has become due (and, for the avoidance of doubt, without regard to the
existence of any cure or grace period before such failure by the RockGen Lessee
becomes a Lease Event of Default); provided, however, notwithstanding the
foregoing, no Lease Event of Default under Section 16(m) and no remedies under
the Facility Lease may be exercised until a Calpine Guaranty Event of Default
has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section
7.1, each Beneficiary shall be entitled to (a) all rights and remedies to which
it may be entitled hereunder or at law, in equity or by statute and may proceed
by appropriate court action to enforce the terms hereof and to recover damages
for the breach hereof. Each and every remedy of the Beneficiaries shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy now or hereafter existing at law or in equity. At the option of
each Beneficiary and upon notice to the Guarantor, the Guarantor may be joined
in any action or proceeding commenced by such Beneficiary against the RockGen
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the RockGen
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or thereunder or otherwise, until all of the Obligations
and all other obligations of the RockGen Lessee and the Guarantor owing to any
of the Beneficiaries (or any other party) under the Operative Documents shall
have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations and
such other obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Beneficiary to whom such Obligation or
other obligation is payable and shall forthwith be paid to such Beneficiary to
be credited and applied to such Obligation or other obligation, whether matured
or unmatured, in accordance with the terms of the Operative Document under
which such Obligation or other obligation arose. If (i) the Guarantor shall
make payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

          (a)   Without limiting the last sentence of Section 7.1, the
Guarantor hereby unconditionally waives (i) notice of any of the matters
referred to in the second sentence of Section 2.3 hereof; (ii) all notices
which may be required by statute, rule of law or

                                      20
<PAGE>
otherwise, now or hereafter in effect, to preserve any rights against the
Guarantor hereunder, including, without limitation, any demand, proof or notice
of non-payment of any Obligation; (iii) any right to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Facility Lease (or under or in respect of any other agreement including any
Operative Document); (iv) notice of acceptance of this Guaranty, demand,
protest, presentment, notice of default and any requirement of diligence; (v)
any requirement to exhaust any remedies or to mitigate any damages resulting
from default by the RockGen Lessee or any Person under the Facility Lease (or
under any other agreement including any Operative Document); and (vi) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety, or which might
otherwise limit recourse against the Guarantor, other than satisfaction in full
of the Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the RockGen Lessee shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the RockGen Lessee), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the RockGen Lessee, and the Guarantor shall be and remain liable
to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

                                      21
<PAGE>
SECTION 8. MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement
or condition of this Guaranty may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively
or prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA  95113

     Facsimile No.:  (408) 975-4648
     Telephone No.:  (408) 995-5115
     Attention:  General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a)   Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the RockGen Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
RockGen Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

                                      22
<PAGE>
          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the RockGen Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the RockGen Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the transferee shall
     assume all the obligations of the Guarantor under the Operative Documents
     pursuant to the Guarantor Assignment and Assumption Agreement and such
     Operative Documents as so assumed shall remain in full force and effect,
     and any guaranty of such transferee's obligations pursuant to this Section
     8.4 shall be in a form satisfactory to the Owner Participant (it being
     acknowledged and agreed that any such guaranty which shall be in form and
     substance substantially similar to this Guaranty shall be deemed to be
     satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

                                      23
<PAGE>
          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this
Guaranty are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions
hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been
dated as of the date first above written for convenience only. This Guaranty
shall be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the RockGen
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of the Guarantor to remove to the
United States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Guaranty, the Facility Lease, the other Operative
Documents, or the subject matter hereof or thereof or any of the transactions
contemplated hereby or thereby brought by any of the Beneficiaries hereunder or
their successors or assigns; (ii) hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State court, or in such federal court; and (iii) to the extent permitted
by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, or

                                       24
<PAGE>
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty, the other
Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be

                                       25
<PAGE>
returned by any Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the RockGen Lessee or otherwise, all as though
such payment had not been made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
RockGen Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the RockGen Lessee to
pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.


                           [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                        CALPINE CORPORATION,
                                        as Guarantor


                                        By:___________________________________
                                           Name:
                                           Title:
<PAGE>
                                        ROCKGEN OL-3, LLC,
                                        a Delaware limited liability company


                                        By: __________________________________
                                            Name:
                                            Title:
<PAGE>
                                        SBR OP-3, LLC,
                                        a Delaware limited liability company


                                        By: __________________________________
                                            Name:
                                            Title:
<PAGE>
                                        STATE STREET BANK AND TRUST
                                        COMPANY, National Association, not in
                                        its individual capacity but solely as
                                        Indenture Trustee


                                        By: __________________________________
                                            Name:
                                            Title:
<PAGE>
                                        STATE STREET BANK AND TRUST COMPANY,
                                        National Association, not in its
                                        individual capacity but solely as Pass
                                        Through Trustee


                                        By: __________________________________
                                            Name:
                                            Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22.38
<SEQUENCE>41
<FILENAME>f80168ex4-22_38.txt
<DESCRIPTION>EXHIBIT 4.22.38
<TEXT>
<PAGE>
                                                                 Exhibit 4.22.38


===============================================================================

              CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4)


                          Dated as of October 18, 2001


                                     among


                              CALPINE CORPORATION,

                                  as Guarantor,

                                      and

                      ROCKGEN OL-4, LLC, as Owner Lessor,


                      SBR OP-4, LLC, as Owner Participant,


              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
      not in its individual capacity but solely as Indenture Trustee, and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                              NATIONAL ASSOCIATION,
       not in its individual capacity but solely as Pass Through Trustee,

                                as Beneficiaries


                                ROCKGEN PROJECT

===============================================================================
<PAGE>
             CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4)

          This CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4), dated as
of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), ROCKGEN
OL-4, LLC, a Delaware limited liability company, as Owner Lessor, SBR OP-4,
LLC, a Delaware limited liability company, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).

                                  WITNESSETH:

          WHEREAS, RockGen Energy LLC (the "RockGen Lessee") is an indirect
wholly-owned subsidiary of the Guarantor;

          WHEREAS, the RockGen Lessee is a party to the Participation
Agreement (RG-4) dated as of October 18, 2001 (the "Participation Agreement"),
among the RockGen Lessee, Wells Fargo Bank Northwest, National Association, not
in its individual capacity except as expressly provided in the Participation
Agreement, but solely as Lessor Manager, RockGen OL-4, LLC, as Owner Lessor,
the Guarantor, SBR OP-4, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as
Indenture Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as expressly
provided in the Participation Agreement, but solely as Pass Through Trustee;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-4) Facility Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Lease"), providing for the Owner
Lessor's leasing an undivided interest of the RockGen Facility to the RockGen
Lessee as contemplated therein;

          WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-4) Facility Site Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Site Lease"), providing for the
Owner Lessor's leasing an undivided interest in the Facility Site to the
RockGen Lessee as contemplated therein;

                                        1
<PAGE>
          WHEREAS, the Guarantor will obtain benefits as a result of the
RockGen Lessee entering into the Facility Lease, the Facility Site Lease and
the other transactions contemplated by the Participation Agreement; and

          WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.

          NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:

SECTION 1.   DEFINITIONS

          (a)   Capitalized terms used in this Guaranty, including the recitals,
and not otherwise defined herein shall have the respective meanings set forth
on Appendix A to the Participation Agreement, provided that if a term that is
defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.

          (b)   As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:

               "2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.

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

               "Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations

                                        2
<PAGE>
(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability determined by such Person's board of directors, in good faith, as, in
light of the facts and circumstances existing at the time, reasonably likely to
be Incurred upon the occurrence of the contingency giving rise to such
obligation.

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

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

               "Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.

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

SECTION 2.   GUARANTEED AND PAYMENT OBLIGATIONS

          Section 2.1.   (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the

                                        3
<PAGE>
due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the RockGen Lessee of all of the
RockGen Lessee's obligations under the Operative Documents to which it is a
party, including, without limitation, but without duplication, (1) the RockGen
Lessee's obligation to make Periodic Rent, Supplemental Rent and other payments
(in accordance with the terms of the Operative Documents) to the Owner Lessor,
(2) the RockGen Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents under and in accordance with the Facility Lease,
(3) without duplication of the preceding clause (2), the RockGen Lessee's
obligation to pay the Equity Portion of Periodic Rent and the Equity Portion of
Termination Value to the Owner Lessor, (4) the RockGen Lessee's obligation to
make indemnity payments when due in accordance with the terms of the
Participation Agreement and the Tax Indemnity Agreement, (5) the RockGen
Lessee's obligation, pursuant to Section 3.3 of the Facility Lease, to pay as
Supplemental Rent an amount equal to (A) interest at the applicable Overdue
Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this Section
2.1(a), not paid when due and (B) any Make-Whole Amount to the extent then due
and payable by the Owner Lessor to the Certificateholders pursuant to the
Participation Agreement, the Facility Lease or any other Operative Document to
which the RockGen Lessee is a party and (6) the RockGen Lessee's obligation to
make any and all other payments, and perform all other covenants and
agreements, when due under and in accordance with the terms of the Operative
Documents.

          (b)   The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the RockGen Lessee's obligations under the Facility Lease or any other
Operative Documents. The Guarantor agrees that it shall make such payment
notwithstanding the fact that the RockGen Lessee may have a defense to the
payment of any such amounts. The Guarantor's obligations in this Section 2.1(b)
are direct and primary obligations (and not obligations of a guarantor or
surety) of the Guarantor to the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor), which shall not be affected in any way by the
provisions of Section 2.1(a) above or any payments under any other Operative
Documents of any amounts until the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor) have received full payment of such amounts.

          (c)   The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against the Guarantor for the payment of the
Termination Value (including without limitation all

                                        4
<PAGE>
amounts the Guarantor is obligated to pay under Section 2.1(b) hereof under the
circumstances specified therein).

          (d)   Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).

          Section 2.2.   In the case of any failure by the RockGen Lessee to
perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents, the Guarantor agrees to
cause such performance or observance to be done, and in the case of any failure
by the RockGen Lessee to make such payment as and when the same shall become
due and payable (by acceleration or otherwise), the Guarantor hereby agrees to
make such payment (and, in addition, such further amounts, if any, as shall be
sufficient to cover the costs and expenses of collection hereunder) as and when
such payment is due and payable.

          All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."

          Section 2.3.   The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the RockGen Lessee and
shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document) or the lack of power or authority of the RockGen Lessee to enter into
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any other Operative Document) to
which the RockGen Lessee is a party, or any substitution, release or exchange
of any other guaranty of, or agreement with respect to, or any other security
for, any of the Obligations (including any settlement, compromise or other
adjustment with respect to the Obligations) or any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor and shall not be subject to any right of
set-off, recoupment or counterclaim and is in no way conditioned or contingent
upon any attempt to collect from the RockGen Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without

                                        5
<PAGE>
limiting the generality of the foregoing, the Guarantor shall have no right to
terminate this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, other than upon full payment and satisfaction and
performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
RockGen Lessee is a party, any release, extension or renewal of the RockGen
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the RockGen Lessee is a party or by which it is
bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the RockGen Lessee's or any Beneficiary's interest in
the Participation Agreement, the Facility Lease or any other Operative Document
in accordance with the terms thereof, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect to
the RockGen Lessee, Owner Lessor, Owner Participant or any other Person,
including, without limitation, termination of the Facility Lease and the
operation of Section 502(b)(6) of the Bankruptcy Code in connection therewith,
(iii) any furnishing or acceptance of additional security or any exchange,
substitution, surrender or release of any security, (iv) any waiver, consent or
other action or inaction or any exercise or nonexercise of any right, remedy or
power with respect to the Obligations (including any settlement, compromise or
other adjustment with respect to the Obligations) or any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any Operative Document) to which the RockGen Lessee is a
party, (v) without limiting Section 3.6(b) hereof, any merger or consolidation
of the RockGen Lessee or the Guarantor into or with any other Person, or any
sale, assignment, conveyance, lease, transfer or other disposition of all or
substantially all of the assets or properties of the RockGen Lessee or the
Guarantor, or any change in the structure of the RockGen Lessee or in the
ownership of the RockGen Lessee by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any Beneficiary, the Indenture Trustee or any other Person under or in
connection with any Operative Document or any other agreement relating to this
Guaranty, (vii) any action or inaction by any Beneficiary as contemplated in
Section 5 of this Guaranty; (viii) any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor;
(ix) any change in the manner, place, timing or schedule of payment or
performance of, or in any other term of, all or any of the Obligations; (x)
whether the Guarantor is related or unrelated to the RockGen Lessee, (xi) the
assignment by the Owner Lessor of its rights and interests hereunder, under the
Facility Lease or under any other Operative Document in accordance with the
Operative Documents (or the genuineness, validity, legality or enforceability
of the obligations of the Owner Lessor under the Collateral Trust Indenture)
and (xii) any other circumstance whatsoever.

                                        6
<PAGE>
SECTION 3.   GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 3.1.   The Guarantor represents and warrants, as of the date
hereof:

          (i) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the State of Delaware and has full power,
     authority and the legal right to execute, deliver and perform the terms of
     this Guaranty and each Operative Document to which it is a party (together,
     the "Calpine Documents").

          (ii) The execution, delivery and performance by the Guarantor of the
     Calpine Documents have been duly authorized by all necessary corporate
     action. The Calpine Documents constitute legal, valid and binding
     obligations of the Guarantor enforceable against the Guarantor in
     accordance with their respective terms, except as such enforcement may be
     affected by applicable bankruptcy, insolvency, moratorium and other similar
     laws affecting creditors' rights generally and by general principles of
     equity.

          (iii) The execution, delivery and performance of the Calpine Documents
     will not (a) contravene any provision of law, rule or regulation to which
     the Guarantor is subject or any judgment, decree or order applicable to the
     Guarantor, (b) conflict or be inconsistent with or result in any breach of
     any terms, covenants, conditions or provisions of, or constitute a default
     under, or result in the creation or imposition of (or the obligation to
     create or impose) any Lien or other encumbrance upon any of the property or
     assets of the Guarantor pursuant to the terms of any agreement or other
     instrument to which the Guarantor is a party or by which it or its property
     is bound or to which it or its property may be subject, in each case the
     violation of which would have a material adverse effect on the business,
     operations, prospects, properties or assets, or in the condition, financial
     or otherwise, of the Guarantor, or (c) violate or contravene any provision
     of the articles of incorporation or by-laws of the Guarantor.

          (iv) No pending or, to the knowledge of the Guarantor, threatened
     action, suit, investigation or proceedings against the Guarantor before any
     Governmental Entity exists which, if determined adversely to the Guarantor,
     would materially adversely affect the business, operations, prospects,
     properties or assets, or in its condition, financial or otherwise, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (v) No consent from, authorization or approval or other action by, and
     no notice to or filing with, any Person is required for the execution,
     delivery and performance by the Guarantor of the Calpine Documents except
     those which have been given and remain in full force and effect.

                                        7
<PAGE>
          (vi) The RockGen Lessee is an indirect, wholly-owned subsidiary of the
     Guarantor.

          (vii) The Guarantor is not an "investment company" or a company
     controlled by an "investment company" within the meaning of the Investment
     Company Act of 1940.

          (viii)   The Guarantor is not in default with respect to any
     judgment, order, writ, injunction, decree, award, rule or regulation of
     any court, arbitrator or governmental department, commission, board,
     bureau, agency or instrumentality, domestic or foreign, which, either,
     separately or in the aggregate, would result in any material adverse
     change in any of its businesses, operations, prospects or assets, or in
     its condition, financial or otherwise, or its ability to perform its
     obligations under the Calpine Documents.

          (ix) The Guarantor is not a party to any agreement or instrument, or
     subject to any corporate restriction or any judgment, order, writ,
     injunction, decree, award, rule or regulation, which materially adversely
     affects, or in the future may materially adversely affect, its business,
     operations, prospects, properties or assets, or conditions, financial or
     otherwise, or its ability to perform its obligations under the Calpine
     Documents.

          (x) The audited financial statements of the Guarantor and its
     Consolidated Subsidiaries, as of December 31, 2000, reported on by Arthur
     Andersen LLP, copies of which have been delivered to the Indenture Trustee,
     the Pass Through Trustee, the Certificateholders and the Owner Participant,
     are true, complete and correct and fairly present the financial condition
     of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
     The financial statements have been prepared in accordance with GAAP. The
     Guarantor and its Consolidated Subsidiaries do not have any material
     liabilities, direct or contingent, except (a) as are disclosed in such
     financial statements or (b) as arise under the Operative Documents. There
     has been no material adverse change in the financial condition of the
     Guarantor and its Consolidated Subsidiaries since the date of the audited
     financial statements referred to above.

          (xi) All factual information relating to the Guarantor (taken as a
     whole) heretofore or contemporaneously furnished by or on behalf of the
     Guarantor in writing to the Owner Lessor, the Owner Participant, the
     Indenture Trustee, the Pass Through Trustee or the Certificateholders
     (including, without limitation, all such information contained herein, in
     the Participation Agreement and in any preliminary or final offering
     circular distributed in accordance with the terms of the Operative
     Documents) for purposes of or in connection with the Calpine Documents or
     any transaction contemplated therein is true and accurate in all material
     respects on the date as of which such information is dated or certified and
     not incomplete by omitting to state any fact necessary to make such
     information relating to the Guarantor (taken as a whole) not misleading in
     any material respect at such time in light of the circumstances under which
     such information was

                                        8
<PAGE>
     provided; provided, that no representation or warranty is made with
     regard to (i) any projections or other forward-looking statements
     provided by or on behalf of the Guarantor, or (ii) the descriptions of
     the Operative Documents or the tax consequences to beneficial owners of
     Certificates; provided, however, each of the Beneficiaries acknowledges
     and agrees that (i) Calpine has heretofore provided to the Appraiser,
     solely in order to assist the Appraiser in connection with the
     preparation of the appraisal to be delivered by the Appraiser to certain
     of the Transaction Parties at the Closing, certain (1) general market
     information, (2) information about the Arizona energy market and (3)
     information passed along from other Persons and (ii) that the RockGen
     Lessee does not make any representation or warranty whatsoever with
     respect to the information described in clause (i) above except to the
     extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.

          (xii) The Guarantor is in compliance with all applicable statutes,
     regulations and orders of, and all applicable restrictions imposed by, all
     governmental bodies, domestic or foreign, in respect of the conduct of its
     business and the ownership of its property (including applicable statutes,
     regulations, orders and restrictions relating to environmental standards
     and controls), except such noncompliance as would not, in the aggregate,
     have a material adverse effect on the business, operations, property,
     assets or condition (financial or otherwise) of the Guarantor, or the
     Guarantor's ability to perform its obligations under the Calpine Documents.

          (xiii) The Guarantor has filed all tax returns and reports required by
     law to have been filed by it and has paid all taxes and governmental
     charges thereby shown to be owing (other than any such taxes or charges
     which are being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP shall
     have been set aside on its books), except such non-filing or non-payment,
     as the case may be, as would not, in the aggregate, have a material adverse
     effect on the business, operations, property, assets or condition
     (financial or otherwise) of the Guarantor.

          (xiv) No default has occurred under this Guaranty, which default would
     reasonably be expected to result in a material adverse effect on the
     business, operations, assets or condition (financial or otherwise) of the
     Guarantor.

          (xv) In accordance with Section 8.12 hereof and Section 14.14 of the
     Participation Agreement, the Guarantor has validly submitted to the
     jurisdiction of the Supreme Court of the State of New York, New York County
     and the United States District Court for the Southern District of New York.

          Section 3.2.   The Guarantor covenants and agrees that on and
after the date hereof and until this Guaranty is terminated pursuant to the
terms hereof the Guarantor shall:

                                        9
<PAGE>
          (a)   file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act.  In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d).  Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);

          (b)   furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;

          (c)   furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto.  Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the

                                       10
<PAGE>
performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and

          (d)   promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.

     So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.

          Section 3.3.   The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the RockGen Lessee to any other Person, without the prior written
consent of the Owner Lessor, the Owner Participant and, so long as the Lien of
the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee (it being agreed and understood
that a consolidation with or merger of the Guarantor into, or a sale by the
Guarantor of all or substantially all of its assets to, another Person in
accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the RockGen Lessee for the purposes of
this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof.  Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the RockGen Lessee (provided
that following such transfer the Guarantor shall continue to own at least a
majority of the Ownership Interest in the RockGen Lessee) without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee, the Pass
Through Trustee or any other Transaction Party if the following conditions have
been satisfied:

          (i) the Owner Lessor, the Owner Participant and, so long as the Lien
     of the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel to the effect that all regulatory approvals
     required in connection with such transfer have been obtained;

          (ii) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the Guarantor shall
     reaffirm in writing all of its obligations hereunder in a manner reasonably
     satisfactory to the Owner Participant, such obligations of the Guarantor
     shall remain in full force and effect;

          (iii) no Significant Lease Default or Lease Event of Default shall
     have occurred and be continuing at the time of or immediately following
     such transfer;

          (iv) the transfer shall not subject the RockGen Lessee, the Owner
     Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
     Trustee or

                                       11
<PAGE>
     any Certificateholder to regulation under PUHCA or state laws and
     regulations regarding the rate and financial or organizational regulation
     of electric utilities in the affected party's reasonable opinion, nor
     result in a Regulatory Event of Loss; and

          (v) the RockGen Lessee shall have paid, at no after-tax cost to such
     parties, all reasonable and documented out-of-pocket expenses (including
     reasonable attorneys' fees and expenses) of the Owner Lessor, the Owner
     Participant, the Indenture Trustee, the Lease Indenture Company and the
     Pass Through Trustee in connection with such assignment.

          Section 3.4.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.

          Section 3.5.   Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens

                                       12
<PAGE>
incurred by any Restricted Subsidiary that does not own, directly or indirectly,
at the time of such original incurrence of such Lien under this clause (2) any
operating properties or assets, securing Indebtedness Incurred to finance the
exploration, drilling, development, construction or purchase of or by, or
repairs, improvements or additions to, property or assets of any Restricted
Subsidiary that does not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, which Liens may
include Liens on the Capital Stock of one or more Restricted Subsidiaries that
do not, directly or indirectly, own any operating properties or assets at the
time of such original incurrence of such Lien, provided, however, that the
Indebtedness secured by any such Lien may not be issued more than 365 days after
the later of the exploration, drilling, development, completion of construction,
purchase, repair, improvement, addition or commencement of full commercial
operation of the property or assets being so financed; (b) Liens existing on the
date hereof (other than Liens relating to Indebtedness or other obligations
being repaid or Liens that are otherwise extinguished with the proceeds of the
offering of the Certificates); (c) Liens on property, assets or shares of stock
of a Person at the time such Person becomes a Subsidiary; provided, however,
that any such Lien may not extend to any other property or assets owned by the
Guarantor or any Restricted Subsidiary; (d) Liens on property or assets at the
time the Guarantor or a Subsidiary acquires the property or asset, including any
acquisition by means of a merger or consolidation with or into the Guarantor or
a Subsidiary; provided, however, that such Liens are not incurred in connection
with, or in contemplation of, such merger or consolidation; and provided,
further, that the Lien may not extend to any other property or asset owned by
the Guarantor or any Restricted Subsidiary; (e) Liens securing Indebtedness or
other obligations of a Subsidiary owing to the Guarantor or a Restricted
Subsidiary or of the Guarantor owing to a Subsidiary; (f) Liens incurred on
assets that are the subject of a Capitalized Lease Obligation to which the
Guarantor or a Subsidiary is a party, which shall include, Liens on the stock or
other ownership interest in one or more Restricted Subsidiaries leasing such
assets; (g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements or
additions to such property or assets and Liens on the stock or other ownership
interest in one or more Restricted Subsidiaries beneficially owning such
property or assets) and (y) the amount of the Indebtedness secured by such Lien
at such time (or, if the amount that may be realized in respect of such Lien is
limited, by contract or otherwise, such limited lesser amount) is not increased
(other than by an amount necessary to pay fees and expenses, including premiums,
related to the refinancing, refunding, extension, renewal or replacement of such
Indebtedness); (h) Liens by which the Obligations are secured equally and
ratably with other Indebtedness pursuant to this Section 3.5; in any such case
without effectively providing that the Obligations shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured; provided, however, that the Guarantor or a
Restricted Subsidiary may Incur other Liens to secure outstanding Indebtedness
as long as the sum of (x) the lesser of (A) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to this proviso (or, if the

                                       13
<PAGE>
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.

          Section 3.6.   (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,

          (i) no Significant Lease Default or Lease Event of Default shall have
     occurred and be continuing;

          (ii) either (A) the Guarantor shall be the continuing Person, or (B)
     the Person (if other than the Guarantor) formed by such consolidation or
     into which the Guarantor is merged or to which the properties and assets of
     the Guarantor are sold, assigned, conveyed, transferred, disposed of or
     leased as aforesaid shall be an entity organized and existing under the
     laws of the United States or any State thereof or the District of Columbia
     and shall execute and deliver to the Owner Participant, the Owner Lessor
     and, so long as the Lien of the Collateral Trust Indenture shall not have
     been terminated or discharged, the Indenture Trustee and the Pass Through
     Trustee, a Guarantor Assignment and Assumption Agreement; and

          (iii) each of the Owner Participant, the Owner Lessor and, so long as
     the Lien of the Collateral Trust Indenture shall not have been terminated
     or discharged, the Indenture Trustee and the Pass Through Trustee shall
     have received an Officer's Certificate of the Guarantor, the surviving
     entity or the transferee, as the case may be, in form and substance
     reasonably satisfactory to each of such parties, stating that the proposed
     merger, consolidation, assignment, conveyance, transfer, disposition, lease
     or sale, and the Guarantor Assignment and Assumption Agreement complies
     with the terms of this Section 3(a) and, as to legal matters, an Opinion of
     Counsel; and

          (iv) In addition to the conditions set forth in clauses (i) through
     (iii) above, the Guarantor, subject to Section 4, will not consummate any
     such consolidation, merger or sale of all or substantially all of its
     properties or assets unless the long-term unsecured debt of the resulting,
     surviving or succeeding entity shall have a credit rating assigned by the
     Rating Agencies that is not less than the lower of (x) the credit rating of
     the long-term unsecured debt of the Guarantor assigned by the Rating
     Agencies immediately prior to such transaction and (y) a credit rating of
     the long-term unsecured debt of the resulting, surviving

                                       14
<PAGE>
     or succeeding entity assigned by the Rating Agencies that is Investment
     Grade; provided however, the foregoing credit rating condition set forth
     in this paragraph may be waived by the Owner Participant in its sole
     discretion, and provided further, that if such credit rating condition is
     not otherwise satisfied, or waived by the Owner Participant, the
     Guarantor, the surviving entity or the transferee, as the case may be,
     may provide in the alternative, either (A) a letter of credit from a L/C
     Bank with at least either (1) an A rating from S&P or (2) an A2 rating
     from Moody's, in either case, covering the Equity Portion of Termination
     Value from time to time throughout the Lease Term, or (B) alternative or
     additional credit support arrangements which result in the satisfaction
     of the rating condition in either clause (x) or clause (y) above,
     provided that such arrangements contemplated in this sub-clause (B) are
     satisfactory to the Owner Participant and result in the satisfaction of
     such rating condition.

          (b)   Upon the consummation of such transaction described in
Section 3.6(a), the resulting, surviving or succeeding entity, if other than
the Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.

          Section 3.7.   The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.

SECTION 4.   BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS

          The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the RockGen Lessee under
the Participation Agreement) the Pass Through Trustee (for the benefit of the
Certificateholders) and the Pass Through Company, in each case, together with
their respective permitted successors and assigns (and with respect to clause
(ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the RockGen Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the RockGen Lessee is obligated to
indemnify a particular Beneficiary (or any Affiliate, agent director, officer,
or employee thereof) in accordance with Section 9 of the Participation
Agreement, then such Beneficiary (or such Affiliate, agent, director, officer
or employee) shall be the sole and

                                       15
<PAGE>
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect.  Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant.  Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
RockGen Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt.  Upon repayment of such new Lease Debt, or compliance with the
terms thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect.  Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.

SECTION 5.   BENEFICIARIES' RIGHTS

          Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

          (a)   change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;

          (b)   sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;

                                       16
<PAGE>
          (c)   exercise or refrain from exercising any rights against the
RockGen Lessee or others or otherwise act or refrain from acting;

          (d)   settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the RockGen Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;

          (e)   apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the RockGen Lessee to such Beneficiary regardless
of what liabilities or liabilities of the RockGen Lessee remain unpaid;

          (f)   consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or

          (g)   act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the RockGen
Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.

Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document, or
the failure of any Beneficiary to exercise any rights or remedies hereunder in
accordance with the provisions hereof or under any other Operative Document,
shall not in any way adversely affect the ability of any other Beneficiary to
exercise its rights or remedies hereunder.

SECTION 6.   SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (ROCKGEN (RG-4))

          Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the RockGen Lessee or any
other Person, or as a result of the appointment of a custodian, interviewer,
receiver, trustee, or other officer with similar powers with respect to the
Guarantor or the RockGen Lessee or any other Person or any substantial part of
the property of the Guarantor or the RockGen Lessee or such other Person, all
as if such payments had not been made.

SECTION 7.   DEFAULTS; REMEDIES; SUBROGATION

                                       17
<PAGE>
          Section 7.1.   Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):

          (a)   the Guarantor or the RockGen Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or

          (b)   the Guarantor or the RockGen Lessee shall fail to make any other
amount payable under any Operative Document after the same shall become due
thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the RockGen Lessee and the Guarantor of written
notice of such failure by the RockGen Lessee and/or the Guarantor, as
applicable;

          (c)   The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of RockGen Lessee ownership), 3.6 (Guarantor merger)
or 8.4 (assignment of Guaranty) of this Guaranty.

          (d)   the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the RockGen Lessee under any of the Operative Documents, 30 days after receipt
by the Guarantor of written notice thereof from the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee; provided,
however, if such condition cannot be remedied within such 30-day period, then
the period within which to remedy such condition shall be extended up to an
additional 180 days, so long as the Guarantor diligently pursues such remedy
and such condition is reasonably capable of being remedied within such
additional 180-day period, and (2) with respect to any other obligation,
covenant or agreement hereunder, 30 days after receipt by the Guarantor of
written notice thereof;

          (e)   there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of any portion of the principal under any such instrument or
instruments, and such unpaid portion exceeds $50,000,000 (or its foreign
currency equivalent) individually or in the

                                       18
<PAGE>
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Guarantor or a Restricted Subsidiary becoming aware of such
default;

          (f)   the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:

               (i)     commences a voluntary case;

               (ii)    consents to the entry of an order for relief against it
                       in an involuntary case;

               (iii)   consents to the appointment of a Custodian of it or for
                       all or substantially all of its property;

               (iv)    makes a general assignment for the benefit of its
                       creditors; or

               (v)     admits in writing its inability to generally pay its
                       debts as such debts become due;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (g)   an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;

          (h)   any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.

     The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the RockGen
Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the
RockGen Lessee to pay or perform the same when it

                                       19
<PAGE>
has become due (and, for the avoidance of doubt, without regard to the
existence of any cure or grace period before such failure by the RockGen Lessee
becomes a Lease Event of Default); provided, however, notwithstanding the
foregoing, no Lease Event of Default under Section 16(m) and no remedies under
the Facility Lease may be exercised until a Calpine Guaranty Event of Default
has occurred and is continuing.

          Section 7.2.   Remedies. Subject to the last paragraph of Section 7.1,
each Beneficiary shall be entitled to (a) all rights and remedies to which it
may be entitled hereunder or at law, in equity or by statute and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof.  Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity.  At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the RockGen
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the RockGen
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.

          Section 7.3.   Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or thereunder or otherwise, until all of the Obligations and all
other obligations of the RockGen Lessee and the Guarantor owing to any of the
Beneficiaries (or any other party) under the Operative Documents shall have
been paid in full.  If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations and such other
obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Obligation or other
obligation is payable and shall forthwith be paid to such Beneficiary to be
credited and applied to such Obligation or other obligation, whether matured or
unmatured, in accordance with the terms of the Operative Document under which
such Obligation or other obligation arose.  If (i) the Guarantor shall make
payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.

          Section 7.4.   Waiver of Demands, Notices, Etc.

          (a)   Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or

                                       20
<PAGE>
otherwise, now or hereafter in effect, to preserve any rights against the
Guarantor hereunder, including, without limitation, any demand, proof or notice
of non-payment of any Obligation; (iii) any right to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Facility Lease (or under or in respect of any other agreement including any
Operative Document); (iv) notice of acceptance of this Guaranty, demand,
protest, presentment, notice of default and any requirement of diligence; (v)
any requirement to exhaust any remedies or to mitigate any damages resulting
from default by the RockGen Lessee or any Person under the Facility Lease (or
under any other agreement including any Operative Document); and (vi) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety, or which might
otherwise limit recourse against the Guarantor, other than satisfaction in full
of the Obligations.

          (b)   This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon.  No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the RockGen Lessee shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have.  No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.

          (c)   If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the RockGen Lessee), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the RockGen Lessee, and the Guarantor shall be and remain liable
to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.

          Section 7.5.   Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.

          Section 7.6.   Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.

                                       21
<PAGE>
SECTION 8.   MISCELLANEOUS

          Section 8.1.   Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.

          Section 8.2.   Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:

     Calpine Corporation
     50 West San Fernando Street, 5th Floor
     San Jose, CA 95113

     Facsimile No.:  (408) 975-4648
     Telephone No.:  (408) 995-5115
     Attention: General Counsel

          Section 8.3.   Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.

          Section 8.4.   Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the RockGen Lessee.

          (b)   Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
RockGen Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:

                                       22
<PAGE>
          (i) unless the Owner Participant shall have consented to such
     assignment, such transferee, or a party which unconditionally guarantees
     such transferee's obligations under the Operative Documents assigned to
     such transferee (A) shall have significant experience owning or operating
     gas-fired electric generating facilities in the United Sates and (B) shall
     have a tangible net worth of at least $1 billion after giving effect to
     such transfer;

          (ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
     of this Guaranty have been satisfied and, immediately after giving effect
     to such transfer, the transferee shall own at least a majority of the
     Ownership Interest of the RockGen Lessee;

          (iii) such transfer occurs (i) subsequent to the tenth year of the
     Facility Lease Term of the RockGen Lessee and (ii) when the aggregate
     principal amount of the Lessor Notes is less than $50 million;

          (iv) neither the transferee nor any Affiliate of the transferee shall
     be involved in any material litigation with the Owner Participant;

          (v) the Rating Agencies shall have confirmed that after giving effect
     to such transfer, the Certificates (if then outstanding) and the transferee
     (or a party which guarantees such transferee's obligations under the
     Operative Documents assigned to such transferee) shall be rated at least
     Investment Grade (and not be on negative credit watch) by the Rating
     Agencies;

          (vi) all the obligations of the RockGen Lessee under the Operative
     Documents shall remain in full force and effect, the transferee shall
     assume all the obligations of the Guarantor under the Operative Documents
     pursuant to the Guarantor Assignment and Assumption Agreement and such
     Operative Documents as so assumed shall remain in full force and effect,
     and any guaranty of such transferee's obligations pursuant to this Section
     8.4 shall be in a form satisfactory to the Owner Participant (it being
     acknowledged and agreed that any such guaranty which shall be in form and
     substance substantially similar to this Guaranty shall be deemed to be
     satisfactory to the Owner Participant); and

          (vii) the Owner Participant, the Owner Lessor and, so long as the Lien
     on the Collateral Trust Indenture shall not have been terminated or
     discharged, the Indenture Trustee and the Pass Through Trustee shall have
     received an Opinion of Counsel as to the satisfaction of the conditions set
     forth in clause (vi) of this Section 8.4(b).

          Section 8.5.   Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).

                                       23
<PAGE>
          Section 8.6.   Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          Section 8.7.   Headings. The headings of the sections of this Guaranty
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.

          Section 8.8.   Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.

          Section 8.9.   Effectiveness of Guaranty. This Guaranty has been dated
as of the date first above written for convenience only.  This Guaranty shall
be effective on the date of execution and delivery by the Guarantor.

          Section 8.10.   Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.

          Section 8.11.   Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the RockGen
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.

          Section 8.12.   Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.

          (a)   The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other Operative Documents, or the
subject matter hereof or thereof or any of the transactions contemplated hereby
or thereby brought by any of the Beneficiaries hereunder or their successors or
assigns; (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court,
or in such federal court; and (iii) to the extent permitted by Applicable Law,
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, or

                                       24
<PAGE>
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty, the other
Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.

          (b)   TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.

          (c)   By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., 440 9th
Avenue, 5th Floor, New York, NY 10001 as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents.  The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.

          Section 8.13.   Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.

          Section 8.14.   Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be

                                       25
<PAGE>
returned by any Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the RockGen Lessee or otherwise, all as though
such payment had not been made.

          Section 8.15.   Additional Obligations. Upon the assumption by the
RockGen Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the RockGen Lessee to
pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.

          Section 8.16.   Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.

                           [No more text on this page]

                                       26
<PAGE>
          IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.

                                    CALPINE CORPORATION,
                                    as Guarantor


                                    By:______________________________________
                                       Name:
                                       Title:
<PAGE>
                                    ROCKGEN OL-4, LLC,
                                    a Delaware limited liability company


                                    By:______________________________________
                                       Name:
                                       Title:
<PAGE>
                                    SBR OP-4, LLC,
                                    a Delaware limited liability company


                                    By:______________________________________
                                       Name:
                                       Title:
<PAGE>
                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Indenture
                                    Trustee


                                    By:________________________________________
                                       Name:
                                       Title:
<PAGE>
                                    STATE STREET BANK AND TRUST
                                    COMPANY, National Association, not in its
                                    individual capacity but solely as Pass
                                    Through Trustee


                                    By:________________________________________
                                       Name:
                                       Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.4
<SEQUENCE>42
<FILENAME>f80168ex10-2_4.txt
<DESCRIPTION>EXHIBIT 10.2.4
<TEXT>
<PAGE>
                                                                  Exhibit 10.2.4

                         FIRST AMENDMENT AND WAIVER TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

        THIS FIRST AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of April 19, 2001 (herein called this "Amendment"), is
entered into by and among CALPINE CORPORATION, a Delaware corporation (herein
called the "Company"), the various financial institutions listed on the
signature page hereof (the "Lenders") and THE BANK OF NOVA SCOTIA, as
administrative agent for the Lenders (herein, in such capacity, called the
"Agent").

                              W I T N E S S E T H:

        WHEREAS, the Company, the Lenders and the Agent have heretofore entered
into a certain Second Amended and Restated Credit Agreement, dated as of May 23,
2000 (herein called the "Credit Agreement"); and

        WHEREAS, the Company, the Lenders and the Agent now desire to amend the
Credit Agreement in certain respects, as hereinafter provided,

        WHEREAS, the Company has requested that the Lenders waive certain
provisions of the Loan Documents, and subject to the terms and provisions
hereinafter set forth, the Lenders have agreed to do so;

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Company, the Lenders and the Agent hereby agree
as follows:

        SECTION 1. The Credit Agreement is hereby amended as follows:

               (a) The definition of the term "Letter of Credit Availability"
in Section 1.1 of the Credit Agreement is hereby amended by deleting
"$200,000,000 (or such greater amount as may be agreed by the Borrower, the
Agent and the Required Lenders from time to time)" and replacing it with
"$400,000,000".

        SECTION 2.

               (a) Pursuant to Section 3.1.3 of the Assignment Agreement,
Calpine Gilroy represented and warranted that to the best of its knowledge no
default existed under the Assigned Agreement (as defined in the Assignment
Agreement) by PG&E. As the result of its failure to make all payments required
pursuant to Section 5.1.1 of the Assigned Agreement, PG&E is now in default
under the Assigned Agreement. Pursuant to Section 6.2.1(a) of the Credit
Agreement, it is a condition precedent to each Extension of Credit that the
representations and warranties in each Loan Document be true and correct in all
material respects as of the date of such Extension of Credit. The Company has
requested that the Lenders waive the provisions of Section 6.2.1(a) to the
extent that it would require that PG&E not be in default under the Assigned
Agreement. By their execution hereof, the undersigned Lenders hereby waive
compliance with Section 6.2.1 of the Credit Agreement insofar as such Section
would be breached as the result of PG&E's default under Section 5.1.1 of the
Assigned Agreement.

<PAGE>
               (b) The Company has advised the Agent and the Lenders that one of
its Canadian Subsidiaries (CanSub) will be issuing approximately $1,500,000,000
of public debt. The Company will directly guaranty that Indebtedness (which
guaranty is permitted by Section 8.2.2(f) of the Credit Agreement). The
obligations of CanSub under such Indebtedness will also be secured by a pledge
of another Wholly Owned Subsidiary's rights to sell its capital stock to a third
Wholly Owned Subsidiary of the Company pursuant to a forward purchase agreement
(the "Forward Purchase Agreement"). The purchasing Subsidiary's obligations will
be guaranteed by the Company. The Company has requested that the Lenders waive
the provisions of Section 8.2.3 of the Credit Agreement to the extent that such
Section would prohibit (i) the pledge by CanSub of its rights under the Forward
Purchase Agreement and the related guaranty and (ii) the prior pledge by a
Wholly Owned Subsidiary to another Wholly Owned Subsidiary of its rights under
the Forward Purchase Agreement and the related guaranty. By their execution
hereof, the undersigned Lenders waive compliance with Section 8.2.3 of the
Credit Agreement to the extent that such provision would be breached by CanSub's
or any other Wholly Owned Subsidiary's pledge of such rights and interests.

               (c) The Company has requested that the Lenders confirm that the
phrase "contributions to capital or loans or advances" in Section 8.2.5(c) of
the Credit Agreement includes the execution of guarantees and other forms of
Contingent Liabilities to the extent that the occurrence of the obligations
being guaranteed or supported would otherwise be permitted by the Credit
Agreement. By their execution hereof, the undersigned Lenders hereby confirm
that the guaranty by the Company of the obligations of a Subsidiary would not
be prohibited pursuant to Section 8.2.5(c) of the Credit Agreement to the
extent that the guaranty (and the incurrence of any Indebtedness associated
therewith) would otherwise be permitted by the Credit Agreement.

               (d) Except as specifically set forth herein, no waiver of any
Default, Event of Default, right or remedy under any of the Loan Documents is
intended by the waivers set forth above and no such waiver is to be implied.

        SECTION 3. To induce the Lenders and the Agent to enter into this
Amendment, the Company hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article VII of the Credit Agreement
(except to the extent such representations and warranties relate solely to an
earlier date) and additionally represents and warrants as follows:

                      (i) The execution and delivery of this Amendment, and the
        performance by the Company of its obligations hereunder, are within the
        Company's corporate powers, have been duly authorized by all necessary
        action, have received all necessary governmental approval (if any shall
        be required), and do not and will not contravene or conflict with any
        provision of law or of the charter or by-laws of the Company or of any
        agreement binding upon the Company; and

                      (ii) This Amendment is the legal, valid and binding
        obligation of the Company enforceable against the Company in accordance
        with its terms.

        SECTION 4. The effectiveness of this Amendment is conditioned upon
receipt by the Agent of all the following documents, each in form and substance
satisfactory to the Agent:


                                       2

<PAGE>
               (i) This Amendment duly executed by the Company, Required Lenders
        and Calpine Gilroy; and

               (ii) Such other documents as the Agent shall have reasonably
        requested.

        SECTION 5. This Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All references to
the Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Credit Agreement as amended hereby.

        SECTION 6. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK. All obligations of the Company and
rights of the Lenders and the Agent expressed herein shall be in addition to and
not in limitation of those provided by applicable law. Whenever possible each
provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.

        SECTION 7. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing one or more counterparts.

        SECTION 8. This Amendment shall be binding upon the Company, the Lenders
and the Agent and their respective successors and assigns, and shall inure to
the benefit of the Company, the Lenders and the Agent and the successors and
assigns of the Lenders and the Agent.

        SECTION 9. THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AMENDMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AMENDMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.



                                       3

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                      CALPINE CORPORATION


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      THE BANK OF NOVA SCOTIA, as Agent and
                                      Lender


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      BAYERISCHE LANDESBANK GIROZENTRALE


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      CIBC INC.


                                      By:_____________________________________
                                      Name:
                                      Title:


                                       4

<PAGE>

                                      CREDIT SUISSE FIRST BOSTON


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      BAYERISCHE HYPO-UND VEREINSBANK AG


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      ING (U.S.) CAPITAL LLC


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      TORONTO DOMINION (TEXAS) INC.


                                      By:_____________________________________
                                      Name:
                                      Title:


                                       5

<PAGE>

                                      UNION BANK OF CALIFORNIA, N.A.


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      BANK OF AMERICA, N.A.


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      CREDIT LYONNAIS NEW YORK BRANCH


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      DRESDNER BANK AG, NEW YORK AND GRAND
                                      CAYMAN BRANCHES


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      By:_____________________________________
                                      Name:
                                      Title:


                                      FLEET NATIONAL BANK


                                      By:_____________________________________
                                      Name:
                                      Title:


                                       6

<PAGE>

                                      FORTIS CAPITAL CORP.


                                      By:_____________________________________
                                      Name:
                                      Title:



The undersigned has reviewed and
approved the Amendment and confirms
that its obligations under the
Assignment Agreement remain in full
force and effect.

CALPINE GILROY COGEN, L.P.,
a Delaware limited partnership

By:     Calpine Gilroy 1, Inc.,
        a Delaware corporation,
        its general partner


        By:_________________________
        Title:

Address:     50 W. San Fernando St.
             San Jose, CA 95113

Attention:   Vice President - Finance

Telecopier:  408-995-0505





                                       7


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.5
<SEQUENCE>43
<FILENAME>f80168ex10-2_5.txt
<DESCRIPTION>EXHIBIT 10.2.5
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.2.5

                              SECOND AMENDMENT TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of March 8, 2002 (herein called this "Amendment"), is entered into by
and among CALPINE CORPORATION, a Delaware corporation (herein called the
"Company"), the various financial institutions listed on the signature page
hereof (the "Lenders") and THE BANK OF NOVA SCOTIA, as administrative agent for
the Lenders (herein, in such capacity, called the "Agent").

                              W I T N E S S E T H:

     WHEREAS, the Company, the Lenders and the Agent have heretofore entered
into a certain Second Amended and Restated Credit Agreement, dated as of May
23, 2000, as amended by that certain First Amendment and Waiver to Second
Amended and Restated Credit Agreement, dated as of April 19, 2001 (herein
called the "Credit Agreement"); and

     WHEREAS, the Company, the Lenders and the Agent now desire to amend the
Credit Agreement in certain respects, as hereinafter provided,

     WHEREAS, the Company has requested that the Lenders waive certain
provisions of the Loan Documents, and subject to the terms and provisions
hereinafter set forth, the Lenders have agreed to do so;

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Company, the Lenders and the Agent hereby agree as
follows:

     SECTION 1.  The Credit Agreement is hereby amended as follows:

          (a)    There shall be added to Section 1.1 of the Credit Agreement in
appropriate alphabetical sequence the following new definitions:

          "2002 Credit Agreement" means that certain Credit Agreement dated as
     of March 8, 2002 among, inter alia, the Borrower and Scotiabank and
     Citicorp, as joint administrative agents, as the same may be amended from
     time to time.

          "Calpine Holdings" means Calpine CCFC Holdings, Inc., a Wholly Owned
     Subsidiary of the Borrower.

          "Canadian Gas Reserves" means the gas reserves of the Borrower's
     Canadian Subsidiaries.

          "CCEC" means Calpine Canada Energy Ltd., a Nova Scotia limited
     liability company.

          "CCEF" means Calpine Canada Energy Finance ULC, a Nova Scotia
     unlimited liability company, and an indirect Wholly Owned Subsidiary of
     QCH.

<PAGE>

          "CCFCI" means Calpine Construction Finance Company, LP a Delaware
     limited partnership and an indirect, Wholly Owned Subsidiary of the
     Borrower.

          "CNGC" means Calpine Natural Gas Company LP, a Delaware limited
     partnership, the 99% limited partner of which is CNGH and the 1% general
     partner of which is CNGGP.

          "CNGGP" means Calpine Natural Gas GP, Inc., a Delaware corporation
     and a direct,  Wholly Owned Subsidiary of the Borrower.

          "CNGH" means Calpine Natural Gas Holdings, Inc., a Delaware
     corporation and a direct,  Wholly Owned Subsidiary of the Borrower.

          "Dedicated Assets" means, collectively, the Domestic Gas Reserves,
     the Canadian Gas Reserves, all property owned by Calpine Holdings and any
     of is Subsidiaries, all property owned by CCEC and any of its Subsidiaries
     (other than Calpine Canada Power Holdings Ltd. and its Subsidiaries), the
     final 25% of the Borrower's indirect equity ownership interest in the
     holding company which owns the Whitbey Energy Centre, the Island Energy
     Centre and the Calgary Energy Centre, the property subject to the Pledge
     Agreements, the Deeds of Trust, the Assignment Agreement and all other
     property and interests pledged as collateral security for the Obligations.
     The Dedicated Assets shall be ratably available to secure the Obligations
     under this Agreement and the 2002 Credit Agreement.

          "Dedicated Subsidiary" means CCEC and each of its Subsidiaries,
     Calpine Holdings (and any successor thereto) and each of its Subsidiaries,
     CNGGP and each of its Subsidiaries and CNGH and each of its Subsidiaries.

          "Deed of Trust" means each mortgage, deed of trust, or other real
     property collateral security instrument, executed and delivered pursuant
     to the 2002 Credit Agreement, as amended, supplemented, restated or
     otherwise modified from time to time.

          "Domestic Gas Reserves" means the gas reserves of the Borrower and
     its Subsidiaries located in the United States.

          "Guarantors" means, collectively, QM, JOQ and QCH and any other
     Subsidiary of the Borrower that executes a joinder to the Guaranty and
     becomes a party thereto.

          "Guaranty" means the guaranty executed and delivered by the
     Guarantors pursuant to the 2002 Credit Agreement.

          "Hazardous Materials Indemnity" means that certain Hazardous
     Materials Indemnity executed and delivered by the Borrower pursuant to the
     2002 Credit Agreement, as amended, supplemented, restated or otherwise
     modified from time to time.

          "JOQ" means JOQ Canada,  Inc., a Delaware corporation and indirect,
     Wholly Owned Subsidiary of CNGH.

                                        2

<PAGE>

          "Pledge Agreements" means the pledge agreements executed and delivered
     pursuant to the 2002 Credit Agreement, as such agreements may be amended,
     supplemented, restated or otherwise modified from time to time, which
     will cover all equity interests in Calpine Holdings, CNGGP and CNGH held
     by the Borrower and all of the equity interests of QCH in CCEC and such
     portion of the equity interests of QM and JOQ in CCEC sufficient to
     pledge to the Agent an aggregate amount of 65% of the total equity
     interests of CCEC.

          "QCH" means Quintana Canada Holdings, LLC, a Delaware limited
     liability company and indirect, Wholly Owned Subsidiary of CNGH.

          "QM" means Quintana Minerals (USA), Inc., a Delaware corporation and
     indirect, Wholly Owned Subsidiary of CNGH.

          "Restricted Subsidiary" has the meaning given in the Senior Note
     Indentures.

          "Zero-Coupon Debentures" means the outstanding Zero-Coupon Convertible
     Debentures due 2021 issued by the Borrower pursuant to that certain
     Indenture dated as of April 30, 2001 between the Borrower and Wilmington
     Trust Company as trustee.

          (b)    The definition of the term "Applicable Margin" in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

          "Applicable Margin" means, in the case of any Base Rate Loan or LIBO
     Rate Loan, a rate per annum determined by reference to the Borrower's
     Credit Rating as follows:

<TABLE>
<CAPTION>
Borrower's      Applicable Base    Applicable LIBO    Commitment
Credit Rating   Rate Margin        Rate Margin        Fee Rate
-------------   -----------        -----------        --------
<S>             <C>                <C>                <C>
Level 1         0.50%              1.50%              0.500%

Level 2         0.75%              1.75%              0.500%

Level 3         1.00%              2.00%              0.500%

Level 4         1.25%              2.25%              0.500%

Level 5         1.75%              2.75%              0.500%
</TABLE>

     The applicable Level for the Borrower shall be determined by reference to
the definition of the term "Borrower's Credit Rating."  Notwithstanding the
foregoing, from March 11, 2002 through the earlier of (i) the date the Loans
have received a rating from S&P or Moody's (ii) or September 8, 2002 the
Borrower's credit rating shall be deemed to be Level 3.

          (c)    The definition of the term "Borrower's Credit Rating" in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety as follows:

          "Borrower's Credit Rating" means, at any time that the Loans shall
     have been rated by Standard & Poor's Ratings Group ("S&P") or Moody's
     Investor Service, Inc. ("Moody's"), a level determined in accordance with
     the following standards: the

                                       3

<PAGE>

     Borrower's Credit Rating shall be "Level 1" if the Loans have (a) an S&P
     Loan Rating of BBB or better or (b) a Moody's Loan Rating of Baa2 or
     better. The Borrower's Credit Rating shall be "Level 2" if the Loans do not
     meet the standards for a "Level 1" rating set forth above and have (a) an
     S&P Loan Rating of BBB- or better or (b) a Moody's Loan Rating of Baa3 or
     better. The Borrower's Credit Rating shall be "Level 3" if the Loans do not
     meet the standards for a "Level 1" or "Level 2" rating set forth above and
     have (a) an S&P Loan Rating of BB+ or better or (b) a Moody's Loan Rating
     of Ba1 or better. The Borrower's Credit Rating shall be "Level 4" if the
     Loans do not meet the standards for a "Level 1", "Level 2" or "Level 3"
     rating set forth above and have (a) an S&P Loan Rating of BB or better or
     (b) a Moody's Loan Rating of Ba2 or better. If the Loans do not meet the
     standards for "Level 1", "Level 2", "Level 3" or "Level 4" set forth above
     or fail to have either an S&P Loan Rating or a Moody's Loan Rating, then
     the Borrower's Credit Rating shall be "Level 5". Notwithstanding the
     foregoing, if the Borrower's S&P Loan Rating and Moody's Loan Rating shall
     differ by two or more Levels, the applicable Level shall be one level
     numerically higher than the numerically lower of such Levels. As used
     herein, "S&P Loan Rating" means the senior secured debt rating given to the
     Loans from time to time by S&P and "Moody's Loan Rating" means the senior
     secured debt rating given to the Loans from time to time by Moody's. In the
     event the Loans have an S&P Loan Rating or a Moody's Loan Rating but not
     both, the Borrower's Credit Rating shall be determined on the basis of the
     single rating that is available without reference to the other rating. At
     all times after September 8, 2002 when the Loans shall not have a rating
     from S&P or Moody's, the Borrower's Credit Rating shall be "Level 5.
     Changes in the Borrower's Credit Rating shall take effect (i) in the case
     of Applicable LIBO Rate Margin for LIBO Rate Loans, at the beginning of the
     following Interest Period, and (ii) otherwise, as of the date of public
     announcement by either S&P or Moody's.

          (d)    The definition of the term "Change in Control" in Section 1.1
of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:

          "Change in Control" means (i) the acquisition by any Person, or two or
     more Persons acting in concert, of beneficial ownership (within the meaning
     of Rule 13d-3 of the Securities and Exchange Commission under the
     Securities Exchange Act of 1934) of 30% or more of the outstanding shares
     of voting stock of the Borrower and/or (ii) any "Change of Control" under
     (and as defined in) any Senior Note Indentures in which such defined term
     appears.

          (e)    The definition of the term "Guaranteed Preferred Securities"
in Section 1.1 of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:

          "Guaranteed Preferred Securities" means the preferred securities
     issued by one of the Trusts, from time to time, including, without
     limitation the $276,000,000 of principal amount of such securities issued
     in October, 1999, the $300,000,000 of principal amount of such securities
     issued in January, 2000, the $60,000,000 of principal amount of such
     securities issued in February, 2000, and the $517,500,000 of principal
     amount of such securities issued in August, 2000.

                                       4

<PAGE>

          (f)    The definition of the term "Issuer" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

          "Issuer" means Scotiabank, or any Affiliate, unit of agency thereof,
     any other Lender acceptable to the Borrower and the Agent, and any
     successor to any of the foregoing Persons.

          For purposes hereof, each reference to the term "Issuer" appearing in
the Credit Agreement shall be deemed amended to refer to (i) one of, (ii) any
of, (iii) certain of or (iv) all of, Scotiabank or such other Lenders, as the
context may require.

          (g)    The definition of the term "Senior Note Indentures" in Section
1.1 of the Credit Agreement is hereby amended by inserting the following clause
immediately prior to the end thereof:

     "and any other indentures relating to outstanding Senior Notes."

          (h)    The definition of the term "Senior Notes" in Section 1.1 of the
Credit Agreement is hereby amended by inserting the following clause immediately
prior to the end thereof:

     "and any similar senior notes issued by the Borrower after the Effective
     Date but on or before January 1, 2002."

          (i)    The definition of the term "Trust" in Section 1.1 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:

          "Trust" means Calpine Capital Trust, Calpine Capital Trust II and
     Calpine Capital Trust III, each a Delaware business trust.

          (j)    There shall be added to the Credit Agreement new subsections
(c), (d) and (e) to Section 2.2 of the Credit Agreement reading in their
entirety as follows:

          (c)    There shall be a mandatory reduction of the Commitments
     hereunder and the commitments under the 2002 Credit Agreement by an amount
     equal to one hundred percent (100%) of Net Available Cash from any Asset
     Sale of any Dedicated Asset; provided, however, that the Borrower may, at
     its discretion retain (and as a consequence of such retention, there shall
     be excluded from any such mandatory reduction) up to an aggregate of
     $75,000,000 of such Net Available Cash so long as such Net Available Cash
     is applied by the Borrower in accordance with Section 8.2.10(b) hereof.

          (d)    Any reduction of the Commitments and commitments described in
     clause (c) shall be effective on the first Business Day following the
     Borrower's receipt of any related Net Available Cash. All such amounts
     shall first be applied to the ratable reduction of the Commitments and the
     commitments under the 2002 Credit Agreement. To that end, such amounts
     shall first be applied to ratably prepay the Loans and loans under the 2002
     Credit Agreement, and the corresponding cancellation of the Commitment
     Amount and the commitments under the 2002 Credit Agreement by the
     respective

                                       5

<PAGE>

     amount of such prepayments (or if no Revolving Loans or loans under the
     2002 Credit Agreement are outstanding to the reduction of any unused
     portion of the Revolving Commitment and such commitments), and finally to
     the ratable cash collateralization of any Letters of Credit and letters of
     credit under the 2002 Credit Agreement.

          (e)    To the extent that the Commitment Amount is at any time less
     than the aggregate Stated Amount of outstanding Letters of Credit then in
     effect, then the Borrower must deposit with the Agent cash collateral in
     accordance with Section 4.7 hereof.

          (k)    Section 3.1 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of subsection (c) thereof, (ii) deleting the
period at the end of subsection (d) thereof and replacing it with "a
semicolon", and (iii) adding new subsections (e) and (f) thereafter reading in
their entirety as follows:

          (e)    shall, if a Default shall have occurred and be continuing on
     any date that the Borrower gives notice of the purchase, redemption or
     prepayment of the Zero Coupon Debentures in cash, or if an Event of
     Default shall have occurred and be continuing on any date that the
     Borrower purchases, redeems or prepays the Zero Coupon Debentures, make a
     mandatory prepayment in an amount equal to the outstanding principal
     amount of all Loans then outstanding and deposit with the Agent, cash
     collateral in an amount equal to the outstanding Letters of Credit; and

          (f)    shall, if any non-cash proceeds from any Asset Sale of any
     Dedicated Assets shall be received by a Subsidiary that is not directly or
     indirectly owned by a Dedicated Subsidiary, thereupon make a mandatory
     prepayment and corresponding reduction in Commitments pursuant to Section
     2.2.2 in an amount equal to the market value of such proceeds, as
     reasonably determined by the Agent.

          (l)    The following sentence shall be added immediately prior to the
end of Section 3.1:

          Notwithstanding any provision of Sections 2.2 or 3.1 to the contrary,
     after the occurrence and during the continuance of an Event of Default,
     all optional and mandatory payments under Section 3.1 shall be applied
     first to pay any fees and expenses then due and owing hereunder and under
     the 2002 Credit Agreement, second to the pro rata payment of accrued and
     unpaid interest on all Loans hereunder and under the 2002 Credit Agreement
     and third as set forth in Section 2.2.

          (m)    Section 4.7 of the Credit Agreement is hereby amended and
restated in its entirety as follows:

          "SECTION 4.7.  Cash Collateral. Upon the occurrence and during the
     continuation of any Event of Default described in Section 9.1.9 or upon
     notice to the Borrower after the occurrence and during the continuation of
     any other Event of Default, at the election of the Agent acting on
     instructions from the Required Lenders, or the occurrence of the
     Commitment Termination Date, an amount equal to that portion of Letter of
     Credit Outstanding attributable to outstanding and undrawn Letters of
     Credit

                                       6

<PAGE>

     shall be deemed to have been paid or disbursed by the Issuers under the
     Letters of Credit (notwithstanding that such amount may not in fact have
     been paid or disbursed), and, upon notification by the Issuers to the
     Agent and the Borrower of its obligations under this Section, the Borrower
     shall be immediately obligated to reimburse the Agent the amount deemed to
     have been so paid or disbursed by the Issuers. Any amounts so received by
     the Agent from the Borrower pursuant to this Section shall be held as
     collateral security for the repayment of the Borrower's obligations in
     connection with the Letters of Credit. At any time when such Letters of
     Credit shall terminate and all Obligations of the Borrower to the Issuers
     are either terminated or paid or reimbursed to the Issuers in full, the
     Obligations of the Borrower under this Section shall also terminate
     (subject, however, to reinstatement in the event any payment in respect of
     such Letters of Credit is recovered in any manner from any Issuer), and
     the Agent will return to the Borrower the aggregate amount deposited by
     the Borrower with the Issuers and not theretofore applied by the Issuers
     to any Reimbursement Obligation.

          At such time when all Events of Default shall have been cured or
     waived, the Agent shall return to the Borrower all amounts then on deposit
     with it pursuant to this Section. All amounts on deposit pursuant to this
     Section shall, until their application to any Reimbursement Obligation or
     their return to the Borrower, as the case may be, bear interest at the
     daily average Federal Funds Rate from time to time in effect (net of the
     costs of any reserve requirements, in respect of amounts on deposit
     pursuant to this Section, pursuant to F.R.S. Board Regulation D), which
     interest shall be held by the Agent as additional collateral security for
     the repayment of the Borrower's Obligations in connection with the Letters
     of Credit issued by the Issuers."

          (n)    Section 6.1.6 of the Credit Agreement is hereby amended by
replacing the date "December 31, 1999" with the date "December 31, 2000".

          (o)    Clause (b) of Section 7.8 of the Credit Agreement is hereby
amended by deleting the reference to "Section 8.2.10" and replacing it with
"Section 8.2.9".

          (p)    Clause (e) of Section 8.2.2 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:

          (e)    Indebtedness of one or more Subsidiaries of the Borrower
     incurred solely to finance the development, construction or purchase of,
     or repairs, expansions, enhancements, improvements or additions to, the
     assets of such Subsidiaries so long as (i) the principal amount of any
     such Indebtedness (x) for development of existing gas reserves does not
     exceed an aggregate of $50,000,000 for any such existing reserves or (y)
     for expansions, enhancements, improvements or additions to an existing
     asset which has already achieved commercial operation does not exceed an
     aggregate of $60,000,000 for any single financing or series of related
     financings for such asset (exclusive of up to $250,000,000 of Indebtedness
     for the expansion of the energy center at Zion, Illinois) and (ii)
     recourse for any such Indebtedness is limited solely (A) to the asset or
     assets being financed, (B) to such Subsidiaries themselves, where the
     asset or assets being financed constitute all or substantially all of the
     assets of such Subsidiaries (each, a "Special

                                       7

<PAGE>

     Purpose Subsidiary"), and/or (C) to the stock or other ownership interests
     in such Special Purpose Subsidiaries;

          (q)    Section 8.2.2 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of subsection (k) thereof, (ii) inserting a
new subsection (l) reading in its entirety as follows:

          "(l)   Indebtedness under the 2002 Credit Agreement; and"

(iii) changing the old subsection (l) to subsection (m) and (iv) changing the
reference in the new subsection (m) from "clause (l)" to "clause (m)".

          (r)    Clause (a) of Section 8.2.3 of the Credit Agreement is hereby
amended by inserting the following clause immediately prior to the end thereof:

     "and Liens securing payment of the obligations of the Borrower granted
     pursuant to the 2002 Credit Agreement, which Liens (including the Lien on
     property subject to the Assignment Agreement) shall ratably secure the
     Obligations hereunder"

          (s)    Clause (m) of Section 8.2.3 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

          (m)    Liens securing Attributable Debt with respect to outstanding
     leases entered into pursuant to Sale/Leaseback Transactions so long as,
     with respect to Sale/Leaseback Transactions closing after January 1, 2002,
     the amount thereof does not exceed 10% of the consolidated tangible assets
     of the Borrower and its Subsidiaries; and

          (t)    Section 8.2.6 of the Credit Agreement is hereby amended by
adding the following proviso immediately prior to the end of subsection (b)(i)
thereof:

     "and provided further, that the Borrower may make optional purchases,
     redemptions or prepayments of the Zero Coupon Debentures if both before
     and after giving effect thereto, no Default shall have occurred and be
     continuing; or"

          (u)    Section 8.2.8 of the Credit Agreement is hereby amended by
deleting the phrase "$10,000,000 in any Fiscal Year or $50,000,000 during the
full term of such arrangements" and replacing it with "$25,00,000 in any Fiscal
Year".

          (v)    Subsection (b) of Section 8.2.10 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

          "(b)   such sale, transfer, lease, contribution or conveyance is not
     covered by clause (a) above and (i) the Borrower or its Subsidiary
     receives consideration at the time of such sale, transfer, lease,
     contribution or conveyance at least equal to the fair market value of
     assets being sold, transferred, leased, contributed or conveyed (ii) at
     least sixty percent (60%) of the consideration received by the Borrower or
     such Subsidiary is in the form of cash or cash equivalents, and (iii) an
     amount equal to 100% of Net Available Cash is either reinvested in
     Additional Assets within 365 days of such asset sale or

                                       8

<PAGE>

     applied by the Borrower pursuant to Section 2.2 to prepay the Loans and
     the loans outstanding under the 2002 Credit Agreement, so long as any Net
     Available Cash from Dedicated Assets is applied by the Borrower pursuant
     to Section 2.2."

          (w)    That portion of Section 8.2.13 of the Credit Agreement prior to
subsection (a) thereof is hereby amended and restated in its entirety to read
as follows:

          SECTION 8.2.13.  Negative Pledges, Restrictive Agreements, etc.  The
     Borrower will not, and will not permit any of its Subsidiaries to, enter
     into any agreement (excluding this Agreement, any other Loan Document and
     any agreement governing any Indebtedness permitted either by clauses (a),
     (b), (e), (f), (g) and (l) of Section 8.2.2 (and refinancings, extensions
     and renewals of such Indebtedness permitted under clause (m) of Section
     8.2.2) or any agreements in respect of Sale/Leaseback Transactions
     permitted by clause (m) of Section 8.2.3) prohibiting

          (x)    The second sentence of Section 11.1 of the Credit Agreement is
hereby amended by deleting the reference therein to "Section 6.3" and replacing
it with "Section 10.3."

          (y)    Subsection (a) of Section 11.11.1 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

          "(a)   with the written consents of the Borrower and the Agent (which
     consents shall not be unreasonably withheld and which consent, in the case
     of the Borrower, shall be deemed to have been given in the absence of a
     written notice delivered by the Borrower to the Agent, on or before the
     tenth Business Day after receipt by the Borrower of such Lender's request
     for consent, stating, in reasonable detail, the reasons why the Borrower
     proposes to withhold such consent) and each Issuer (which consents may be
     granted or withheld in their sole unfettered discretion) may at any time
     assign and delegate to one or more commercial banks or other financial
     institutions, and"

          (z)    Subsection (b) of Section 11.11.1 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

          (b)    with notice to the Borrower, the Agent and the Issuers and with
     the written consent of the Issuers (which consents may be granted or
     withheld in their sole unfettered discretion) and the Borrower (which
     consent shall not be unreasonably withheld and which consent shall be
     deemed to have been given in the absence of a written notice delivered by
     the Borrower to the Agent, on or before the tenth Business Day after
     receipt by the Borrower of such Lender's request for consent, stating, in
     reasonable detail, the reasons why the Borrower proposes to withhold such
     consent) may assign and delegate to any of its Affiliates or to any other
     Lender

          (aa)   Indented clause (ii) following subsection (b) of Section
11.11.1 of the Credit Agreement is hereby amended by adding immediately after
the reference to "accepted by the Agent" the following:

     "and the Borrower (such approval not to be unreasonably withheld)"

                                       9

<PAGE>

     SECTION 2.  To induce the Lenders and the Agent to enter into this
Amendment, the Company hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article VII of the Credit Agreement
(except to the extent such representations and warranties relate solely to an
earlier date) and additionally represents and warrants as follows:

          (i)    The execution and delivery of this Amendment, and the
     performance by the Company of its obligations hereunder, are within the
     Company's corporate powers, have been duly authorized by all necessary
     action, have received all necessary governmental approval (if any shall be
     required), and do not and will not contravene or conflict with any
     provision of law or of the charter or by-laws of the Company or of any
     agreement binding upon the Company;

          (ii)   This Amendment is the legal, valid and binding obligation of
     the Company enforceable against the Company in accordance with its terms;
     and

          (iii)  No Default has occurred and is continuing and no Default will
     result from the execution and delivery of this Amendment.

     SECTION 3.  The effectiveness of this Amendment is conditioned upon receipt
by the Agent of all the following documents, each in form and substance
satisfactory to the Agent:

          (i)    This Amendment duly executed by the Company, Required Lenders
     and Calpine Gilroy; and

          (ii)   Such other documents as the Agent shall have reasonably
     requested.

     SECTION 4.  This Amendment shall be deemed to be an amendment to the Credit
Agreement, and the Credit Agreement, as amended hereby, is hereby ratified,
approved and confirmed in each and every respect. All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby. It is
understood and agreed that from and after the date of the effectiveness of this
Amendment, the proceeds of any Net Available Cash from any Asset Sale of
Dedicated Asset (including, without limitation, any proceeds realized from the
Assignment Agreement or any Lien granted pursuant to the Assignment Agreement),
will be ratably shared among the Lenders and the lenders party to the 2002
Credit Agreement. By their execution hereof, the parties hereto have agreed to
permit (a) the assignment by Calpine Gilroy of its rights under the contract
that is the subject of the Assignment Agreement to the Borrower and (b) the
pledge by Borrower of all of the rights assigned to it to be pledged as
collateral security with the obligations under this Credit Agreement pursuant
to an Amended and Restated Assignment Agreement and under the 2002 Credit
Agreement on terms and conditions satisfactory to the Agent. Upon the execution
of such documentation, the perfection of the interests thereunder, and with the
receipt of written consent from all Lenders, the Agent may terminate the
Assignment Agreement and such Amended and Restated Assignment Agreement shall
thereupon be deemed to be the Assignment Agreement for all purposes of the
Credit Agreement

     SECTION 5.  THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL

                                       10

<PAGE>

LAWS OF THE STATE OF NEW YORK. All obligations of the Company and rights of the
Lenders and the Agent expressed herein shall be in addition to and not in
limitation of those provided by applicable law. Whenever possible each
provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

     SECTION 6.  This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing one or more counterparts.

     SECTION 7.  This Amendment shall be binding upon the Company, the Lenders
and the Agent and their respective successors and assigns, and shall inure to
the benefit of the Company, the Lenders and the Agent and the successors and
assigns of the Lenders and the Agent.

     SECTION 8.  THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AMENDMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AMENDMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

                                       11

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                     CALPINE CORPORATION

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     THE BANK OF NOVA SCOTIA, as Agent and
                                     Lender

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     BAYERISCHE LANDESBANK
                                     GIROZENTRALE

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     CIBC INC.

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

<PAGE>

                                     CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     BAYERISCHE HYPO-UND VEREINSBANK AG

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     ING (U.S.) CAPITAL LLC

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     TORONTO DOMINION (TEXAS) INC.

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

<PAGE>

                                     UNION BANK OF CALIFORNIA, N.A.

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     BANK OF AMERICA, N.A.

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     CREDIT LYONNAIS NEW YORK BRANCH

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     DRESDNER BANK AG, NEW YORK AND
                                     GRAND CAYMAN BRANCHES

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

                                     FLEET NATIONAL BANK

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

<PAGE>

                                     FORTIS CAPITAL CORP.

                                     By:________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

The undersigned has reviewed and approved
the Amendment and confirms that its obligations
under the Assignment Agreement remain in full
force and effect.

CALPINE GILROY COGEN, L.P.,
a Delaware limited partnership

By: Calpine Gilroy 1, Inc.,
    a Delaware corporation,
    its general partner

    By:_____________________________________
    Title:

Address:     50 W. San Fernando St.
             San Jose, CA 95113

Attention:   Vice President - Finance

Telecopier:  408-995-0505

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.6
<SEQUENCE>44
<FILENAME>f80168ex10-2_6.txt
<DESCRIPTION>EXHIBIT 10.2.6
<TEXT>
<PAGE>


                                                                  EXHIBIT 10.2.6


                                CREDIT AGREEMENT

                           dated as of March 8, 2002,

                                      among

                              CALPINE CORPORATION,
                                as the Borrower,

                    CERTAIN COMMERCIAL LENDING INSTITUTIONS,
                                 as the Lenders,

                             THE BANK OF NOVA SCOTIA

                                       and

                       BAYERISCHE LANDESBANK GIROZENTRALE,
           as Lead Arrangers and Bookrunners on the Revolving Facility

                            SALOMON SMITH BARNEY INC.

                                       and

                         DEUTSCHE BANC ALEX. BROWN INC.,
            as Lead Arrangers and Bookrunners on the Term B Facility
                and as Lead Arrangers on the Revolving Facility,

                             THE BANK OF NOVA SCOTIA

                                       and

                               CITICORP USA, INC.,
                         as Joint Administrative Agents,

                            THE BANK OF NOVA SCOTIA,
                                as Funding Agent,

                     BANK OF AMERICA, NATIONAL ASSOCIATION,
        as Lead Arranger and Syndication Agent of the Revolving Facility,

                   CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH,
                 as Lead Arranger and Syndication Agent for the
                               Revolving Facility
                  and as Lead Arranger on the Term B Facility,

                                       and

                            TD SECURITIES (USA) INC.,
                  as Lead Arranger for the Revolving Facility.

<PAGE>

                                CREDIT AGREEMENT

     THIS CREDIT AGREEMENT, dated as of March 8, 2002, among CALPINE
CORPORATION, a Delaware corporation (together with its successors, the
"Borrower"), the various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), various lead arrangers, THE BANK OF NOVA
SCOTIA ("Scotiabank") as joint administrative agent and funding agent (in such
capacity, the "Agent") and CITICORP USA, INC. ("CUSA"), as Joint Administrative
Agent (in such capacity, together with Scotiabank, the "Administrative Agents").

                              W I T N E S S E T H:

     WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries and Joint Ventures in the business of acquiring, developing, owning
and operating power generation facilities, purchasing, developing and selling
electricity and steam (including geothermal steam and fluids) and purchasing,
developing and selling natural gas and other fuels and related marketing
activities; and

     WHEREAS, the Borrower desires to obtain Commitments from the Lenders
pursuant to which

          (a)  Revolving  Loans will be made to the Borrower from time to time
     prior to the  Revolving Loan Commitment Termination Date;

          (b)  Letters of Credit will be issued by an Issuer for the account of
     the Borrower and under the several responsibilities of the Revolving
     Lenders from time to time prior to the Revolving Loan Commitment
     Termination Date; and

          (c)  Term B Loans will be made to the Borrower on a single
     date  prior to the Term B Loan Commitment Termination Date;

     WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article VI), to extend such
Commitments, make such Loans to the Borrower and issue and participate in such
Letters of Credit;

     WHEREAS, in order to facilitate the extension of such Commitments, the
making of such Loans and the issuance of such Letters of Credit, Calpine's
Wholly Owned Subsidiary, CNGH is acquiring Calpine Calgary Inc. which owns the
Canadian Gas Reserves, thereby providing additional security for this financing,
as requested by the Lenders;

     WHEREAS, the Letters of Credit and the proceeds of such Loans will be
used for general corporate purposes of the Borrower and its Subsidiaries,
including, capital expenditures; provided, that no Loans or Letters of Credit
may be used to finance acquisitions (other than the acquisition of equipment,
sites and property in the ordinary course of the Borrower and its Subsidiaries'
business and the refinancing of acquisitions made on or before the date hereof,
but in no event may Loans or Letters of Credit be used to finance new
acquisitions of power projects,

<PAGE>

reserves of geothermal steam and fluids and natural gas reserves) or make new
Investments in any third parties (other than investments in Subsidiaries);

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1.   Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

     "Acquisition" means an acquisition by the Borrower or any of its
Subsidiaries of power projects, reserves of geothermal steam and fluids, natural
gas reserves, and other assets within the scope of its existing business.

     "Additional Assets" means (i) any property or assets related to the
ownership, acquisition, development, construction, improvement and operation of
Facilities, including any related fuel reserves, which will be owned and used by
the Borrower or a Subsidiary; (ii) the capital stock of a Person that becomes a
Subsidiary as a result of the acquisition of such capital stock by the Borrower
or another Subsidiary or (iii) capital stock constituting a minority interest in
any Person that at such time is a Subsidiary.

     "Administrative Agents" is defined in the preamble.

     "Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power

          (a)  to vote 10% or more of the securities (on a fully diluted basis)
     having  ordinary voting power for the election of directors or managing
     general partners; or

          (b)  to direct or cause the direction of the management and policies
     of such Person whether by contract or otherwise.

     "Agent" is defined in the preamble and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section
10.4.

     "Aggregate Percentage" means, relative to any Lender, the percentage
set forth opposite its name on Schedule II under the caption "Aggregate
Percentage" or as set forth in its Lender Assignment Agreement, as such
percentage may be adjusted from time to time pursuant to Sections 2.7 or 2.8 or
pursuant to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) and delivered pursuant to Section 11.11.

                                       2

<PAGE>

     "Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.

     "Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of

          (a)  the rate of interest most recently established by Scotiabank at
     its Domestic Office as its base rate; and

          (b)  the Federal Funds Rate most recently determined by Scotiabank
     plus 1/2 of 1%.

The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans or any L/C Advances will take effect simultaneously with each change
in the Alternate Base Rate. The Agent will give notice promptly to the Borrower
and the Lenders of changes in the Alternate Base Rate.

     "Applicable LIBO Rate Margin" is the rate per annum in respect of any Loan
or L/C Advance determined by reference to the relevant "Applicable LIBO Rate
Margin" for such Loan or L/C Advance in the definition of the term "Applicable
Margin."

     "Applicable Margin" means, in the case of any Base Rate Loan, LIBO Rate
Loan or L/C Advance maintained under the Revolving Loan Commitment, a rate per
annum determined by reference to the Borrower's Credit Rating as follows:

<TABLE>
<CAPTION>
                                       Revolving Loans
                                       ---------------
                            Applicable Base     Applicable LIBO
Borrower's Credit Rating      Rate Margin         Rate Margin
------------------------      -----------         -----------
<S>                           <C>                 <C>
Level 1                       0.50%               1.50%
Level 2                       0.75%               1.75%
Level 3                       1.00%               2.00%
Level 4                       1.25%               2.25%
Level 5                       1.75%               2.75%
</TABLE>

The applicable Level for the Borrower shall be determined by reference to the
definition of the term "Borrower's Credit Rating." The Applicable Margin for any
Term B Loan maintained as a LIBO Rate Loan shall be 2.75% and the Applicable
Margin for any Term B Loan maintained as a Base Rate Loan shall be 1.75%.
Notwithstanding anything to the contrary herein, if at the time of the Borrowing
of Term B Loans hereunder, the Applicable Margin for any Term B Loan shall have
been increased or decreased from the rates set forth in the preceding sentence
in accordance with Section 11.1, the Applicable Margin for Revolving Loans as
set forth above shall be increased or decreased by a corresponding amount. For
example, if at the time of the Borrowing

                                       3

<PAGE>

of Term B Loans, the Applicable Margin for Term B Loans maintained as LIBO Rate
Loans shall be reset at 3.5%, the Applicable Margin for all Revolving Loans
shall be increased by .75% in all circumstances. Notwithstanding the foregoing,
from the Effective Date through the earlier of (i) the date the Loans have
received a rating from S&P or Moody's or (ii) September 8, 2002, the Borrower's
credit rating shall be deemed to be Level 3.

     "Arranger" or "Arrangers" means, individually or collectively as the case
may be, each of Scotiabank, BayernLB, Deutsche, Salomon Smith Barney Inc., Bank
of America, National Association, Credit Suisse First Boston, Cayman Islands
Branch and TD Securities (USA) Inc.

     "Asset Sale" means any sale, transfer, lease or other disposition described
in Section 8.2.10(b).

     "Assignee Lender" is defined in Section 11.11.1.

     "Assignment Agreement" means that certain Assignment and Security Agreement
executed and delivered by the Borrower pursuant to Section 6.1.8, substantially
in the form of Exhibit J hereto, as amended, supplemented, amended and restated
or otherwise modified from time to time.

     "Attributable Debt" means, with respect to a Sale/Leaseback Transaction,
the present value as of the date of determination (discounted at the weighted
average interest rate borne by the Senior Notes, compounded annually) of the
total obligations of the lessee for rental payments for the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).

     "Authorized Officer" means, relative to any Obligor, the president, any
executive vice president, any senior vice president, the vice president -
finance, the chief financial officer and the treasurer, in each case for whom a
signature and incumbency certificate has been delivered to the Agent.

     "Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.

     "BayernLB" means Bayerische Landesbank Girozentrale.

     "Borrower" is defined in the preamble.

     "Borrower EBITDA" means, for any period, the consolidated EBITDA of the
Borrower and its Subsidiaries, minus that portion of Consolidated Interest
Expense payable by the consolidating Subsidiaries, minus the principal payments
of the consolidating Subsidiaries, minus the consolidated non-discretionary
Capital Expenditures (i.e., Capital Expenditures which are expressly required to
be made under any agreement, contract, instrument, permit, license, law,
regulation, judgment or other arrangement (other than those arrangements and
contracts that relate to the performance of the work for which the Capital
Expenditure is being made) binding on the Borrower or any Subsidiary) of the
Borrower and its Subsidiaries, plus, without duplication, cash and Cash
Equivalent Investments of the Borrower's Wholly Owned Subsidiaries and Cogen
America that are legally and contractually available to each such

                                       4

<PAGE>

Subsidiary for the payment of dividends, but only to the extent the source of
such cash and Cash Equivalent Investments is from such Subsidiary's EBITDA or
from repayments to such Subsidiary of loans made by such Subsidiary.

     "Borrower Interest Expense" means, for any period, as applied to the
Borrower, the sum of (a) the total interest expense of the Borrower for such
period as determined in accordance with GAAP, including, without limitation, all
interest paid by the Borrower under its subordinated debt securities issued to a
Trust, plus (b) all but the principal component of rentals in respect of
Capitalized Lease Liabilities paid, accrued, or scheduled to be paid or accrued
by the Borrower, plus (c) one-third of all operating lease obligations paid,
accrued and/or scheduled to be paid by the Borrower, plus (d) capitalized
interest plus (e) dividends paid in respect of preferred stock of the Borrower
held by Persons other than the Borrower, plus (f) cash contributions to any
employee stock ownership plan to the extent such contributions are used by such
employee stock ownership plan to pay interest or fees to any person (other than
Borrower) in connection with loans incurred by such employee stock ownership
plan to purchase capital stock of the Borrower.

     "Borrower's Credit Rating" means, at any time that the Loans shall have
been rated by Standard & Poor's Ratings Group ("S&P") or Moody's Investor
Service, Inc. ("Moody's"), a level determined in accordance with the following
standards: the Borrower's Credit Rating shall be "Level 1" if the Loans have (a)
an S&P Loan Rating of BBB or better or (b) a Moody's Loan Rating of Baa2 or
better. The Borrower's Credit Rating shall be "Level 2" if the Loans do not meet
the standards for a "Level 1" rating set forth above and have (a) an S&P Loan
Rating of BBB- or better or (b) a Moody's Loan Rating of Baa3 or better. The
Borrower's Credit Rating shall be "Level 3" if the Loans do not meet the
standards for a "Level 1" or "Level 2" rating set forth above and have (a) an
S&P Loan Rating of BB+ or better or (b) a Moody's Loan Rating of Ba1 or better.
The Borrower's Credit Rating shall be "Level 4" if the Loans do not meet the
standards for a "Level 1", "Level 2" or "Level 3" rating set forth above and
have (a) an S&P Loan Rating of BB or better or (b) a Moody's Loan Rating of Ba2
or better. If the Loans do not meet the standards for "Level 1", "Level 2",
"Level 3" or "Level 4" set forth above or fail to have either an S&P Loan Rating
or a Moody's Loan Rating, then the Borrower's Credit Rating shall be "Level 5".
Notwithstanding the foregoing, if the Borrower's S&P Loan Rating and Moody's
Loan Rating shall differ by two or more Levels, the applicable Level shall be
one level numerically higher than the numerically lower of such Levels. As used
herein, "S&P Loan Rating" means the debt rating given to the Loans from time to
time by S&P and "Moody's Loan Rating" means the debt rating given to the Loans
from time to time by Moody's. In the event the Loans have an S&P Loan Rating or
a Moody's Loan Rating but not both, the Borrower's Credit Rating shall be
determined on the basis of the single rating that is available without reference
to the other rating. At all times after September 8, 2002, if the Loans shall
not have a rating from S&P or Moody's, the Borrower's Credit Rating shall be
"Level 5". Changes in the Borrower's Credit Rating shall take effect (i) in the
case of Applicable LIBO Rate Margin for LIBO Rate Loans, at the beginning of the
following Interest Period, and (ii) otherwise, as of the date of public
announcement by either S&P or Moody's.

     "Borrowing" means the Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.

                                       5

<PAGE>

     "Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit B.

     "Business Day" means

          (a)  any day which is neither a Saturday or Sunday nor a legal
     holiday on which  banks are authorized or required to be closed in San
     Francisco or New York; and

          (b)  relative to the making, continuing, prepaying or repaying of any
     LIBO Rate Loans, any day on which dealings in Dollars are carried on in the
     London interbank market.

     "Calpine Gilroy" means Calpine Gilroy Cogen, L.P., a Delaware limited
partnership.

     "Calpine Holdings" means Calpine CCFC Holdings, Inc., a Wholly Owned
Subsidiary of the Borrower.

     "Canadian Dollars" and the sign "Cdn$" shall each mean freely transferable
lawful money of Canada.

     "Canadian Gas Reserves" means the gas reserves of the Borrower's Canadian
Subsidiaries.

     "Capital Expenditures" means, for any period, the aggregate amount of all
expenditures of the Borrower and its Subsidiaries for fixed or capital assets
made during such period which, in accordance with GAAP, would be classified as
capital expenditures.

     "Capitalized Lease Liabilities" means all rental obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

     "Cash Equivalent Investment" means, at any time:

          (a)  any evidence of Indebtedness, maturing not more than one year
     after such time, issued or guaranteed by the United States government or
     an agency or instrumentality thereof;

          (b)  commercial  paper, maturing not more than nine months from the
     date of issue,  which is issued by

               (i)    a corporation (excluding Affiliates of the Borrower)
          organized under the laws of any state of the United States or of the
          District of Columbia and rated at least A-l by S&P or P-l by Moody's,
          or

                                       6

<PAGE>

               (ii)   any Lender (or its holding company or Affiliates);

          (c)  any certificate of deposit or bankers acceptance, maturing not
     more than one year after such time, which is issued by either

               (i)    a commercial banking institution that is a member of the
          Federal Reserve System and has a combined capital and surplus and
          undivided  profits  of  not  less  than $500,000,000, or

               (ii)   any Lender;

          (d)  money market mutual funds registered with the Securities and
     Exchange Commission;

          (e)  corporate evidences of indebtedness rated A or better by S&P or
     A2 or better by Moody's;

          (f)  any repurchase agreement entered into with any Lender (or other
     commercial  banking institution of the stature referred to in clause (c)
     (i)) which

               (i)    is secured by a fully perfected security interest in any
          obligation  of the type described in any of clauses (a) through (e);
          and

               (ii)   has a market value at the time such repurchase agreement
          is entered into of not less than 100% of the repurchase obligation of
          such Lender (or other commercial banking institution) thereunder; or

          (g)  any other investment approved by the Required Lenders.

     "CCEC" means Calpine Canada Energy Ltd., a Nova Scotia limited liability
company.

     "CCEF" means Calpine Canada Energy Finance ULC, a Nova Scotia unlimited
liability company, and a direct Wholly Owned Subsidiary of QCH.

     "CCFCI" means Calpine Construction Finance Company, LP a Delaware limited
partnership and an indirect, Wholly Owned Subsidiary of the Borrower.

     "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

     "CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.

     "Change in Control" means (i) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock
of the Borrower and/or (ii) any "Change of Control" under (and as defined in)
the Pre-2000 Indentures.

                                       7

<PAGE>

     "CNGC" means Calpine Natural Gas Company LP, a Delaware limited
partnership, the 99% limited partner of which is CNGH and the 1% general partner
of which is CNGGP.

     "CNGGP" means Calpine Natural Gas GP, Inc., a Delaware corporation and a
direct, Wholly Owned Subsidiary of the Borrower.

     "CNGH" means Calpine Natural Gas Holdings, Inc., a Delaware corporation and
a direct, Wholly Owned Subsidiary of the Borrower.

     "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

     "Cogen America" means Calpine Cogeneration Corporation (previously named
Cogeneration Corporation of America), a Delaware corporation of which the
Borrower owns not less than 50% of the outstanding voting stock.

     "Commitment" means, relative to any Term B Lender, its Term B Loan
Commitment and relative to any Revolving Lender, its Revolving Loan Commitment.

     "Commitment Amount" means, as the context may require, either the Term
B Loan Commitment Amount or the Revolving Commitment Amount.

     "Commitment Termination Date" means, as the context may require, either
the Revolving Loan Commitment Termination Date or the Term B Loan Commitment
Termination Date.

     "Commitment Termination Event" means

          (a)  the occurrence of any Default described in clauses (a) through
     (d) of  Section 9.1.9 with respect to the Borrower or any Significant
     Subsidiary; or

          (b)  the occurrence and continuance of any other Event of Default and
     either

               (i)    the declaration of the Loans to be due and payable
               pursuant to Section 9.3, or

               (ii)   in the absence of such declaration, the giving of notice
          by the Agent, acting at the direction of the Required Lenders, to the
          Borrower that the Commitments have been terminated.

     "Consolidated Income Tax Expense" means, for any period, as applied to the
Borrower, the provision for local, state, federal or foreign income taxes on a
consolidated basis for such period determined in accordance with GAAP.

     "Consolidated Interest Expense" means, for any period, as applied to the
Borrower, the sum of (a) the total interest expense of the Borrower and its
consolidated Subsidiaries for such period as determined in accordance with GAAP,
plus (b) all but the principal component of rentals in respect of Capitalized
Lease Liabilities paid, accrued, or scheduled to be paid or

                                       8

<PAGE>

accrued by the Borrower or its consolidated Subsidiaries, plus (c) one-third of
all operating lease obligations paid, accrued, and/or scheduled to be paid by
the Borrower and its consolidated Subsidiaries, plus (d) capitalized interest,
plus (e) dividends paid in respect of preferred stock of the Borrower or any
Subsidiary held by Persons other than the Borrower or a Wholly Owned
Subsidiary, including, without limitation, but without duplication of payments
by the Borrower to a Trust, all payments by a Trust of dividends and
distributions with respect to the Guaranteed Preferred Securities, plus (f)
cash contributions to any employee stock ownership plan to the extent such
contributions are used by such employee stock ownership plan to pay interest or
fees to any Person (other than the Borrower or a Subsidiary) in connection with
loans incurred by such employee stock ownership plan to purchase capital stock
of the Borrower.

     "Consolidated Net Income (Loss)" means, for any period, as applied to the
Borrower, the Consolidated Net Income (loss) of the Borrower and its
consolidated Subsidiaries for such period, determined in accordance with GAAP,
adjusted by excluding (without duplication), to the extent included in such net
income (loss), the following: (i) all extraordinary gains or losses; (ii) any
net income of any Person if such Person is not incorporated or organized in the
United States, a state thereof or the District of Columbia, except that (A) the
Borrower's equity in the net income of any such Person for such period shall be
included in Consolidated Net Income (Loss) up to the aggregate amount of cash
actually distributed by such Person during such period to the Borrower or a
Subsidiary incorporated or organized in the United States, a state thereof or
the District of Columbia, as a dividend or other distribution and (B) the equity
of the Borrower or a Subsidiary in a net loss of any such Person for such period
shall be included in determining Consolidated Net Income (Loss); (iii) the net
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such income is not at
the time thereof permitted, directly or indirectly, by operation of the terms of
its charter or by-laws or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary or its
stockholders; (iv) any net income (or loss) of any Person combined with the
Borrower or any of its Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of such combination; (v) any gain
(but not loss) realized upon the sale or other disposition of any property,
plant or equipment of the Borrower or its Subsidiaries (including pursuant to
any sale-and-leaseback arrangement) which is not sold or otherwise disposed of
in the ordinary course of business and any gain (but not loss) realized upon the
sale or other disposition by the Borrower or any Subsidiary of any capital stock
of any Person, provided that losses shall be included on an after-tax basis; and
(vi) the cumulative effect of a change in accounting principles; and further
adjusted by subtracting from such net income the tax liability of any parent of
the Borrower to the extent of payments made to such parent by the Borrower
pursuant to any tax sharing agreement or other arrangement for such period.

     "Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall be
calculated on a net basis (i.e., after taking into effect agreements,
undertakings and other arrangements between the Person whose obligations are
being guaranteed and the

                                       9

<PAGE>

counterparty to such Person's obligations) and shall (subject to any limitation
set forth therein) be deemed to be the outstanding net principal amount (or
maximum net principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby, or, if the principal amount is not stated or
determinable, the maximum reasonably anticipated net liability in respect
thereof as determined by the Person in good faith, provided that (y) the amount
of any Contingent Liability arising out of any indebtedness, obligation or
liability other than the items described in clauses (a), (b) and (c) of the
definition of "Indebtedness" and (z) the amount of any Contingent Liability
consisting of a "keep-well", "make well" or other similar arrangement shall be
deemed to be zero unless and until the Borrower is required to make any payment
with respect thereto (and shall thereafter be deemed to be the amount required
to be paid).

     "Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C.

     "Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.

     "Convertible Senior Notes" means the $1,200,000,000 of 4% Convertible
Senior Notes Due 2006 issued by the Borrower pursuant to the Shelf Indenture.

     "Credit Extension" means and includes (a) the advancing of any Loans by
the applicable Lenders in connection with a Borrowing, and (b) any issuance or
extension by an Issuer of a Letter of Credit.

     "CSFB" means Credit Suisse First Boston, Cayman Islands Branch.

     "CUSA" is defined in the preamble.

     "Debt" means the outstanding principal amount of all Indebtedness of the
Borrower and its consolidated Subsidiaries of the nature referred to in clauses
(a), (b), (c) and (f) of the definition of "Indebtedness," and (without
duplication) all Contingent Liabilities in respect of any of the foregoing.

     "Dedicated Assets" means, collectively, the Domestic Gas Reserves, the
Canadian Gas Reserves, all property owned by Calpine Holdings and any of its
Subsidiaries, all property owned by CCEC and any of its Subsidiaries (other than
Calpine Canada Power Holdings Ltd. and its Subsidiaries), the final 25% of the
Borrower's indirect equity ownership interest in the holding company which owns
the Whitbey Energy Centre, the Island Energy Centre and the Calgary Energy
Centre, the property subject to the Pledge Agreements, the Deeds of Trust, the
Assignment Agreement and all other property and interests pledged as collateral
security for the Obligations. The Dedicated Assets shall be ratably available to
secure the Obligations under this Agreement and the Existing Credit Agreement.

                                       10

<PAGE>

     "Dedicated Subsidiary" means CCEC and each of its Subsidiaries, Calpine
Holdings (and any successor thereto) and each of its Subsidiaries, CNGGP and
each of its Subsidiaries and CNGH and each of its Subsidiaries.

     "Deed of Trust" means each mortgage, deed of trust, or other real property
collateral security instrument in a form reasonably satisfactory to the Agent,
executed and delivered pursuant to Section 8.1.8 as amended, supplemented,
restated or otherwise modified from time to time.

     "Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.

     "Deutsche" means Deutsche Banc Alex. Brown Inc.

     "Disbursement" is defined in Section 4.5.

     "Disbursement Date" is defined in Section 4.5.

     "Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule 1, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.

     "Dollar" and the sign "$" mean lawful money of the United States.

     "Domestic Gas Reserves" means the gas reserves of the Borrower and its
Subsidiaries located in the United States.

     "Domestic Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto. A Lender may have separate Domestic Offices for purposes of
making, maintaining or continuing Base Rate Loans.

     "EBITDA" means, for any period, as applied to the Borrower, the sum of
Consolidated Net Income (Loss) (but without giving effect to adjustments,
accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent included in calculating Consolidated Net Income
(Loss): (a) Consolidated Income Tax Expense, (b) Consolidated Interest Expense,
(c) depreciation expense, (d) amortization expense and (e) all other non-cash
items reducing Consolidated Net Income, less all non-cash items increasing
Consolidated Net Income, in each case for such period; provided that, if the
Borrower has any Subsidiary that is not a Wholly Owned Subsidiary, EBITDA shall
be reduced (to the extent not otherwise reduced by GAAP) by an amount equal to
(A) the consolidated net income (loss) of such Subsidiary (to the extent
included in Consolidated Net Income (Loss)) multiplied by (B) the quotient of
(1) the number of shares of outstanding common stock of such Subsidiary not
owned on the last day of such period by the Borrower or any Wholly Owned
Subsidiary of the Borrower divided by (2) the total number of shares of
outstanding common stock of such Subsidiary on the last day of such period.

                                       11

<PAGE>

     "8 1/4% Senior Notes" means the $250,000,000 of 8 1/4% Senior Notes due
2005 issued by the Borrower pursuant to the Shelf Indenture.

     "8 1/2% Senior Notes" means the $2,000,000,000 of 8 1/2% Senior Notes due
2011 issued by the Borrower pursuant to the Shelf Indenture.

     "8 3/4% Senior Note Indenture" means that certain Indenture dated as of
July 8, 1997, as supplemented by the First Supplemental Indenture dated as of
September 10, 1997 and the Second Supplemental Indenture dated as of July 31,
2000, between the Borrower and The Bank of New York, as Trustee.

     "8 3/4% Senior Notes" means the $275,000,000 of 8 3/4% Senior Notes due
2007 issued by the Borrower pursuant to the 8 3/4% Senior Note Indenture.

     "8 5/8% Senior Notes" means the $750,000,000 of 8 5/8% Senior Notes due
2010 issued by the Borrower pursuant to the Shelf Indenture.

     "Effective Date" means the date on or before March 15, 2002, specified
in a written notice from the Agent on which this Agreement becomes effective
pursuant to Section 11.8.

     "Environmental Laws" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and guidelines (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment.

     "Equivalent Amount" means, on any date, and in respect of any Foreign
Currency Letter of Credit, the equivalent amount in U.S. Dollars of the Stated
Amount of any such Foreign Currency Letter of Credit (or any related
Reimbursement Obligations or Disbursements) denominated in either Canadian
Dollars or Sterling, as the case may be, determined by using the quoted spot
rate at which the Issuer of such Letter of Credit offers to exchange Dollars for
such Canadian Dollars or Sterling at the opening of business on such date.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

     "Event of Default" is defined in Section 9.1.

     "Excepted Prospects" is defined in Section 6.1.14.

     "Existing Credit Agreement" means that certain Second Amended and Restated
Credit Agreement dated as of May 23, 2000, among the Borrower, various lenders
and Scotiabank, as administrative agent, as the same may be amended from time
to time.

     "Existing Letters of Credit" means the letters of credit and bank guarantee
described in Schedule 4.10.

                                       12

<PAGE>

     "Facility" means a power generation facility or energy producing
facility and all related assets and facilities, including any related fuel
reserves.

     "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to

          (a)  the weighted average of the rates on overnight federal funds
     transactions with members of the Federal Reserve System arranged by federal
     funds brokers, as published for such day (or, if such day is not a Business
     Day, for the next preceding Business Day) by the Federal Reserve Bank of
     New York; or

          (b)  if such rate is not so published for any day which is a Business
     Day, the average of the quotations for such day on such transactions
     received by Scotiabank from three federal funds brokers of recognized
     standing selected by it.

     "Fee Letter" means the fee letter agreement described in Section 3.3.2.

     "Fiscal Quarter" means any period of three consecutive months ending on
March 31, June 30, September 30 or December 31 of any year.

     "Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "2002 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.

     "Foreign Currency Letter of Credit" means any Letter of Credit denominated
in either Canadian Dollars or Sterling.

     "Foreign Currency Letter of Credit Commitment Amount" means $200,000,000.

     "Foreign Currency Letter of Credit Outstandings" means any Letter of Credit
Outstandings in respect of Foreign Currency Letters of Credit.

     "F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.

     "GAAP" is defined in Section 1.4.

     "Guaranteed Preferred Securities" means the preferred securities issued by
one of the Trusts, from time to time, including, without limitation the
$276,000,000 of principal amount of such securities issued in October, 1999,
the $300,000,000 of principal amount of such securities issued in January,
2000, the $60,000,000 of principal amount of such securities issued in
February, 2000, and the $517,500,000 of principal amount of such securities
issued in August, 2000.

     "Guarantors" means, collectively, QM, JOQ and QCH and any other Subsidiary
of the Borrower that executes a joinder to the Guaranty and becomes a party
thereto.

                                       13

<PAGE>

     "Guaranty" means the guaranty executed and delivered by the Guarantors
pursuant to Section 6.1.3, which shall be substantially in the form of Exhibit H
hereto, as amended, supplemented or otherwise modified from time to time.

     "Hazardous Material" means

          (a)  any "hazardous substance", as defined by CERCLA;

          (b)  any "hazardous waste", as defined by the Resource Conservation
     and Recovery Act, as amended;

          (c)  any petroleum product; or

          (d)  any pollutant or contaminant or hazardous, dangerous or toxic
     chemical, material or substance within the meaning of any other applicable
     federal, state or local law, regulation, ordinance or requirement
     (including consent decrees and administrative orders) relating to or
     imposing liability or standards of conduct concerning any hazardous, toxic
     or dangerous waste, substance or material, all as amended or hereafter
     amended.

     "Hazardous Materials Indemnity" means that certain Hazardous Materials
Indemnity executed and delivered by the Borrower pursuant to Section 8.1.8, in a
form satisfactory to the Administrative Agents, as amended, supplemented,
restated or otherwise modified from time to time.

     "Hedging Obligations" means, with respect to any Person, the net
liabilities of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, foreign exchange
contracts, currency swap agreements and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates and (b) commodity or power swap or exchange agreements.

     "herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.

     "Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification

          (a)  which is of a "going concern" or similar nature;

          (b)  which relates to the limited scope of examination of matters
     relevant  to  such financial statement; or

          (c)  which relates to the treatment or classification of any item in
     such financial statement and which, as a condition to its removal, would
     require an adjustment

                                       14

<PAGE>

     to such item the effect of which would be to cause such Obligor to be in
     default of any of its obligations under Section 8.2.4.

     "including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.

     "Increasing Lender" is defined in Section 2.7.

     "Indebtedness" of any Person means, without duplication:

          (a)  all obligations of such Person for borrowed money and all
     obligations of such Person evidenced by bonds, debentures, notes or other
     similar instruments (excluding the Borrower's subordinated debt securities
     issued to a Trust and the Guaranteed Preferred Securities or any similar
     securities);

          (b)  all obligations, contingent or otherwise, relative to the stated
     amount of all letters of credit, whether or not drawn, and banker's
     acceptances issued for the account of such Person; provided, however, that
     if a letter of credit or banker's acceptance has been issued to support or
     secure any other form of Indebtedness, only the greater of the stated
     amount of such letter of credit or banker's acceptance or the outstanding
     principal amount of Indebtedness supported or secured, but not both, will
     be considered Indebtedness hereunder;

          (c)  all obligations of such Person as lessee under leases which have
     been or should be, in accordance with GAAP, recorded as Capitalized Lease
     Liabilities;

          (d)  all other items other than deferred taxes, deferred revenue and
     deferred leases which, in accordance with GAAP, would be included as
     liabilities on the liability side of the balance sheet of such Person as of
     the date at which Indebtedness is to be determined;

          (e)  net liabilities of such Person under all Hedging Obligations;

          (f)  whether or not so included as liabilities in accordance with
     GAAP, all net obligations of such Person to pay the deferred purchase price
     of property or services (excluding accounts payable incurred in the
     ordinary course of business), and indebtedness (excluding prepaid interest
     thereon) secured by a Lien on property owned or being purchased by such
     Person (including indebtedness arising under conditional sales or other
     title retention agreements), whether or not such indebtedness shall have
     been assumed by such Person or is limited in recourse, but excluding any
     royalties or similar payments to be made by such Person which are based on
     production or performance; and

          (g)  all Contingent Liabilities of such Person in respect of any of
     the foregoing.

                                       15

<PAGE>

For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, unless the indebtedness of such partnership
or joint venture is expressly nonrecourse to such Person.

     "Indemnified Liabilities" is defined in Section 11.4.

     "Indemnified Parties" is defined in Section 11.4.

     "Interest Coverage Ratio" means, for any period of four Fiscal Quarters,
the ratio of (x) the consolidated EBITDA of the Borrower and its Subsidiaries
during such period to (y) the Consolidated Interest Expense of the Borrower and
its Subsidiaries (excluding from Consolidated Interest Expense for purposes of
this clause (y) interest capitalized in connection with the construction of a
new Facility which interest is capitalized during the construction of such
Facility) incurred during such period. This ratio shall be calculated after
giving pro forma effect to any Acquisition based upon the historical audited
financial statements of the project that was the subject of the Acquisition. It
is agreed that for purposes of clause (f) of Section 8.2.2 only, the Interest
Coverage Ratio shall be calculated in conformity in all respects with the
calculation of "Consolidated Coverage Ratio" under the Pre-2000 Indentures.

     "Interest Coverage Ratio (Parent Only)" means, for any period of four
Fiscal Quarters, the ratio of (x) the Borrower EBITDA during such period to (y)
the Borrower Interest Expense (excluding from Borrower Interest Expense for
purposes of this clause (y) interest capitalized in connection with the
construction of a new Facility which interest is capitalized during the
construction of such Facility) during such period; provided, however, that if
the Interest Coverage Ratio (Parent Only) as so calculated falls below 1.70 to
1.00, then for purposes of Section 6.3.4, the Interest Coverage Ratio (Parent
Only) shall be calculated as of the end of any calendar month on a rolling
twelve month basis until the Interest Coverage Ratio (Parent Only) equals or
exceeds 1.70 to 1.00, at which time such ratio shall again be tested quarterly.
This ratio shall be calculated after giving pro forma effect to any Acquisition.

     "Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and ending on (but excluding) the day which numerically corresponds to such date
one, three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in each case as the
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that

          (a)  the Borrower shall not be permitted to select Interest Periods
     to be in effect at any one time which have expiration dates occurring on
     more than five different dates;

          (b)  Interest Periods commencing on the same date for Loans
     comprising part of the same Borrowing shall be of the same duration;

          (c)  if such Interest Period would otherwise end on a day which is
     not a Business Day, such Interest Period shall end on the next following
     Business Day (unless, if such Interest Period applies to LIBO Rate Loans,
     such next following Business Day is

                                       16

<PAGE>

     the first Business Day of a calendar month, in which case such Interest
     Period shall end on the Business Day next preceding such numerically
     corresponding day); and

          (d)  no Interest Period may end later than the date set forth in
     clause (a)  of the definition of "Commitment Termination Date".

     "Investment" means, relative to any Person, without duplication,

          (a)  any loan or advance made by such Person to any other Person
     (excluding commission, travel and similar advances to officers and
     employees made in the ordinary course of business and prepaid expenses);

          (b)  any Contingent Liability of such Person; and

          (c)  any ownership or similar interest held by such Person in any
     other Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.

     "Investment Joint Venture" means, with respect to any Person, any
corporation, partnership or other Person of which 25% or more of the outstanding
capital stock or other comparable ownership interest having ordinary voting
power to elect not less than 25% of the board of directors of such corporation
(irrespective or whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

     "Issuance Request" means a request and certificate duly executed by the
chief executive, accounting or financial Authorized Officer of the Borrower, in
substantially the form of Exhibit D (with such changes thereto as may be agreed
upon from time to time by the Agent and the Borrower), together with a properly
completed application for a Letter of Credit on an Issuer's standard form,
executed by an Authorized Officer of the Borrower. In the event of a conflict
between the terms of an application for a Letter of Credit and the terms of this
Agreement, the terms of this Agreement shall prevail.

     "Issuer" means BayernLB, so long as the Letter of Credit Outstandings in
respect of Letters of Credit issued by BayernLB and any Affiliate thereof do
not exceed $700,000,000 in the aggregate immediately after any such issuance
(or such greater amount as may be agreed by BayernLB and the Borrower), Bankers
Trust Company, so long as the Letter of Credit Outstandings in respect of
Letters of Credit issued by Bankers Trust Company and any Affiliate thereof do
not exceed $300,000,000 in the aggregate immediately after any such issuance
(or such greater amount as may be agreed by Bankers Trust Company and the
Borrower), or any Affiliate, unit of agency of any of the foregoing, any other
Lender acceptable to the Borrower and the Agent, and any successor to any of
the foregoing Persons.

                                       17

<PAGE>

     "Joint Venture" means, with respect to any Person, any corporation,
partnership or other Person of which 50% of the outstanding capital stock or
other comparable ownership interest having ordinary voting power to elect not
less than 50% of the board of directors of such corporation (irrespective or
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

     "JOQ" means JOQ Canada, Inc., a Delaware corporation and indirect, Wholly
Owned Subsidiary of CNGH.

     "knowledge" or "to the Borrower's knowledge" means the knowledge of or to
the knowledge of the president, any vice president, the general counsel, the
secretary, the chief financial officer, the controller or the vice
president-finance of the Borrower.

     "L/C Advance" is defined in Section 4.5.

     "Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit E.

     "Lenders" is defined in the preamble.

     "Letter of Credit" is defined in Section 4.1.

     "Letter of Credit Outstandings" means, at any time, an amount equal to the
sum of (a) the aggregate Stated Amount at such time of all Letters of Credit
then outstanding and undrawn (as such aggregate Stated Amount shall be adjusted,
from time to time, as a result of drawings, the issuance of Letters of Credit,
or otherwise) after converting the aggregate Stated Amounts of all Foreign
Currency Letters of Credit to the Equivalent Amount thereof, plus (b) the then
aggregate amount of all unpaid and outstanding Reimbursement Obligations (after
converting the aggregate Reimbursement Obligations with respect to Disbursements
made in either Canadian Dollars or Sterling to the Equivalent Amount thereof).

     "Leverage Ratio" means the ratio of (a) Debt to (b) Debt plus Tangible Net
Worth.

     "LIBO Rate" is defined in Section 3.2.1.

     "LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).

     "LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.

     "LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) as designated from time to time by notice from such
Lender to the Borrower and the Agent, whether or not outside the United States,
which shall be making or maintaining LIBO Rate Loans of such Lender hereunder.

                                       18

<PAGE>

     "LIBOR Reserve Percentage" is defined in Section 3.2.1.

     "Lien" means any security interest, mortgage, pledge, hypothecation,
assignment for security, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

     "Loan" means, as the context may require, either a Term B Loan or a
Revolving Loan.

     "Loan Document" means this Agreement, the Notes, the Pledge Agreements,
the Guaranty, the Deeds of Trust, the Assignment Agreement, the Hazardous
Materials Indemnity, the Fee Letter, and each other relevant agreement, document
or instrument delivered in connection therewith.

     "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets
(including power projects), business or prospects of the Borrower and its
Significant Subsidiaries taken as a whole; or (b) a material adverse change in
the ability of the Borrower or any other Obligor to perform under any Loan
Document.

     "Monthly Payment Date" means the last day of each calendar month or, if
any such day is not a Business Day, the next succeeding Business Day.

     "Moody's" is defined in the definition of the term "Borrower's Credit
Rating".

     "Net Available Cash" means, (a) with respect to any Asset Sale, the
cash or cash equivalent payments received by the Borrower or any of its
Subsidiaries in connection with such Asset Sale (including any cash received by
way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as or when received and also including the
proceeds of other property received when converted to cash or cash equivalents)
net of the sum of, without duplication, (i) all reasonable legal, title and
recording tax expenses, reasonable commissions, and other reasonable fees and
expenses incurred directly relating to such Asset Sale, (ii) all local, state,
federal and foreign taxes required to be paid or accrued as a liability by the
Borrower or any of its Subsidiaries as a consequence of such Asset Sale, (iii)
payments made to repay Indebtedness which is secured by any assets subject to
such Asset Sale in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or by applicable law, be repaid out of the proceeds from such Asset Sale and
(iv) all distributions required by any contract entered into other than in
contemplation of such Asset Sale to be paid to any holder of a minority equity
interest in such Subsidiary as a result of such Asset Sale, so long as such
distributions do not exceed such minority holder's pro rata portion (based on
such minority holder's proportionate equity interest) of the cash or cash
equivalent payments described above, net of the amounts set forth in clauses
(i)-(iii) above and (b) all cash insurance proceeds received by the Borrower or
any of its Subsidiaries from any condemnation awards or casualty losses in
respect of any of the Dedicated Assets, net of all payments made to repay
Indebtedness which is secured by the assets which were the subject of such
condemnation or casualty; provided, however, so long as no Event of Default
shall have occurred and be continuing, upon the Borrower's request within ninety
days

                                       19

<PAGE>

after the date of such occurrence, such proceeds shall be retained by the
Borrower or such Subsidiary or delivered to the Borrower or such Subsidiary to
repair or replace the property subject to such casualty so long as the Borrower
or such Subsidiary has undertaken and is diligently pursuing the repair of such
property; provided, however, that if such repairs cease or if, after such
repairs are completed, the Borrower or such Subsidiary retains any of such
proceeds, such proceeds shall thereupon be applied as provided in Section 2.2.2.

     "Net Equity Proceeds" means, with respect to any issuance by the Borrower
or a Trust of any equity securities (including the Guaranteed Preferred
Securities), the gross consideration received by or for the account of the
issuer minus underwriting and brokerage commissions, discounts and fees
relating to such issuance that are payable by the issuer.

     "New Lender" is defined in Section 2.7.

     "Nonmaterial Subsidiary Default" means any Default (excluding any Event
of Default) arising or resulting from the default or potential default by a
Subsidiary (other than a Significant Subsidiary) under any obligation or
condition under Section 8.1 of this Agreement (but not any other Section of this
Agreement) or under any other agreement, contract or undertaking binding on such
Subsidiary other than (i) the failure by such Subsidiary to make a required
payment under any Indebtedness of such Subsidiary having a principal amount in
excess of $10,000,000 and (ii) a default in the performance or observance of any
obligation or condition with respect to any Indebtedness of such Subsidiary
having a principal amount in excess of $10,000,000 and, as a result thereof, the
holder or holders of such Indebtedness, or any trustee or agent for such
holders, causes such Indebtedness to be repaid more quickly than theretofore
scheduled, whether through the introduction of a "cash sweep," the increase of
an existing "cash sweep" or otherwise.

     "Note" means, as the context may require, either a Revolving Note or a
Term Note.

     "Notes" means the Revolving Notes and the Term Notes.

     "Obligations" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Notes and each other Loan Document.

     "Obligor" means the Borrower, each Guarantor or any other Person (other
than the Agent or any Lender) obligated under, or otherwise a party to, any Loan
Document.

     "Organic Document" means, relative to any Obligor, its certificate of
incorporation, partnership agreement, or similar organizational document, its
by-laws and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock or other ownership
interests.

     "Participant" is defined in Section 11.11.2.

     "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

                                       20

<PAGE>

     "Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.

     "Percentage" means, as the context may require, a Lender's Revolving
Percentage, Term Percentage or Aggregate Percentage.

     "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.

     "Plan" means any Pension Plan or Welfare Plan.

     "Pledge Agreements" means the pledge agreements executed and delivered
pursuant to Section 6.1.4, as such agreements may be amended, supplemented,
restated or otherwise modified from time to time, which will be in substantially
the form of Exhibit I hereto and which will cover all equity interests in
Calpine Holdings, CNGGP and CNGH held by the Borrower and all of the equity
interests of QCH in CCEC and such portion of the equity interests of QM and JOQ
in CCEC sufficient to pledge to the Agent an aggregate amount of 65% of the
total equity interests of CCEC.

     "Pre-2000 Indentures" means the Senior Note Indentures other than the
Shelf Indenture and the Zero-Coupon Indenture.

     "pro forma" or "pro forma basis" means, for any period, that if the
Borrower or any Subsidiary shall have made any acquisition or disposition of
assets or capital stock (occurring by merger or otherwise) since the beginning
of such period (including any acquisition or disposition of assets or capital
stock occurring in connection with a transaction causing a calculation to be
made hereunder), subject to the qualifications set forth in the definitions
thereof, the Interest Coverage Ratio and Interest Coverage Ratio (Parent Only)
calculated for such period shall be calculated after giving pro forma effect to
such acquisition or disposition, based upon the historical audited financial
statements covering the assets or stock so acquired or disposed.

     "QCH" means Quintana Canada Holdings, LLC, a Delaware limited liability
company and indirect, Wholly Owned Subsidiary of CNGH.

     "QM" means Quintana Minerals (USA), Inc., a Delaware corporation and
indirect, Wholly Owned Subsidiary of CNGH.

     "Quarterly Payment Date" means the last day of each March, June, September,
and December or, if any such day is not a Business Day, the next succeeding
Business Day.

     "Reimbursement Obligation" is defined in Section 4.6.

                                       21

<PAGE>

     "Release" means a "release", as such term is defined in CERCLA.

     "Required Lenders" means, at any time, Lenders owed or holding (a) if the
Revolving Loan Commitments shall not have been terminated, at least 51% of the
aggregate of all Term B Loans and Revolving Loan Commitments then outstanding
or (b) if the Revolving Loan Commitments shall have been terminated, at least
51% of the aggregate amount of all Loans and L/C Advances then outstanding.

     "Required Revolving Lenders" means, at any time, Revolving Lenders having
Revolving Percentages aggregating at least 51%.

     "Required Term B Lenders" means, at any time, Term B Lenders owed or
holding (a) if the Term B Loan Commitments shall not have been terminated, at
least 51% of the Term Percentages or (b) if the Term B Loan Commitments shall
have been terminated, at least 51% of the aggregate amount of all Term B Loans
then outstanding.

     "Reset Date" is defined in Section 4.12.

     "Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery  Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.

     "Restricted Subsidiary" has the meaning given in the Pre-2000 Indentures.

     "Revolving Commitment Amount" means, on any date, $1,000,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2 or increased
pursuant to Section 2.7.

     "Revolving Commitment Availability" means, on any date, the excess of (a)
the then Revolving Commitment Amount, over (b) the sum of (i) the outstanding
principal amount of all Revolving Loans on such date plus (ii) the Letter of
Credit Outstandings on such date.

     "Revolving Lead Arrangers" means Scotiabank, BayernLB, Deutsche, CSFB, CUSA
and Bank of America, National Association.

     "Revolving Lender" means each Lender that holds a Revolving Loan Commitment
or a Revolving Loan.

     "Revolving Loan" means each Loan made by the Revolving Lenders pursuant to
the Revolving Loan Commitment.

     "Revolving Loan Commitment" is defined in Section 2.1.2.

     "Revolving Loan Commitment Termination Date" means the earliest of

          (a)  May 24, 2003;

          (b)  the date on which the Revolving Loan Commitments of the
     Revolving Lenders are terminated in full or reduced to zero pursuant to
     Section 2.2; and

          (c)  the date on which any Commitment Termination Event occurs.

                                       22

<PAGE>

Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitments shall terminate automatically and without any further action.

     "Revolving Note" means a promissory note of the Borrower payable to the
order of any Revolving Lender, in the form of Exhibit A-1 (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Revolving Lender
resulting from its outstanding Revolving Loans and L/C Advances, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.

     "Revolving Percentage" means, relative to any Revolving Lender, the
percentage set forth opposite its name on Schedule II under the caption
"Revolving Percentage" or as set forth in its Lender Assignment Agreement, as
such percentage may be adjusted from time to time pursuant to Section 2.7 or
pursuant to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) and delivered pursuant to Section 11.11. After the Revolving
Loan Commitment Termination Date, relative to any Revolving Lender, at any time,
such Revolving Lender's "Revolving Percentage" shall be as in effect immediately
prior to the Revolving Commitment Termination Date and after giving effect to
any Lender Assignment Agreement(s) of such Lender executed by such Lender and
its Assignee Lender(s) and delivered pursuant to Section 11.11 at or prior to
such time.

     "S&P" is defined in the definition of the term "Borrower's Credit Rating".

     "Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Borrower or a Subsidiary transfers such
property to a Person and leases it back from such Person, other than leases for
a term of not more than 36 months or between the Borrower and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries. "Sale/Leaseback Transactions"
shall not include any arrangements or transactions constituting Capitalized
Lease Liabilities.

     "Scotiabank" is defined in the preamble.

     "Senior Note Indentures" means, collectively, the 7 3/4% Senior Note
Indenture, the 7 5/8% Senior Note Indenture, the 7 7/8% Senior Note Indenture,
the 8 3/4% Senior Note Indenture, the Shelf Indenture (to the extent relating
solely to the Senior Notes), the 10 1/2% Senior Note Indenture and the Zero
Coupon Indenture.

     "Senior Notes" means, collectively, the 7 3/4% Senior Notes, the 7 5/8%
Senior Notes, the 7 7/8% Senior Notes, the 8 1/4% Senior Notes, the 8 1/2%
Senior Notes, the 8 3/4% Senior Notes, the 8 5/8% Senior Notes, the 10 1/2%
Senior Notes, the Convertible Senior Notes and the Zero-Coupon Debentures.

     "7 5/8% Senior Note Indenture" means that certain Indenture dated as of
March 29, 1999, as supplemented by the First Supplemental Indenture dated as of
July 31, 2000, between the Borrower and The Bank of New York, as Trustee.

     "7 5/8% Senior Notes" means the $250,000,000 of 7 5/8% Senior Notes due
2006 issued by the Borrower pursuant to the 7 5/8% Senior Note Indenture.

                                       23

<PAGE>

     "7 7/8% Senior Note Indenture" means that certain Indenture dated as of
March 31, 1998, as supplemented by the First Supplemental Indenture dated as of
July 24, 1998 and the Second Supplemental Indenture dated as of July 31, 2000,
between the Borrower and The Bank of New York, as Trustee.

     "7 7/8% Senior  Notes" means the $400,000,000 of 7 7/8% Senior Notes due
2008 issued by the Borrower  pursuant to the 7 7/8% Senior Note Indenture.

     "7 3/4% Senior Note Indenture" means that certain Indenture dated as of
March 29, 1999, as supplemented by the First Supplemental Indenture dated as of
July 31, 2000, between the Borrower and The Bank of New York, as Trustee.

     "7 3/4% Senior Notes" means the $350,000,000 of 7 3/4% Senior Notes due
2009 issued by the Borrower pursuant to the 7 3/4% Senior Note Indenture.

     "Shelf Indenture" means that certain Indenture dated as of August 10,
2000, as supplemented from time to time, between the Borrower and Wilmington
Trust Company, as Trustee.

     "Significant Subsidiary" means each Subsidiary of the Borrower that

          (a)  accounted for at least 10% of consolidated revenues of the
     Borrower and its Subsidiaries or 10% of consolidated earnings of the
     Borrower and its Subsidiaries before interest and taxes, in each case for
     the last four full Fiscal Quarters immediately preceding the date as of
     which any such determination is made; or

          (b)  has assets which represent at least 10% of the consolidated
     assets of the Borrower and its Subsidiaries as of the last day of the
     last Fiscal Quarter of the Borrower immediately preceding the date as of
     which any such determination is made,

all of which shall be as reflected on the financial statements of the Borrower
for the period, or as of the date, in question.

     "Solvency Certificates" means the solvency certificates to be executed
and delivered to the Agent for the benefit of the Lenders by the chief financial
officer or an Authorized Representative of each of CCEC, CCEF and QCH in a form
reasonably acceptable to the Agent.

     "Solvent" means, as to any Person at any time, that (i) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (whether subordinated, contingent, unmatured, unliquidated or
otherwise); (ii) the present fair saleable value of the property of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (iii) such
Person is able to pay its debts and other liabilities as they mature in the
normal course of business; (iv) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and (v) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital.

                                       24

<PAGE>

     "Special Purpose Subsidiary" is defined in Section 8.2.2(e).

     "Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.

     "Stated Expiry Date" is defined in Section 4.1(b).

     "Stated Maturity Date" means, in the case of Revolving Loans, May 24,
2003 and, in the case of Term B Loans, the 24 month anniversary of the date of
the Borrowing thereof (or if the Term B Loans are not borrowed, of the date
hereof).

     "Sterling" and the sign "[pound]"shall mean freely transferable lawful
money of the United Kingdom.

     "Subordinated Debt" means all unsecured Indebtedness of the Borrower for
money borrowed which is subordinated, upon terms satisfactory to the Agent and
the Required Lenders, in right of payment to the payment in full in cash of all
Obligations.

     "Subsidiary" means, with respect to any Person, any corporation,
partnership or other Person of which at least 50% of the outstanding capital
stock or other comparable ownership interest having ordinary voting power to
elect a majority of the board of directors of such corporation, partnership or
other Person (irrespective of whether at the time capital stock of any other
class or classes of such corporation, partnership or other Person shall or might
have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.

     "Tangible Net Worth" means the consolidated net worth of the Borrower and
its Subsidiaries, including the aggregate outstanding face amount of the
Guaranteed Preferred Securities, after subtracting therefrom the aggregate
amount of any intangible assets of the Borrower and its Subsidiaries, including
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks and brand names.

     "Taxes" is defined in Section 5.6.

     "10 1/2% Senior Note Indenture" means that certain Indenture dated as of
May 16, 1996, as supplemented by the First Supplemental Indenture dated as of
August 1, 2000, between Borrower and State Street Bank and Trust Company (as
successor trustee to Fleet National Bank), as Trustee.

     "10 1/2% Senior Notes" means the $180,000,000 of 10 1/2% Senior Notes due
2006 issued by the Borrower pursuant to the 10 1/2% Senior Note Indenture.

     "Term B Lead Arrangers" means Salomon Smith Barney Inc. and/or CUSA,
Deutsche and CSFB.

     "Term B Lender" means each Lender that holds a Term B Loan Commitment or
a Term B Loan.

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<PAGE>

     "Term B Loan" is defined in Section 2.1.1.

     "Term B Loan Commitment" is defined in Section 2.1.1.

     "Term B Loan Commitment Amount" means, on any date, $600,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2 or increased
pursuant to Section 2.8.

     "Term B Loan Commitment Termination Date" means the earliest of

          (a)  June 8, 2002;

          (b)  the date of the initial Borrowing of Term B Loans;

          (c)  the date on which the Term B Loan Commitments of the Term B
     Lenders are terminated in full or reduced to zero in accordance with
     Section 2.2; and

          (d)  the date on which any Commitment Termination Event occurs.

     Upon the occurrence of any event described above, the Term B Loan
Commitments shall terminate automatically and without any further action.

     "Term Note" means a promissory note of the Borrower payable to the order
of any Term B Lender, in the form of Exhibit A-2 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Term B Lender
resulting from its outstanding Term B Loan, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.

     "Term Percentage" means, relative to any Term B Lender, the percentage set
forth opposite its name on Schedule II under the caption "Term Percentage" or
as set forth in its Lender Assignment Agreement, as such percentage may be
adjusted from time to time pursuant to Section 2.8 or pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 11.11.

     "Trust" means Calpine Capital Trust, Calpine Capital Trust II and Calpine
Capital Trust III, each a Delaware business trust.

     "type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.

     "United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.

     "U.S. Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States of America.

     "Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.

     "Wholly Owned Subsidiary" means a Subsidiary all the capital stock of which
(other than directors' qualifying shares) is owned by the Borrower or another
Wholly Owned Subsidiary.

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<PAGE>

     "Zero-Coupon Debentures" means the outstanding Zero-Coupon Convertible
Debentures due 2021 issued by the Borrower pursuant to the Zero-Coupon
Indenture.

     "Zero-Coupon Indenture" means that certain Indenture dated as of April 30,
2001 between the Borrower and Wilmington Trust Company as Trustee.

     SECTION 1.2.   Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.

     SECTION 1.3.   Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in
any Article, Section or definition to any clause are references to such clause
of such Article, Section or definition.

     SECTION 1.4.   Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 8.2.4) shall be made, and all financial
statements required /to be delivered hereunder or thereunder shall be prepared
in accordance with, generally accepted accounting principles ("GAAP") in effect
in the United States from time to time.

                                     ARTICLE II

                   COMMITMENTS, BORROWING PROCEDURES AND NOTES

     SECTION 2.1.   Commitments. On the terms and subject to the conditions of
this Agreement  (including  Article VI), each Lender severally agrees to make
Loans pursuant to the Commitments described in this Section 2.1.

     SECTION 2.1.1.   Term B Loan Commitment. On a date prior to the Term B Loan
Commitment Termination Date, each Term B Lender severally will make loans in
U.S. Dollars (relative to such Lender, its "Term B Loan") to the Borrower equal
to such Lender's Term Percentage of the aggregate amount of the Borrowing of
Term B Loans requested by the Borrower to be made on such day. The Commitment of
each Term B Lender described in this Section 2.1.1 is herein referred to as its
"Term B Loan Commitment". On the date of the initial Borrowing of Term B Loans
hereunder, the Term B Loan Commitment shall terminate, and any portion of the
Term B Loan Commitment Amount that is not borrowed on such date shall be
extinguished. No amounts paid or prepaid with respect to Term B Loans may be
reborrowed.

     SECTION 2.1.2.   Revolving Loan Commitment. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
each Revolving Lender severally will make loans in U.S. Dollars (relative to
such Lender, its "Revolving Loans") to the Borrower equal to such Lender's
Revolving Percentage of the aggregate amount of the Borrowing of Revolving
Loans requested by the Borrower to be made on such day. On the terms

                                       27

<PAGE>

and subject to the conditions hereof, the Borrower may from time to time
borrow, prepay and reborrow Revolving Loans.

     SECTION 2.1.3.   Commitment to Issue Letters of Credit. From time to time
on any Business Day, an Issuer will issue, and each Revolving Lender will
participate in, the Letters of Credit, in accordance with Article IV.

     SECTION 2.1.4.   Lenders Not Permitted or Required To Make Loans or Issue
or Participate in Letters of Credit Under Certain Circumstances.  No Lender or
Issuer, as the case may be, shall be permitted or required to

          (a)  make its Term B Loan if, after giving effect thereto,

               (i)    the aggregate outstanding principal amount of all Term B
          Loans of all Lenders  would exceed the Term B Loan Commitment Amount,
          or

               (ii)   the aggregate outstanding principal amount of the Term B
          Loans of such Lender would exceed such Lender's Term Percentage of
          the Term B Loan Commitment Amount;

          (b)  make any Revolving Loan if, after giving effect thereto,

               (i)    the aggregate outstanding principal amount of all
     Revolving Loans of all Lenders, together with all Letter of Credit
     Outstandings, would exceed the Revolving Commitment Amount, or

               (ii)   the aggregate outstanding principal amount of all
     Revolving Loans of such Lender, together with its Revolving Percentage of
     all Letter of Credit Outstandings, would exceed such Lender's Revolving
     Percentage of the Revolving Commitment Amount; or

          (c)  issue (in the case of an Issuer) or participate in (in the case
     of each Revolving Lender) any Letter of Credit prior to the Revolving Loan
     Commitment Termination Date, if, after giving effect thereto

               (i)    all Letter of Credit Outstandings together with the
     aggregate outstanding principal amount of all Revolving Loans of all
     Lenders would exceed the Revolving Commitment Amount,

               (ii)   in the case of the issuance of any Foreign Currency Letter
     of Credit, the Equivalent Amount of all Foreign Currency Letter of Credit
     Outstandings would exceed the Foreign Currency Letter of Credit Commitment
     Amount, or

               (iii)  such Lender's Revolving Percentage of all Letter of
     Credit Outstandings together with the aggregate outstanding principal
     amount of all Revolving Loans of such Lender would exceed such Lender's
     Revolving Percentage of the Revolving Commitment Amount.

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<PAGE>

     SECTION 2.2.     Reduction of Commitment Amounts. The Commitment Amounts
are subject to reduction from time to time pursuant to this Section 2.2.

     SECTION 2.2.1.   Optional Reduction. The Borrower may, from time to time
on any Business Day voluntarily reduce any Commitment Amount; provided,
however, that all such reductions shall require at least three Business Days'
prior notice to the Agent and be permanent reductions of such Commitment
Amount, and any partial reduction of any Commitment Amount shall be in a
minimum amount of $2,000,000 and in an integral multiple of $500,000.

     SECTION 2.2.2.   Mandatory Reductions.

          (a)  There shall be a mandatory reduction of the Term B Loan
     Commitment Amount, the Revolving Commitment Amount and the commitments
     under the Existing Credit Agreement by an amount equal to one hundred
     percent (100%) of Net Available Cash from any Asset Sale of any Dedicated
     Assets; provided, however, that the Borrower may, at its discretion retain
     (and, as a consequence of such retention, these shall be excluded from such
     mandatory reduction) up to an aggregate of $75,000,000 of such Net
     Available Cash so long as such Net Available Cash is applied by the
     Borrower in accordance with Section 8.2.10(b) hereof.

          (b)  Upon the conversion of any non-cash proceeds realized from any
     transaction described in clause (a) above (whether received by the Borrower
     or any Subsidiary) to cash, the principal amount of such proceeds and any
     interest attributable thereto shall be deemed to be Net Available Cash and
     applied by the Agent as hereinafter provided.

          (c)  Any reduction of the Commitment Amounts described in clauses (a)
     and (b) shall be effective on the first Business Day following the
     Borrower's receipt of any related Net Available Cash. All such amounts
     shall be applied to the ratable reduction of the Term B Loan Commitment
     Amount, the Revolving Commitment Amount and the commitments under the
     Existing Credit Agreement. To that end, such amounts shall first be applied
     to ratably prepay the Term B Loans, Revolving Loans and the loans under
     the Existing Credit Agreement, and the corresponding cancellation of the
     Revolving Commitment Amount and the commitments under the Existing Credit
     Agreement by the respective amount of such prepayments and to the
     cancellation of the unused portion of the Revolving Commitment Amount and
     the commitments under the Existing Credit Agreement and finally to ratably
     cash collaterize outstanding Letter of Credit and letters of credit under
     the Existing Credit Agreement.

          (d)  To the extent that prior to the Revolving Loan Commitment
     Termination Date the Revolving Commitment Amount is less than the aggregate
     amount of the Letter of Credit Outstandings and Revolving Loans on any date
     prior to the Revolving Loan Commitment Termination Date, then the Borrower
     must deposit with the Agent cash collateral in accordance with Section 4.7
     hereof.

          (e)  Notwithstanding anything to the contrary in this Section 2.2.2
     (but subject to the terms of Section 2.2.3), if the Term B Lead Arrangers
     shall demand a mandatory

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<PAGE>

     prepayment of the Term B Loans pursuant to the terms of the Fee Letter,
     all Term B Loans shall be due and payable, and any payment in respect
     thereof shall be applied as a mandatory reduction of the Term B Loan
     Commitment Amount.

     SECTION 2.2.3.   Post Default Application. After the occurrence and during
the continuance of an Event of Default, all optional and mandatory reductions
of Commitment Amounts under Section 2.2.1 and Section 2.2.2 shall be applied to
the pro rata reduction of all outstanding Revolving Loans, Term B Loans and
outstanding loans under the Existing Credit Agreement and the
cash-collateralization of any letters of credit outstanding under the Existing
Credit Agreement and any Letters of Credit outstanding hereunder.

     SECTION 2.3.   Borrowing Procedure. By delivering a Borrowing Request to
the Agent on or before 10:00 a.m., San Francisco time, on a Business Day, an
Authorized Officer of the Borrower may from time to time irrevocably request,
on not less than three days, in the case of LIBO Rate Loans, or one day in the
case of Base Rate Loans, nor more than five Business Days' notice, that a
Borrowing be made in a minimum amount of $2,000,000 or in the unused amount of
the applicable Commitment. The Agent shall promptly transmit the information in
the Borrower's request to each applicable Lender. On the terms and subject to
the conditions of this Agreement, each Borrowing shall be comprised of the type
of Loans, and shall be made on the Business Day, specified in such Borrowing
Request. On or before 11:00 a.m. (San Francisco time) on the Business Day
specified in such Borrowing Request each applicable Lender shall deposit with
the Agent same day funds in an amount equal to such Lender's applicable
Percentage of the requested Borrowing. Such deposit will be made to an account
which the Agent shall specify from time to time by notice to the Lenders. To
the extent funds are received from the applicable Lenders, the Agent shall make
such funds available to the Borrower by wire transfer to the accounts the
Borrower shall have specified in its Borrowing Request. No Lender's obligation
to make any Loan or L/C Advance shall be affected by any other Lender's failure
to make any Loan or L/C Advance.

     SECTION 2.4.   Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m., San
Francisco time, on a Business Day, an Authorized Officer of the Borrower may
from time to time irrevocably elect, on not less than three nor more than five
Business Days' notice that all, or any portion in an aggregate minimum amount of
$2,000,000 of any Loans be, in the case of Base Rate Loans, converted into LIBO
Rate Loans or, in the case of LIBO Rate Loans, be converted into a Base Rate
Loan or continued as a LIBO Rate Loan (in the absence of delivery of a
Continuation/ Conversion Notice with respect to any LIBO Rate Loan at least
three Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (i) each such conversion
or continuation shall be pro rated among the applicable outstanding Loans of all
Lenders, and (ii) no portion of the outstanding principal amount of any Loans
may be continued as, or be converted into, LIBO Rate Loans when any Default has
occurred and is continuing. The Agent shall promptly transmit the information in
each Continuation/Conversion Notice to each Lender.

     SECTION 2.5.   Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing
one of its foreign branches or

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<PAGE>

Affiliates (or an international banking facility created by such Lender) to
make or maintain such LIBO Rate Loan; provided, however, that such LIBO Rate
Loan shall nonetheless be deemed to have been made and to be held by such
Lender, and the obligation of the Borrower to repay such LIBO Rate Loan shall
nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility; provided, further, that each
Lender shall use reasonable efforts in making any such election to minimize the
costs payable by the Borrower hereunder with respect to any Loan, Commitment or
Letter of Credit. In addition, the Borrower hereby consents and agrees that,
for purposes of any determination to be made for purposes of Section 5.1, 5.2,
5.3 or 5.4, it shall be conclusively assumed that each Lender elected to fund
all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's
interbank eurodollar market.

     SECTION 2.6.   Notes; Register. Unless the Agent shall have been advised by
a Lender that it does not want to receive a Note, each Lender's Loans under
each of its Commitments shall be evidenced by a Note payable to the order of
such Lender in a maximum principal amount equal to such Lender's applicable
Percentage of the original applicable Commitment Amount. Whether or not a Loan
is evidenced by a Note, the Borrower hereby designates Agent to serve as its
agent, solely for the purposes of this Section, to maintain a register (the
"Register") on which Agent will record the name and address of each Lender, the
Commitments and Loans and each repayment in respect of the principal amount of
the Loans of each Lender from time to time. No payment with respect to the
outstanding principal and interest applicable for each of the Loans shall be
made to any Person other than the Person identified in such Register as the
Lender. Failure to make any such recordation or any errors in such recordation
shall not affect the Borrower's obligations in respect of such Loans. The
entries in the Register shall be conclusive and binding on the Borrower absent
manifest error. Upon reasonable notice and during normal business hours,
representatives of the Borrower may from time to time inspect the Register. The
Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's Notes (or on
any continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans and L/C Advances evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower
or any other Obligor.

     SECTION 2.7.   Increase in Revolving Commitment Amount.

          (a)  Provided that no Default then exists, the Borrower may, on any
     Business Day prior to May 24, 2003, request in writing that the then
     effective Revolving Commitment Amount be increased in accordance with the
     provisions of this Section. The Borrower may make only one request under
     this Section and in no event may the aggregate amount of such increase
     exceed $400,000,000. Any request under this Section to increase the
     Revolving Commitment Amount shall be submitted by the Borrower to the
     Revolving Lead Arrangers, and shall specify the proposed effective date
     (which date shall be not less than 5 days after the date of such request)
     and the amount of such increase (which shall be in integral multiples of
     $1,000,000). No Lender shall have any obligation, express or implied, to
     offer to increase its Revolving Loan Commitment. Only the consent of the
     Revolving Lead Arrangers and those Lenders that have increased

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<PAGE>

     their Revolving Loan Commitments (the "Increasing Lenders") shall be
     required for an increase in the Revolving Commitment Amounts pursuant to
     this Section.

          (b)  The Borrower may accept some or all of the offered amounts from
     the then-current Lenders or designate new lenders which are reasonably
     acceptable to the Revolving Lead Arrangers and each Issuer as additional
     Lenders hereunder in accordance with clause (c) of this Section (each, a
     "New Lender"), which New Lender may assume all or a portion of the
     increase in the Revolving Commitment Amount. The Revolving Lead Arrangers
     and the Borrower shall have discretion to adjust the allocation of the
     increased Revolving Commitment Amount among Increasing Lenders and New
     Lenders.

          (c)  Each New Lender designated by the Borrower and reasonably
     acceptable to the Revolving Lead Arrangers and each Issuer shall become
     an additional party hereto as a New Lender concurrently with the
     effectiveness of the proposed increase in the Revolving Commitment Amount
     upon its execution of an instrument of joinder to this Agreement which is
     in form and substance reasonably acceptable to the Revolving Lead
     Arrangers and each Issuer and which, in any event, contains the
     representations, warranties, indemnities and other protections afforded
     to the Revolving Lead Arrangers, the Agent and the other Lenders.

          (d)  Concurrently with the effectiveness of any increase in the
     Revolving Commitment Amount pursuant to this Section 2.7, all obligations
     of the Borrower under the Existing Credit Agreement shall be repaid or
     otherwise terminated and the commitments of all lenders and letter of
     credit issuers thereunder terminated. Subject to the foregoing, any
     increase requested by the Borrower shall be effective as of the date
     proposed by the Borrower and shall be in the principal amount equal to
     (i) the amount which Increasing Lenders are willing to assume as
     increases to the amount of their Commitments plus (ii) the amount offered
     by any New Lender, in either case as adjusted by the Revolving Lead
     Arrangers and the Borrower pursuant to Section 2.7(b). Upon the
     effectiveness of any such increase, if requested by a Lender, the
     Borrower shall issue replacement Notes to each Increasing Lender and new
     Notes to each New Lender, and the applicable Percentages of each Lender
     will be adjusted to give effect to the increase in the Revolving
     Commitment Amount as set forth in a new Schedule II issued by the Agent.
     To the extent that the adjustment of Percentages results in loss or
     expenses to any Lender as a result of the prepayment of any LIBO Rate
     Loan on a date other than the scheduled last day of the Interest Period
     applicable thereto, the Borrower shall be responsible for such loss or
     expenses pursuant to Section 5.4.

     SECTION 2.8.   Increase in Term B Loan Commitment Amount. Provided that no
Default then exists, on any Business Day prior to the Term B Loan Commitment
Termination Date, the Borrower, with the prior written consent of the Term B
Lead Arrangers, may increase the Term B Loan Commitment Amount in accordance
with the provisions of this Section. No Lender shall have any obligation,
express or implied, to offer to increase its Term B Loan Commitment.
Concurrently with the effectiveness of any increase in the Term B Loan
Commitment Amount pursuant to this Section 2.8, there shall be a corresponding
reduction of the Revolving Commitment Amount. Upon the effectiveness of any
such increase, the applicable Percentages of each Lender will be adjusted to
give effect to the increase in the

                                       32

<PAGE>

Term B Loan Commitment Amount and corresponding reduction of the Revolving
Commitment Amount as set forth in a new Schedule II issued by the Agent. To the
extent that the adjustment of Percentages results in loss or expenses to any
Lender as a result of the prepayment of any LIBO Rate Loan on a date other than
the scheduled last day of the Interest Period applicable thereto, the Borrower
shall be responsible for such loss or expenses pursuant to Section 5.4.

                                   ARTICLE III

                   REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1.   Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the applicable Stated Maturity
Date therefor.

     SECTION 3.1.1.   Payment Terms. Prior to the Stated Maturity Date of each
Loan, the Borrower

          (a)  may, from time to time on any Business Day, make a voluntary
     prepayment, in whole or in part, of the outstanding principal amount of
     any Loans; provided, however, that

               (i)    any such prepayment shall be made pro rata among Loans of
          the same type and, if applicable, having the same Interest Period,
          of all Lenders;

               (ii)   no such prepayment of any LIBO Rate Loan may be made on
          any day other than the last day of the Interest Period for such
          Loan, unless the Borrower also pays all losses and expenses (for
          which the Borrower has received written notice, including
          calculations in reasonable detail) as a result of such prepayment as
          provided in Section 5.4;

               (iii)  all such voluntary prepayments shall require at least
          three but no more than five Business Days' prior written notice to
          the Agent; and

               (iv)   all such voluntary partial prepayments shall be in an
          aggregate minimum amount of $2,000,000; and

          (b)  shall, on each date when any reduction in a Commitment Amount
     shall become effective, make a mandatory prepayment (which, in the case
     of the Revolving Loan Commitment, shall be applied (or held for
     application, as the case may be) as set forth in Section 2.2.2(c);

          (c)  shall, immediately upon any acceleration of the Commitment
     Termination Date of any Loans pursuant to Section 9.2 or Section 9.3,
     repay all Loans, unless, pursuant to Section 9.3, only a portion of all
     Loans is so accelerated;

          (d)  shall, on each Quarterly Payment Date, deliver cash collateral
     to the Agent in an amount equal to the excess, if any, of the sum of (i)
     the outstanding principal amount of all Loans plus (ii) all Letter of
     Credit Outstandings over the Revolving Commitment Amount;

                                       33

<PAGE>

          (e)  shall, if a Default shall have occurred and be continuing on any
     date that the Borrower gives notice of the purchase, redemption or
     prepayment of the Zero Coupon Debentures in cash, or if an Event of
     Default shall have occurred and be continuing on any date that the
     Borrower purchases, redeems or prepays the Zero Coupon Debentures, make a
     mandatory prepayment in an amount equal to the outstanding principal
     amount of all Revolving Loans then outstanding and deposit with the
     Agent, cash collateral in an amount equal to the outstanding Term B Loans
     and outstanding Letters of Credit; and

          (f)  shall, if any non-cash proceeds from any Asset Sale of any
     Dedicated Assets shall be received by a Subsidiary that is not directly
     or indirectly owned by a Dedicated Subsidiary, thereupon make a mandatory
     prepayment, and corresponding reduction of Commitments pursuant to
     Section 2.2.2 in an amount equal to the fair market value of such
     proceeds, as reasonably determined by the Agent.

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 5.4. No voluntary
prepayment of principal of any Revolving Loans shall cause a reduction in the
Revolving Commitment Amount. No mandatory prepayment of principal of any
Revolving Loans under paragraph (e) shall cause a reduction in the Revolving
Commitment Amount.

     SECTION 3.1.2.   Post Default Application of Payments. Notwithstanding any
provision of Sections 2.2.2 or 3.1.1 to the contrary, after the occurrence and
during the continuance of an Event of Default, all optional and mandatory
payments under Section 3.1.1 shall be applied first to pay any fees and expenses
then due and owing hereunder and under the Existing Credit Agreement, second to
the pro rata payment of accrued and unpaid interest on all Loans hereunder and
under the Existing Credit Agreement and third as set forth in Section 2.2.2(c).

     SECTION 3.2.   Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.

     SECTION 3.2.1.   Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:

          (a)  on that portion maintained from time to time as a Base Rate
     Loan, equal to the sum of the Alternate Base Rate from time to time in
     effect plus the Applicable Margin; and

          (b)  on that portion maintained as a LIBO Rate Loan, during each
     Interest Period applicable thereto, equal to the sum of the LIBO Rate
     (Reserve Adjusted) for such Interest Period plus the Applicable Margin.

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<PAGE>

     The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:

                           =                 LIBO Rate
 LIBO Rate                             -------------------------------
(Reserve Adjusted)                     1.00 - LIBOR Reserve Percentage

The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Agent on the basis of the LIBOR Reserve Percentage in
effect on, and the applicable rates furnished to and received by the Agent from
Scotiabank, two Business Days before the first day of such Interest Period.

     "LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to Scotiabank's LIBOR Office in the
London interbank market as at or about 11:00 a.m. London time two Business Days
prior to the beginning of such Interest Period for delivery on the first day of
such Interest Period, and in an amount approximately equal to the amount of
Scotiabank's LIBO Rate Loan and for a period approximately equal to such
Interest Period.

     "LIBOR Reserve Percentage" means, for each day of any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified from time to time under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of and
including "Eurocurrency Liabilities", as currently defined in Regulation D of
the F.R.S. Board.

     All LIBO Rate Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.

     SECTION 3.2.2.   Post-Maturity Rates. After the date any principal amount
of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus a margin of 2%.

     SECTION 3.2.3.   Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:

          (a)  on the Stated Maturity Date therefor;

          (b)  on the date of any optional or required payment or prepayment,
     in whole or in part, of principal outstanding on such Loan being prepaid;

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          (c)  with respect to Base Rate Loans, on each Quarterly Payment Date
     occurring after the Effective Date;

          (d)  with respect to LIBO Rate Loans, on the last day of each
     applicable Interest Period (and, if such Interest Period shall exceed
     three months, at the end of the third month of such Interest Period);

          (e)  with respect to any Base Rate Loans converted into LIBO Rate
     Loans on a day when interest would not otherwise have been payable
     pursuant to clause (c), on the date of such conversion; and

          (f)  on that portion of any Loans the Stated Maturity Date of which is
     accelerated pursuant to Section 9.2 or Section 9.3, immediately upon
     such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the applicable Stated Maturity Date, upon acceleration or
otherwise) shall be payable upon demand.

     SECTION 3.3.   Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.

     SECTION 3.3.1.   Commitment Fees. The Borrower agrees to pay to the Agent
for the account of each Revolving Lender, for the period (including any portion
thereof when any of its Commitments are suspended by reason of the Borrower's
inability to satisfy any condition of Article VI) commencing on the Effective
Date and continuing through the Revolving Loan Commitment Termination Date, a
commitment fee at the rate of 0.50% per annum, calculated on such Lender's
Revolving Percentage of the average daily unused portion of the Revolving
Commitment Amount. Such commitment fees shall be payable by the Borrower in
arrears on each Quarterly Payment Date, commencing with the first such day
following the Effective Date, and on the Revolving Loan Commitment Termination
Date.

     SECTION 3.3.2.   Lead Arrangers' Fees. The Borrower agrees to pay to the
lead arrangers identified on the cover page for their own account the fees
described in the Fee Letter, at the times required in such letter.

     SECTION 3.3.3.   Letter of Credit Fee. The Borrower agrees to pay to the
Agent, for the account of the Revolving Lenders, for each Letter of Credit for
the period from and including the date of the issuance of such Letter of Credit
to (and including) the date upon which (or on the next succeeding Business Day
upon which) such Letter of Credit expires or is returned to the Issuer that
issued such Letter of Credit, a fee, in Dollars, on the average daily stated
amount of such Letter of Credit (or the Equivalent Amount thereof with respect
to Foreign Currency Letters of Credit) calculated at a per annum rate equal to
the Applicable LIBO Rate Margin for Revolving Loans in effect from time to
time; provided, however, that for each day after the Stated Maturity Date for
Revolving Loans that any Letter of Credit shall be outstanding, the fees on
such Letter of Credit shall accrue at the Applicable LIBO Rate Margin for Term
B Loans in effect from time to time. Such fee shall be payable by the Borrower
in arrears on each Quarterly Payment Date, and on the date of termination or
expiry of the last Letter of Credit outstanding

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<PAGE>

hereunder (for any period then ending for which such fee shall not theretofore
have been paid), commencing on the first such date after the issuance of such
Letter of Credit.

     SECTION 3.3.4.   Letter of Credit Issuing Fee. The Borrower agrees to pay
to the Agent, for the account of each Issuer, an issuing fee, in Dollars, for
each Letter of Credit issued by such Issuer for the period from and including
the date of issuance of such Letter of Credit to (and including) the date upon
which such Letter of Credit expires or is returned to the Issuer that issued
such Letter of Credit at such rates as may be agreed in writing by the Borrower
and the Issuers from time to time. Such fee shall be payable by the Borrower in
arrears on each Quarterly Payment Date and on the date of termination or expiry
of the last Letter of Credit outstanding hereunder for any period then ending
for which such fee shall not theretofore have been paid, commencing on the
first such date after the issuance of such Letter of Credit.

                                   ARTICLE IV

                                LETTERS OF CREDIT

     SECTION 4.1.   Issuance Requests. By delivering to the Agent and an Issuer
an Issuance Request on or before 12:00 noon, New York time, the Borrower may
request, from time to time prior to the Revolving Loan Commitment Termination
Date and on not less than three nor more than ten Business Days' notice, that
such Issuer issue an irrevocable standby letter of credit, in Dollars, Canadian
Dollars or Sterling (provided that the Equivalent Amount of the aggregate
Stated Amount of all Foreign Currency Letters of Credit after giving effect to
such issuance shall not exceed the Foreign Currency Letter of Credit Commitment
Amount) and in such form as may be requested by the Borrower and approved by
such Issuer (each, together with the Existing Letters of Credit and any Foreign
Currency Letters of Credit, a "Letter of Credit"), in support of the general
corporate purposes of the Borrower (including credit support by the Borrower
for gas and power contracts for Calpine Energy Services, L.P., Calpine Energy
Services Canada Partnership and Calpine Energy Services UK Limited) and which
are described in such Issuance Request, provided that no Letter of Credit may
be used to finance acquisitions (other than acquisitions of equipment, sites
and property in the ordinary course of the Borrower and its Subsidiaries'
business, but in no event may Letters of Credit be used to finance acquisitions
of power projects, reserves of geothermal steam and fluids and material gas
reserves) or make any Investments in any third parties (other than
Subsidiaries), directly or indirectly, through the Borrower or any of its
Subsidiaries or Affiliates and provided, further, that Letters of Credit shall
only be used to secure or support obligations (other than for the deferred
purchase price of property) entered into in the ordinary course of business of
the Company and its Restricted Subsidiaries. Upon receipt of an Issuance
Request, the Agent shall promptly notify the Revolving Lenders thereof. Each
Letter of Credit shall by its terms:

          (a)  be issued in a Stated Amount which

               (i)    is at least the Equivalent Amount of $500,000 or such
          lesser amount as may be agreed by the Agent;

               (ii)   does not exceed (or would not exceed) the then Revolving
          Commitment Availability;

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<PAGE>

          (b)  be stated to expire on a date (its "Stated Expiry Date") no later
     than the earlier of one year from its date of issuance and May 24, 2003
     (which date may, with the written consent of the Borrower, ING (U.S.)
     Capital LLC and the Revolving Lead Arrangers, be extended to a date no
     later than five Business Days prior to the Stated Maturity Date for Term
     B Loans); provided, however, that a Letter of Credit may provide that if
     it is not renewed prior to its Stated Expiry Date, it may be drawn by the
     beneficiary thereof; and

          (c)  on or prior to its Stated Expiry Date

               (i)    terminate immediately upon notice to the Issuer thereof
          from the beneficiary thereunder that all obligations covered thereby
          have been terminated, paid, or otherwise satisfied in full and
          surrender by the beneficiary of the Letter of Credit to such Issuer,
          and

                (ii)   reduce in part immediately and to the extent the
          beneficiary thereunder has notified the Issuer thereof that the
          obligations covered thereby have been paid or otherwise satisfied
          in part and that the Letter of Credit may be reduced.

So long as no Default (other than a Nonmaterial Subsidiary Default) has occurred
and is continuing by delivery to the Issuer thereof and the Agent of an Issuance
Request at least three but not more than ten Business Days prior to the Stated
Expiry Date of any Letter of Credit, the Borrower may request such Issuer on any
date prior to the Stated Maturity Date for Revolving Loans to extend the Stated
Expiry Date of such Letter of Credit for an additional period not to exceed the
earlier of one year from its date of extension or May 24, 2003 (which date may,
with the written consent of the Borrower, ING (U.S.) Capital LLC and the
Revolving Lead Arrangers, be extended to a date no later than five Business Days
prior to the Stated Maturity Date for Term B Loans).

     SECTION 4.2.   Issuances and Extensions. On the terms and subject to the
conditions of this Agreement (including Article VI), the Issuer to whom notice
was given under Section 4.1 shall issue Letters of Credit, and extend the Stated
Expiry Dates of outstanding Letters of Credit, in accordance with the Issuance
Requests made therefor. Such Issuer will make available the original of each
Letter of Credit which it issues in accordance with the Issuance Request
therefor to the beneficiary thereof (and will notify the Agent of any issuance
or amendment and such notice will be accompanied by a copy of each Letter of
Credit issued and any amendment thereto) and will notify the beneficiary under
any Letter of Credit of any extension of the Stated Expiry Date thereof. The
Agent will promptly notify the Revolving Lenders of issuances and amendments
and, if requested in a writing by a Revolving Lender, will provide copies of
issuances and amendments to such requesting Revolving Lender.

     SECTION 4.3.   Expenses. The Borrower agrees to pay to the Agent for the
account of each Issuer the standard charges of such Issuer in connection with
the issuance, maintenance, modification (if any) and administration of each
Letter of Credit issued by such Issuer upon demand from time to time.

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<PAGE>

     SECTION 4.4.   Other Revolving Lenders' Participation. Each Letter of
Credit issued pursuant to Section 4.2 shall, effective upon its issuance and
without further action, be issued on behalf of all Revolving Lenders (including
the Issuer thereof) pro rata according to their respective Revolving
Percentages. Each Revolving Lender shall, to the extent of its Revolving
Percentage, be deemed irrevocably to have participated in the issuance of such
Letter of Credit and shall be responsible to pay promptly to the Issuer thereof
such Lender's Revolving Percentage of any unreimbursed drawings under a Letter
of Credit which have not been reimbursed by the Borrower in accordance with
Section 4.5, or which have been reimbursed by the Borrower but must be
returned, restored or disgorged by the Issuer thereof for any reason, and each
Revolving Lender shall, to the extent of its Revolving Percentage, be entitled
to receive from the Agent a ratable portion of the letter of credit fees
received by the Agent pursuant to Section 3.3.3, with respect to each Letter of
Credit. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 4.4 in respect of Letters of
Credit issued or amended while such Revolving Lender remains a party to this
Agreement is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment of any Letter of Credit or the
occurrence and continuation of a Default or Event of Default or reduction or
termination of the Revolving Loan Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. In
the event that the Borrower shall fail to reimburse the Issuer thereof, or if
for any reason Revolving Loans shall not be made to fund any Reimbursement
Obligation, all as provided in Section 4.5 and in an amount equal to the amount
of any drawing honored by such Issuer under a Letter of Credit issued by it, or
in the event such Issuer must for any reason return or disgorge such
reimbursement, such Issuer shall promptly notify each Revolving Lender of the
unreimbursed amount of such drawing and of such Revolving Lender's respective
participation therein. Each Revolving Lender shall make available to such
Issuer, whether or not any Default shall have occurred and be continuing, an
amount equal to its respective participation in same day or immediately
available funds at the office of such Issuer specified in such notice not later
than 2:00 p.m., New York time, on the Business Day (under the laws of the
jurisdiction of such Issuer) after the date notified by such Issuer. In the
event that any Revolving Lender fails to make available to an Issuer the amount
of such Revolving Lender's participation in such Letter of Credit as provided
herein, such Issuer shall be entitled to recover such amount on demand from
such Revolving Lender together with interest at the daily average Federal Funds
Rate for three Business Days and thereafter at the Alternate Base Rate plus 2%.
Nothing in this Section shall be deemed to prejudice the right of any Revolving
Lender to recover from any Issuer any amounts made available by such Revolving
Lender to an Issuer pursuant to this Section in the event that it is determined
by a court of competent jurisdiction that the payment with respect to a Letter
of Credit by the Issuer thereof in respect of which payment was made by such
Revolving Lender constituted gross negligence or willful misconduct on the part
of such Issuer. Each Issuer shall distribute to each Revolving Lender which has
paid all amounts payable by it under this Section with respect to any Letter of
Credit issued by such Issuer such Lender's Revolving Percentage of all payments
received by such Issuer from the Borrower in reimbursement of drawings honored
by such Issuer under such Letter of Credit when such payments are received.

      SECTION 4.5.   Disbursements. Each Issuer will notify the Borrower and the
Agent promptly of the presentment for payment of any Letter of Credit issued by
it, together with notice of the date (a "Disbursement Date") such payment shall
be made (each such payment, a

                                       39

<PAGE>

"Disbursement"). Unless otherwise agreed by the applicable Issuer and the
Borrower, drawings under any Letter of Credit issued under Section 4.1 shall be
made on sight. Subject to the terms and provisions of such Letter of Credit,
each Issuer shall make such payment to the beneficiary (or its designee) of
such Letter of Credit. Prior to 2:00 p.m., New York time, on the Disbursement
Date, the Borrower will reimburse each Issuer for all amounts in the currency
which it has disbursed under the Letter of Credit or will notify such Issuer
that it elects to make such reimbursement by requesting the Revolving Lenders
to make a Revolving Loan in the Equivalent Amount of such required
reimbursement. If Borrower elects to make such reimbursement by requesting a
Revolving Loan in such amount and the conditions precedent in Article VI shall
have been satisfied, the Revolving Lenders shall fund such Reimbursement
Obligation by making Base Rate Loans in the appropriate Equivalent Amounts in
accordance with Section 2.3. To the extent an Issuer is not reimbursed in full
on the date payment is made under a Letter of Credit, the Borrower's
Reimbursement Obligation shall accrue interest at the Alternate Base Rate plus
the Applicable Base Rate Margin for two Business Days and thereafter at the
Post Maturity Rate described in Section 3.2.2, payable on demand, until
reimbursed in full. In the event an Issuer is not reimbursed by the Borrower on
any Disbursement Date, or if an Issuer must for any reason return or disgorge
such reimbursement, the Revolving Lenders (including such Issuer) shall fund
the Reimbursement Obligation therefor by making, on the next Business Day,
Loans (or, if the Revolving Loan Commitments shall no longer then be in effect,
advances ("L/C Advances") that are payable on demand and have the same
characteristics as Loans and which shall be Obligations hereunder) in the
appropriate Equivalent Amounts which are Base Rate Revolving Loans (or L/C
Advances bearing interest by reference to the Base Rate) (except that such
Revolving Loans or L/C Advances shall be made upon demand by the Agent rather
than upon notice by the Borrower and shall be made, notwithstanding anything in
this Agreement to the contrary, without regard to the satisfaction of the
conditions precedent to the making of Revolving Loans set forth in Article VI
of this Agreement and notwithstanding any termination of the Commitments). Each
Revolving Lender's obligation to make Revolving Loans or L/C Advances in the
amount of its Revolving Percentage of any unreimbursed amounts outstanding
under a Letter of Credit pursuant hereto is several, and not joint or joint and
several. Except as specifically noted herein, all terms and provisions that are
applicable to Revolving Loans under this Agreement shall be equally applicable
to L/C Advances. For example, and without limitation, the provisions of
Sections 3.1(e), 3.2.2, 3.2.3, 5.5, 5.6, 5.8, 5.9, 7.13, 8.2.10(b)(iii), 9.1.1,
10.5, 11.1(c), 11.4(a) and 11.11 shall equally apply to L/C Advances as well as
Loans.

      SECTION 4.6.   Reimbursement. The Borrower's obligation (a "Reimbursement
Obligation") under Section 4.5 to reimburse an Issuer with respect to each
disbursement (including interest thereon), and each Revolving Lender's
obligation to make participation payments in each drawing which has not been
reimbursed by the Borrower, shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim, or defense to
payment which the Borrower may have or have had against any Revolving Lender or
any beneficiary of a Letter of Credit, including any defense based upon the
occurrence of any Default, any draft, demand or certificate or other document
presented under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient, the failure of any disbursement to conform to the terms of the
applicable Letter of Credit (if, in such Issuer's good faith opinion, such
disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such disbursement, or the
legality, validity, form, regularity, or

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<PAGE>

enforceability of such Letter of Credit; provided, however, that nothing herein
shall adversely affect the right of the Borrower to commence any proceeding
against an Issuer for any wrongful disbursement made by such Issuer under a
Letter of Credit as a result of acts or omissions constituting gross negligence
or willful misconduct on the part of such Issuer.

     SECTION 4.7.   Cash Collateral. Upon the occurrence and during the
continuation of any Event of Default described in Section 9.1.9 or upon notice
to the Borrower after the occurrence and during the continuation of any other
Event of Default, at the election of the Agent acting on instructions from the
Required Revolving Lenders, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall be
deemed to have been paid or disbursed by the Issuers under the Letters of
Credit (notwithstanding that such amount may not in fact have been paid or
disbursed), and, upon notification by the Issuers to the Agent and the Borrower
of its obligations under this Section, the Borrower shall be immediately
obligated to reimburse the Agent the amount deemed to have been so paid or
disbursed by the Issuers. Any amounts so received by the Agent from the
Borrower pursuant to this Section shall be held as collateral security for the
repayment of the Borrower's obligations in connection with the Letters of
Credit. At any time when such a Letter of Credit shall terminate and all L/C
Advances and Obligations of the Borrower to the Issuers in respect of such
Letter of Credit are either terminated or paid or reimbursed to the Revolving
Lenders and the Issuers in full, the Obligations of the Borrower under this
Section with respect to such Letter of Credit shall also terminate (subject,
however, to reinstatement in the event any payment in respect of such Letter of
Credit is recovered in any manner from any Issuer or Revolving Lender), and the
Agent will return to the Borrower the aggregate amount deposited by the
Borrower with the Agent in respect of such Letter of Credit and not theretofore
applied by the Agent to any Reimbursement Obligation.

     At such time when all Events of Default shall have been cured or waived,
the Agent shall return to the Borrower all amounts then on deposit with it
pursuant to this Section. All amounts on deposit pursuant to this Section
shall, until their application to any Reimbursement Obligation or their return
to the Borrower, as the case may be, bear interest at the daily average Federal
Funds Rate from time to time in effect (net of the costs of any reserve
requirements, in respect of amounts on deposit pursuant to this Section,
pursuant to F.R.S. Board Regulation D), which interest shall be held by the
Agent as additional collateral security for the repayment of the Borrower's
Obligations in connection with the Letters of Credit issued by the Issuers.

     SECTION 4.8.   Nature of Reimbursement Obligations. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither any Issuer (except to the extent of its own
gross negligence or willful misconduct) nor any Revolving Lender shall be
responsible for:

          (a)  the form, validity, sufficiency, accuracy, genuineness, or legal
     effect of any document submitted by any party in connection with the
     application for and issuance of a Letter of Credit, even if it should in
     fact prove to be in any or all respects invalid, insufficient,
     inaccurate, fraudulent, or forged;

          (b)  the form, validity, sufficiency, accuracy, genuineness, or legal
     effect of any instrument transferring or assigning or purporting to
     transfer or assign a Letter of

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<PAGE>

     Credit or the rights or benefits thereunder or proceeds thereof in whole
     or in part, which may prove to be invalid or ineffective for any reason;

          (c)  failure of the beneficiary to comply fully with conditions
     required in order to demand payment under a Letter of Credit;

          (d)  errors, omissions, interruptions, or delays in transmission or
     delivery of any messages, by mail, cable, telegraph, telex, or otherwise;

          (e)  any error, omission, interruption, loss or delay in the
     transmission or delivery of any draft, notice or other communication
     under or relating to any Letter of Credit (including any document
     required in order to make a Disbursement thereunder) or of the proceeds
     thereof;

          (f)  any error in interpretation of technical terms;

          (g)  the performance of any transaction which underlies any Letter of
     Credit;

          (h)  any act or omission of any Person other than the Issuer and the
     Revolving Lenders;

          (i)  loss or destruction of any draft, demand, or document in transit
     or in the possession of others;

          (j)  lack of knowledge of any particular trade usage (other than
     standard United States and Western European banking usage as used in the
     normal course of business); or

          (k)  any consequence arising from causes beyond the control of the
     Issuer and the Revolving Lenders.

None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted any Issuer or any Revolving Lender hereunder. In
furtherance and extension, and not in limitation or derogation, of any of the
foregoing, any action taken or omitted to be taken by an Issuer in good faith
and which is not grossly negligent shall be binding upon the Borrower and shall
not put such Issuer under any resulting liability to the Borrower; provided,
however, that nothing herein shall relieve any Issuer, the Agent or any
Revolving Lender for any liability for its gross negligence or willful
misconduct.

     SECTION 4.9.   Increased Costs; Indemnity. If by reason of

          (a)  any change after the Effective Date in applicable law,
     regulation, rule, decree or regulatory requirement or any change after
     the Effective Date in the interpretation or application by any judicial
     or regulatory authority of any law, regulation, rule, decree or
     regulatory requirement, or

          (b)  compliance by any Issuer or any Revolving Lender with any new or
     modified (after the Effective Date) direction, request or requirement
     (whether or not

                                       42

<PAGE>

     having the force of law) of any governmental or monetary authority,
     including Regulation D of the F.R.S. Board:

               (i)    any Issuer or any Revolving Lender shall be subject to any
          tax (other than franchise taxes or taxes measured by net income or
          receipts), levy, charge or withholding of any nature or to any
          variation thereof or to any penalty with respect to the maintenance
          or fulfillment of its obligations under this Article IV, whether
          directly or by such being imposed on or suffered by any Issuer or
          any Revolving Lender;

               (ii)   any reserve, deposit or similar requirement is or shall be
          applicable, imposed or modified in respect of any Letters of Credit
          issued by any Issuer or participations therein purchased by any
          Revolving Lender; or

               (iii)  there shall be imposed on any Issuer or any Revolving
          Lender any other condition regarding this Article IV, any Letter of
          Credit or any participation therein;

and the result of the foregoing is directly or indirectly to increase the cost
to an Issuer or such Revolving Lender of issuing, making or maintaining any
Letter of Credit or of purchasing or maintaining any participation therein, or
to reduce any amount receivable in respect thereof by such Issuer or such
Revolving Lender, then and in any such case such Issuer or such Revolving Lender
may, at any time after the additional cost is incurred or the amount received is
reduced, notify the Borrower thereof and provide Borrower with data and
calculations supporting such costs, and the Borrower shall pay such amounts as
such Issuer or Revolving Lender may specify to be necessary to compensate such
Issuer or Revolving Lender for such additional cost or reduced receipt within
ten (10) Business Days after receiving such notice, together with interest on
such amount from the date of receipt of such notice until payment in full
thereof at a rate equal at all times to the Alternate Base Rate plus the
Applicable Margin; provided, however, that Section 5.6, rather than this Section
4.9 shall govern Borrower's obligations with respect to Taxes relating to
payments by the Borrower described in the first sentence of Section 5.6(a). The
good faith determination by an Issuer or Revolving Lender, as the case may be,
of any amount due pursuant to this Section, as set forth in a statement setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest error, be final and conclusive and binding on all of the parties
hereto. In addition to amounts payable as elsewhere provided in this Article IV,
the Borrower hereby agrees to protect, indemnify, pay and save the Issuers and
the Revolving Lenders harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Issuer or any Revolving Lender may incur or be
subject to as a consequence, direct or indirect, of

          (x)  the issuance of the Letters of Credit, other than as a result of
     the gross negligence or willful misconduct of an Issuer as determined by
     a court of competent jurisdiction, or

          (y)  the failure of an Issuer to honor a drawing under any Letter of
     Credit as a result of any act or omission, whether rightful or wrongful,
     of any present or future de jure or de facto government or governmental
     authority.

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<PAGE>

     SECTION 4.10.   Existing Letters of Credit. On the Effective Date, the
Existing Letters of Credit shall be deemed for all purposes to be Letters of
Credit outstanding under this Agreement and entitled to the benefits of this
Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. Each
Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Issuers on the Effective Date a participation in
each such Letter of Credit and each drawing thereunder in an amount equal to
the product of (i) such Lender's Revolving Percentage times (ii) the maximum
amount available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of Section 2.1.2, the Existing Letters of
Credit shall be deemed to utilize pro rata the Revolving Loan Commitment of
each Revolving Lender.

     SECTION 4.11.   Equivalent Amount Determinations. For purposes of
determining the amount of Foreign Currency Letter of Credit Outstandings and
for purposes of calculating fees payable under Section 3.3.3 with respect to
Foreign Currency Letter of Credit Outstandings, the principal amount of such
Foreign Currency Letter of Credit Outstandings shall be deemed to be, as of any
date of determination, the Equivalent Amount thereof at such date. The initial
Equivalent Amount of any Foreign Currency Letter of Credit shall be determined
by the Issuer of such Letter of Credit and notified by such Issuer in writing
to the Agent and the Borrower on the date of issuance thereof. If a
Disbursement is made by an Issuer under any Foreign Currency Letter of Credit,
the Equivalent Amount of such Disbursement shall be determined by the relevant
Issuer on the Disbursement Date related thereto, and such Issuer shall notify
the Agent and the Borrower promptly of such Equivalent Amount.

     SECTION 4.12.   Currency Fluctuations, etc. Not later than 12:00 p.m., New
York time, on each Quarterly Payment Date, each Issuer shall determine the
Equivalent Amount as of such Quarterly Payment Date with respect to each
Foreign Currency for which there are at such time outstanding Foreign Currency
Letters of Credit issued by such Issuer or in respect thereof (after giving
effect to any Loans to be made or repaid or Letters of Credit to be issued or
Reimbursement Obligations to be repaid on such date). Each Issuer shall notify
the Borrower, the Revolving Lenders and the Agent of such Equivalent Amount.
The Equivalent Amount so determined shall become effective on the first
Business Day immediately following the relevant Quarterly Payment Date (each, a
"Reset Date") and shall remain effective until the next succeeding Reset Date.

                                      ARTICLE V

                     CERTAIN LIBO RATE AND OTHER PROVISIONS

     SECTION 5.1.   LIBO Rate Lending Unlawful. If any Lender shall determine in
good faith (which good faith determination shall, upon notice thereof to the
Borrower and the Lenders, be conclusive and binding on the Borrower) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of all Lenders to
make, continue, maintain or convert into any such Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the Agent
that the circumstances causing such suspension no

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<PAGE>

longer exist, and all LIBO Rate Loans of such type shall automatically convert
into Base Rate Loans at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion. Until such
time as such Lender's obligation to make, continue and maintain LIBO Rate Loans
is reinstated, the Borrower shall have the right (with the prior written
consent of the Agent, which consent shall not be unreasonably withheld) to
replace such affected Lender by obtaining another financial institution that is
willing to purchase such affected Lender's interest herein for the full amount
of any outstanding Loans, Reimbursement Obligations and other amounts owed
hereunder (including principal, accrued interest, breakage costs and any other
unreimbursed costs and expenses owed to such Lender), to assume such affected
Lender's obligations under this Agreement and to become a Lender hereunder. In
such event, the affected Lender shall, upon ten (10) Business Days notice from
Borrower, assign one hundred percent (100%) of its interest hereunder to such
replacement lender for the price described in the previous sentence.

     SECTION 5.2.   Deposits Unavailable.  If the Agent shall have determined
that

          (a)  Dollar deposits in the relevant amount and for the relevant
     Interest Period are not available to the Agent or any Lender in its
     relevant market; or

          (b)  by reason of circumstances affecting the Agent's or any Lender's
      relevant market, adequate means do not exist for ascertaining the
     interest rate applicable hereunder to LIBO Rate Loans,

then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be
suspended (at the end of the applicable Interest Period, in the case of
outstanding LIBO Rate Loans) until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

     SECTION 5.3.   Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans as a result in any change after the Effective Date,
in applicable law, regulation, rule, decree or regulatory requirement or in the
interpretation or application by any judicial or regulatory authority of any
law, regulation, rule, decree or regulatory requirement. Such Lender shall
promptly notify the Agent and the Borrower in writing of the occurrence of any
such event, such notice to state, in reasonable detail, the reasons therefor and
the additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be payable by
the Borrower directly to such Lender within five Business Days of its receipt of
such notice, and such notice shall, in the absence of manifest error and if
given in good faith, be conclusive and binding on the Borrower. If such
increased costs do not affect all of the Lenders, the Borrower shall have the
right (with the prior written consent of the Agent, which consent shall not be
unreasonably withheld) to replace the affected Lender by obtaining another
financial institution that is willing to purchase such affected Lender's
interest herein for the full amount of any outstanding Loans and Reimbursement
Obligations (principal and accrued interest), to assume such affected Lender's

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<PAGE>

obligations under this Agreement and to become a Lender hereunder. In such
event, the affected Lender shall, upon five (5) Business Days notice from
Borrower, assign one hundred percent (100%) of its interests hereunder to such
replacement lender for the price described in the previous sentence and
thereafter such Lender shall have no further obligations hereunder.

     SECTION 5.4.   Funding Losses. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of

          (a)  any conversion or repayment or prepayment of the principal amount
     of any LIBO Rate Loans on a date other than the scheduled last day of the
     Interest Period applicable thereto;

          (b)  any Loans not being made as LIBO Rate Loans in accordance with
     the Borrowing Request therefor other than as a result of any act or
     omission by such Lender;

          (c)  any Loans not being continued as, or converted into, LIBO Rate
     Loans in accordance with the Continuation/ Conversion Notice therefor
     other than as a result of any act or omission by such Lender; or

          (d)  any LIBO Rate Loan not being prepaid in accordance with a notice
     of prepayment,

then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall, within five Business Days of its receipt thereof,
pay directly to such Lender such amount as will (in the reasonable determination
of such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail and all
information and documentation reasonably necessary to support such calculations)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.

     SECTION 5.5.   Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority causes the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender
attributable to or based upon the Loans, the Letters of Credit or Commitments
hereunder to be increased, and such Lender determines (in its reasonable
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Commitments, issuance of or participation in Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrower, the Borrower shall immediately pay
directly to such Lender additional amounts sufficient to compensate such Lender
or such controlling Person for such reduction in rate of return. A statement of
such Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error and if
made in good faith, be conclusive and

                                       46

<PAGE>

binding on the Borrower. In determining such amount, such Lender may use any
method of averaging and attribution that it (in its good faith discretion)
shall deem applicable.

     SECTION 5.6.   Taxes. (a) Subject to each Lender's compliance with Section
5.6, all payments by the Borrower of principal of, and interest on, the Loans
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by any Lender's net income or receipts
(such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrower will

               (i)    pay directly to the relevant authority the full amount
          required to be so withheld or deducted;

               (ii)   promptly forward to the Agent an official receipt or other
          documentation satisfactory to the Agent evidencing such payment to
          such authority; and

               (iii)  pay to the Agent for the account of the Lenders such
          additional amount or amounts as is necessary to ensure that the net
          amount actually received by each Lender will equal the full amount
          such Lender would have received had no such withholding or deduction
          been required.

      Moreover, if any Taxes are directly asserted against the Agent or any
     Lender with respect to any payment received by the Agent or such Lender
     hereunder, the Agent or such Lender may pay such Taxes and the Borrower
     will promptly pay such additional amounts (including any penalties,
     interest or expenses) as is necessary in order that the net amount
     received by such person after the payment of such Taxes (including any
     Taxes on such additional amount) shall equal the amount such person would
     have received had not such Taxes been asserted.

          If the Borrower fails to pay any Taxes when due to the appropriate
     taxing authority or fails to remit to the Agent, for the account of the
     respective Lenders, the required receipts or other required documentary
     evidence, the Borrower shall indemnify the Lenders for any incremental
     Taxes, interest or penalties that may become payable by any Lender as a
     result of any such failure. For purposes of this Section 5.6, a
     distribution hereunder by the Agent or any Lender to or for the account
     of any Lender shall be deemed a payment by the Borrower.

          (b)  Upon the request of the Borrower or the Agent, each Lender
     (including, any participant or Assignee Lender) that is (a) organized
     under the laws of the United States or a state thereof shall execute and
     deliver to the Borrower and the Agent one or more (as the Borrower or the
     Agent may reasonably request) appropriately completed United States
     Internal Revenue Service Forms W-9 (or any successor forms or documents)
     and (b) organized under the laws of a jurisdiction other than the United
     States

                                       47

<PAGE>

     shall, prior to the due date of and as a condition to any payments
     hereunder or under the Notes, execute and deliver to the Borrower and the
     Agent one or more (as the Borrower or the Agent may reasonably request)
     United States Internal Revenue Service Forms W-8ECI or Forms W-8BEN or
     such other forms or documents (or successor forms or documents),
     appropriately completed, as may be applicable to establish that such
     Lender (or participant or Assignee Lender) is entitled to receive
     payments under this Agreement without deduction or withholding of any
     United States federal income taxes.

          The Borrower shall not be required to pay any additional amounts to
     any Lender (or participant or Assignee Lender) in respect of Taxes
     pursuant to this Section 5.6 if the obligation to pay such additional
     amounts would not have arisen but for a failure by such Lender (or
     participant or Assignee Lender) to comply with the provisions of this
     Section 5.6 unless such failure results from (a) a change in applicable
     treaty, law or regulation or interpretation thereof or (b) an amendment,
     modification or revocation of any applicable tax treaty or a change in
     official position regarding the application or interpretation thereof, in
     each case after the date such Lender (or participant or Assignee Lender)
     becomes a party to this Agreement.

     SECTION 5.7.   Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the pro
rata account of the Lenders entitled to receive such payment. All such payments
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 11:00 a.m., San Francisco time, on the date due,
in same day or immediately available funds, to such account as the Agent shall
specify from time to time by notice to the Borrower. Funds received after that
time shall be deemed to have been received by the Agent on the next succeeding
Business Day. The Agent shall promptly remit in same day funds to each Lender
its share, if any, of such payments received by the Agent for the account of
such Lender. All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days (or, in the case of interest on a Base Rate Loan (other
than when calculated with respect to the Federal Funds Rate), 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if
any, in connection with such payment.

     SECTION 5.8.   Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
5.3, 5.4 and 5.5) or Letter of Credit in excess of its pro rata share of
payments then or therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Loans made by them and/or Letters
of Credit as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such

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<PAGE>

recovery together with an amount equal to such selling Lender's ratable share
(according to the proportion of (a) the amount of such selling Lender's
required repayment to the purchasing Lender to (b) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 5.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.

     SECTION 5.9.   Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing in accordance with the fourth recital; without limiting the
foregoing, no Letter of Credit or proceeds of any Loan will be used to (i)
acquire any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934 or any "margin stock", as defined in
F.R.S. Board Regulation U, (ii) finance acquisitions (other than the
acquisition of equipment, sites and property in the ordinary course of the
Borrower and its Subsidiaries' business, but in no event may Loans or Letters
of Credit be used to finance acquisitions of power projects, reserves of
geothermal steam and fluids and natural gas reserves), or (iii) make
Investments in any third parties (other than Investments in Subsidiaries),
directly or indirectly, through the Borrower or any of its Subsidiaries or
Affiliates.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     SECTION 6.1.   Initial Credit Extension. The obligation of each Lender to
make its initial Credit Extension shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 6.1.

     SECTION 6.1.1.   Resolutions, etc. The Agent shall have received from each
Obligor a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary, as to

          (a)  resolutions of its Board of Directors then in full force and
     effect authorizing the execution, delivery and performance of this
     Agreement, the Notes and each other Loan Document to be executed by it;
     and

          (b)  the incumbency and signatures of those of its officers authorized
     to act with respect to this Agreement, the Notes and each other Loan
     Document executed by it,

upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.

     SECTION 6.1.2.   Delivery of Revolving Notes. The Agent shall have
received, for the account of each Revolving Lender requesting same, its
Revolving Note duly executed and delivered by the Borrower.

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<PAGE>

     SECTION 6.1.3.   Guaranty. The Agent shall have received the Guaranty,
dated the date hereof,  duly executed by the Guarantors.

     SECTION 6.1.4.   Pledge Agreements. The Agent shall have received executed
counterparts of the Pledge Agreements, dated as of the date hereof, together
with the certificates evidencing 100% of the issued and outstanding capital
stock of Calpine Holdings, CNGGP and CNGH and 65% of the issued and outstanding
capital stock of CCEC, all of which certificates shall in each case be
accompanied by undated stock powers duly executed in blank.

     SECTION 6.1.5.   Amendment to Existing Credit Agreement. The Agent shall
have received executed counterparts of an amendment to the Existing Credit
Agreement (a) increasing the pricing thereunder to the pricing set forth
hereunder, (b) amending the definition of the term "Issuer" to provide for
letters of credit to be issued both by Scotiabank and other to-be-determined
lenders thereunder, (c) permitting the creation of the security interest in
favor of the Lenders pursuant to the Assignment Agreement and the ratable
sharing of the proceeds of such security among the Lenders and the lenders
under the Existing Credit Agreement, and (d) addressing such other matters as
the Lead Arrangers may reasonably request.

     SECTION 6.1.6.   Termination of Master Reimbursement Agreement. The Agent
shall have received evidence satisfactory to it of the termination of the
Master Reimbursement Agreement for Letters of Credit dated as of August 23,
2001 among the Borrower, Scotiabank and BayernLB.

     SECTION 6.1.7.   Termination of Bank One Credit Facility. The Agent shall
have received evidence satisfactory to it of (a) the repayment of all
obligations under, and the termination of the commitments under, that certain
Credit Agreement dated as of January 1, 2000 among CNGC, Bank One N.A., as
agent, and each of the financial institutions party thereto from time to time,
as amended by the First Amendment dated September 28, 2000, the Second
Amendment dated March 30, 2001, the Third Amendment dated April 20, 2001 and
the Fourth Amendment dated August 13, 2001 (as so amended, the "Bank One
Agreement") or (b) the purchase by the Borrower of the Indebtedness under the
Bank One Agreement and the pledge of such Indebtedness to the Agent.

     SECTION 6.1.8.   Assignment Agreement. The Agent shall have received
executed counterparts of the Assignment Agreement duly executed by the
Borrower, together with

          (a)  acknowledgment copies of properly filed Uniform Commercial Code
      financing statements (Form UCC-1) or such other evidence of filing as
     may be acceptable to the Agent, naming the Borrower as the debtor and the
     Agent as the secured party, or other similar instruments or documents,
     filed under the Uniform Commercial Code of all jurisdictions as may be
     necessary or, in the opinion of the Agent, desirable to perfect the
     security interest of the Agent pursuant to the Assignment Agreement;

          (b)  executed copies of proper Uniform Commercial Code Form UCC-3
      termination statements, if any, necessary to release all Liens and other
     rights of any Person in any collateral described in the Assignment
     Agreement previously granted by any Person; and

                                       50

<PAGE>

          (c)  certified copies of Uniform Commercial Code Requests for
     Information or Copies (Form UCC-11), or a similar search report certified
     by a party acceptable to the Agent, dated as of a date reasonably near to
     the date of the initial Borrowing, listing all effective financing
     statements which name Calpine Gilroy or the Borrower as the debtor and
     which are filed in the jurisdictions in which filings were made pursuant
     to clause (a) above, together with copies of such financing statements
     (none of which (other than those described in clause (a), if such Form
     UCC-11 or search report, as the case may be, is current enough to list
     such financing statements described in clause (a)) shall cover any
     collateral described in the Assignment Agreement); and

          (d)  a consent, in form and substance satisfactory to the Agent, from
     PG&E to the assignment by Calpine Gilroy to the Borrower of its rights
     under the agreement that is the subject of the Assignment Agreement and
     the execution and delivery by the Borrower of the Assignment Agreement.

     SECTION 6.1.9.   Solvency. The Agent shall have received duly executed
Solvency Certificates from each of CCEC, CCEF and the Guarantors, dated as of
Effective Date.

     SECTION 6.1.10.   Compliance Certificate. The Agent shall have received a
certificate, executed by an Authorized Officer of the Borrower, showing
compliance with the financial covenants in Sections 6.3.4 and 8.2.4 as of
December 31, 2001.

     SECTION 6.1.11.   Fee Letter. The Agent shall have received the Fee Letter
duly executed by all parties thereto.

     SECTION 6.1.12.   Opinions of Counsel. The Agent shall have received
opinions, dated the date of the Effective Date and addressed to the Agent and
all Lenders, from

          (a)  Lisa Bodensteiner, Esq., general counsel of the Borrower, and
     Covington & Burling, special counsel to the Borrower, substantially in
     the form of Exhibits F-1 and F-2.

          (b)  Mayer, Brown, Rowe & Maw, counsel to the Agent, substantially in
     the form of Exhibit G.

          (c)  McCarthy Tetrault, special Canadian counsel to the Borrower,
     substantially in the form of Exhibit L.

          (d)  Stewart McKelvey Stirling Scales, special Canadian counsel to
     the Borrower, substantially in the form of Exhibit M.

          (e)  Thelen Reid & Priest, counsel to the Borrower, substantially in
     the form of Exhibit N.

          (f)  Stoel Rives, counsel to the Borrower, substantially in the form
     of Exhibit O.

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<PAGE>

     SECTION 6.1.13.   Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 11.3, if then invoiced.

     SECTION 6.1.14.   No Material Adverse Effect. Except for those matters
described to the Lenders in Item 6.1.10 of the Disclosure Schedule that could
affect the prospects of the Borrower (the "Excepted Prospects"), no Material
Adverse Effect shall have occurred since December 31, 2000.

     SECTION 6.1.15.   Canadian Restructure. The contractual arrangements
described on Schedule 6.15 among CCEC, QCH and CCEF in respect of the term
debentures dated April 25, 2001, August 14, 2001 and August 23, 2001 between
CCEC and CCEF and the documentation executed in connection therewith shall have
been amended on terms reasonably satisfactory to the Revolving Lead Arrangers
and Term B Lead Arrangers.

     SECTION 6.2.   Term B Loan Borrowing. The obligations of the Term B Lenders
to fund the Term B Loans shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 6.2;
provided, that if the initial Borrowing of Term B Loans is not funded by the
Term B Loan Commitment Termination Date, the Term B Loan Commitments shall then
expire.

     SECTION 6.2.1.   Syndication of Term B Commitments. The Term B Lead
Arrangers shall have completed the syndication of the Term B Loan Commitments
on terms to their reasonable satisfaction; provided, however, that
notwithstanding the foregoing the Borrower may make the Borrowing of Term B
Loans on the Term B Loan Commitment Termination Date.

     SECTION 6.2.2.   Term B Notes. The Agent shall have received, for the
account of each Term B Lender requesting the same, a Term B Note duly executed
and delivered by the Borrower.

     SECTION 6.2.3.   Deeds of Trust, etc. The Agent and Term B Lead Arrangers
shall have received confirmation that all of the Domestic Gas Reserves shall
have been transferred to the Borrower and that the other requirements of
Section 8.1.8 shall have been satisfied on or before the date of the requested
Borrowing.

     SECTION 6.2.4.   CCFCI. The Agent and Term B Lead Arrangers shall have
received confirmation that all of the requirements of Section 8.1.9 shall have
been satisfied on or before the date of the requested Borrowing.

     SECTION 6.2.5.   Senior Debt Rating. The Agent and Term B Lead Arrangers
shall have received confirmation that the debt rating given to the Loans and
then in effect from Moody's shall be Ba3 or better and the debt rating from S&P
shall be BB- or better.

     SECTION 6.2.6.   Market Disruption. The Term B Lead Arrangers, in their
good faith judgment, shall have determined that there has not occurred any
disruption of, or adverse change in, financial, banking or capital market
conditions since the date of this Agreement that could materially impair the
satisfactory syndication of the Term B Credit Facility.

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<PAGE>

     SECTION 6.2.7.   Canadian Undertakings. The Borrower shall cause to be
delivered to the Agent and the Lenders such solvency opinions in respect of
each of CCEC, CCEF and QCH from Houlihan, Lokey, Howard & Zukin in a form and
as of such dates as may be reasonably satisfactory to the Revolving Lead
Arrangers and Term B Lead Arrangers.

     SECTION 6.3.   All Credit Extensions. The obligation of each Lender to make
any Credit Extension (including the initial Credit Extension) shall be subject
to the satisfaction of each of the conditions precedent set forth in this
Section 6.3.

     SECTION 6.3.1.   Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension (but, if any Default of the
nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Borrowing) the following statements shall be
true and correct

          (a)  the representations and warranties set forth in Article VII
     (excluding, however, those contained in Section 7.7) and in each other
     Loan Document shall be true and correct in all material respects with the
     same effect as if then made (unless stated to relate solely to an early
     date, in which case such representations and warranties shall be true and
     correct as of such earlier date);

          (b)   except as disclosed by the Borrower to the Agent and the Lenders
     pursuant to Section 7.7

               (i)    no labor controversy, litigation, arbitration or
          governmental investigation or proceeding shall be pending or, to the
          knowledge of the Borrower, threatened against the Borrower or any of
          its Significant Subsidiaries which would reasonably be expected to
          cause a Material Adverse Effect or which purports to materially and
          adversely affect the legality, validity or enforceability of this
          Agreement, the Notes or any other Loan Document; and

               (ii)   no development shall have occurred in any labor
          controversy, litigation, arbitration or governmental investigation
          or proceeding disclosed pursuant to Section 7.7 which might have a
          Material Adverse Effect; and

          (c)  no Default (other than a Nonmaterial Subsidiary Default) shall
     have then occurred and be continuing, and neither the Borrower, any other
     Obligor, nor any of its Significant Subsidiaries are in material
     violation of any law or governmental regulation or court order or decree
     which would reasonably be expected to cause a Material Adverse Effect.

     SECTION 6.3.2.   Credit Request. The Agent shall have received a Borrowing
Request or Issuance Request, as the case may be, for such Credit Extension.
Each of the delivery of a Borrowing Request or an Issuance Request and the
acceptance by the Borrower of the proceeds of the Borrowing or the issuance of
the Letter of Credit, as applicable, shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing (both immediately
before and after giving effect to such Borrowing and the application of the
proceeds

                                       53

<PAGE>

thereof) or the issuance of the Letter of Credit, as applicable, the statements
made in Section 6.3.1 are true and correct.

     SECTION 6.3.3.   Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be satisfactory in form and substance
to the Agent and its counsel; the Agent and its counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent or its
counsel may reasonably request.

     SECTION 6.3.4.   Interest Coverage Ratio (Parent Only). The Interest
Coverage Ratio (Parent Only), calculated as of the end of the most recently
ended Fiscal Quarter or, if the Interest Coverage Ratio (Parent Only) had
previously fallen below 1.70 to 1.00 and had not subsequently returned to 1.70
to 1.00 or better, calculated as of the end of the most recently ended calendar
month, shall be at least 1.70 to 1.00 for the previous 12 months.

     SECTION 6.3.5.   Indentures. (a) The Borrower shall have certified to the
Agent that its incurrence of the Indebtedness under such Borrowing is permitted
under the terms of Section 3.4 of the Pre-2000 Indentures. To the extent that
the Borrower is relying on clause (a) of Section 3.4 of the Pre-2000
Indentures, the Borrower shall have delivered to the Agent a certificate
demonstrating its compliance with the incurrence test set forth therein.

          (b)  The Borrower shall have certified to the Agent that the
     incurrence of Liens in respect of such Borrowing is permitted under the
     terms of Section 3.7 of the Pre-2000 Indentures and Section 3.4 of the
     Shelf Indenture. To the extent the Borrower is relying on Section
     3.7(f)(1) of each of the Pre-2000 Indentures and on Section 3.4(a)(i) of
     the Shelf Indenture, the Borrower shall have delivered to the Agent a
     certificate demonstrating its compliance with the provision thereof. To
     the extent that the Borrower is relying on the proviso to Section 3.7 of
     each of the Pre-2000 Indentures and the proviso to Section 3.4 of the
     Shelf Indenture, the Borrower shall have delivered to the Agent a
     certificate demonstrating its compliance with the incurrence tests set
     forth therein.

     SECTION 6.3.6.   Solvency. Both before and after giving effect to any
Borrowing of Loans or issuance of any Letter of Credit hereunder, the Borrower
and its Subsidiaries, on a consolidated basis, shall be Solvent.

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

     In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans or L/C Advances and issue Letters of Credit
hereunder, the Borrower represents and warrants unto the Agent and each Lender
as set forth in this Article VII.

     SECTION 7.1.   Organization, etc. The Borrower and each of its Significant
Subsidiaries is a corporation, partnership, limited liability company or similar
entity validly organized and existing and in good standing under the laws of the
State of its organization, is duly qualified to do business and is in good
standing as a foreign organization in each jurisdiction where the

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nature of its business requires such qualification and where the failure to so
qualify would have a material adverse effect on the Borrower's or any Obligor's
ability to perform its obligations under the Loan Documents to which it is a
party, and has full power and authority and holds all requisite governmental
licenses, permits and other approvals to enter into and perform its Obligations
under this Agreement, the Notes and each other Loan Document to which it is a
party and to own or hold under lease its property and to conduct its business
substantially as currently conducted by it.

     SECTION 7.2.   Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed
or to be executed by it are within the Borrower's and each such Obligor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not

          (a)  contravene the Borrower's or any such Obligor's Organic
     Documents;

          (b)  contravene any contractual restriction (including, without
     limitation, the Senior Note Indentures), law or governmental regulation
     or court decree or order binding on or affecting the Borrower or any such
     Obligor; or

          (c)  result in, or require the creation or imposition of, any Lien on
     any of the Borrower's or any other Obligor's properties.

     SECTION 7.3.   Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement,
the Notes or any other Loan Document to which it is a party. Neither the
Borrower nor any of its Significant Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

     SECTION 7.4.   Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms except as enforceability may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors or (ii) general principles of equity,
including the possible unavailability of specific performance or injunctive
relief; and each Loan Document executed pursuant hereto by each other Obligor
will, on the due execution and delivery thereof by such Obligor, be the legal,
valid and binding obligation of such Obligor enforceable in accordance with its
terms except as enforceability may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors or (ii) general principles of equity,
including the possible unavailability of specific performance or injunctive
relief.

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     SECTION 7.5.   Financial Information. The balance sheets of the Borrower
and each of its Subsidiaries as at December 31, 2000 and the related statements
of earnings and cash flow of the Borrower and each of its Subsidiaries, copies
of which have been furnished to the Agent and each Lender, have been prepared
in accordance with GAAP consistently applied, and present fairly the
consolidated financial condition of the corporations covered thereby as at the
date thereof and the results of their operations for the period then ended.

      SECTION 7.6.   No Material Adverse Effect. Except for Excepted Prospects,
(a) since December 31, 2000, there has been no Material Adverse Effect and (b)
since the date hereof, there has been no material adverse development in the
matters set forth as Excepted Prospects that could have a material adverse
effect upon the financial condition, operations, assets (including power
projects), business or prospects of the Borrower and its Significant
Subsidiaries taken as a whole.

     SECTION 7.7.   Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action,
proceeding, investigation, or labor controversy affecting the Borrower or any
of its Significant Subsidiaries, or any of their respective properties,
businesses, assets or revenues, which would reasonably be expected to have a
Material Adverse Effect or which purports to materially and adversely affect
the legality, validity or enforceability of this Agreement, the Notes or any
other Loan Document, except as disclosed in Item 7.7 ("Litigation") of the
Disclosure Schedule.

     SECTION 7.8.   Subsidiaries. The Borrower has no Significant Subsidiaries,
except those Significant Subsidiaries

          (a)  which are identified in Item 7.8 ("Existing Significant
     Subsidiaries") of the Disclosure Schedule; or

          (b)  which are permitted to have been acquired in accordance with
     Section 8.2.5 or 8.2.9.

     The organizational chart attached hereto as Schedule III accurately
reflects the ownership structures of the Borrower's equity interests in its
Foreign Subsidiaries as of the Closing Date.

     SECTION 7.9.   Ownership of Properties. The Borrower and each of its
Significant Subsidiaries owns good and marketable title to all of its material
properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 8.2.3. As of the Effective Date,
the Borrower owns all of the equity interests in Calpine Holdings, CNGGP and
CNGH, CNGGP and CNGH own all of the partnership interests of CNGC, the Canadian
Gas Reserves are owned by Calpine Canada Natural Gas Partnership, the Domestic
Gas Reserves are owned by CNGC and Calpine Holdings indirectly owns all of the
partnership interests of CCFCI, the Saltend project is indirectly owned by CCEC
and the receivable that is the subject of the Assignment Agreement is owned by
the Borrower or Calpine Gilroy. Once the financing statements referred to in
Section 6.1.8(a) have been duly filed with the Secretaries of State of the
States of California and Delaware, all

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governmental filings necessary to perfect and protect, and establish and, so
long as continuation statements are duly filed with the Secretaries of State of
the States of California and Delaware within the time periods required under
the Uniform Commercial Code, maintain the priority of, such Liens have been
duly effected or taken.

     SECTION 7.10.   Taxes. The Borrower and each of its Significant
Subsidiaries has filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.

     SECTION 7.11.   Pension and Welfare Plans. No steps have been taken to
terminate any Pension Plan, and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the
Borrower or any member of the Controlled Group of any material liability, fine
or penalty. Except as disclosed in Item 7.11 ("Employee Benefit Plans") of the
Disclosure Schedule, neither the Borrower nor any member of the Controlled
Group has any contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.

     SECTION 7.12.   Environmental Warranties. Except as set forth in Item 7.12
("Environmental Matters") of the Disclosure Schedule:

          (a)  all facilities and property (including underlying groundwater)
     owned or leased by the Borrower or any of its Significant Subsidiaries
     have been, and continue to be, owned or leased by the Borrower and its
     Significant Subsidiaries in material compliance with all Environmental
     Laws;

          (b)  there have been no past, and there are no pending or, to the
     Borrower's knowledge, threatened

               (i)    claims, complaints, notices or requests for information
          received by the Borrower or any of its Significant Subsidiaries
          with respect to any alleged violation of any Environmental Law that,
          singly or in the aggregate, may reasonably be expected to result in
          a Material Adverse Effect, or

               (ii)   complaints, notices or inquiries to the Borrower or any of
          its Significant Subsidiaries regarding potential liability under any
          Environmental Law that, singly or in the aggregate, may reasonably
          be expected to result in a Material Adverse Effect;

          (c)  there are no unremediated Releases of Hazardous Materials at,
     on or under any property now or previously owned or leased by the
     Borrower or any of its Significant Subsidiaries that, singly or in the
     aggregate, result in, or may reasonably be expected to result in, a
     Material Adverse Effect;

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          (d)  the Borrower and its Significant Subsidiaries have been issued
     and are in material compliance with all permits, certificates, approvals,
     licenses and other authorizations relating to environmental matters and
     necessary for their businesses;

          (e)  no property now or previously owned or leased by the Borrower or
     any of its Significant Subsidiaries is listed or proposed for listing
     (with respect to owned property only) on the National Priorities List
     pursuant to CERCLA, on the CERCLIS or on any similar state list of sites
     requiring investigation or clean-up;

          (f)  there are no underground storage tanks, active or abandoned,
     including petroleum storage tanks, on or under any property now or
     previously owned or leased by the Borrower or any of its Significant
     Subsidiaries that, singly or in the aggregate, result in, or may
     reasonably be expected to result in, a Material Adverse Effect;

          (g)  neither Borrower nor any Significant Subsidiary of the Borrower
     has directly transported or directly arranged for the transportation of
     any Hazardous Material to any location which is listed or proposed for
     listing on the National Priorities List pursuant to CERCLA, on the
     CERCLIS or on any similar state list or which is the subject of federal,
     state or local enforcement actions or other investigations which may lead
     to material claims against the Borrower or such Significant Subsidiary
     thereof for any remedial work, damage to natural resources or personal
     injury, including claims under CERCLA;

          (h)  there are no polychlorinated biphenyls or friable asbestos
     present at any property now or previously owned or leased by the Borrower
     or any Significant Subsidiary of the Borrower that, singly or in the
     aggregate, result in, or may reasonably be expected to result in, a
     Material Adverse Effect; and

          (i)  no conditions exist at, on or under any property now or
     previously owned or leased by the Borrower which, with the passage of
     time, or the giving of notice or both, would give rise to liability under
     any Environmental Law which would reasonably be expected to result in a
     Material Adverse Effect.

     SECTION 7.13.   Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates
F.R.S. Board Regulation U or X. Terms for which meanings are provided in F.R.S.
Board Regulation U or X or any regulations substituted therefor, as from time
to time in effect, are used in this Section with such meanings.

     SECTION 7.14.   Accuracy of Information. All factual information (which
shall not include projections) heretofore or contemporaneously furnished by or
on behalf of the Borrower in writing to the Agent, any Issuer or any Lender for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information hereafter
furnished by or on behalf of the Borrower to the Agent or any Lender will be,
true and accurate in every material respect on the date as of which such
information is dated or certified (except with respect to the financial
statements of Borrower and its Subsidiaries, which will fairly present the
financial condition of the entities covered thereby as of the date thereof)
and,

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with respect to information provided prior to the execution of this
Agreement, as of the date of execution and delivery of this Agreement by the
Agent and such Lender, and such information is not, or shall not be, as the
case may be, incomplete by omitting to state any material fact necessary to
make such information not misleading.

     SECTION 7.15.   Protection under Pledge Agreements and Deeds of Trust.
Subject to the exceptions agreed to in the agreed form of such documents, the
Pledge Agreements constitute a valid perfected first priority security interest
in the property subject thereto and the Deeds of Trust, when executed, together
with the financing statements (if any) filed with respect thereto, will
constitute valid, first mortgage liens on, the property subject thereto.

     SECTION 7.16.   Indebtedness of Certain Subsidiaries. As of the Effective
Date, the only outstanding Indebtedness of any of Calpine Holdings and its
Subsidiaries, CNGGP, CNGH, QM, JOQ, QCH and CCEC and its Subsidiaries is as set
forth on Item 7.16 of the Disclosure Schedule.

     SECTION 7.17.   Designation of Subsidiaries. As of the Effective Date,
CCEC and each of its Subsidiaries is an Unrestricted Subsidiary, as such term
is defined in the Pre-2000 Indentures.

                                   ARTICLE VIII

                                    COVENANTS

     SECTION 8.1.   Affirmative Covenants. The Borrower agrees with the Agent
and each Lender that, from and after the Effective Date, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.1.

     SECTION 8.1.1.   Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to each Lender and the Agent
copies of the following financial statements, reports, notices and information:

          (a)  as soon as available and in any event within 60 days after the
     end of each of the first three Fiscal Quarters of each Fiscal Year of the
     Borrower, (i) the consolidated balance sheet, statement of earnings and
     cash flow statement of the Borrower and its Subsidiaries for such Fiscal
     Quarter and for the period commencing at the end of the previous Fiscal
     Year and ending with the end of such Fiscal Quarter, certified by an
     Authorized Officer of the Borrower and (ii) a consolidating balance sheet
     and a consolidating statement of earnings of the Borrower and its
     Subsidiaries for such Fiscal Quarter and for the period commencing at the
     end of the previous Fiscal Year and ending with the end of such Fiscal
     Quarter, certified by an Authorized Officer of the Borrower;

          (b)  as soon as available and in any event within 120 days after
     the end of each Fiscal Year of the Borrower, (i) a copy of the annual
     audit report for such Fiscal Year for the Borrower and its Subsidiaries,
     including therein the consolidated balance sheet, statement of earnings
     and cash flow statement of the Borrower and its Subsidiaries as of the
     end of such Fiscal Year, in each case certified (without any
     Impermissible

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     Qualification) in a manner acceptable to the Agent and the Required
     Lenders by Arthur Andersen & Company or other independent public
     accountants acceptable to the Agent and the Required Lenders and (ii) a
     consolidating balance sheet and a consolidating statements of earnings of
     the Borrower and its Subsidiaries as of the end of such Fiscal Year,
     certified by an Authorized Officer of the Borrower;

          (c)  as soon as available and in any event within 60 days after the
     end of each of the first three Fiscal Quarters of each Fiscal Year and
     within 120 days after the end of each Fiscal Year, a certificate,
     executed by an Authorized Officer of the Borrower, showing (in reasonable
     detail and with appropriate calculations and computations in all respects
     satisfactory to the Agent) compliance with the financial covenants set
     forth in Sections 6.3.4 and 8.2.4;

          (d)  as soon as available and in any event within ninety days after
     the end of each Fiscal Year of the Borrower, a consolidated budget for the
     Borrower and its Subsidiaries for the following Fiscal Year, in form and
     substance satisfactory to the Agent;

          (e)  if the Interest Coverage Ratio (Parent Only), calculated as of
     the end of the most recently ended Fiscal Quarter, had previously fallen
     below 1.70 to 1.00 and had not subsequently returned to 1.70 to 1.00 or
     better, as soon as available and in any event within 30 days after the end
     of each calendar month thereafter, a certificate, executed by an
     Authorized Officer of the Borrower, showing (in reasonable detail and with
     appropriate calculations and computations in all respect satisfactory to
     the Agent) the calculation of the Interest Coverage Ratio (Parent Only) as
     of the end of such calendar month;

          (f)  as soon as possible and in any event within three days after the
      Borrower obtains knowledge of each Default, a statement of an Authorized
     Officer of the Borrower setting forth details of such Default and the
     action which the Borrower has taken and proposes to take with respect
     thereto;

          (g)  as soon as possible and in any event within five days after (x)
     the Borrower obtains knowledge of any adverse development with respect to
     any litigation, action, proceeding, or labor controversy described in
     Section 7.7, (y) the commencement of any labor controversy, litigation,
     action, proceeding of the type described in Section 7.7, or (z) any other
     Material Adverse Effect, notice thereof and copies of all documentation
     relating thereto;

          (h)  promptly after the sending or filing thereof, copies of all
     reports which the Borrower sends to any of its securityholders, and all
     reports and registration statements which the Borrower or any of its
     Significant Subsidiaries files with the Securities and Exchange
     Commission or any national securities exchange;

          (i)  immediately upon the Borrower's knowledge of the institution
     of any steps by the Borrower or any member of its Controlled Group to
     terminate any Pension Plan, or the failure to make a required
     contribution to any Pension Plan if such failure is

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<PAGE>

     sufficient to give rise to a Lien under section 302(f) of ERISA, or the
     taking of any action with respect to a Pension Plan which could result in
     the requirement that the Borrower furnish a bond or other security to the
     PBGC or such Pension Plan, or the occurrence of any event with respect to
     any Pension Plan which could result in the incurrence by the Borrower of
     any material liability, fine or penalty, or any material increase in the
     contingent liability of the Borrower with respect to any post-retirement
     Welfare Plan benefit, notice thereof and copies of all documentation
     relating thereto; and

          (j)  such other information respecting the condition or operations,
     financial or otherwise, of the Borrower or any of its Significant
     Subsidiaries as any Lender through the Agent may from time to time
     reasonably request and which the Borrower is legally permitted to provide
     to such Lender.

The Borrower may provide some or all of the information required in clauses (a)
and (b) above by providing copies of its Forms 10-Q and/or 10-K filed with the
Securities and Exchange Commission.

     SECTION 8.1.2. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):

          (a)  the maintenance and preservation of its corporate existence and,
     if applicable, qualification as a foreign corporation; and

          (b)  the payment, before the same become delinquent, of all taxes,
     assessments and governmental charges imposed upon it or upon its
     property except to the extent being diligently contested in good faith by
     appropriate proceedings and for which adequate reserves in accordance
     with GAAP shall have been set aside on its books.

     SECTION 8.1.3.   Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
material properties in good repair, working order and condition, and make
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times
unless the Borrower determines in good faith that the continued maintenance of
any of its properties is no longer economically desirable.

     SECTION 8.1.4.   Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses and will, upon request of the Agent, furnish to each Lender at
reasonable intervals a certificate of an Authorized Officer of the Borrower
setting forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section.

     SECTION 8.1.5.   Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect all of
its business affairs and transactions and permit the Agent or any of its
representatives or any Lender, at reasonable times and intervals, to visit all
of its offices, to discuss its financial matters with its officers and

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independent public accountant (and the Borrower hereby authorizes such
independent public accountant to discuss the Borrower's financial matters with
either Administrative Agent or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the exercise by either Administrative Agent of its
rights pursuant to this Section; provided, however, after the occurrence and
during the continuance of any Default, the Borrower shall pay for all fees of
such independent accountants incurred with each exercise by the Administrative
Agents or any Lender of its rights pursuant to this Section.

     SECTION 8.1.6.   Environmental Covenant. The Borrower will, and will cause
each of its Significant Subsidiaries to,

          (a)  use and operate all of its facilities and properties in material
     compliance with all Environmental Laws, keep all necessary permits,
     approvals, certificates, licenses and other authorizations relating to
     environmental matters in effect and remain in material compliance
     therewith, and handle all Hazardous Materials in material compliance with
     all applicable Environmental Laws;

          (b)  immediately notify the Agent and provide copies upon receipt of
     all material written claims, complaints, notices or inquiries relating to
     the condition of its facilities and properties or compliance with
     Environmental Laws; and

          (c)  provide such information and certifications which the Agent may
      reasonably request from time to time to evidence compliance with this
     Section 8.1.6.

     SECTION 8.1.7.   Dividends of Subsidiaries. Promptly upon (but in no case
more than five (5) Business Days after) the occurrence of an Event of Default,
the Borrower shall cause each of its Wholly Owned Subsidiaries to declare and
pay dividends on, or to make payments or distributions on account of, the
shares of all classes of stock of such entity in an amount equal to (x) all
funds legally and contractually available at such time to such Subsidiary for
the payment of dividends minus (y) without duplication, such Wholly Owned
Subsidiary's budgeted working capital and budgeted cash requirements for the
following six months.

     SECTION 8.1.8.   Domestic Gas Reserves. The Borrower will use commercially
reasonable efforts to cause the Domestic Gas Reserves to be transferred to it as
soon as possible. In any event, on or before May 25, 2002, all or substantially
all of the Domestic Gas Reserves shall have been transferred to the Borrower
pursuant to a transaction reasonably satisfactory to the Administrative Agents
and Agent shall have contemporaneously received executed counterparts of Deeds
of Trust with respect to each Domestic Gas Reserve, duly executed by each of the
owners of such Domestic Gas Reserve, together with

          (a)  evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings of each of the Deeds of Trust
     as may be necessary or, in the reasonable opinion of the Agent, desirable
     effectively to record the Deeds of Trust as valid, perfected Liens against
     the Domestic Gas Reserves, which Liens

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     are subject to no outstanding monetary Liens recorded against the
     Domestic Gas Reserves;

          (b)  title opinions (collectively, the "title opinions") in form and
     substance reasonably satisfactory to the Agent and issued by Persons
     reasonably acceptable to the Agent, with respect to not less than 90%
     of the value of properties subject to the Deeds of Trust;

          (c)  such other approvals, opinions, or documents (including, without
     limitation, environmental reports) in connection with the foregoing
     as the Agent may reasonably request; and

          (d)  the Hazardous Materials Indemnity duly executed by the Borrower,
     together with a legal opinion in a form reasonably satisfactory to
     the Administrative Agents in respect thereof.

     SECTION 8.1.9.   CCFCI. On or before June 8, 2002, the stock of Calpine
Holdings shall have been transferred to CNGH pursuant to a transaction
reasonably satisfactory to the Administrative Agents. Upon completion of such
transfer, CCFCI shall be an indirect, Wholly-Owned Subsidiary of CNGH.
Concurrently with the effectiveness of such transfer, the Agent shall release
its pledge of the stock of Calpine Holdings obtained pursuant to the terms of
one of the Pledge Agreements.

     SECTION 8.1.10.   Intercompany Notes. The Borrower will, promptly upon the
creation of any Indebtedness owing from any of its Dedicated Subsidiaries,
cause such Indebtedness to be evidenced by a promissory note and pledged to the
Agent, on terms reasonably acceptable to the Agent, as collateral security for
the Obligations.

     SECTION 8.1.11.   Ownership Interests. The Borrower shall at all times
directly or indirectly own 100% of all equity interests of CCEC, which shall,
in turn, directly or indirectly own 100% of the equity interests in Calpine
Canada Natural Gas Partnership and Calpine Saltend Energy Centre, PLC. Calpine
Canada Natural Gas Partnership shall at all times own all of the Canadian Gas
Reserves. The Borrower shall at all times own 100% of the equity interests of
CNGGP and CNGH, and CNGGP and CNGH shall own 100% of the equity interests of
CNGC until CNGC is dissolved. Calpine Holdings shall at all times own 100% of
the equity interests of CCFCI.

     SECTION 8.2.   Negative Covenants. The Borrower agrees with the Agent and
each Lender that, from and after the Effective Date until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.2.

     SECTION 8.2.1.   Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries or Joint Ventures to, engage in any business
activity, except those described in the first recital and such activities as
may be incidental or related thereto; provided, however, that up to ten percent
(10%) of the consolidated net assets of the Borrower and its Subsidiaries may
be used for unrelated businesses.

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     SECTION 8.2.2.   Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:

          (a)  Indebtedness created in connection with any Loan Document and
     any Indebtedness existing as of the Effective Date which is identified in
     Item 8.2.2(a) ("Ongoing Indebtedness") of the Disclosure Schedule;

          (b)  Indebtedness which is incurred by the Borrower or any of the
     Borrower's Subsidiaries to a vendor of any assets to finance the
     acquisition of such assets so long as the only recourse of such
     vendor is to some or all of the assets so financed and, in the case
     of a Special Purpose Subsidiary that has acquired such assets, to
     the stock or other ownership interests of such Special Purpose
     Subsidiary;

          (c)  unsecured Indebtedness incurred in the ordinary course of
     business (including open accounts extended by suppliers on normal trade
     terms in connection with purchases of goods and services, but
     excluding Indebtedness incurred through the borrowing of money or
     Contingent Liabilities);

          (d)  Indebtedness of the Borrower which is owed to and held by a
     Restricted Subsidiary (it being understood and agreed that the
     obligations of the Borrower under its subordinated debt securities
     issued to a Trust in connection with the Guaranteed Preferred
     Securities are not considered Indebtedness for purposes of this
     Agreement) and Indebtedness of a Restricted Subsidiary which is
     owed to and held by the Borrower or a Restricted Subsidiary;
     provided, however, that any subsequent transfer of such
     Indebtedness (other than to the Borrower or a Restricted
     Subsidiary) shall be deemed, in each case, to constitute the
     incurrence of such Indebtedness by the Borrower or by a Restricted
     Subsidiary, as the case may be;

          (e)  Indebtedness of one or more Subsidiaries of the Borrower
     incurred solely to finance the development, construction or purchase of,
     or repairs, expansions, enhancements, improvements or additions to,
     the assets of such Subsidiaries so long as (i) the principal amount
     of any such Indebtedness (x) for development of existing gas
     reserves does not exceed an aggregate of $50,000,000 for any such
     existing reserves or (y) for expansions, enhancements, improvements
     or additions to an existing asset which has already achieved
     commercial operation does not exceed an aggregate of $60,000,000
     for any single financing or series of related financings for such
     asset (exclusive of up to $250,000,000 of Indebtedness for the
     expansion of the energy center at Zion, Illinois) and (ii) recourse
     for any such Indebtedness is limited solely (A) to the asset or
     assets being financed, (B) to such Subsidiaries themselves, where
     the asset or assets being financed constitute all or substantially
     all of the assets of such Subsidiaries (each, a "Special Purpose
     Subsidiary"), and/or (C) to the stock or other ownership
     interests in such Special Purpose
     Subsidiaries;

          (f)  Indebtedness in respect of Capitalized Lease Liabilities,
     unsecured Subordinated Debt of the Borrower and other unsecured
     Indebtedness of the Borrower or a Subsidiary if, after giving effect to
     the issuance thereof, the Interest Coverage Ratio

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     calculated as of the end of the most recent Fiscal Quarter on a pro forma
     basis is equal to or greater than 2.00 to 1.00;

          (g)  Indebtedness secured by property or assets acquired by, or owned
     by any Person acquired by, the Borrower or any of its Subsidiaries
     that was in existence at the time such property, assets or Person
     are acquired so long as such Indebtedness was not incurred in
     contemplation of such acquisition; provided, however, that the
     Borrower would have been able to incur such Indebtedness at the
     time of incurrence thereof pursuant to clause (f) above (assuming
     for purposes of this proviso that such Indebtedness was unsecured);

          (h)  unsecured Indebtedness of the Borrower or any of its
     Subsidiaries arising from the endorsements of instruments for collection
     in the ordinary course of business;

          (i)  unsecured Indebtedness of the Borrower or any of its
     Subsidiaries with respect to surety, appeal, indemnity, performance or
     other similar bonds in the ordinary course of business;

          (j)  unsecured Hedging Obligations and unsecured Contingent
     Liabilities of the Borrower or any of its Subsidiaries, in the ordinary
     course of business and consistent with applicable risk management
     guidelines established by the Borrower from time to time;

          (k)  Indebtedness in respect of commercial paper issued and sold in
     the commercial paper market in an aggregate principal or stated amount
     not to exceed the sum of (i) the stated amount of any letters of
     credit issued under the Existing Credit Agreement to support or
     secure such commercial paper plus (ii) the unused availability
     under this Agreement;

          (l)  Indebtedness under the Existing Credit Agreement; and

          (m)  extensions, renewals and refinancings of any of the foregoing
     permitted Indebtedness (except with respect to the Loans and other
     Obligations referred to in clause (j) above); provided that the
     outstanding principal amount of such Indebtedness is not increased,
     no obligor under such Indebtedness is liable for any such
     Indebtedness except to the extent it was liable for the
     Indebtedness so renewed or refinanced and if the Indebtedness being
     refinanced is subordinated to the Indebtedness of any obligor, such
     Indebtedness shall be subordinated at least to the same extent;
     provided, further, that the limitations set forth in this clause
     (m) shall not apply to Indebtedness which is otherwise permitted
     under this Section 8.2.2, even if such Indebtedness is used to
     repay or refinance other existing Indebtedness.

provided, however, that no Indebtedness otherwise permitted by clauses (d),
(f), (g), (j) or (k) shall be permitted if, after giving effect to the
incurrence thereof, any Default (other than a Nonmaterial Subsidiary Default)
shall have occurred and be continuing and provided further that in no event
shall Calpine Holdings, QM, JOQ or QCH or any of their respective Subsidiaries
(except Calpine Canada Power Holdings Ltd. and its Subsidiaries) create, incur,
assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness other than, without

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duplication, (x) Indebtedness permitted by clauses (a), (b), (c), (h), (i) and
(m) of this Section 8.2.2, (y) $85,000,000 of unsecured Indebtedness of Calpine
Saltend Energy Centre, PLC and (z) up to $15,000,000 of other unsecured
Indebtedness. Notwithstanding the foregoing, in no event shall QM, JOQ, QCH or
CCEC incur any Indebtedness of any type whatsoever after the Effective Date,
other than Indebtedness pursuant to the Loan Documents.

     SECTION 8.2.3. Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of
its property, revenues or assets, whether now owned or hereafter acquired,
except:

          (a)  Liens securing payment of the Obligations granted pursuant to any
     Loan Document and Liens securing payment of the obligations granted
     pursuant to the loan documents relating to the Existing Credit
     Agreement;

          (b)  Liens granted prior to the Effective Date to secure payment of
     Indebtedness of the type permitted and described in clause (a) of
     Section 8.2.2;

          (c)  Liens granted to secure payment of Indebtedness of the type
     permitted and described in clause (b) of Section 8.2.2 where
     recourse is limited as described in clause (b) of Section 8.2.2;

          (d)  Liens for taxes, assessments or other governmental charges or
     levies not at the time delinquent or thereafter payable without
     penalty or being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP
     shall have been set aside on its books;

          (e)  Liens of carriers, warehousemen, mechanics, materialmen and
     landlords incurred in the ordinary course of business for sums not
     overdue or being diligently contested in good faith by appropriate
     proceedings and for which adequate reserves in accordance with GAAP
     shall have been set aside on its books;

          (f)  Liens incurred in the ordinary course of business in connection
     with workmen's compensation, unemployment insurance or other forms
     of governmental insurance or benefits, or to secure performance of
     tenders, statutory obligations, leases and contracts (other than
     for borrowed money) entered into in the ordinary course of business
     or to secure obligations on surety or appeal bonds;

          (g)  judgment Liens in existence less than 15 days after the entry
     thereof or with respect to which execution has been stayed or the
     payment of which is covered in full (subject to a customary
     deductible) by insurance maintained with responsible insurance
     companies;

          (h)  Liens granted to secure payment of Indebtedness of the type
     permitted and described in clauses (e) and (g) of Section 8.2.2
     where recourse is limited as described in clauses (e) or (g), as
     applicable, of Section 8.2.2;

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          (i)  Zoning restrictions, easements, rights of way, title
     irregularities and other similar encumbrances which alone or in the
     aggregate do not materially detract from the value of the property subject
     thereto;

          (j)  Liens on the property or assets of any Subsidiary of the
     Borrower in favor of the Borrower;

          (k)  Banker's Liens and similar Liens (including set-off rights) in
     respect of bank deposits;

          (l)  Landlord's Liens and similar Liens in respect of leased property;

          (m)  Liens securing Attributable Debt with respect to outstanding
     leases entered into pursuant to Sale/Leaseback Transactions so long as,
     with respect to Sale/Leaseback Transactions closing after January 1,
     2002, the amount thereof does not exceed 10% of the consolidated tangible
     assets of the Borrower and its Subsidiaries; and

          (n)  Liens incurred in connection with the extension, renewal or
     refinancing of Indebtedness secured by Liens permitted and described in
     clauses (b), (c) and (h) of this Section 8.2.3; provided, however, that
     (x) such new Lien shall be limited to all or part of the same property
     that secured the original Lien and (y) the Indebtedness secured by such
     Lien at such time is not increased (other than by an amount necessary to
     pay fees and expenses, including premiums, related to the refinancing,
     refunding, extension, renewal or replacement of such Indebtedness);
     provided, further, that the limitations set forth in this clause (n)
     shall not apply to Liens which are otherwise permitted under this Section
     8.2.3, even if such Liens secure Indebtedness issued to repay or
     refinance existing Indebtedness permitted and described in clauses (b),
     (c) and (h) of this Section 8.2.3.

     Without limitation of the foregoing, in no event shall Calpine Holdings,
     QM, JOQ, QCH or any of their Subsidiaries (except Calpine Canada Power
     Holdings Ltd. and its Subsidiaries) create, incur, assume or suffer to
     exist a Lien upon any of its property, revenues, or assets, whether now
     owned or hereafter acquired, except for Liens permitted by clauses (a)
     through (g), (i) through (l) and (n) of this Section 8.2.3, and in no
     event shall QM, JOQ, QCH or CCEC create any Liens of any type whatsoever
     after the Effective Date, except for Liens created pursuant to Loan
     Documents.

     SECTION 8.2.4.   Financial Condition.  The Borrower will not permit:

          (a)  Its Tangible Net Worth to be less than (i) $820,699,000 plus (ii)
     50% of the Consolidated Net Income of the Borrower and its
     Subsidiaries (without giving effect to any losses) for each Fiscal
     Quarter ending on or after December 31, 1999 plus (iii) 100% of the Net
     Equity Proceeds from any equity offering by the Borrower after May 23,
     2000.

          (b)  Its Leverage Ratio to be greater than .85 to 1.00 as of the end
     of any Fiscal Quarter.

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          (c) Its Interest Coverage Ratio as of the end of any Fiscal Quarter,
     to be less than 1.75 to 1.00 for the twelve (12) month period comprising
     the four previous Fiscal Quarters.

          (d) Its Interest Coverage Ratio (Parent Only) as of the end of any
     Fiscal Quarter, to be less than 1.60 to 1.00 for the twelve (12) month
     period comprising the four previous Fiscal Quarters.

     SECTION 8.2.5. Investments. The Borrower will not, and will not permit any
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment
in any other Person, except:

          (a)  Investments existing on the Effective Date;

          (b)  Cash Equivalent Investments or Investments (as defined in the
     Pre-2000 Indentures) by a Restricted Subsidiary in the Borrower or any
     other Restricted Subsidiary;

          (c)  Investments by the Borrower in any of its Subsidiaries or in any
     Investment Joint Venture of the Borrower or Investments by the Borrower's
     Subsidiaries in other Subsidiaries or in any Investment Joint Venture of
     the Borrower, whether now existing or hereafter organized in permitted
     lines of business of the Borrower and its Subsidiaries and lines of
     business related thereto by way of contributions to capital or loans or
     advances (including guarantees and other forms of Contingent Liabilities
     to the extent that the occurrence of the obligations being guaranteed or
     supported would otherwise be permitted hereunder); and

          (d)  from and after the Effective Date, in the ordinary course of
     business, Investments by the Borrower or any of its Subsidiaries in
     Persons that are not Subsidiaries of the Borrower or Investment Joint
     Ventures of the Borrower so long as such Persons are engaged only in
     permitted lines of business of the Borrower and its Subsidiaries and
     lines of business related thereto and so long as no such single
     Investment (or series of related Investments) exceeds 5% of the
     Borrower's consolidated tangible assets as of the end of the most recent
     Fiscal Quarter for which the Borrower has delivered the financial
     statements required under Section 8.1.1 hereof and the aggregate of all
     such Investments at any time outstanding does not exceed 10% of the
     Borrower's consolidated tangible assets as of the end of the most recent
     Fiscal Quarter for which the Borrower has delivered the financial
     statements required under Section 8.1.1 hereof;

provided, however, that

          (e)  any Investment which when made complies with the requirements of
     the definition of the term "Cash Equivalent Investment" may continue to
     be held notwithstanding that such Investment if made thereafter would not
     comply with such requirements; and

          (f)  no Investment otherwise permitted by clauses (c) or (d) shall be
     permitted to be made if, immediately before or after giving effect
     thereto, any Material Adverse

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     Effect or any Default (other than a Nonmaterial Subsidiary Default) shall
     have occurred and be continuing.

     SECTION 8.2.6.   Restricted Payments, etc.  On and at all times after the
     Effective Date:

          (a)  the Borrower will not declare, pay or make any dividend or
     distribution (in cash, property or obligations) on any shares of any
     class of capital stock (now or hereafter outstanding) of the Borrower or
     on any warrants, options or other rights with respect to any shares of
     any class of capital stock (now or hereafter outstanding) of the Borrower
     (other than dividends or distributions payable in its common stock or
     warrants to purchase its common stock or splitups or reclassifications of
     its stock into additional or other shares of its common stock) or apply,
     or permit any of its Subsidiaries (other than Restricted Subsidiaries) to
     apply, any of its funds, property or assets to the purchase, redemption,
     sinking fund or other retirement of, or agree or permit any of its
     Subsidiaries (other than Restricted Subsidiaries) to purchase or redeem,
     any shares of any class of capital stock (now or hereafter outstanding)
     of the Borrower, or warrants, options or other rights with respect to any
     shares of any class of capital stock (now or hereafter outstanding) of
     the Borrower;

          (b)  the Borrower will not, and will not permit any of its
     Subsidiaries to

               (i)    make any payment or prepayment of principal of, or make
          any payment of interest on, any Senior Notes or any Subordinated
          Debt on any day other than the stated date for such payment or
          prepayment set forth in the documents and instruments memorializing
          any Senior Notes or such Subordinated Debt, or which would violate
          the subordination provisions of any such Subordinated Debt;
          provided, that the Borrower may pay or prepay all or a portion of
          the Senior Notes if both before and after giving effect thereto, no
          Default shall have occurred or be continuing and there are no Loans
          outstanding hereunder; and provided further, that the Borrower may
          make optional purchases, redemptions or prepayments of the Zero
          Coupon Debentures if both before and after giving effect thereto, no
          Default shall have occurred and be continuing; or

               (ii)   redeem, purchase or defease any Senior Notes or any
          Subordinated Debt unless the effect of such redemption, purchase or
          defeasance is to make a payment or prepayment permitted under clause
          (b)(i);

          (c)  the Borrower will not, and will not permit any Subsidiary to,
     make any deposit for any of the foregoing purposes except to the
     extent a payment or prepayment would be otherwise permitted
     hereunder; and

          (d)  the Borrower will not, and will not permit any of its
     Subsidiaries to, make any voluntary prepayment of principal of any
     Indebtedness (other than payments by any Subsidiary on Indebtedness owed
     to the Borrower or any Restricted Subsidiary), if either before or after
     giving effect thereto, there shall exist a Default (other than a
     Nonmaterial Subsidiary Default) or an Event of Default.

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     SECTION 8.2.7.   Capital Expenditures and Investments. The Borrower will
not make or commit to make Capital Expenditures for or Investments in, or
in connection with, any new project (other than Capital Expenditures or
Investments (as defined in the Pre-2000 Indentures) made through one or more
Restricted Subsidiaries) if a Default (other than a Nonmaterial Subsidiary
Default) or Event of Default shall have occurred and be continuing; provided,
however, that if on the date of any such Default, the Borrower is contractually
obligated to make such a Capital Expenditure or Investment, the Borrower shall
be permitted to make such Capital Expenditure or Investment.

     SECTION 8.2.8.   Rental Obligations. The Borrower will not enter into at
any time any arrangement which does not create a Capitalized Lease
Liability or a Sale/Leaseback Transaction and which involves the leasing by the
Borrower from any lessor of any real or personal property (or any interest
therein), except arrangements which, together with all other such arrangements
which shall then be in effect, will not require the payment of an aggregate
amount of rentals by the Borrower in excess of (excluding escalations resulting
from a rise in the consumer price or similar index) $25,000,000 in any Fiscal
Year; provided, however, that any calculation made for purposes of this Section
shall exclude any amounts required to be expended for maintenance and repairs,
insurance, taxes, assessments, and other similar charges.

     SECTION 8.2.9.   Consolidation, Merger, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other corporation, or purchase or otherwise
acquire all or substantially all of the assets of any Person (or of any
division thereof) except

          (a)  the Borrower or a Wholly Owned Subsidiary may merge with another
     Person if (i) (A) Borrower or such Subsidiary is the continuing Person
     following such merger or (B) in the case of a merger by the Borrower, the
     Person (if other than the Borrower) formed by such merger (including a
     consolidation effected by a sale or transfer of all or substantially all
     of the assets of a Person) is a corporation organized and existing under
     the laws of the United States or any State thereof or the District of
     Columbia and expressly assumes the obligations of the Borrower under this
     Agreement, (ii) such merger or consolidation is otherwise permitted under
     the Senior Note Indentures, (iii) no Default (other than a Nonmaterial
     Subsidiary Default) has occurred and is continuing or would occur after
     giving effect thereto and (iv) after giving effect thereto, (x) the S&P
     Rating of the Borrower shall not be reduced below BB- and Moody's Rating
     of the Borrower shall not be reduced below Ba3 or, (y) if the Borrower
     shall not be the survivor, the S&P Rating of such survivor shall not be
     below BBB- and Moody's Rating of such survivor shall not be below Baa3;

          (b)  any such Subsidiary may liquidate or dissolve voluntarily into,
     and may merge with and into, the Borrower or any other Subsidiary, and
     the assets or stock of any Subsidiary may be purchased or otherwise
     acquired by the Borrower or any other Subsidiary; provided, however, in
     no event may a Subsidiary that holds a direct interest in a power
     generating facility merge with any other Subsidiary that holds a direct
     or indirect interest in any other power generating facility or other
     business;

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<PAGE>

          (c)  so long as no Default (other than a Nonmaterial Subsidiary
     Default) has occurred and is continuing or would occur after giving
     effect thereto, the Borrower or any of its Subsidiaries may purchase all
     or substantially all of the assets or stock of any Person if permitted
     (without duplication) by Section 8.2.5 and Section 8.2.7; and

          (d)  a Restricted Subsidiary may consolidate with, or merge into or
     with, or purchase or otherwise acquire all or substantially all the
     assets of, another Restricted Subsidiary.

     SECTION 8.2.10.   Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person other than to the Borrower or a
Restricted Subsidiary, unless

          (a)  such sale, transfer, lease, contribution or conveyance is in the
     ordinary course of its business or is permitted by Section 8.2.9; or

          (b)  such sale, transfer, lease, contribution or conveyance is not
     covered by clause (a) above and (i) the Borrower or its Subsidiary
     receives consideration at the time of such sale, transfer, lease,
     contribution or conveyance at least equal to the fair market value of
     assets being sold, transferred, leased, contributed or conveyed (ii) at
     least sixty percent (60%) of the consideration received by the Borrower
     or such Subsidiary is in the form of cash or cash equivalents, and (iii)
     an amount equal to 100% of Net Available Cash is either reinvested in
     Additional Assets within 365 days of such asset sale or applied by the
     Borrower pursuant to Section 2.2.2(a) to prepay the Loans and the loans
     outstanding under the Existing Credit Agreement, so long as any Net
     Available Cash from Dedicated Assets is applied by the Borrower pursuant
     to Section 2.2.2(a).

     SECTION 8.2.11.   Modification of Certain Agreements. The Borrower will not
consent to any amendment, supplement or other modification of any of the terms
or provisions contained in, or applicable to, the Senior Notes or the Senior
Note Indentures, or any document or instrument evidencing or applicable to any
Subordinated Debt, other than any amendment, supplement or other modification
which extends the date, reduces the amount of any required repayment or
redemption, or cures any ambiguity, omission, defect or inconsistency in any
Senior Notes issued thereunder so long as such a cure is not adverse to the
interests of the Lenders.

     SECTION 8.2.12.   Transactions with Affiliates. Except for transactions
between the Borrower and its Wholly Owned Subsidiaries or Cogen America or
between one Wholly Owned Subsidiary and another Wholly Owned Subsidiary or
Cogen America, the Borrower will not, and will not permit any of its
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any of its other Affiliates unless such
arrangement or contract is fair and equitable to the Borrower or such
Subsidiary and is an arrangement or contract of the kind which would be entered
into by a prudent Person in the position of the Borrower or such Subsidiary
with a Person which is not one of its Affiliates.

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     SECTION 8.2.13. Negative Pledges, Restrictive Agreements, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding this Agreement, any other Loan Document and any agreement
governing any Indebtedness permitted either by clauses (a), (b), (e), (f), (g)
and (l) of Section 8.2.2 (and refinancings, extensions and renewals of such
Indebtedness permitted under clause (m) of Section 8.2.2) or any agreements in
respect of Sale/Leaseback Transactions permitted by clause (m) of Section
8.2.3) prohibiting

          (a) the creation or assumption of any Lien upon its properties,
     revenues or assets, whether now owned or hereafter acquired, or the
     ability of the Borrower or any other Obligor to amend or otherwise modify
     this Agreement or any other Loan Document; or

          (b) the ability of any Subsidiary to make any payments, directly or
     indirectly, to the Borrower by way of dividends, advances, repayments of
     loans or advances, reimbursements of management and other intercompany
     charges, expenses and accruals or other returns on investments, or any
     other agreement or arrangement which restricts the ability of any such
     Subsidiary to make any payment, directly or indirectly, to the Borrower.

     SECTION 8.2.14.   Amendments to Canadian Documentation. The Borrower will
not, and will not permit CCEC, CCEF or QCH, to amend the contractual
arrangements among CCEC, QCH and CCEF in respect of the term debentures dated
April 25, 2001, August 14, 2001 and August 23, 2001 between CCEC and CCEF and
the documentation executed in connection therewith or the memorandum of
association or articles of association of CCEC without the prior written
consent of the Administrative Agents and the Term B Lead Arrangers, which
consent shall not be unreasonably withheld or delayed. The Borrower will not
permit any amendments to be made to the articles of incorporation of any
Guarantor without the prior written consent of the Administrative Agents and
the Term B Lead Arrangers, which consent shall not be unreasonably withheld or
delayed.

     SECTION 8.3.   No Restriction on Payments to the Borrower. Nothing herein
shall restrict the ability of any Subsidiary of the Borrower to make any
payment by way of dividends, advances, repayments of loans or advances,
reimbursements of management and other intercompany charges, expenses and
accruals or other returns on investments or any other payment, directly or
indirectly, to the Borrower.

                                 ARTICLE IX

                              EVENTS OF DEFAULT

     SECTION 9.1.   Listing of Events of Default. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".

     SECTION 9.1.1.   Non-Payment of Obligations. The Borrower shall default in
the payment or prepayment when due of any principal of any Loan, the Borrower
shall default in the payment when due of any Reimbursement Obligation, or the
Borrower shall default (and such

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default shall continue unremedied for a period of five days) in the payment
when due of interest on any Loan, any fee or of any other Obligation.

     SECTION 9.1.2.   Breach of Warranty. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate
furnished by or on behalf of the Borrower or any other Obligor to the Agent or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
VI) is or shall be incorrect when made in any material respect.

     SECTION 9.1.3.   Non-Performance of Certain Covenants and Obligations. The
Borrower shall default in the due performance and observance of any of its
obligations under Section 8.2 or the Fee Letter and such default shall continue
unremedied for a period of 10 days after the earlier of (i) actual knowledge
thereof by the Borrower or (ii) notice thereof has been given to the Borrower
by the Agent or by any Lender.

     SECTION 9.1.4.   Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Agent or any Lender (or
such longer period as the Required Lenders in their discretion, may agree,
provided that such Obligor has commenced such cure within such 30 day period
and thereafter diligently pursues such cure to completion).

     SECTION 9.1.5.   Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of the Borrower or any of its Significant
Subsidiaries or any other Obligor having a principal amount, individually or in
the aggregate, in excess of $10,000,000, or a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the maturity of any
such Indebtedness or, in the case of the Borrower only, such default shall
continue unremedied for any applicable period of time sufficient to permit the
holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity or a default shall occur in the performance or observance of
any obligation or condition with respect to the Borrower's debt securities
issued to a Trust or to any Indebtedness of any Significant Subsidiary or
Obligor, in each case having a principal amount in excess of $10,000,000, and,
as a result thereof, the holder or holders of such debt securities or such
Indebtedness, or any trustee or agent for such holders, causes such securities
or Indebtedness to be repaid more quickly than theretofore scheduled, whether
through the introduction of a "cash sweep," the increase of an existing "cash
sweep" or otherwise.

     SECTION 9.1.6.   Judgments. Any final judgment or order (not covered by
insurance) for the payment of money shall be rendered against the Borrower or
any Significant Subsidiary or any other Obligor in an amount in excess of
$25,000,000 (or its foreign currency equivalent) (treating any deductibles,
self-insurance or retention as not so covered) which is not stayed or
discharged within 30 days after entry of such final judgment or order, and
there shall be any

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period of more than 30 consecutive days following entry of the final judgment
or order in excess of $25,000,000 (or its foreign currency equivalent) during
which a stay of enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.

     SECTION 9.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan

          (a)  the institution of any steps by the Borrower, any member of its
     Controlled Group or any other Person to terminate a Pension Plan if, as a
     result of such termination, the Borrower or any such member could be
     required to make a contribution to such Pension Plan, or could reasonably
     expect to incur a liability or obligation to such Pension Plan, in excess
     of $10,000,000; or

          (b)  a contribution failure occurs with respect to any Pension Plan
     sufficient to give rise to a Lien under Section 302(f) of ERISA.

     SECTION 9.1.8.    Control of the Borrower.  Any Change in Control shall
occur.

     SECTION 9.1.9.    Bankruptcy,  Insolvency,  etc. The Borrower or any of its
Significant  Subsidiaries or any other Obligor shall

          (a)  become insolvent or generally fail to pay, or admit in writing
     its inability or unwillingness to pay, debts as they become due;

          (b)  apply for, consent to, or acquiesce in, the appointment of a
     trustee, receiver, sequestrator or other custodian for the Borrower or
     any of its Significant Subsidiaries or any other Obligor or any property
     of any thereof, or make a general assignment for the benefit of creditors;

          (c)  in the absence of such application, consent or acquiescence,
     permit or suffer to exist the appointment of a trustee, receiver,
     sequestrator or other custodian for the Borrower or any of its
     Significant Subsidiaries or any other Obligor or for a substantial part
     of the property of any thereof, and such trustee, receiver, sequestrator
     or other custodian shall not be discharged within 60 days, provided that
     the Borrower, each Significant Subsidiary and each other Obligor hereby
     expressly authorizes the Agent and each Lender to appear in any court
     conducting any relevant proceeding during such 60-day period to preserve,
     protect and defend their rights under the Loan Documents;

          (d)  permit or suffer to exist the commencement of any bankruptcy,
     reorganization, debt arrangement or other case or proceeding under any
     bankruptcy or insolvency law, or any dissolution, winding up or
     liquidation proceeding, in respect of the Borrower or any of its
     Significant Subsidiaries or any other Obligor, and, if any such case or
     proceeding is not commenced by the Borrower or such Significant
     Subsidiary or such other Obligor, such case or proceeding shall be
     consented to or acquiesced in by the Borrower or such Significant
     Subsidiary or such other Obligor or shall result in the entry of an order
     for relief or shall remain for 60 days undismissed, provided that the
     Borrower, each Significant Subsidiary and each other Obligor hereby
     expressly authorizes the Agent and each Lender to appear in any court
     conducting any such case or proceeding during

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    such 60-day period to preserve, protect and defend their rights under the
     Loan Documents; or

          (e)  take any action authorizing any of the foregoing.

     SECTION 9.1.10.   Impairment of Security, etc. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; or the
Borrower, any other Obligor or any Subsidiary shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; or any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien, subject only to those exceptions
expressly permitted by such Loan Document.

     SECTION 9.2.   Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 9.1.9 shall occur with respect to the
Borrower or any Significant Subsidiary or any other Obligor, the Commitments
(if not theretofore terminated) shall automatically terminate and the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice
or demand.

     SECTION 9.3.   Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of
Section 9.1.9 with respect to the Borrower or any Significant Subsidiary or any
other Obligor) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent, upon the direction of the Required Lenders, shall
by notice to the Borrower declare all or any portion of the outstanding
principal amount of the Loans and other Obligations to be due and payable
and/or the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which
shall be so declared due and payable shall be and become immediately due and
payable, without further notice, demand or presentment, and/or, as the case may
be, the Commitments shall terminate and the Agent may thereupon exercise any
and all remedies available under the Loan Documents and applicable law.

                                    ARTICLE X

                       THE AGENT AND ADMINISTRATIVE AGENTS

     SECTION 10.1.   Actions. Each Lender hereby appoints Scotiabank as its
Agent and Scotiabank and Citibank as its Administrative Agents under and for
purposes of this Agreement, the Notes and each other Loan Document. Each Lender
authorizes the Agent and Administrative Agents to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by such Person (with respect to which such Person agrees that it
will comply, except as otherwise provided in this Section or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent and Administrative Agents by
the terms hereof and thereof, together with such powers as may be reasonably
incidental thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) the Agent, each Arranger and the
Administrative Agents, pro

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rata according to such Lender's Aggregate Percentage, from and against any and
all liabilities, obligations, losses, damages, claims, costs or expenses of any
kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Agent, any Arranger or an Administrative Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the Agent, any
Arranger or such Administrative Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted from the Agent's, any Arranger's or an
Administrative Agent's, as the case may be, gross negligence or willful
misconduct. The Agent, each Arranger and the Administrative Agent shall not be
required to take any action hereunder, under the Notes or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement, the
Notes or any other Loan Document, unless they are indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent, any Arranger or an
Administrative Agent shall be or become, in such Person's determination,
inadequate, such Person may call for additional indemnification from the
Lenders and cease to do the acts indemnified against hereunder until such
additional indemnity is given.

     SECTION 10.2.   Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., San
Francisco time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its applicable Percentage of such
Borrowing on the date specified therefor, the Agent may assume that such Lender
has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to
the extent that such Lender shall not have made such amount available to the
Agent, such Lender and the Borrower severally agree to repay the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date the Agent made such amount available to the Borrower
to the date such amount is repaid to the Agent, at the interest rate applicable
at the time to Loans comprising such Borrowing.

     SECTION 10.3.   Exculpation. Neither the Agent, either Administrative
Agent nor any of their respective directors, officers, employees or agents
shall be liable to any Lender for any action taken or omitted to be taken by it
under this Agreement or any other Loan Document, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence, nor
responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of this Agreement or
any other Loan Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by the Agent or the Administrative Agents shall not obligate
them to make any further inquiry or to take any action. The Agent and the
Administrative Agents shall be entitled to rely upon advice of counsel
concerning legal matters and upon any notice, consent, certificate, statement
or writing which they believe to be genuine and to have been presented by a
proper Person.

     SECTION 10.4.   Successor. The Agent or any Administrative Agent may
resign as such at any time upon at least 30 days' prior notice to the Borrower
and all Lenders. If the Agent or

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any Administrative Agent at any time shall resign, the Required Lenders may
appoint another Lender as a successor thereto which shall thereupon become the
Agent or an Administrative Agent, as applicable, hereunder.  If no successor
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Administrative
Agent's giving notice of resignation, then the retiring Person may, on behalf
of the Lenders, appoint a successor, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the U.S.  (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having a combined capital and surplus of at least $500,000,000.  Upon the
acceptance of any appointment as Agent or Administrative Agent hereunder by a
successor Agent or Administrative Agent, such successor shall be entitled to
receive from the retiring Agent or Administrative Agent such documents of
transfer and assignment as such successor may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Agent or Administrative Agent, as applicable, and the
retiring Agent or Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's or Administrative
Agent's resignation hereunder as the Agent or Administrative Agent, the
provisions of

          (a)  this Article X shall inure to its benefit as to any actions
     taken or omitted to be taken by it while it was the Agent or
     Administrative Agent under this Agreement; and

          (b)  Section 11.3 (with respect to expenses incurred prior to
     resignation) and Section 11.4 shall continue to inure to its benefit.

     SECTION 10.5.   Loans or Letters of Credit Issued by Agent, either
Administrative Agent or any Issuer.

          (a)  The Agent and each Administrative Agent shall have the same
     rights and powers with respect to (x) the Loans made by it or any of its
     Affiliates, (y) the Notes held by it or any of its Affiliates, and (z) its
     participating interests in the Letters of Credit as any other Lender and
     may exercise the same as if it were not the Agent. The Agent, each
     Administrative Agent and their Affiliates may accept deposits from, lend
     money to, and generally engage in any kind of business with the Borrower
     or any Subsidiary or Affiliate of the Borrower as if such Person were not
     the Agent or Administrative Agent hereunder.

          (b)  Each Issuer shall have the same rights and powers with respect
     to (x) the Loans made by it or any of its Affiliates, (y) the Notes held
     by it or any of its Affiliates, and (z) its participating interests in the
     Letters of Credit as any other Lender and may exercise the same as if it
     were not an Issuer. Each Issuer and its Affiliates may accept deposits
     from, lend money to, and generally engage in any kind of business with the
     Borrower or any Subsidiary or Affiliate of the Borrower as if it were not
     an Issuer hereunder.

     SECTION 10.6.   Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent, the Administrative Agents and each other Lender,
and based on such Lender's review of the financial information of the Borrower,
this Agreement, the other Loan Documents (the terms and provisions of which
being satisfactory to such Lender) and such other documents,

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information and investigations as such Lender has deemed appropriate, made its
own credit decision to extend its Commitments. Each Lender also acknowledges
that it will, independently of the Agent, the Administrative Agents and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.

     SECTION 10.7.   Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and copies of all
other communications received by the Agent from the Borrower for distribution
to the Lenders by the Agent in accordance with the terms of this Agreement.

     SECTION 10.8.   Other Agents; Lead Arrangers. None of the Lenders
identified on the facing page or signature pages of this Agreement as a
"bookrunner," or "lead arranger" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such.  Without limiting the foregoing, none of the
Lenders so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified in deciding to enter
into this Agreement or in taking or not taking action hereunder.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

     SECTION 11.1.   Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented
to by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:

         (a)  modify this Section 11.1 or modify any requirement hereunder that
     any particular action be taken by all the Lenders or by the Required
     Lenders shall be effective unless consented to by each Lender;

         (b)  modify any requirement hereunder that any particular action be
     taken by the Required Revolving Lenders or change the definition of
     "Required Revolving Lenders" shall be effective unless consented to by
     each Revolving Lender;

         (c)  modify any requirement hereunder that any particular action be
     taken by the Required Term B Lenders or change the definition of "Required
     Term B Lenders" shall be effective unless consented to by each Term B
     Lender;

         (d)  increase the Revolving Commitment Amount of any Revolving Lender
     or the Revolving Percentage of any Revolving Lender shall be made without
     the consent of such Lender or extend the Revolving Loan Commitment
     Termination Date or change any

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     provision expressly requiring the consent of all Revolving Lenders shall
     be made without the consent of each Revolving Lender;

         (e)  increase the Term B Loan Commitment Amount of any Term B Lender
     or the Term Percentage of any Term B Lender shall be made without the
     consent of such Lender or extend the Term B Loan Commitment Termination
     Date or change any provision expressly requiring the consent of all Term B
     Lenders shall be made without the consent of each Term B Lender;

         (f)  reduce any fees described in Article III shall be made without
     the consent of each Lender affected thereby or extend the due date for, or
     reduce the amount of, any scheduled payment of principal, interest or fees
     on any Loan (or reduce the principal amount of or rate of interest on any
     Loan) shall be made without the consent of the Lender holding the Note
     evidencing such Loan;

         (g)  release the Dedicated Assets subject to the Assignment Agreement
     shall be effective without the consent of the Required Lenders unless the
     proceeds thereof shall be applied as provided in Section 2.2.2(c) hereof
     or release any of the other Dedicated Assets shall be effective without
     the consent of all Lenders unless the proceeds of such Dedicated Assets
     shall be applied as provided in Section 2.2.2(c) hereof;

         (h)  modify the application of payments specified under Section 2.2.2
     shall be effective without the consent of all Lenders;

         (i)  release any Guarantor shall be effective without the consent of
     all Lenders;

         (j)  extend the due date for, or reduce the amount of, any
     Reimbursement Obligation for a Letter of Credit which has been drawn shall
     be made without the consent of the Issuer thereof and each Revolving
     Lender;

         (k)  affect adversely the interests, rights or obligations of an
     Issuer qua an Issuer shall be made without the consent of such Issuer;

         (l)  affect adversely the interests, rights or obligations of the
     Agent qua the Agent shall be made without consent of the Agent; or

         (m)  affect adversely the interests, rights or obligations of the
     Administrative Agents qua the Administrative Agents without the consent of
     the Administrative Agents.

Notwithstanding the foregoing, (a) prior to completion of the syndication of
the Term B Loans, the Term B Lead Arrangers may exercise their rights under the
Fee Letter and (b) prior to the completion of the syndication of the Revolving
Commitment Amount, the Revolving Lead Arrangers may exercise their rights under
the Fee Letter; provided that in no event may such Persons release any
Dedicated Assets or reduce the fees payable to any Lender or extend the due
date for, or reduce any scheduled payment of principal, interest or fees on any
Loan (or reduce the principal amount of or rate of interest on any Loan)
without the consent of the affected Lender. In addition, Section 10.3 shall not
be amended without the consent of the Agent and the

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Administrative Agents. No failure or delay on the part of the Agent, any Lender
or the holder of any Note in exercising any power or right under this Agreement
or any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Agent,
any Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

     SECTION 11.2.   Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party
at its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.

     SECTION 11.3.   Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable expenses of the Agent and the Administrative Agents
(including the reasonable fees and out-of-pocket expenses of a single counsel
to the Agent and the Administrative Agents, of local counsel, if any, who may
be retained by counsel to the Agent and the Administrative Agents and of
Houlihan, Lokey, Howard & Zukin) in connection with

         (a)  the negotiation, preparation, execution, delivery or
     administration of this Agreement and of each other Loan Document,
     including schedules and exhibits, and any amendments, waivers, consents,
     supplements or other modifications to this Agreement or any other Loan
     Document as may from time to time hereafter be required, whether or not
     the transactions contemplated hereby are consummated,

         (b)  the filing, recording, refiling or rerecording of any Uniform
     Commercial Code financing statements relating to the Assignment Agreement
     and all amendments, supplements and modifications to any thereof and any
     and all other documents or instruments of further assurance required to be
     filed or recorded or refiled or rerecorded by the terms hereof or of the
     Assignment Agreement, and

         (c)  the preparation and review of the form of any document or
     instrument relevant to this Agreement or any other Loan Document.

     If the Agent, either Administrative Agent or their counsel shall be
precluded from undertaking the duties described in clause (b) above due to a
conflict of interest, the Lenders may appoint another Lender and/or counsel to
discharge such duties and the Borrower shall be responsible for the reasonable
expenses of such Lender and counsel. The Borrower further agrees to pay, and to
save the Agent, the Administrative Agents, each Issuer and the Lenders harmless
from all liability for, any stamp or other taxes (other than income taxes)
which may be

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payable in connection with the execution or delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes, the issuance of the Letters of
Credit, or any other Loan Documents. The Borrower also agrees to reimburse the
Agent and the Administrative Agents, each Issuer and each Lender upon demand
for all reasonable out-of-pocket expenses (including attorneys' fees and legal
expenses) incurred by the Agent or such Lender in connection with (x) the
negotiation of any restructuring or "work-out", whether or not consummated, of
any Obligations and (y) the enforcement of any Obligations upon and during the
continuing of an Event of Default.

     SECTION 11.4.   Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent, each Arranger,
the Administrative Agents, the Issuers and each Lender and each of their
respective officers, directors, employees and agents, and each other person
controlling any of the foregoing within the meaning of either Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred by any Indemnified Party
in connection therewith (irrespective of whether any such Indemnified Party is
a party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to

         (a)  any transaction financed or to be financed in whole or in part,
     directly or indirectly, with the proceeds of any Loan or the use of any
     Letter of Credit;

         (b)  the entering into and performance of this Agreement and any other
     Loan Document by any of the Indemnified Parties (including any action
     brought by or on behalf of the Borrower as the result of the Required
     Lenders' refusal to make any Credit Extension as a result of the
     Borrower's failure to satisfy the conditions in Article VI hereof but not
     including any breach of this Agreement or any other Loan Document by the
     Agent or any of the Lenders);

         (c)  any investigation, litigation or proceeding related to any
     acquisition or proposed acquisition by the Borrower or any of its
     Subsidiaries of all or any portion of the stock or assets of any Person,
     whether or not the Agent or such Lender is party thereto;

         (d)  any investigation, litigation or proceeding related to any
     environmental cleanup, audit, compliance or other matter relating to the
     protection of the environment or the Release by the Borrower or any of its
     Subsidiaries of any Hazardous Material; or

         (e)  the presence on or under, or the escape, seepage, leakage,
     spillage, discharge, emission, discharging or releases from, any real
     property owned or operated by the Borrower or any Subsidiary thereof of
     any Hazardous Material (including any losses, liabilities, damages,
     injuries, costs, expenses or claims asserted or arising under any
     Environmental Law), regardless of whether caused by, or within the control
     of, the Borrower or such Subsidiary,

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except for any such Indemnified Liabilities resulting from, arising out of or
relating to the relevant Indemnified Party's gross negligence or willful
misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. In addition to the
foregoing, the Borrower hereby waives any and all rights to seek or obtain
consequential damages from any Indemnified Party.

     The Lenders agree to indemnify each Issuer with respect to any acts taken
or omissions suffered by the Issuer in connection with each Letter of Credit
issued by it or proposed to be issued by it and the related Issuance Request
(to the extent not reimbursed by the Borrower), ratably according to their
respective Aggregate Percentages, from and against any and all claims, damages,
losses, liabilities and expenses (including without limitation, reasonable fees
and disbursements of counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against any Issuer in any way relating to
or arising out of any of the Loan Documents or the Letters of Credit or any
action taken or omitted by such Issuer under the Loan Documents or the Letters
of Credit (EXPRESSLY INCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY OR
EXPENSE ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF THE
ISSUER, BUT EXCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY OR EXPENSE
ATTRIBUTABLE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ISSUER). IT
IS THE INTENT OF THE PARTIES HERETO THAT THE ISSUER SHALL, TO THE EXTENT
PROVIDED IN THIS SECTION 11.4, BE INDEMNIFIED FOR ITS OWN ORDINARY, SOLE OR
CONTRIBUTORY NEGLIGENCE. Without limitation of the foregoing, each Lender
agrees to reimburse each Issuer promptly upon demand for such Lender's ratable
share of any reasonable out-of-pocket expenses (including reasonable counsel
fees) incurred by such Issuer in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, the Loan Documents or the Letters
of Credit, or any of them, to the extent that the Issuer is not reimbursed for
such expenses by the Borrower.

     SECTION 11.5.   Survival. The obligations of the Borrower under Sections
5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the Lenders under
Section 10.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.

     SECTION 11.6.   Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall,
as to such provision and such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.

     SECTION 11.7.   Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.

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     SECTION 11.8.   Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrower and the Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent.

     SECTION 11.9.   Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK. This Agreement, the Notes and the other Loan Documents constitute
the entire understanding among the parties hereto with respect to the subject
matter hereof and supersede any prior agreements, written or oral, with respect
thereto.

     SECTION 11.10.   Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:

         (a)  the Borrower may not assign or transfer its rights or obligations
     hereunder without the prior written consent of the Agent and all Lenders;
     and

         (b)  the rights of sale, assignment and transfer of the Lenders are
     subject to Section 11.11.

     SECTION 11.11.   Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this Section
11.11.

     SECTION 11.11.1.   Assignments.  Any Lender,

          (a)  with the written consents of the Borrower, the Agent and each
     Issuer (which consents shall not be unreasonably withheld and which
     consents shall be deemed to have been given in the absence of a written
     notice delivered by the Borrower, the Agent or such Issuer to the Agent,
     on or before the fifth Business Day after receipt by such Person of such
     Lender's request for consent, stating, in reasonable detail, the reasons
     why such Person proposes to withhold such consent and which consent shall
     not be required from the Borrower after the occurrence and during the
     continuance of an Event of Default or during the primary syndication of
     the Revolving Loan Commitment) may at any time assign and delegate to one
     or more commercial banks or other financial institutions its Revolving
     Loans and Revolving Loan Commitments, and

          (b)  with notice to the Borrower, the Agent and the Issuers may
     assign and delegate any of its Loans to any of its Affiliates or to any
     other Lender, and

          (c)  with notice to the Borrower and the Agent may assign and
     delegate its Term Loans to any other Person.

                                      83

<PAGE>

(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or a fraction of such Lender's total
Loans, Commitments or other interests of such Lender hereunder (which
assignment and delegation shall be of a constant, and not a varying, percentage
of all the assigning Lender's Loans, Commitments and other interests) in a
minimum aggregate amount of $5,000,000 in the case of Revolving Loan
Commitments or $1,000,000 in the case of Term B Loans or, if less, the amount
of such Lender's Commitment; provided, however, that any such Assignee Lender
will comply, if applicable, with the provisions contained in Section 5.6 and
further, provided, however, that, the Borrower, each other Obligor and the
Agent shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to an
Assignee Lender until

               (i)    written notice of such assignment and delegation,
          together with payment instructions, addresses and related information
          with respect to such Assignee Lender, shall have been given to the
          Borrower and the Agent by such Lender and such Assignee Lender,

               (ii)   such Assignee Lender shall have executed and delivered to
          the Borrower and the Agent a Lender Assignment Agreement, and to the
          extent and on the terms required herein, such agreement shall have
          been accepted by the Agent and the Borrower, and

               (iii)  the processing fees described below shall have been paid.

From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents with respect to obligations arising after the date of
assignment. Within five Business Days after its receipt of notice that the
Agent has received an executed Lender Assignment Agreement, the Borrower shall
execute and deliver to the Agent (for delivery to the relevant Assignee Lender)
new Notes evidencing such Assignee Lender's assigned Loans and Commitments and,
if the assignor Lender has retained Loans and Commitments hereunder,
replacement Notes in the principal amount of the Loans and Commitments retained
by the assignor Lender hereunder (such Notes to be in exchange for, but not in
payment of, those Notes then held by such assignor Lender). Each such Note
shall be dated the date of the predecessor Notes. The assignor Lender shall
mark the predecessor Notes "exchanged" and deliver them to the Borrower.
Accrued interest on that part of the predecessor Notes evidenced by the new
Notes, and accrued fees, shall be paid as provided in the Lender Assignment
Agreement. Accrued interest on that part of the predecessor Notes evidenced by
the replacement Notes shall be paid to the assignor Lender. Accrued interest
and accrued fees shall be paid at the same time or times provided in the
predecessor Notes and in this Agreement. Such assignor Lender or such Assignee
Lender must also pay a processing fee to the Agent upon delivery of any Lender
Assignment Agreement in the amount of $3,000; provided, however that

                                      84

<PAGE>

such processing fee shall not be charged in the case of assignments by the
Administrative Agents. Any attempted assignment and delegation not made in
accordance with this Section 11.11.1 shall be null and void. In addition to the
foregoing, and notwithstanding any other provision hereof, (i) any Lender may
at any time without notice to or consent by any other Person assign its rights
under this Agreement to any Federal Reserve Bank and (ii) the Agent shall
provide notice to the Lenders of any assignments by it under this Section
11.11.1.

     SECTION 11.11.2.   Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests (or
a sub-participating interest, in the case of a Lender's participating interest
in a Letter of Credit) in any of the Loans, Commitments, or other interests of
such Lender hereunder; provided, however, that

          (a)  no participation or sub-participation contemplated in this
     Section 11.11 shall relieve such Lender from its Commitments or its other
     obligations hereunder or under any other Loan Document,

          (b)  such Lender shall remain solely responsible for the performance
     of its Commitments and such other obligations,

          (c)  the Borrower and each other Obligor and the Agent shall continue
     to deal solely and directly with such Lender in connection with such
     Lender's rights and obligations under this Agreement and each of the other
     Loan Documents,

          (d)  no Participant, unless such Participant is an Affiliate of such
     Lender, or is itself a Lender, shall be entitled to require such Lender to
     take or refrain from taking any action hereunder or under any other Loan
     Document, except that such Lender may agree with any Participant that such
     Lender will not, without such Participant's consent, take any actions of
     the type described in clause (b) or (c) of Section 11.1, and

          (e)  the Borrower shall not be required to pay any amount under
     Section 5.6 that is greater than the amount which it would have been
     required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4, shall be considered a
Lender.

     SECTION 11.11.3.   Special Funding Vehicles. Notwithstanding anything to
the contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle (a "SPC"), identified as such in writing from
time to time by the Granting Lender to the Agent and the Borrower, the option
to provide to the Borrower all or any part of any Loan that such Granting
Lender is obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan, (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall remain
obligated to make such Loan pursuant to the terms hereof, (iii) the Borrower
shall not be required to pay any amount under Section 5.6 that is greater than
the amount which it would have been required to pay had there been no grant to
an SPC and any SPC (or assignee of an SPC) will comply, if applicable, with the
provisions contained in

                                      85

<PAGE>

Section 5.6. No grant by any Granting Lender to an SPC agreeing to provide a
Loan or making of such Loan by any SPC shall operate to relieve such Granting
Lender of its liabilities and obligations hereunder, except to the extent of
the making of such Loan by such SPC. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). In addition, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, any SPC may (i) with
notice to, but without the prior written consent of, the Borrower and the Agent
and without paying any processing fee therefore, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions
(consented to by the Borrower and Agent, each in its sole discretion) providing
liquidity and/or credit support to or for the account of such SPC to support
the funding or maintenance of Loans and (ii) disclose on a confidential basis
any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section may not be amended without the
written consent of any SPC that holds an option to provide Loans. No recourse
under any obligation, covenant, or agreement of the SPC contained in this
Agreement shall be had against any shareholder, officer, agent or director of
the SPC as such, by the enforcement of any assessment or by any proceeding, by
virtue of any statute or otherwise; it being expressly agreed and understood
that this Agreement is a corporate obligation of the SPC and no personal
liability shall attach to or be incurred by any officer, agents or member of
the SPC as such, or any of them under or by reason of any of the obligations,
covenants or agreements of the SPC contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by the SPC of
any such obligations, covenants or agreements, either at law or by statute or
constitution, of every such shareholder, officer, agent or director is hereby
expressly waived by all parties to this Agreement as a condition of and
consideration for the SPC entering into this Agreement; provided, however, that
the foregoing shall not relieve any such person or entity of any liability they
might otherwise have as a result of fraudulent actions or omissions taken by
them. All parties to this Agreement acknowledge and agree that the SPC shall
only be liable for any claims that each of them may have against the SPC only
to the extent of the SPC's assets. The provisions of this clause shall survive
the termination of this Agreement.

     SECTION 11.12.   Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.

     SECTION 11.13.   Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY

                                      86

<PAGE>

SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK OR IN ANY MANNER
PROVIDED BY LAW. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     SECTION 11.14.   Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION AMONG ANY OF THE
AGENT, THE LENDERS AND THE BORROWER BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

     SECTION 11.15.   Confidentiality. The Lenders shall hold all non-public
information (which has been identified as such by the Borrower) obtained
pursuant to the requirements of this Agreement in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to any of their examiners, their Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by

                                      87

<PAGE>

any bona fide transferee, participant or assignee or as required or requested
by any governmental agency or representative thereof or pursuant to legal
process; provided, however, that

          (a)  unless specifically prohibited by applicable law or court order,
     each Lender shall notify the Borrower of any request by any governmental
     agency or representative thereof (other than any such request in
     connection with an examination of the financial condition of such Lender
     by such governmental agency) for disclosure of any such non-public
     information prior to disclosure of such information;

          (b)  prior to any such disclosure pursuant to this Section 11.15,
     each Lender shall require any such bona fide transferee, participant and
     assignee receiving a disclosure of non-public information to agree in
     writing

               (i)    to be bound by this Section 11.15;

               (ii)   to require such Person to require any other Person to
          whom  such Person discloses such non-public information to be
          similarly bound by this Section 11.15; and

          (c)  except as may be required by an order of a court of competent
     jurisdiction and to the extent set forth therein, no Lender shall be
     obligated or required to return any materials furnished by the Borrower or
     any Subsidiary.

     SECTION 11.16.   Judgment Currency. The Obligations of the Borrower and
any other Obligor in respect of any sum due to any Lender or the Agent
hereunder, under the Notes or under or in respect of any other Loan Document
shall, notwithstanding any judgment in a currency (the "Judgment Currency")
other than the currency in which such sum was originally denominated (the
"Original Currency"), be discharged only to the extent that on the Business Day
following receipt by such Lender or the Agent of any sum adjudged to be so due
in the Judgment Currency, such Lender or the Agent, in accordance with normal
banking procedures, purchases the Original Currency with the Judgment Currency.
If the amount of Original Currency so purchased is less than the sum originally
due to such Lender or the Agent, the Borrower agrees as a separate obligation
and notwithstanding any such judgment, to indemnify each Lender and the Agent,
as the case may be, against such loss, and if the amount of Original Currency
so purchased exceeds the sum originally due to such Lender and the Agent, as
the case may be, each Lender and the Agent agree to remit any excess to the
applicable Obligor. If, for the purpose of obtaining judgment in any court, it
is necessary to convert a sum due under any Loan Document in another currency
into Dollars, Canadian Dollars or Sterling, as the case may be, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which, in accordance with normal banking
procedures, the applicable Lender could purchase such other currency with
Dollars, Canadian Dollars or Sterling, as the case may be, in New York, at the
close of business on the Business Day immediately preceding the day on which
final judgment is given, together with any premiums and costs of exchange
payable in connection with such purchase.

                                      88

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                             CALPINE CORPORATION

                             By:______________________________________________
                                Name:       Michael Thomas
                                Title:      Senior Vice President - Finance

                             Address:       50 West San Fernando Avenue
                                            San Jose, CA 95113

                             Facsimile No.: (408) 995-0505

                             Attention:     Senior Vice President-Finance

<PAGE>

                             THE BANK OF NOVA SCOTIA,
                             as Agent and Administrative Agent

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       580 California Street
                                            Suite 2100
                                            San Francisco, CA  94111

                             Facsimile No.: (415) 397-0791

                             Attention: Jon Burckin

                             with a copy to:

                                     The Bank of Nova Scotia
                                     600 Peachtree Street N.E.
                                     Suite 2700
                                     Atlanta, GA  30308
                                     Attention:  Hilma Gabbidon
                                                 Administrative Agent -
                                                 Loan Administration

                                     Facsimile No.:  (404) 888-8998

<PAGE>

                             CITICORP USA, INC.,
                             as Administrative Agent

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       388 Greenwich Street
                                            New York, NY  10013

                             Facsimile No.: (212) 723-8540

                             Attention:  Dale Goncher

<PAGE>

                             LENDERS

                             THE BANK OF NOVA SCOTIA

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       580 California Street
                                            Suite 2100
                                            San Francisco, CA  94111

                             Facsimile No.: (415) 397-0791

                             Attention: Jon Burckin

                             with a copy to:

                                     The Bank of Nova Scotia
                                     600 Peachtree Street N.E.
                                     Suite 2700
                                     Atlanta, GA  30308
                                     Attention:   Hilma Gabbidon
                                                  Administrative Agent -
                                                  Loan Administration

                                     Facsimile No.:  (404) 888-8998

<PAGE>

                             CITICORP USA, INC.

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       388 Greenwich Street
                                            New York, NY  10013

                             Facsimile No.: (212) 816-8098

                             Attention:  Robert J. Harrity

<PAGE>

                             BAYERISCHE LANDESBANK GIROZENTRALE

                             By:______________________________________________
                                Name:
                                Title:

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       560 Lexington Avenue
                                            New York, NY 10022

                             Facsimile No.: (212) 230-9117

                             Attention:  Christopher Stolarski

                             with a copy to:

                             Bayerische Landesbank Girozentrale
                             560 Lexington Avenue
                             New York, NY 10022

                             Facsimile No.: (212) 310-9930

                             Attention:   Patricia Sanchez
                                          Loan Administration

<PAGE>

                             BANK OF AMERICA, NATIONAL ASSOCIATION

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       CA5-705-12-10
                                            555 California Street, 12th Floor
                                            San Francisco, CA 94104

                             Facsimile No.: (415) 291-8127

                             Attention:  Raymond Gagne

                             with a copy to:

                             Bank of America Plaza
                             TX1-492-14-05
                             901 Main Street
                             Dallas, Texas 75202

                             Attention:  Betty Canales

                             Facsimile No.  (214) 290-8377

<PAGE>

                             CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH


                             By:______________________________________________
                                Name:
                                Title:

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       Eleven Madison Avenue
                                            New York, New York  10010

                             Facsimile No.: (212) 538-3477

                             Attention:  Loan Department

<PAGE>

                             TORONTO DOMINION (TEXAS) INC.


                             By:______________________________________________
                                Name:
                                Title:

                             Address:       909 Fannin Street
                                            17th Floor
                                            Houston, Texas 77010

                             Facsimile No.: (713) 951-9921

                             Attention:  Mark A. Baird

<PAGE>

                             BANKERS TRUST COMPANY


                             By:______________________________________________
                                Name:
                                Title:

                             Address:       __________________________________
                                            __________________________________
                                            __________________________________

                             Facsimile No.: __________________________________

                             Attention: ______________________________________

<PAGE>

                             ING (U.S.) CAPITAL LLC

                             By:______________________________________________
                                Name:
                                Title:

                             By:______________________________________________
                                Name:
                                Title:

                             Address:       1325 Avenue of the Americas
                                            New York, NY 10019

                             Facsimile No.: (646) 424-6440 or (646) 424-6441

                             Attention:  Charmen Smith (646) 424-6458

<PAGE>

                                                                     SCHEDULE I

                             DISCLOSURE SCHEDULE*

ITEM 6.1.10       Prospects.

ITEM 7.7          Litigation.

         Description of Proceeding  Action or Claim Sought

ITEM 7.8          Existing Significant Subsidiaries.

                          State of                  Ownership          Business
Name                   Incorporation                    %            Description

ITEM 7.11         Employee Benefit Plans.


ITEM 7.12         Environmental Matters.


ITEM 7.15         Indebtedness.

ITEM 8.2.2(a)     Ongoing Indebtedness.

         Creditor                 Outstanding Principal Amount

____________________________

*    Item numbers are keyed to refer to Sections where the item is principally
referred to and will have to be revised as such Sections are renumbered.

<PAGE>

                                                                     SCHEDULE II

                                   PERCENTAGES

<TABLE>
<CAPTION>
                              Revolving            Revolving       Term B              Term B          Aggregate
Lender                        Commitment           Percentage      Commitment          Percentage      Percentage
------                        ----------           ----------      ----------          ----------      ----------
<S>                           <C>                  <C>             <C>                 <C>             <C>
The Bank of Nova Scotia       $143,333,333         14.333%         0                   0               8.958%
Citicorp USA, Inc.            $143,333,333         14.333%         $200,000,000        33.333%         21.458%
Bayerische Landesbank         $143,333,333         14.333%         0                   0               8.958%
Girozentrale
Bankers Trust Company         $143,333,333         14.333%         $200,000,000        33.333%         21.458%
Credit Suisse First Boston,   $143,333,333         14.333%         $200,000,000        33.333%         21.458%
Cayman Islands Branch
Bank of America, National     $143,333,333         14.333%         0                   0               8.958%
Association
Toronto Dominion (Texas)      $100,000,000         10%             0                   0               6.250%
Inc.
ING (U.S.) Capital LLC        $40,000,000          4%              0                   0               2.500%
</TABLE>

                                       1

<PAGE>

                                                                  SCHEDULE 4.10

                           EXISTING LETTERS OF CREDIT

POUND STERLING LCS AND BANK GUARANTEES FOR THE SALTEND COGENERATION PROJECT

BAYERISCHE LANDESBANK AS ISSUER

<TABLE>
<CAPTION>
BVL L/C #                  Beneficiary                                 [pound] Amount          Expiry Date
---------                  -----------                                 --------------          -----------
<S>                        <C>                                         <C>                     <C>
BPG0801-001                BP Gas Marketing Limited Standby LC         [pound]35,000,000       August  22, 2002

N/A                        National Grid Company Bank Performance      [pound] 7,142,000       March 31, 2002
                           Guarantee

BPG0801-003                Elexon Clear Limited Standby LC             [pound] 6,120,000       August 22, 2002

TBD                        National Grid Company Standby LC            [pound]   758,131       August 22, 2002

Saltend Subtotals:                                                     [pound]49,020,131
</TABLE>

                                       1

<PAGE>

                                                                    EXHIBIT A-1

                                 REVOLVING NOTE

$____________                                                     March 8, 2002

     FOR VALUE RECEIVED, the undersigned, CALPINE CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of
____________________ (the "Lender") on the Revolving Loan Commitment
Termination Date, the principal sum of _________________ DOLLARS ($________)
or, if less, the aggregate unpaid principal amount of all Revolving Loans made
by the Lender pursuant to that certain Credit Agreement, dated as of March 8,
2002 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "Credit Agreement"), among the Borrower,
THE BANK OF NOVA SCOTIA, as Agent, and the various financial institutions
(including the Lender) as are, or may from time to time become, parties
thereto. This Note also evidences the obligation of the Borrower to reimburse
each Lender for such Lender's Revolving Percentage of all outstanding L/C
Advances under the Credit Agreement.

     The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.

     Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.

     This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.

     All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.

                                       A-1-1

<PAGE>

     THIS NOTE SHALL BE DEEMED TO BE MADE UNDER AND GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                             CALPINE CORPORATION


                             By______________________________________________
                                Name:
                                Title:

                                       A-1-2

<PAGE>

                          LOANS AND PRINCIPAL PAYMENTS

<TABLE>
<CAPTION>
==========================================================================================================================
        Amount of Revolving   Interest            Amount of Principal      Unpaid Principal
        Loan Made             Period              Repaid                   Balance                            Notation
Date                          (If Applicable)                                                        Total    Made By
----    -------------------   ---------------     -------------------      ----------------          -----    --------
==========================================================================================================================
<S>     <C>           <C>                         <C>             <C>      <C>            <C>
        Base          LIBO                        Base            LIBO     Base           LIBO
        Rate          Rate                        Rate            Rate     Rate           Rate
        ----          ----                        ----            ----     ----           ----
--------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

--------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       A-1-3

<PAGE>

                                                                    EXHIBIT A-2

                                    TERM NOTE

$[______________________]                                       _________, 2002

     FOR VALUE RECEIVED, the undersigned, CALPINE CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of [ ] (the
"Lender") on the Term Loan B Commitment Termination Date, the principal sum of
[ ($ )] or, if less, the aggregate unpaid principal amount of all Loans made by
the Lender pursuant to that certain Credit Agreement, dated as of March 8, 2002
(together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "Credit Agreement"), among the Borrower, THE
BANK OF NOVA SCOTIA, as Agent, and the various financial institutions
(including the Lender) as are, or may from time to time become, parties thereto.

     The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.

     Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.

     This Term Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Term Note and for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Term Note and on which such Indebtedness may be declared to be immediately due
and payable. Unless otherwise defined, terms used herein have the meanings
provided in the Credit Agreement.

     All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.

                                       A-2-1

<PAGE>

     THIS TERM NOTE SHALL BE DEEMED TO BE MADE UNDER AND GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                             CALPINE CORPORATION


                             By:______________________________________________
                             Name:____________________________________________
                             Title:___________________________________________

                                       A-2-2

<PAGE>

                        TERM LOANS AND PRINCIPAL PAYMENTS

<TABLE>
<CAPTION>
=========== ===================== ============== ====================== ====================== ========= ==============
                                    Interest
            Amount of Term          Period (If     Amount of              Unpaid Principal                 Notation
Date        Loan Made               Applicable)    Principal Repaid       Balance                Total     Made By
----        ---------               -----------    ----------------       -------                -----     -------
=======================================================================================================================
            Base          LIBO                     Base          LIBO     Base          LIBO
            Rate          Rate                     Rate          Rate     Rate          Rate
            ----          ----                     ----          ----     ----          ----
<S>         <C>      <C>  <C>       <C>            <C>      <C>  <C>      <C>       <C> <C>      <C>       <C>
----------- -------- --   --------- -------------- -------- ---- -------- --------- --- -------- --------- --------------

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

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

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

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

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

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

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

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

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

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

----------- -------- --   --------- -------------- -------- ---- -------- --------- --- -------- --------- --------------
</TABLE>

                                       A-2-3

<PAGE>

                                                                    EXHIBIT B

                                BORROWING REQUEST

The Bank of Nova Scotia
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA  30308

Attention:  [Ms. Hilma Gabbidon]

                               CALPINE CORPORATION

Gentlemen and Ladies:

     This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Credit Agreement, dated as of March 8, 2002 (together with all amendments, if
any, from time to time made thereto, the "Credit Agreement"), among Calpine
Corporation, a Delaware corporation (the "Borrower"), certain financial
institutions and The Bank of Nova Scotia, as agent (the "Agent"). Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.

     The Borrower hereby requests that a [Revolving/Term B] Loan be made in the
aggregate principal amount of $________________________________________ on
__________, ____ as a [LIBO Rate Loan having an Interest Period of ______
months] [Base Rate Loan].

     The Borrower hereby certifies that its Moody's Loan Rating is _____ and
that its S&P Loan Rating is _____. The Borrower hereby further certifies that
its incurrence of the Indebtedness evidenced by the Loans is permitted under
the terms of the Pre-2000 Indentures pursuant to Sections 3.4[_] thereof. If
the Borrower is relying on clause (a) of Section 3.4 of the Pre-2000
Indentures, the Borrower has attached hereto a certificate demonstrating its
compliance with the incurrence test set forth therein.

     The Borrower hereby certifies to the Agent that the incurrence of Liens in
respect of such Borrowing is permitted under the terms of Section 3.7 of the
Pre-2000 Indentures and Section 3.4 of the Shelf Indenture. To the extent the
Borrower is relying on Section 3.7(f)(1) of each of the Pre-2000 Indentures and
on Section 3.4(a)(i) of the Shelf Indenture, the Borrower has attached a
certificate demonstrating its compliance with the provisions thereof. To the
extent that the Borrower is relying on the proviso to Section 3.7 of each of
the Pre-2000 Indentures and the proviso to Section 3.4 of the Shelf Indenture,
the Borrower has attached a certificate demonstrating its compliance with the
incurrence tests set forth therein.

     The Borrower hereby acknowledges that, pursuant to Section 6.3.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the

                                       B-1

<PAGE>

application of the proceeds therefrom, all statements set forth in Section
6.3.1 are true and correct in all material respects.

     The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Agent.  Except to
the extent, if any, that prior to the time of the Borrowing requested hereby
the Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.

         Please wire transfer the proceeds of the Borrowing to the accounts of
the following persons at the financial institutions indicated respectively:

<TABLE>
<CAPTION>
Amount to be Transferred                                                                  Name, Address, etc. of
             ------------
Lender                          Name                         Account No.                  Transferred
------                                                                                    -----------
<S>                             <C>                          <C>                          <C>
$
 ---------------------          ---------------------        ------------------           ----------------------
                                                                                          ----------------------
                                                             Attention:                   ----------------------

$
 ---------------------          ---------------------        ------------------           ----------------------
                                                                                          ----------------------
                                                             Attention:                   ----------------------

Balance of such proceeds        The Borrower
                                                              ------------------          ----------------------
                                                                                          ----------------------
                                                             Attention:                   ----------------------
</TABLE>

     The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ____ day of ___________, 200_.

                             CALPINE CORPORATION

                             By______________________________________________
                                Name:
                                Title:

                                       B-2

<PAGE>

                                                                    EXHIBIT C

                         CONTINUATION/CONVERSION NOTICE


The Bank of Nova Scotia
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA  30308

Attention:  [Ms. Hilma Gabbidon]


                               CALPINE CORPORATION

Gentlemen and Ladies:

     This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Credit Agreement, dated as of March 8, 2002 (together with
all amendments, if any, from time to time made thereto, the "Credit
Agreement"), among Calpine Corporation, a Delaware corporation (the
"Borrower"), certain financial institutions and The Bank Of Nova Scotia, as
agent (the "Agent").  Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.

     The Borrower hereby requests that on ___________, 200_,

          (1)  $___________ of the presently outstanding principal amount of
     the Loans originally made on _________, 200_ [and $___________ of the
     presently outstanding principal amount of the Loans originally made on
     ___________, 200_],

          (2)  and all presently being maintained as *[Base Rate Loans] [LIBO
     Rate Loans],

          (3)  be [converted into] [continued as],

          (4)  **[LIBO Rate Loans having an Interest Period of _______
     months] [Base Rate Loans].

The Borrower hereby:

          (a)  certifies and warrants that no Default has occurred and is
     continuing; and

____________________________

*    Select appropriate interest rate option.

**   Insert appropriate interest rate option.

                                       C-1

<PAGE>

          (b)    agrees that if prior to the time of such continuation or
         conversion any matter certified to herein by it will not be true and
         correct at such time as if then made, it will immediately so notify the
         Agent.

Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.

     The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be
made, by its Authorized Officer this ___ day of__________, 200_.

                             CALPINE CORPORATION

                             By______________________________________________
                                Name:
                                Title:

                                       C-2

<PAGE>

                                                                    EXHIBIT D

                                ISSUANCE REQUEST

The Bank of Nova Scotia,
  acting as agent (the "Agent")
  for the Lenders (defined below)
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA  30308

Attention:  [Ms. Hilma Gabbidon]

         Re:      Credit Agreement, dated as of March 8, 2002 (together with all
                  amendments, if any, thereafter from time to time made thereto,
                  the "Credit Agreement"), among Calpine Corporation, (the
                  "Borrower"), various financial institutions (the "Lenders")
                  and the Agent.

Gentlemen/Ladies:

     This Issuance Request is delivered to you pursuant to Section 4.1 of the
Credit Agreement. Unless otherwise defined herein, terms used herein have the
meanings assigned to them in the Credit Agreement. In the event of a conflict
between the terms and conditions of any application for a Letter of Credit and
the terms and conditions of the Credit Agreement, then the terms and conditions
of the Credit Agreement will control.

     The Borrower hereby requests that on _________, 200_ (the "Date of
Issuance") [_____________] (the "Issuer") *[issue a [Foreign Currency] Letter
of Credit on ______________, 200_ in the initial Stated Amount of
[$_______________][Cdn $____________][[pound]____________] with a Stated Expiry
Date (as defined therein) of ______________, 200_] [extend the Stated Expiry
Date (as defined under Irrevocable Letter of Credit No.__, issued on
__________________________, 200_, in the initial Stated Amount of
[$______________][Cdn $____________][[pound]____________]) to a revised Stated
Expiry Date (as defined therein) of _________________, 200_].

     Attached hereto is a duly executed application for [the issuance] [the
extension] of a [Foreign Currency] Letter of Credit on your standard form. Such
[Foreign Currency] Letter of Credit will be in support of
**________________________________.

____________________________

*    Insert as appropriate.

**   Insert description of supported Indebtedness or other obligations and name
of agreement to which it relates.

                                       D-1

<PAGE>

     The Borrower hereby acknowledges that, pursuant to Section 6.3.2 of the
Credit Agreement, each of the delivery of this Issuance Request and the
[issuance][extension] of the [Foreign Currency] Letter of Credit requested
hereby constitutes a representation and warranty by the Borrower that, on such
date of [issuance] [extension] all statements set forth in Section 6.3.1 are
true and correct in all material respects.

     The Borrower agrees that if, prior to the time of the *[issuance]
[extension] of the [Foreign Currency] Letter of Credit requested hereby, any
matter certified to herein by it will not be true and correct at such time as
if then made, it will immediately so notify the Agent. Except to the extent, if
any, that prior to the time of the issuance or extension requested hereby the
Agent and the Issuer shall receive written notice to the contrary from the
Borrower, each matter certified to herein shall be deemed to be certified at
the date of such issuance or extension.

     IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its duly Authorized Officer this ___day of _____________, 200_.

                             CALPINE CORPORATION

                             By_______________________________________________
                                Name:
                                Title:

____________________________

*    Complete as appropriate.

                                       D-2

<PAGE>

                           LENDER ASSIGNMENT AGREEMENT


To:  Calpine Corporation

To:  The Bank of Nova Scotia,
     as the Agent

     [Bayerische Landesbank Girozentrale,
     as Issuer]

     [Bankers Trust Company,
     as Issuer]

                               CALPINE CORPORATION

Gentlemen and Ladies:

     We refer to Section 11.11.1 of the Credit Agreement, dated as of March 8,
2002 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "Credit Agreement"), among Calpine
Corporation, a Delaware corporation (the "Borrower"), the various financial
institutions (the "Lenders") as are, or shall from time to time become, parties
thereto, and The Bank of Nova Scotia, as agent (the "Agent") for the Lenders.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.

     This agreement is delivered to you pursuant to Section 11.11.1 of the
Credit Agreement and also constitutes notice to each of you, pursuant to
Section 11.11.1 of the Credit Agreement, of the assignment and delegation to
_______________ (the "Assignee") of ___% of the [Revolving] [Term B] Loans and
[Revolving] [Term B] Loan Commitments of _____________ (the "Assignor")
outstanding under the Credit Agreement on the date hereof. After giving effect
to the foregoing assignment and delegation, the Assignor's and the Assignee's
[Revolving] [Term B] Percentages for the purposes of the Credit Agreement are
set forth opposite such Person's name on the signature pages hereof.

     [Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]

     The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Credit Extensions thereunder. The Assignee
further confirms and agrees that in becoming a Lender and in making its
Commitments and Loans under the Credit Agreement, such actions have and will be
made without recourse to, or representation or warranty by the Agent.

                                       E-1

<PAGE>

     Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent

          (a)  the Assignee

               (i)    shall be deemed automatically to have become a party to
          the Credit Agreement, have all the rights and obligations of a
          "Lender" under the Credit Agreement and the other Loan Documents as
          if it were an original signatory thereto to the extent specified in
          the second paragraph hereof; and

               (ii)   agrees to be bound by the terms and conditions set forth
          in the Credit Agreement and the other Loan Documents as if it were an
          original signatory thereto; and

          (b)  the Assignor shall be released from its obligations under the
     Credit Agreement and the other Loan Documents to the extent specified in
     the second paragraph hereof with respect to obligations arising after the
     effective date of this assignment.

     The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 11.11.1 of the
Credit Agreement upon the delivery hereof.

     The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Agent to acknowledge receipt of this document:

          (A)  Address for Notices:

               Institution Name:

               Attention:

               Domestic Office:

               Telephone:

               Facsimile:

               LIBOR Office:

               Telephone:

               Facsimile:

          (B)  Payment Instructions:

     The Assignee agrees to furnish the tax form required by the last sentence
of Section 5.6 (if so required) of the Credit Agreement no later than the date
of acceptance hereof by the Agent.

                                       E-2

<PAGE>

     This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same agreement.

Adjusted [Revolving] [Term] Percentage         [ASSIGNOR]

[Revolving] [Term B] Loan Commitment
         and Loans:        __%
[Letters of Credit:        __%]                 By ___________________________
                                                   Title:

[Revolving] [Term] Percentage                   [ASSIGNEE]

[Revolving] [Term B] Loan Commitment
         and Loans:        __%

[Letters of Credit:        __%]                 By ___________________________
                                                   Title:

Accepted and Acknowledged
this ______ day of _________, 200_

The Bank of Nova Scotia,
  as Agent

By___________________________________
   Title:


[Bayerische Landesbank Girozentrale,
     as Issuer

By___________________________________
   Title:


Bankers Trust Company,
     as Issuer

By___________________________________
   Title:]

                                       E-3

<PAGE>

Consented to and acknowledged
this _____ day of __________, 200_

Calpine Corporation

By___________________________________
   Title:

                                       E-4

<PAGE>

                                                                    EXHIBIT F

                      [Opinions of Counsel to the Borrower]

                                       F-1

<PAGE>

                                                                    EXHIBIT G

                                  March 8, 2002

To the Agent and Banks party to
       the hereinafter described
       Credit Agreement

       Re:      Calpine Corporation

Gentlemen:

     We have participated in the preparation of the Credit Agreement dated as
of March 8, 2002 (the "Credit Agreement") among Calpine Corporation
("Borrower"), the banks listed on the signature pages thereof (the "Banks") and
The Bank of Nova Scotia, as agent (the "Agent"), and have acted as special
counsel for the Agent for purposes of rendering this opinion. Terms defined in
the Credit Agreement are used herein as therein defined.

     We have examined originals or copies, certified to our satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as we
have deemed necessary or advisable for purposes of this opinion.

     Upon the basis of the foregoing, we are of the opinion that the documents
delivered to the Agent by the Borrower pursuant to Sections 6.1.1 through
6.1.10 of the Credit Agreement are substantially responsive to the requirements
of said Sections and the delivery of such documents satisfies the conditions
precedent set forth therein.

     We are members of the Bar of the State of California, and the foregoing
opinion is limited to the laws of the State of California and the federal laws
of the United States of America.

     This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.

                             Very truly yours,

                             MAYER, BROWN, ROWE & MAW

                             By______________________________________________
                             Its Partner

                                       G-1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGE
<S>                                                                                                              <C>
ARTICLE I     DEFINITIONS AND ACCOUNTING TERMS .................................................................   2

         SECTION 1.1.               Defined Terms...............................................................   2

         SECTION 1.2.               Use of Defined Terms........................................................  27

         SECTION 1.3.               Cross-References............................................................  27

         SECTION 1.4.               Accounting and Financial Determinations.....................................  27

ARTICLE II            COMMITMENTS, BORROWING PROCEDURES AND NOTES...............................................  27

         SECTION 2.1.               Commitments.................................................................  27

         SECTION 2.2.               Reduction of Commitment Amounts.............................................  29

         SECTION 2.3.               Borrowing Procedure.........................................................  30

         SECTION 2.4.               Continuation and Conversion Elections.......................................  30

         SECTION 2.5.               Funding.....................................................................  30

         SECTION 2.6.               Notes; Register.............................................................  31

         SECTION 2.7.               Increase in Revolving Commitment Amount.....................................  31

         SECTION 2.8.               Increase in Term B Loan Commitment Amount...................................  32

ARTICLE III           REPAYMENTS, PREPAYMENTS, INTEREST AND FEES................................................  33

         SECTION 3.1.               Repayments and Prepayments..................................................  33

         SECTION 3.2.               Interest Provisions.........................................................  34

         SECTION 3.3.               Fees........................................................................  36

ARTICLE IV            LETTERS OF CREDIT.........................................................................  37

         SECTION 4.1.               Issuance Requests...........................................................  37

         SECTION 4.2.               Issuances and Extensions....................................................  38

         SECTION 4.3.               Expenses....................................................................  38

         SECTION 4.4.               Other Revolving Lenders' Participation......................................  39

         SECTION 4.5.               Disbursements...............................................................  39

         SECTION 4.6.               Reimbursement...............................................................  40

         SECTION 4.7.               Cash Collateral.............................................................  41

         SECTION 4.8.               Nature of Reimbursement Obligations.........................................  41

         SECTION 4.9.               Increased Costs; Indemnity..................................................  42

         SECTION 4.10.              Existing Letters of Credit..................................................  44

         SECTION 4.11.              Equivalent Amount Determinations............................................  44
</TABLE>

                                        i

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                                 PAGE
<S>                                                                                                              <C>
         SECTION 4.12.              Currency Fluctuations, etc..................................................  44

ARTICLE V    CERTAIN LIBO RATE AND OTHER PROVISIONS ............................................................  44

         SECTION 5.1.               LIBO Rate Lending Unlawful..................................................  44

         SECTION 5.2.               Deposits Unavailable........................................................  45

         SECTION 5.3.               Increased LIBO Rate Loan Costs, etc.........................................  45

         SECTION 5.4.               Funding Losses..............................................................  46

         SECTION 5.5.               Increased Capital Costs.....................................................  46

         SECTION 5.6.               Taxes.......................................................................  47

         SECTION 5.7.               Payments, Computations, etc.................................................  48

         SECTION 5.8.               Sharing of Payments.........................................................  48

         SECTION 5.9.               Use of Proceeds.............................................................  49

ARTICLE VI            CONDITIONS PRECEDENT......................................................................  49

         SECTION 6.1.               Initial Credit Extension....................................................  49

         SECTION 6.2.               Term B Loan Borrowing.......................................................  52

         SECTION 6.3.               All Credit Extensions.......................................................  53

ARTICLE VII           REPRESENTATIONS AND WARRANTIES............................................................  54

         SECTION 7.1.               Organization, etc...........................................................  54

         SECTION 7.2.               Due Authorization, Non-Contravention, etc...................................  55

         SECTION 7.3.               Government Approval, Regulation, etc........................................  55

         SECTION 7.4.               Validity, etc...............................................................  55

         SECTION 7.5.               Financial Information.......................................................  55

         SECTION 7.6.               No Material Adverse Effect. Except for Excepted Prospects, since
                                    December 31, 2000, there has been no Material Adverse Effect and no
                                    material adverse development in the matters set forth as Excepted
                                    Prospects that could have a material adverse effect upon the
                                    financial condition, operations, assets (including power projects),
                                    business or prospects of the Borrower and its Significant
                                    Subsidiaries taken as a whole...............................................   56

         SECTION 7.7.               Litigation, Labor Controversies, etc........................................   56

         SECTION 7.8.               Subsidiaries................................................................   56

         SECTION 7.9.               Ownership of Properties.....................................................   56
</TABLE>

                                      ii

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
         SECTION 7.10.              Taxes.......................................................................   57

         SECTION 7.11.              Pension and Welfare Plans...................................................   57

         SECTION 7.12.              Environmental Warranties....................................................   57

         SECTION 7.13.              Regulations U and X.........................................................   58

         SECTION 7.14.              Accuracy of Information.....................................................   58

         SECTION 7.15.              Protection under Pledge Agreements and Deeds of Trust.......................   59

         SECTION 7.16.              Indebtedness of Certain Subsidiaries........................................   59

         SECTION 7.17.              Designation of Subsidiaries.................................................   59

ARTICLE VIII          COVENANTS.................................................................................   59

         SECTION 8.1.               Affirmative Covenants.......................................................   59

         SECTION 8.2.               Negative Covenants..........................................................   63

         SECTION 8.3.               No Restriction on Payments to the Borrower..................................   72

ARTICLE IX            EVENTS OF DEFAULT.........................................................................   72

         SECTION 9.1.               Listing of Events of Default................................................   72

         SECTION 9.2.               Action if Bankruptcy........................................................   75

         SECTION 9.3.               Action if Other Event of Default............................................   75

ARTICLE X             THE AGENT AND ADMINISTRATIVE AGENTS.......................................................   75

         SECTION 10.1.              Actions.....................................................................   75

         SECTION 10.2.              Funding Reliance, etc.......................................................   76

         SECTION 10.3.              Exculpation.................................................................   76

         SECTION 10.4.              Successor...................................................................   76

         SECTION 10.5.              Loans or Letters of Credit Issued by Agent, either Administrative
                                    Agent or any Issuer.........................................................   77

         SECTION 10.6.              Credit Decisions............................................................   77

         SECTION 10.7.              Copies, etc.................................................................   78

         SECTION 10.8.              Other Agents; Lead Arrangers................................................   78

ARTICLE XI            MISCELLANEOUS PROVISIONS..................................................................   78

         SECTION 11.1.              Waivers, Amendments, etc....................................................   78

         SECTION 11.2.              Notices.....................................................................   80

         SECTION 11.3.              Payment of Costs and Expenses...............................................   80

         SECTION 11.4.              Indemnification.............................................................   81
</TABLE>

                                      iii

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                                   PAGE
<S>                                                                                                                <C>
         SECTION 11.5.              Survival....................................................................   82

         SECTION 11.6.              Severability................................................................   82

         SECTION 11.7.              Headings....................................................................   82

         SECTION 11.8.              Execution in Counterparts, Effectiveness, etc...............................   82

         SECTION 11.9.              Governing Law; Entire Agreement.............................................   83

         SECTION 11.10.             Successors and Assigns......................................................   83

         SECTION 11.11.             Sale and Transfer of Loans and Notes; Participations in Loans and
                                    Notes.......................................................................   83

         SECTION 11.12.             Other Transactions..........................................................   86

         SECTION 11.13.             Forum Selection and Consent to Jurisdiction.................................   86

         SECTION 11.14.             Waiver of Jury Trial........................................................   87

         SECTION 11.15.             Confidentiality.............................................................   87
         SECTION 11.16.             Judgment Currency...........................................................   88
</TABLE>

                                      iv

<PAGE>

<TABLE>
<CAPTION>
<S>                         <C>
SCHEDULE I            -     Disclosure Schedule
SCHEDULE II           -     Percentages
SCHEDULE 4.10         -     Existing Letters of Credit

EXHIBIT A-1           -     Form of Revolving Note
EXHIBIT A-2           -     Form of Term Note
EXHIBIT B             -     Form of Borrowing Request
EXHIBIT C             -     Form of Continuation/Conversion Notice
EXHIBIT D             -     Form of Issuance Request
EXHIBIT E             -     Form of Lender Assignment Agreement
EXHIBIT F             -     Form of Opinion of Counsel to the Borrower
EXHIBIT G             -     Form of Opinion of Counsel to the Agent
EXHIBIT H             -     Form of Guaranty
EXHIBIT I             -     Form of Pledge Agreements
EXHIBIT J             -     Form of Hazardous Materials Indemnity
EXHIBIT K             -     Form of Assignment Agreement
</TABLE>

                                       v










</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.7
<SEQUENCE>45
<FILENAME>f80168ex10-2_7.txt
<DESCRIPTION>EXHIBIT 10.2.7
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.2.7

                        ASSIGNMENT AND SECURITY AGREEMENT

     THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Assignment Agreement"),
dated as of March 8, 2002, made by CALPINE CORPORATION, a Delaware corporation
(the "Grantor"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successors thereto in such capacity, the "Agent") for each
of the Lender Parties (as defined below).

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement, dated as of even date
herewith (together with all amendments and other modifications, if any, from
time to time thereafter made thereto, the "Credit Agreement"), among Grantor,
the various commercial lending institutions (individually a "Lender" and
collectively the "Lenders") as are, or may from time to time become, parties
thereto and the Agent, the Lenders have extended Commitments to the Grantor; and

     WHEREAS, as a condition precedent to the effectiveness of the Credit
Agreement, the Grantor is required to execute and deliver this Assignment
Agreement; and

     WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Assignment Agreement; and

     NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders to make Loans (including the initial Loans) to the Grantor and issue
Letters of Credit for the account of the Grantor pursuant to the Credit
Agreement, the Grantor agrees, for the benefit of each Lender Party, as
follows:

                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Assignment Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

     "Agent" is defined in the preamble.

     "Assigned Agreement" is defined in Section 2.1.

     "Assignment Agreement" is defined in the preamble.

     "Calpine Gilroy" means Calpine Gilroy Cogen L.P., a Delaware limited
partnership.

     "Collateral" is defined in Section 2.1.

<PAGE>

     "Credit Agreement" is defined in the first recital.

     "Grantor" is defined in the preamble.

     "Lender" is defined in the first recital.

     "Lender Party" means, as the context may require, any Lender or the Agent
and each of its respective successors, transferees and assigns.

     "Lenders" is defined in the first recital.

     "Secured Obligations" is defined in the Section 2.2.

     "U.C.C." means the Uniform Commercial Code, as in effect in the State of
Delaware.

     SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Assignment
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.

     SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Assignment Agreement, including its preamble and recitals,
with such meanings.

                                   ARTICLE II

                                ASSIGNMENT, ETC.

     SECTION 2.1. Assignment. The Grantor hereby collaterally assigns to the
Agent for its benefit and the ratable benefit of each of the Lender Parties,
and hereby grants to the Agent for its benefit and the ratable benefit of each
of the Lender Parties a security interest in, all of the Grantor's right, title
and interest, whether now existing or hereafter arising or acquired, in and to
the following (the "Collateral"): Purchase Agreement, between Calpine
Corporation and Calpine Gilroy Cogen L.P., a Delaware limited partnership,
dated as of March 8, 2002, as it may be amended or otherwise modified from time
to time (as so amended or modified, the "Assigned Agreement"), including,
without limitation,

          (a)   all rights of the Grantor to receive moneys due and to become
     due under or pursuant to the Assigned Agreement,

          (b)   all rights of the Grantor to receive proceeds of any insurance,
     indemnity, warranty, guaranty or collateral security with respect to the
     Assigned Agreement,

          (c)   all claims of the Grantor for damages arising out of or for
     breach of or default under the Assigned Agreement,

          (d)   the right of the Grantor to terminate the Assigned Agreement,
     to perform thereunder and to compel performance and otherwise exercise all
     remedies thereunder, and

                                      2

<PAGE>

          (e)   to the extent not included in the foregoing, all proceeds of
     any and all of the foregoing collateral.

     SECTION 2.2. Security for Obligations. This Assignment Agreement secures
the payment of all obligations of the Grantor now or hereafter existing under
the Credit Agreement, the Notes and each other Loan Document to which the
Grantor is or may become a party, whether for principal, interest, costs, fees,
expenses or otherwise, and all obligations of the Grantor now or hereafter
existing under this Assignment Agreement and each other Loan Document to which
it is or may become a party (all such obligations of the Grantor being the
"Secured Obligations").

     SECTION 2.3. Continuing Assignment and Security Interest; Transfer of
Notes. This Assignment Agreement shall create a continuing security interest in
the Collateral and shall

          (a)   remain in full force and effect until payment in full of all
     Secured Obligations and the termination of all Commitments,

          (b)   be binding upon the Grantor, its successors, transferees and
     assigns, and

          (c)   inure, together with the rights and remedies of the Agent
     hereunder, to the benefit of the Agent and each other Lender Party.

Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Assignment Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.11 of the Credit Agreement. Upon
the payment in full of all Secured Obligations and the termination of all
Commitments, the security interest granted herein shall terminate and all
rights to the Collateral shall revert to the Grantor. Upon any such
termination, the Agent will, at the Grantor's sole expense, execute and deliver
to the Grantor such documentation as the Grantor shall reasonably request to
evidence such termination.

     SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding

          (a)   the Grantor shall remain liable under the contracts and
     agreements included in the Collateral to the extent set forth therein, and
     shall perform all of its duties and obligations under such contracts and
     agreements to the same extent as if this Assignment Agreement had not been
     executed,

          (b)   the exercise by the Agent of any of its rights hereunder shall
     not release the Grantor from any of its duties or obligations under any
     such contracts or agreements included in the Collateral, and

          (c)   neither the Agent nor any other Lender Party shall have any
     obligation or liability under any such contracts or agreements included in
     the Collateral by reason of

                                      3

<PAGE>

     this Assignment Agreement or by the exercise by any Lender Party of its
     rights hereunder or under any other Loan Document, nor shall the Agent or
     any other Lender Party be obligated to perform any of the obligations or
     duties of the Grantor thereunder or to take any action to collect or
     enforce any claim for payment assigned hereunder.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1. Representations and Warranties. The Grantor represents and
warrants unto each Lender Party as set forth in this Article.

     SECTION 3.1.1. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Grantor of this Assignment Agreement, is within
the Grantor's powers, has been duly authorized by all necessary corporate
action, and does not

          (a)   contravene the Grantor's Organic Documents;

          (b)   contravene any contractual restriction (including, without
     limitation, the Assigned Agreement), law or governmental regulation or
     court decree or order binding on or affecting the Grantor; or

          (c)   except for the Lien created hereunder, result in, or require
     the creation or imposition of, any Lien on any of the Grantor's
     properties.

     SECTION 3.1.2. Validity of Assigned Agreement. The Assigned Agreement, a
true and complete copy of which has been furnished to the Agent, has been duly
authorized, executed and delivered by the parties thereto, has not been amended
or otherwise modified and is in full force and effect and is binding upon and
enforceable against the parties thereto in accordance with its terms. The
Grantor has fully performed all of its obligations under the Assigned Agreement
and, to the best of the Grantor's knowledge, Calpine Gilroy has no defense,
setoff or counterclaim arising under the Assigned Agreement. There exists no
default under the Assigned Agreement by the Grantor and, to the best of the
Grantor's knowledge, by Calpine Gilroy.

     SECTION 3.1.3. Location of Collateral, etc. The place of business and
chief executive office of the Grantor and the office where the Grantor keeps
its records concerning the Collateral is the address specified for the Grantor
on the signature page hereto. The Grantor has no trade name. The Grantor has
not been known by any legal name difference from the one set forth on the
signature page hereto, nor has the Grantor been the subject of any merger or
other corporate reorganization. None of the Collateral is evidenced by a
promissory note or other instrument.

     SECTION 3.1.4. Ownership, No Liens, etc. The Grantor owns the Collateral
free and clear of any Lien, security interest, charge or encumbrance except for
the security interest created by this Assignment Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Agent relating to this Assignment Agreement.

                                      4

<PAGE>

     SECTION 3.1.5. Validity, etc. This Assignment Agreement creates a valid
and, upon filing of a proper financing statement with the Delaware Secretary of
State, first priority security interest in the Collateral, securing the payment
of the Secured Obligations, and, upon the filing of such financing statement,
all filings and other actions necessary or desirable to perfect and protect
such security interest will have been duly taken.

     SECTION 3.1.6. Authorization, Approval, etc. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either

          (a)   for the grant by the Grantor of the security interest granted
     hereby or for the execution, delivery and performance of this Assignment
     Agreement by the Grantor, or

          (b)   for the perfection of or the exercise by the Agent of its
     rights and remedies hereunder.

     SECTION 3.1.7. Compliance with Laws. The Grantor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which might materially
adversely affect the business, properties, assets, operations, condition
(financial or otherwise) or prospects of the Grantor or the value of the
Collateral or the worth of the Collateral as collateral security.

                                   ARTICLE IV

                                   COVENANTS

     SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid or any
Lender shall have any outstanding Commitment, the Grantor will, unless the
Required Lenders shall otherwise consent in writing, perform the obligations
set forth in this Section.

     SECTION 4.1.1. As to Assigned Agreement. The Grantor, at its expense,
shall or shall cause Calpine Gilroy, as applicable, to:

          (a)   perform and observe all the terms and provisions of the
     Assigned Agreement to be performed or observed by Grantor or Calpine
     Gilroy, maintain the Assigned Agreement in full force and effect, enforce
     the Assigned Agreement in accordance with its terms, and take all such
     action to such end as may be from time to time requested by the Agent; and

          (b)   furnish to the Agent promptly upon receipt thereof copies of
     all material notices, requests and other documents received by the Grantor
     or Calpine Gilroy under or pursuant to the Assigned Agreement, and from
     time to time (i) furnish to the Agent such information and reports
     regarding the Collateral as the Agent may reasonably request and (ii) upon
     request of the Agent make to Calpine Gilroy such demands and requests for
     information and reports or for action as the Grantor is entitled to make
     under the Assigned Agreement.

                                      5

<PAGE>

     SECTION 4.1.2.Transfers and Other Liens. The Grantor shall not and shall
cause Calpine Gilroy not to:

          (a)   sell, assign (by operation of law or otherwise) or otherwise
     dispose of any of the Collateral, or create or suffer to exist any Lien,
     security interest or other charge or encumbrance upon or with respect to
     any of the Collateral to secure Indebtedness of any Person or entity,
     except for the assignment and security interest created by this Assignment
     Agreement;

          (b)   cancel or terminate the Assigned Agreement or consent to or
     accept any cancellation or termination thereof;

          (c)   amend or otherwise modify the Assigned Agreement or give any
     consent, waiver or approval thereunder without the consent of the Required
     Lenders, such consent by the Required Lenders not to be unreasonably
     withheld;

          (d)   waive any default under or breach of the Assigned
     Agreement without the consent of the Required Lenders, such consent by the
     Required Lenders not to be unreasonably withheld; or

          (e)   take any other action in connection with the Assigned Agreement
     which would impair the value of the interest or rights of the Grantor
     thereunder or which would impair the interest or rights of the Agent.

     SECTION 4.1.3. Further Assurances, etc. The Grantor agrees that, from time
to time, at the expense of the Grantor, the Grantor will and will cause Calpine
Gilroy to promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that the
Agent may reasonably request, in order to perfect, preserve and protect any
security interest granted or purported to be granted hereby or to enable the
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, the Grantor
will and will cause Calpine Gilroy to

          (a)   if any Collateral shall be evidenced by a promissory note or
     other instrument, negotiable document or chattel paper, deliver and pledge
     to the Agent hereunder such promissory note or instrument, negotiable
     document or chattel paper duly indorsed and accompanied by duly executed
     instruments of transfer or assignment, all in form and substance
     reasonably satisfactory to the Agent; and

          (b)   execute and file such financing or continuation statements, or
     amendments thereto, and such other instruments or notices, as may be
     necessary or desirable, or as the Agent may reasonably request, in order
     to perfect and preserve the security interests and other rights granted or
     purported to be granted to the Agent hereby.

With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of the Grantor where permitted by law. A
carbon, photographic or other reproduction of this Assignment Agreement

                                      6

<PAGE>

or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

     SECTION 4.1.4. Maintain its Existence. The Grantor shall keep its state of
incorporation in the state of Delaware.

                                   ARTICLE V

                                   THE AGENT

     SECTION 5.1. Agent Appointed Attorney-in-Fact. Grantor hereby irrevocably
appoints the Agent the Grantor's attorney-in-fact, with full authority in the
place and stead of the Grantor and in the name of the Grantor or otherwise,
from time to time in the Agent's discretion, but only after the occurrence and
during the continuance of an Event of Default, to take any action (including
any action under the Assigned Agreement that the Grantor is entitled to take)
and to execute any instrument which the Agent may deem necessary or advisable
to accomplish the purposes of this Assignment Agreement, including, without
limitation:

          (a)   to ask, demand, collect, sue for, recover, compromise, receive
     and give acquittance and receipts for moneys due and to become due under
     or in respect of any of the Collateral;

          (b)   to receive, endorse, and collect any drafts or other
     instruments, documents and chattel paper, in connection with clause (a)
     above;

          (c)   to file any claims or take any action or institute any
     proceedings which the Agent may deem necessary or desirable for the
     collection thereof or to enforce compliance with the terms and conditions
     of the Assigned Agreement; and

          (d)   to perform the affirmative obligations of the Grantor hereunder
     (including all obligations of the Grantor pursuant to Section 4.1.1 and
     Section 4.1.3).

The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

     SECTION 5.2. Agent May Perform. If the Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Grantor pursuant to Section 6.2.

     SECTION 5.3. Agent Has No Duty. In addition to, and not in limitation of,
Section 2.4, the powers conferred on the Agent hereunder are solely to protect
its interest (on behalf of the Lender Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for reasonable care
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.

                                      7

<PAGE>

     SECTION 5.4. Reasonable Care. The Agent is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as the Grantor reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable
care.

                                   ARTICLE VI

                                    REMEDIES

     SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:

          (a)   The Agent may exercise in respect of the Collateral, in
     addition to other rights and remedies provided for herein or otherwise
     available to it, all the rights and remedies of a secured party on default
     under the U.C.C. (whether or not the U.C.C. applies to the affected
     Collateral) and also may exercise any and all rights and remedies of the
     Grantor under or in connection with the Assigned Agreement or otherwise in
     respect of the Collateral, including, without limitation, any and all
     rights of the Grantor to demand or otherwise require payment of any amount
     under, or performance of any provision of, the Assigned Agreement;

          (b)   all payments received by the Grantor under or in connection
     with the Assigned Agreement or otherwise in respect of the Collateral
     shall be received in trust for the benefit of the Agent, shall be
     segregated from other funds of the Grantor and shall be forthwith paid
     over to the Agent in the same form as so received (with any necessary
     indorsement); and

          (c)   all payments made under or in connection with the Assigned
     Agreement or otherwise in respect of the Collateral and received by the
     Agent may, in the discretion of the Agent, be held by the Agent as
     collateral for, and/or then or at any time thereafter applied (after
     payment of any amounts payable to the Agent pursuant to Section 6.2) in
     whole or in part by the Agent for the ratable benefit of the Lender
     Parties against, all or any part of the Secured Obligations in such order
     as the Agent shall elect. Any surplus of such payments held by the Agent
     and remaining after payment in full of all the Secured Obligations shall
     be paid over to the Grantor or to whomsoever may be lawfully entitled to
     receive such surplus.

     SECTION 6.2. Indemnity and Expenses.

          (a)   The Grantor agrees to indemnify the Agent from and against any
     and all claims, losses and liabilities arising out of or resulting from
     this Assignment Agreement (including, without limitation, enforcement of
     this Assignment Agreement), except claims, losses or liabilities resulting
     from the Agent's or any Lender Party's gross negligence or wilful
     misconduct.

                                      8

<PAGE>

          (b)   The Grantor will upon demand pay to the Agent the amount of any
     and all reasonable fees and expenses of its counsel and of any experts and
     agents, which the Agent may incur in connection with (i) the
     administration of this Assignment Agreement, (ii) the custody or
     preservation of, or the collection from, or other realization upon, any of
     the Collateral, (iii) the exercise or enforcement of any of the rights of
     the Agent or the Lender Parties hereunder, or (iv) the failure by the
     Grantor to perform or observe any of the provisions hereof.

                                  ARTICLE VII

                            MISCELLANEOUS PROVISIONS

     SECTION 7.1. Loan Document. This Assignment Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.

     SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision
of this Assignment Agreement nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

     SECTION 7.3. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telefacsimile) and, if to
the Grantor, mailed or telecopied or delivered to it, addressed to it at the
address set forth below its signature hereto, if to the Agent, mailed or
delivered to it, addressed to it at the address of the Agent, telecopied
specified in the Credit Agreement, or as to either party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telecopied, respectively, be
effective when deposited in the mails or telecopied, respectively, addressed as
aforesaid.

     SECTION 7.4. Section Captions. Section captions used in this Assignment
Agreement are for convenience of reference only, and shall not affect the
construction of this Assignment Agreement.

     SECTION 7.5. Severability. Wherever possible each provision of this
Assignment Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Assignment Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Assignment Agreement.

     SECTION 7.6. Governing Law, Entire Agreement, etc. THIS ASSIGNMENT
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL

                                      9

<PAGE>

LAWS OF THE STATE OF NEW YORK. This Assignment Agreement constitutes the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.

                                      10

<PAGE>

     IN WITNESS WHEREOF, the Grantor has caused this Assignment Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

                                  CALPINE CORPORATION,
                                  a Delaware corporation

                                  By:__________________________________________
                                  Title:

                                  Address:

                                  Attention:

                                  Telecopier:

                                  THE BANK OF NOVA SCOTIA

                                  By:__________________________________________
                                  Title:

                                  Address:       580 California Street
                                                 San Francisco, CA  94111

                                  Attention: Jon Burckin

                                  Telecopier: 415-397-0791

                                      11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.8
<SEQUENCE>46
<FILENAME>f80168ex10-2_8.txt
<DESCRIPTION>EXHIBIT 10.2.8
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.2.8


                                PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of March 8,
2002, made by Calpine Corporation, a Delaware corporation (the "Borrower"), in
favor of The Bank of Nova Scotia, as agent (together with any successor(s)
thereto in such capacity, the "Agent") for each of the Lender Parties (as
defined below).

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement, dated as of March 8,
2002 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "2002 Credit Agreement"), among the
Borrower, the various financial institutions as are or may become parties
hereto (collectively, the "2002 Lenders"), The Bank of Nova Scotia and
Bayerische Landesbank Girozentrale, as Lead Arrangers and Bookrunners on the
Revolving Facility, Salomon Smith Barney Inc. and Deutsche Banc Alex. Brown
Inc., as Lead Arrangers and Bookrunners on the Term B Facility, The Bank of
Nova Scotia, as Joint Administrative Agent and Funding Agent, Citicorp USA,
Inc., as Joint Administrative Agent, Bank of America, National Association and
Credit Suisse First Boston, Cayman Islands Branch as Lead Arrangers and
Syndication Agents for the Revolving Facility and TD Securities (USA) Inc. as
Lead Arranger for the Revolving Facility, the Lenders have extended Commitments
to make Loans and to issue Letters of Credit to the Borrower; and

     WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of May 23, 2000 (together with all amendments and other
modifications, if any, from time to time made thereto, the "2000 Credit
Agreement" and together with the 2002 Credit Agreement, the "Credit
Agreements"), among the Borrower, the various financial institutions as are or
may become parties thereto (collectively, the "2000 Lenders" and together with
the 2002 Lenders, the "Lenders"), Bayerische Landesbank Girozentrale as
co-arranger and syndication agent for the 2000 Lenders and The Bank of Nova
Scotia as lead arranger and administrative agent for the 2000 Lenders; and

     WHEREAS, as a condition precedent to the making of the initial Loans under
the 2002 Credit Agreement and to continue making loans under the 2000 Credit
Agreement, the Borrower is required to execute and deliver this Pledge
Agreement; and

     WHEREAS, the Borrower has duly authorized the execution, delivery and
performance of this Pledge Agreement; and

     WHEREAS, it is in the best interests of the Borrower to execute this
Pledge Agreement inasmuch as the Borrower will derive substantial direct and
indirect benefits from the Loans made and Letters of Credit issued from time to
time to the Borrower by the Lenders pursuant to the Credit Agreements;

     NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) and to issue Letters of Credit for the account of
the Borrower pursuant to the Credit Agreements, the Borrower agrees, for the
benefit of each Lender Party, as follows:
<PAGE>
                                  ARTICLE I
                                 DEFINITIONS

     SECTION 1.1.   Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

     "Agent" is defined in the preamble.

     "Borrower" is defined in the preamble.

     "Collateral" is defined in Section 2.1.

     "Credit Agreements" is defined in the second recital.

     "Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.

     "Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.

     "Lender Party" means, as the context may require, any Lender, Issuer or
the Agent and each of its respective successors, transferees and assigns under
either of the Credit Agreements.

     "Lenders" is defined in the second recital.

     "Pledge Agreement" is defined in the preamble.

     "Pledged Property" means all Pledged Shares and all other pledged shares
of capital stock, all other securities, all assignments of any amounts due or
to become due, all other instruments which are now being delivered by the
Borrower to the Agent or may from time to time hereafter be delivered by the
Borrower to the Agent for the purpose of pledge under this Pledge Agreement or
any other Loan Document, and all proceeds of any of the foregoing.

     "Pledged Share Issuer" means each Person identified in Attachment 1 hereto
as the issuer of the Pledged Shares identified opposite the name of such Person.

     "Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Borrower to the Agent as Pledged Property
hereunder.

     "Secured Obligations" is defined in Section 2.2.

     "Securities Act" is defined in Section 6.2.

     "U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.

                                      2
<PAGE>
     SECTION 1.2.   Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Pledge Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreements.

     SECTION 1.3.   U.C.C. Definitions. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Pledge Agreement, including its preamble and recitals,
with such meanings.

                                  ARTICLE II
                                    PLEDGE

     SECTION 2.1.   Grant of Security Interest. The Borrower hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Agent, for its benefit and the ratable benefit of each of the Lender Parties,
and hereby grants to the Agent, for its benefit and the ratable benefit of the
Lender Parties, a continuing security interest in, all of the following
property (the "Collateral"):

          (a)  all issued and outstanding shares of capital stock of each
     Pledged Share Issuer identified in Attachment 1 hereto;

          (b)  and the certificates representing the Pledged Shares and all
     dividends, cash, instruments and other property from time to time
     received, receivable or otherwise distributed in respect of or in exchange
     for any or all of the Pledged Shares;

          (c)  all additional shares of stock of any issuer of the Pledged
     Shares from time to time acquired by the Borrower in any manner, and the
     certificates representing such additional shares, and all dividends, cash,
     instruments and other property from time to time received, receivable or
     otherwise distributed in respect of or in exchange for any or all of such
     shares;

          (d)  all other Pledged Shares issued from time to time;

          (e)  all other Pledged Property, whether now or hereafter delivered
     to the Agent in connection with this Pledge Agreement;

          (f)  all Dividends, Distributions, interest, and other payments and
     rights with respect to any Pledged Property; and

          (g)  all proceeds of any of the foregoing.

     SECTION 2.2.   Security for Obligations. This Pledge Agreement secures the
payment and performance in full of all Obligations of the Borrower now or
hereafter existing under the Credit Agreements, the Notes, each Letter of
Credit and each other Loan Document to which the Borrower is or may become a
party, whether for principal, interest, costs, fees, expenses, or otherwise,
and all obligations of the Borrower now or hereafter existing under this Pledge
Agreement and each other Loan Document to which it is or may become a party
(all such obligations of the Borrower being the "Secured Obligations").

                                      3
<PAGE>
     SECTION 2.3.   Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares, shall be delivered to and held by or on behalf of the Agent pursuant
hereto, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.

     SECTION 2.4.   Intentionally Omitted.

     SECTION 2.5.   Continuing Security Interest; Transfer of Note. This
Pledge Agreement shall create a continuing security interest in the Collateral
and subject to Section 8.1.9 of the Credit Agreement shall

          (a)  remain in full force and effect until payment in full of all
     Secured Obligations and the termination of all Commitments,

          (b)  be binding upon the Borrower and its successors, transferees and
     assigns, and

          (c)  inure, together with the rights and remedies of the Agent
     hereunder, to the benefit of the Agent and each other Lender Party.

Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any right or obligation under the Loan Documents
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.11 of each of the Credit
Agreements. Upon the indefeasible payment in full, in cash, of all Secured
Obligations and the termination of all Commitments, the security interest
granted herein shall terminate and all rights to the Collateral shall revert to
the Borrower. Upon any such termination, the Agent will, at the Borrower's sole
expense, deliver to the Borrower, without any representations, warranties or
recourse of any kind whatsoever, all certificates and instruments representing
or evidencing all Pledged Shares, together with all other Collateral held by
the Agent hereunder, and execute and deliver to the Borrower such documents as
the Borrower shall reasonably request to evidence such termination.

     SECTION 2.6.   Security Interest Absolute. All rights of the Agent and
the security interests granted to the Agent hereunder, and all obligations of
the Borrower hereunder, shall be absolute and unconditional, irrespective of

          (a)  any lack of validity or enforceability of either of the Credit
     Agreements, any Note or any other Loan Document,

          (b)  the failure of any Lender Party or any holder of any Note

               (i)    to assert any claim or demand or to enforce any right or
          remedy against the Borrower, any other Obligor or any other Person
          under the provisions

                                      4
<PAGE>
          of either of the Credit Agreements, any Note, any other Loan Document
          or otherwise, or

               (ii)   to exercise any right or remedy against any other
          guarantor of, or collateral securing, any Obligations of the Borrower
          or any other Obligor,

          (c)  any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Obligations or any other extension,
     compromise or renewal of any Obligation of the Borrower or any other
     Obligor,

          (d)  any reduction, limitation, impairment or termination of any
     Obligations of the Borrower or any other Obligor for any reason, including
     any claim of waiver, release, surrender, alteration or compromise, and
     shall not be subject to (and the Borrower hereby waives any right to or
     claim of) any defense or setoff, counterclaim, recoupment or termination
     whatsoever by reason of the invalidity, illegality, nongenuineness,
     irregularity, compromise, unenforceability of, or any other event or
     occurrence affecting, any Obligations of the Borrower, any other Obligor
     or otherwise,

          (e)  any amendment to, rescission, waiver, or other modification of,
     or any consent to departure from, any of the terms of either of the Credit
     Agreements, any Note or any other Loan Document,

          (f)  any addition, exchange, release, surrender or non-perfection of
     any collateral (including the Collateral), or any amendment to or waiver
     or release of or addition to or consent to departure from any guaranty,
     for any of the Obligations, or

          (g)  any other circumstances which might otherwise constitute a
     defense available to, or a legal or equitable discharge of, the Borrower,
     any other Obligor, any surety or any guarantor.

     SECTION 2.7.   Subrogation, etc. The Borrower will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise until the prior indefeasible payment in
full, in cash, of all Obligations of the Borrower and each other Obligor. Any
amount paid to the Borrower on account of any payment made hereunder prior to
the payment in full of all Obligations of the Borrower and each other Obligor
shall be held in trust for the benefit of the Lender Parties and each holder of
a Note and shall immediately be paid to the Lender Parties and each holder of a
Note and credited and applied against the Obligations of the Borrower and each
other Obligor, whether matured or unmatured, in accordance with the terms of
the Credit Agreements; provided, however, that if

          (a)  the Borrower has made payment to the Lender Parties and each
     holder of a Note of all or any part of the Obligations of the Borrower or
     any other Obligor, and

          (b)  all Obligations of the Borrower and each other Obligor have been
     indefeasibly paid in full, in cash, and all Commitments have been
     permanently terminated,

                                      5
<PAGE>
each Lender Party and each holder of a Note agrees that, at the Borrower's
request, the Lender Parties and the holders of the Notes will execute and
deliver to the Borrower appropriate documents (without recourse and without
representation or warranty and at the sole cost and expense of Borrower)
necessary to evidence the transfer by subrogation to the Borrower of an
interest in the Obligations of the Borrower and each other Obligor resulting
from such payment by the Borrower. In furtherance of the foregoing, for so long
as any Obligations or Commitments remain outstanding, the Borrower shall
refrain from taking any action or commencing any proceeding against the
Borrower or any other Obligor (or its successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under this Pledge Agreement to any Lender Party or any
holder of a Note.

     SECTION 2.8.   Waiver of Subrogation. Until such time as the Obligations
have been indefeasibly paid in full, in cash, and the Commitments have been
terminated, the Borrower hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower or any other Obligor
that arise from the existence, payment, performance or enforcement of the
Borrower's obligations under this Pledge Agreement or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
Parties against the Borrower or any other Obligor or any collateral which the
Agent now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment
or security on account of such claim or other rights. If any amount shall be
paid to the Borrower in violation of the preceding sentence and the Obligations
shall not have been indefeasibly paid in full, in cash, and the Commitments
have not been terminated, such amount shall be deemed to have been paid to the
Borrower for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Lender Parties to be credited and applied upon
the Obligations, whether matured or unmatured. The Borrower acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreements and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.

                                 ARTICLE III
                        REPRESENTATIONS AND WARRANTIES

     SECTION 3.1.   Warranties, etc. The Borrower represents and warrants unto
each Lender Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Shares) by the Borrower to the
Agent of any Collateral, as set forth in this Article.

     SECTION 3.1.1   Ownership, No Liens, etc. The Borrower is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
liens, security interests, options, or other charges or encumbrances, except
any lien or security interest granted pursuant hereto in favor of the Agent.

     SECTION 3.1.2   Valid Security Interest. The delivery of such Collateral
to the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all

                                      6
<PAGE>
proceeds thereof, securing the Secured Obligations. No filing or other action
will be necessary to perfect or protect such security interest.

     SECTION 3.1.3   As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized
and validly issued, fully paid, and non-assessable, and constitute all of the
issued and outstanding shares of capital stock entitled to vote in the election
of the Board of Directors of each Pledged Share Issuer.

                                  ARTICLE IV
                                   COVENANTS

     SECTION 4.1.   Protect Collateral; Further Assurances, etc. The Borrower
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Agent hereunder and as otherwise expressly
permitted by the Credit Agreements. The Borrower will warrant and defend the
right and title herein granted unto the Agent in and to the Collateral (and all
right, title, and interest represented by the Collateral) against the claims
and demands of all Persons whomsoever. The Borrower agrees that at any time,
and from time to time, at the expense of the Borrower, the Borrower will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that the Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.

     SECTION 4.2.   Stock Powers, etc. The Borrower agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral)
delivered by the Borrower pursuant to this Pledge Agreement will be accompanied
by duly executed undated blank stock powers, or other equivalent instruments of
transfer acceptable to the Agent. The Borrower will, from time to time upon the
request of the Agent, promptly deliver to the Agent such stock powers,
instruments, and similar documents, satisfactory in form and substance to the
Agent, with respect to the Collateral as the Agent may reasonably request and
will, from time to time upon the request of the Agent after the occurrence of
any Event of Default, promptly transfer any Pledged Shares or other shares of
common stock constituting Collateral into the name of any nominee designated by
the Agent.

     SECTION 4.3.   Continuous Pledge. Subject to Section 2.4, the Borrower
will, at all times, keep pledged to the Agent pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other securities, instruments, proceeds, and rights from time to time received
by or distributable to the Borrower in respect of any Collateral.

     SECTION 4.4.   Voting Rights; Dividends, etc. The Borrower agrees after
any Event of Default shall have occurred and be continuing and the Agent has
notified the Borrower of the Agent's intention to exercise its voting power
under this Section 4.4

               (i)    the Agent may exercise (to the exclusion of the Borrower)
          the voting power and all other incidental rights of ownership with
          respect to any Pledged Shares or other shares of capital stock
          constituting Collateral and the

                                      7
<PAGE>
          Borrower hereby grants the Agent an irrevocable proxy, exercisable
          under such circumstances, to vote the Pledged Shares and such other
          Collateral; and

               (ii)   promptly to deliver to the Agent such additional proxies
          and other documents as may be necessary to allow the Agent to exercise
          such voting power.

The Agent agrees that unless an Event of Default shall have occurred and be
continuing and the Agent shall have given the notice referred to in Section
4.4(b), the Borrower shall have the exclusive voting power with respect to any
shares of capital stock (including any of the Pledged Shares) constituting
Collateral and the Agent shall, upon the written request of the Borrower,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by the Borrower which are necessary to allow the Borrower
to exercise voting power with respect to any such share of capital stock
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver, or ratification given,
or action taken by the Borrower that would impair any Collateral or be
inconsistent with or violate any provision of the Credit Agreements or any
other Loan Document (including this Pledge Agreement).

     SECTION 4.5.   Additional Undertakings. The Borrower will not, without the
prior written consent of the Agent take or omit to take any action the taking
or the omission of which would result in any impairment or alteration of any
obligation of the maker of any instrument constituting Collateral.

                                   ARTICLE V
                                   THE AGENT

     SECTION 5.1.   Agent Appointed Attorney-in-Fact. The Borrower hereby
irrevocably appoints the Agent the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the
Borrower or otherwise, from time to time in the Agent's discretion, to take any
action and to execute any instrument which the Agent may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including
without limitation:

          (a)  after the occurrence and continuance of an Event of Default, to
     ask, demand, collect, sue for, recover, compromise, receive and give
     acquittance and receipts for moneys due and to become due under or in
     respect of any of the Collateral;

          (b)  to receive, endorse, and collect any drafts or other
     instruments, documents and chattel paper, in connection with clause (a)
     above; and

          (c)  to file any claims or take any action or institute any
     proceedings which the Agent may deem necessary or desirable for the
     collection of any of the Collateral or otherwise to enforce the rights of
     the Agent with respect to any of the Collateral.

The Borrower hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.

                                      8
<PAGE>
     SECTION 5.2.   Agent May Perform. If the Borrower fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith shall be payable by the Borrower pursuant to Section 6.4.

     SECTION 5.3.   Agent Has No Duty. The powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers.  Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have
no duty as to any Collateral or responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Property, whether or not the Agent has or
is deemed to have knowledge of such matters, or (b) taking any necessary steps
to preserve rights against prior parties or any other rights pertaining to any
Collateral.

     SECTION 5.4.   Reasonable Care. The Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as the Borrower reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable care.

                                  ARTICLE VI
                                   REMEDIES

     SECTION 6.1.   Certain Remedies. If any Event of Default shall have
occurred and be continuing:

          (a)  The Agent may exercise in respect of the Collateral, in addition
     to other rights and remedies provided for herein or otherwise available to
     it, all the rights and remedies of a secured party on default under the
     U.C.C. (whether or not the U.C.C.  applies to the affected Collateral) and
     also may, without notice except as specified below, sell the Collateral
     or any part thereof in one or more parcels at public or private sale, at
     any of the Agent's offices or elsewhere, for cash, on credit or for future
     delivery, and upon such other terms as the Agent may deem commercially
     reasonable.  The Borrower agrees that, to the extent notice of sale shall
     be required by law, at least ten days' prior notice to the Borrower of the
     time and place of any public sale or the time after which any private sale
     is to be made shall constitute reasonable notification.  The Agent shall
     not be obligated to make any sale of Collateral regardless of notice of
     sale having been given.  The Agent may adjourn any public or private sale
     from time to time by announcement at the time and place fixed therefor,
     and such sale may, without further notice, be made at the time and place
     to which it was so adjourned.

          (b)  The Agent may

                                      9
<PAGE>
               (i)    transfer all or any part of the Collateral into the name
          of the Agent or its nominee, with or without disclosing that such
          Collateral is subject to the lien and security interest hereunder,

               (ii)   notify the parties obligated on any of the Collateral to
          make payment to the Agent of any amount due or to become due
          thereunder,

               (iii)  enforce collection of any of the Collateral by suit or
          otherwise, and surrender, release or exchange all or any part thereof,
          or compromise or extend or renew for any period (whether or not longer
          than the original period) any obligations of any nature of any party
          with respect thereto,

               (iv)   endorse any checks, drafts, or other writings in the
          Borrower's name to allow collection of the Collateral,

               (v)    take control of any proceeds of the Collateral, and

               (vi)   execute (in the name, place and stead of the Borrower)
          endorsements, assignments, stock powers and other instruments of
          conveyance or transfer with respect to all or any of the Collateral.

     SECTION 6.2.   Securities Laws.  If the Agent shall determine to exercise
its right to sell all or any of the Collateral pursuant to Section 6.1, the
Borrower agrees that, upon request of the Agent, the Borrower will, at its own
expense:

          (a)  execute and deliver, and cause each issuer of the Collateral
     contemplated to be sold and the directors and officers thereof to execute
     and deliver, all such instruments and documents, and do or cause to be
     done all such other acts and things, as may be necessary or, in the
     opinion of the Agent, advisable to register such Collateral under the
     provisions of the Securities Act of 1933, as from time to time amended
     (the "Securities Act"), and to cause the registration statement relating
     thereto to become effective and to remain effective for such period as
     prospectuses are required by law to be furnished, and to make all
     amendments and supplements thereto and to the related prospectus which, in
     the opinion of the Agent, are necessary or advisable, all in conformity
     with the requirements of the Securities Act and the rules and regulations
     of the Securities and Exchange Commission applicable thereto;

          (b)  use its best efforts to qualify the Collateral under the state
     securities or "Blue Sky" laws and to obtain all necessary governmental
     approvals for the sale of the Collateral, as requested by the Agent;

          (c)  cause each such issuer to make available to its security
     holders, as soon as practicable, an earnings statement that will satisfy
     the provisions of Section 11(a) of the Securities Act; and

          (d)  do or cause to be done all such other acts and things as may be
     necessary to make such sale of the Collateral or any part thereof valid
     and binding and in compliance with applicable law.

                                      10
<PAGE>
     SECTION 6.3.   Compliance with Restrictions. The Borrower agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Borrower further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the
Borrower for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.

     SECTION 6.4.   Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral may thereafter be applied (after payment of
any amounts payable to the Agent pursuant to Article III of the Credit
Agreements and Section 6.4) in whole or in part by the Agent against, all or
any part of the Secured Obligations in such order as the Agent shall elect.

     Any surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Secured Obligations, and the termination of
all Commitments, shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.

     SECTION 6.5.   Indemnity and Expenses. The Borrower hereby indemnifies and
holds harmless the Agent from and against any and all claims, losses, and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses, or liabilities
resulting from the Agent's gross negligence or wilful misconduct. Upon demand,
the Borrower will pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Agent may incur in connection with:

          (a)  the administration of this Pledge Agreement, the Credit
     Agreements and each other Loan Document;

          (b)  the custody, preservation, use, or operation of, or the sale of,
     collection from, or other realization upon, any of the Collateral;

          (c)  the exercise or enforcement of any of the rights of the Agent
     hereunder; or

          (d)  the failure by the Borrower to perform or observe any of the
     provisions hereof.

                                      11
<PAGE>
                                 ARTICLE VII
                           MISCELLANEOUS PROVISIONS

     SECTION 7.1.   Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.

     SECTION 7.2.   Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement nor consent to any departure by the Borrower herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.

     SECTION 7.3.   Protection of Collateral. The Agent may from time to time,
at its option, perform any act which the Borrower agrees hereunder to perform
and which the Borrower shall fail to perform after being requested in writing
so to perform (it being understood that no such request need be given after the
occurrence and during the continuance of an Event of Default) and the Agent may
from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

     SECTION 7.4.   Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and, if to the Borrower, mailed or telegraphed or delivered to
it at the address set forth below its signature hereto, if to the Agent, mailed
or delivered to it, addressed to it at the address of the Agent specified in
the 2002 Credit Agreement or, as to either party, at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid.

     SECTION 7.5.   Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.

     SECTION 7.6.   Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.

     SECTION 7.7.   Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW

                                      12
<PAGE>
YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

     SECTION 7.8.   Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE BORROWER SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION.  THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE AGREEMENT.

     SECTION 7.9.   Waiver of Jury Trial. THE LENDER PARTIES AND THE BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE LENDER PARTIES OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN

                                      13
<PAGE>
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THE CREDIT AGREEMENTS AND EACH
SUCH OTHER LOAN DOCUMENT.

                                      14
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

                                CALPINE CORPORATION

                                By:__________________________________________
                                Name:________________________________________
                                Title:_______________________________________

                                Address:        50 West San Fernando Avenue
                                                San Jose, CA 95113

                                Facsimile No.:  (408) 995-0505

                                Attention:      Senior Vice President-Finance

                                      15
<PAGE>
                                THE BANK OF NOVA SCOTIA

                                By:__________________________________________
                                Name:________________________________________
                                Title:_______________________________________

                                Address:        580 California Street
                                                Suite 2100
                                                San Francisco, CA 94111

                                Facsimile No.:  (415) 397-0791

                                Attention:      Jon Burckin

                                with a copy to:

                                                The Bank of Nova Scotia
                                                600 Peachtree Street, N.E.
                                                Suite 2700
                                                Atlanta, GA 30308

                                Attention:      Hilma Gabbidon
                                                Administrative Agent
                                                Loan Administration

                                Facsimile No.:  (404) 888-8998

                                      16
<PAGE>
                                                                    ATTACHMENT 1
                                                                              to
                                                                Pledge Agreement

<TABLE>
<CAPTION>
Pledged Shares
--------------

Pledged Share Issuer                   Common Stock
--------------------                   ------------
                                       Authorized     Outstanding    % of Shares
                                        Shares         Shares         Pledged
                                       --------       --------       ----------
<S>                                    <C>            <C>            <C>
Calpine Natural Gas GP, Inc.              1000           1000        100%

Calpine Natural Gas Holdings, Inc.        1000           1000        100%

Calpine CCFC Holdings, Inc.               1000           1000        100%
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.9
<SEQUENCE>47
<FILENAME>f80168ex10-2_9.txt
<DESCRIPTION>EXHIBIT 10.2.9
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.2.9


                                PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of March 8,
2002, made by Quintana Minerals (USA), Inc., a Delaware corporation, JOQ
Canada, Inc., a Delaware corporation and Quintana Canada Holdings, LLC, a
Delaware limited liability company (each a "Pledgor" and collectively, the
"Pledgors"), in favor of The Bank of Nova Scotia, as agent (together with any
successor(s) thereto in such capacity, the "Agent") for each of the Lender
Parties (as defined below).

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement, dated as of March 8,
2002 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "2002 Credit Agreement"), among the
Borrower, the various financial institutions as are or may become parties
hereto (collectively, the "2002 Lenders"), The Bank of Nova Scotia and
Bayerische Landesbank Girozentrale, as Lead Arrangers and Bookrunners on the
Revolving Facility, Salomon Smith Barney Inc. and Deutsche Banc Alex. Brown
Inc., as Lead Arrangers and Bookrunners on the Term B Facility, The Bank of
Nova Scotia, as Joint Administrative Agent and Funding Agent, Citicorp USA,
Inc., as Joint Administrative Agent, Bank of America, National Association and
Credit Suisse First Boston, Cayman Islands Branch as Lead Arrangers and
Syndication Agents for the Revolving Facility and TD Securities (USA) Inc. as
Lead Arranger for the Revolving Facility, the Lenders have extended Commitments
to make Loans and to issue Letters of Credit to the Borrower; and

     WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of May 23, 2000 (together with all amendments and other
modifications, if any, from time to time made thereto, the "2000 Credit
Agreement" and together with the 2002 Credit Agreement, the "Credit
Agreements"), among the Borrower, the various financial institutions as are or
may become parties thereto (collectively, the "2000 Lenders" and together with
the 2002 Lenders, the "Lenders"), Bayerische Landesbank Girozentrale as
co-arranger and syndication agent for the 2000 Lenders and The Bank of Nova
Scotia as lead arranger and administrative agent for the 2000 Lenders; and

     WHEREAS, as a condition precedent to the making of the initial Loans under
the 2002 Credit Agreement and to continue making loans under the 2000 Credit
Agreement, the Pledgors are required to execute and deliver this Pledge
Agreement; and

     WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and

     WHEREAS, it is in the best interests of the Pledgors to execute this
Pledge Agreement inasmuch as each Pledgor will derive substantial direct and
indirect benefits from the Loans made and Letters of Credit issued from time to
time to the Borrower by the Lenders pursuant to the Credit Agreements;

     NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans)
<PAGE>
and to issue Letters of Credit for the account of the Borrower pursuant to the
Credit Agreements, the each Pledgor agrees, for the benefit of each Lender
Party, as follows:

                                    ARTICLE I
                                   DEFINITIONS

     SECTION 1.1.   Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

     "Agent" is defined in the preamble.

     "Borrower" is defined in the first recital.

     "Collateral" is defined in Section 2.1.

     "Credit Agreements" is defined in the second recital.

     "Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.

     "Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.

     "Lender Party" means, as the context may require, any Lender, Issuer or
the Agent and each of its respective successors, transferees and assigns under
either of the Credit Agreements.

     "Lenders" is defined in the second recital.

     "Pledge Agreement" is defined in the preamble.

     "Pledged Property" means all Pledged Shares and all other pledged shares
of capital stock, all other securities, all assignments of any amounts due or
to become due, all other instruments which are now being delivered by the
Pledgors to the Agent or may from time to time hereafter be delivered by the
Pledgors to the Agent for the purpose of pledge under this Pledge Agreement or
any other Loan Document, and all proceeds of any of the foregoing.

     "Pledged Share Issuer" means each Person identified in Attachment 1 hereto
as the issuer of the Pledged Shares identified opposite the name of such
Person.

     "Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Borrower to the Agent as Pledged Property
hereunder.

     "Secured Obligations" is defined in Section 2.2.

                                      2
<PAGE>
     "Securities Act" is defined in Section 6.2.

     "U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.

     SECTION 1.2.   Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Pledge Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreements.

     SECTION 1.3.   U.C.C.  Definitions.  Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C.  are used in this Pledge Agreement, including its preamble and recitals,
with such meanings.

                                   ARTICLE II
                                     PLEDGE

     SECTION 2.1.   Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Agent, for its benefit and the ratable benefit of each of the Lender Parties,
and hereby grants to the Agent, for its benefit and the ratable benefit of the
Lender Parties, a continuing security interest in, all of the following
property (the "Collateral"):

          (a)  all issued and outstanding shares of capital stock identified on
     Attachment 1 hereto of each Pledged Share Issuer identified on Attachment
     1 hereto;

          (b)  and the certificates representing the Pledged Shares and all
     dividends, cash, instruments and other property from time to time
     received, receivable or otherwise distributed in respect of or in exchange
     for any or all of the Pledged Shares;

          (c)  all additional shares of stock of any issuer of the Pledged
     Shares from time to time acquired by any Pledgor in any manner, and the
     certificates representing such additional shares, and all dividends, cash,
     instruments and other property from time to time received, receivable or
     otherwise distributed in respect of or in exchange for any or all of such
     shares; and

          (d)  all proceeds of any of the foregoing.

     SECTION 2.2.   Security for Obligations. This Pledge Agreement secures the
payment and performance in full of all Obligations of the Borrower now or
hereafter existing under the Credit Agreements, the Notes, each Letter of
Credit and each other Loan Document to which the Borrower is or may become a
party, whether for principal, interest, costs, fees, expenses, or otherwise,
and all obligations of the Pledgors now or hereafter existing under this Pledge
Agreement and each other Loan Document to which it is or may become a party
(all such obligations of the Borrower and the Pledgors being the "Secured
Obligations").

     SECTION 2.3.   Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares, shall be delivered to and held by or on behalf of the Agent pursuant
hereto, shall be in suitable form for transfer by

                                      3
<PAGE>
delivery, and shall be accompanied by all necessary instruments of transfer or
assignment, duly executed in blank.

     SECTION 2.4.   Intentionally Omitted.

     SECTION 2.5.   Continuing Security Interest; Transfer of Note.  This
Pledge Agreement shall create a continuing security interest in the Collateral
and shall

          (a)  remain in full force and effect until payment in full of all
     Secured Obligations and the termination of all Commitments,

          (b)  be binding upon each Pledgor and its successors, transferees and
     assigns, and

          (c)  inure, together with the rights and remedies of the Agent
     hereunder, to the benefit of the Agent and each other Lender Party.

Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any right or obligation under the Loan Documents
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.11 of each of the Credit
Agreements. Upon the indefeasible payment in full, in cash, of all Secured
Obligations and the termination of all Commitments, the security interest
granted herein shall terminate and all rights to the Collateral shall revert to
the Pledgors. Upon any such termination, the Agent will, at the Borrower's sole
expense, deliver to the Borrower, without any representations, warranties or
recourse of any kind whatsoever, all certificates and instruments representing
or evidencing all Pledged Shares, together with all other Collateral held by
the Agent hereunder, and execute and deliver to each Pledgor such documents as
the Pledgors shall reasonably request to evidence such termination.

     SECTION 2.6.   Security Interest Absolute.  All rights of the Agent and
the security interests granted to the Agent hereunder, and all obligations of
the Pledgors hereunder, shall be absolute and unconditional, irrespective of

          (a)  any lack of validity or enforceability of either of the Credit
     Agreements, any Note or any other Loan Document,

          (b)  the failure of any Lender Party or any holder of any Note

               (i)    to assert any claim or demand or to enforce any right or
          remedy against the Borrower, any other Obligor or any other Person
          under the provisions of either of the Credit Agreements, any Note,
          any other Loan Document or otherwise, or

               (ii)   to exercise any right or remedy against any other
          guarantor of, or collateral securing, any Obligations of the Borrower
          or any other Obligor,

                                      4
<PAGE>
          (c)  any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Obligations or any other extension,
     compromise or renewal of any Obligation of the Borrower or any other
     Obligor,

          (d)  any reduction, limitation, impairment or termination of any
     Obligations of the Borrower or any other Obligor for any reason, including
     any claim of waiver, release, surrender, alteration or compromise, and
     shall not be subject to (and the Pledgors hereby waive any right to or
     claim of) any defense or setoff, counterclaim, recoupment or termination
     whatsoever by reason of the invalidity, illegality, nongenuineness,
     irregularity, compromise, unenforceability of, or any other event or
     occurrence affecting, any Obligations of the Borrower, any other Obligor
     or otherwise,

          (e)  any amendment to, rescission, waiver, or other modification of,
     or any consent to departure from, any of the terms of either of the Credit
     Agreements, any Note or any other Loan Document,

          (f)  any addition, exchange, release, surrender or non-perfection of
     any collateral (including the Collateral), or any amendment to or waiver
     or release of or addition to or consent to departure from any guaranty,
     for any of the Obligations, or

          (g)  any other circumstances which might otherwise constitute a
     defense available to, or a legal or equitable discharge of, the Borrower,
     any other Obligor, any surety or any guarantor.

     SECTION 2.7.   Subrogation, etc. The Pledgors will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise until the prior indefeasible payment in
full, in cash, of all Obligations of the Borrower and each other Obligor. Any
amount paid to any Pledgor on account of any payment made hereunder prior to
the payment in full of all Obligations of the Borrower and each other Obligor
shall be held in trust for the benefit of the Lender Parties and each holder of
a Note and shall immediately be paid to the Lender Parties and each holder of a
Note and credited and applied against the Obligations of the Borrower and each
other Obligor, whether matured or unmatured, in accordance with the terms of
the Credit Agreements; provided, however, that if

          (a)  any Pledgor has made payment to the Lender Parties and each
     holder of a Note of all or any part of the Obligations of the Borrower or
     any other Obligor, and

          (b)  all Obligations of the Borrower and each other Obligor have been
     indefeasibly paid in full, in cash, and all Commitments have been
     permanently terminated,

each Lender Party and each holder of a Note agrees that, at the Pledgors'
request, the Lender Parties and the holders of the Notes will execute and
deliver to the Pledgors appropriate documents (without recourse and without
representation or warranty and at the sole cost and expense of the Pledgors)
necessary to evidence the transfer by subrogation to the Pledgors of an
interest in the Obligations of the Borrower and each other Obligor resulting
from such payment by the Pledgors. In furtherance of the foregoing, for so long
as any Obligations or Commitments

                                      5
<PAGE>
remain outstanding, the Pledgors shall refrain from taking any action or
commencing any proceeding against the Borrower or any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this Pledge
Agreement to any Lender Party or any holder of a Note.

     SECTION 2.8.   Waiver of Subrogation. Until such time as the Obligations
have been indefeasibly paid in full, in cash, and the Commitments have been
terminated, each Pledgor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower or any other Obligor
that arise from the existence, payment, performance or enforcement of the
Pledgors' obligations under this Pledge Agreement or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
Parties against the Borrower or any other Obligor or any collateral which the
Agent now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment
or security on account of such claim or other rights. If any amount shall be
paid to any Pledgor in violation of the preceding sentence and the Obligations
shall not have been indefeasibly paid in full, in cash, and the Commitments
have not been terminated, such amount shall be deemed to have been paid to such
Pledgor for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Lender Parties to be credited and applied upon
the Obligations, whether matured or unmatured. Each Pledgor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreements and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1.   Warranties, etc. Each Pledgor represents and warrants unto
each Lender Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Shares) by such Pledgor to the
Agent of any Collateral, as set forth in this Article.

     SECTION 3.1.1  Organization, etc. Each Pledgor is a corporation validly
organized and existing and in good standing under the laws of the State of its
organization, is duly qualified to do business and is in good standing as a
foreign organization in each jurisdiction where the nature of its business
requires such qualification and where the failure to so qualify would have a
material adverse effect on such Pledgor's ability to perform its obligations
under this Pledge Agreement or the other Loan Documents to which it is a party,
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Secured Obligations
under this Pledge Agreement and each other Loan Document to which it is a party
and to own or hold under lease its property and to conduct its business
substantially as currently conducted by it.

     SECTION 3.1.2  Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by any Pledgor of this Pledge Agreement and each other
Loan Document executed or to be executed by it are within such Pledgor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not

                                      6
<PAGE>
          (a)  contravene such Pledgor's Organic Documents;

          (b)  contravene any contractual restriction (including, without
     limitation, the Senior Note Indentures), law or governmental regulation or
     court decree or order binding on or affecting such Pledgor; or

          (c)  result in, or require the creation or imposition of, any Lien
     (other than the lien created hereunder) on any of such Pledgor's
     properties.

     SECTION 3.1.3  Regulation, etc. Each Pledgor is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

     SECTION 3.1.4  Validity, etc. This Pledge Agreement constitutes, and each
other Loan Document executed by each Pledgor will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of each
Pledgor enforceable in accordance with their respective terms except as
enforceability may be subject to or limited by (i) bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting the
rights of creditors or (ii) general principles of equity, including the
possible unavailability of specific performance or injunctive relief.

     SECTION 3.1.5  Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) the Collateral, free and clear of all
liens, security interests, options, or other charges or encumbrances, except
any lien or security interest granted pursuant hereto in favor of the Agent.

     SECTION 3.1.6  Valid Security Interest. The delivery of such Collateral
to the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. No filing or other action will be necessary to perfect or protect
such security interest.

     SECTION 3.1.7  As to Pledged Shares. All of the Pledged Shares are duly
authorized and validly issued, fully paid, and non-assessable, and constitute
sixty-five percent (65%) of all of the issued and outstanding shares of capital
stock entitled to vote in the election of the Board of Directors of the Pledged
Share Issuer.

     SECTION 3.1.8  Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either

          (a)  for the pledge by any Pledgor of any Collateral pursuant to this
     Pledge Agreement or for the execution, delivery, and performance of this
     Pledge Agreement by any Pledgor, or

          (b)  for the exercise by the Agent of the voting or other rights
     provided for in this Pledge Agreement, or, except with respect to any
     Pledged Shares, as may be required

                                      7
<PAGE>
     in connection with a disposition of such Pledged Shares by laws affecting
     the offering and sale of securities generally, the remedies in respect of
     the Collateral pursuant to this Pledge Agreement.

     SECTION 3.1.9  Compliance with Laws. Each Pledgor is in compliance with
the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which might materially
adversely affect the business, properties, assets, operations, condition
(financial or otherwise) or prospects of any Pledgor or the value of the
Collateral or the worth of the Collateral as collateral security.

                                   ARTICLE IV
                                    COVENANTS

     SECTION 4.1.   Protect Collateral; Further Assurances, etc. No Pledgor
will sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Agent hereunder or in favor of Restricted
Subsidiary (as such term is defined in the Pre-2000 Indenture)). Each Pledgor
will warrant and defend the right and title herein granted unto the Agent in
and to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. Each
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgors, the Pledgors will promptly execute and deliver all further
instruments, and take all further action, that may be necessary or desirable,
or that the Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral.

     SECTION 4.2.   Stock Powers, etc. The Pledgors agree that all Pledged
Shares (and all other shares of capital stock constituting Collateral)
delivered by the Pledgors pursuant to this Pledge Agreement will be accompanied
by duly executed undated blank stock powers, or other equivalent instruments of
transfer acceptable to the Agent. The Pledgors will, from time to time upon the
request of the Agent, promptly deliver to the Agent such stock powers,
instruments, and similar documents, satisfactory in form and substance to the
Agent, with respect to the Collateral as the Agent may reasonably request and
will, from time to time upon the request of the Agent after the occurrence of
any Event of Default, promptly transfer any Pledged Shares or other shares of
common stock constituting Collateral into the name of any nominee designated by
the Agent.

     SECTION 4.3.   Continuous Pledge. Subject to Section 2.4, the Pledgors
will, at all times, keep pledged to the Agent pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other securities, instruments, proceeds, and rights from time to time received
by or distributable to any Pledgor in respect of any Collateral.

     SECTION 4.4.   Voting Rights; Dividends, etc.  The Pledgors agree after
any Event of Default shall have occurred and be continuing and the Agent has
notified the Pledgors of the Agent's intention to exercise its voting power
under this Section 4.4(b)

                                      8
<PAGE>
               (i)    the Agent may exercise (to the exclusion of the Pledgors)
          the voting power and all other incidental rights of ownership with
          respect to any Pledged Shares or other shares of capital stock
          constituting Collateral and each Pledgor hereby grants the Agent an
          irrevocable proxy, exercisable under such circumstances, to vote the
          Pledged Shares and such other Collateral; and

               (ii)   promptly to deliver to the Agent such additional proxies
          and other documents as may be necessary to allow the Agent to
          exercise such voting power.

The Agent agrees that unless an Event of Default shall have occurred and be
continuing and the Agent shall have given the notice referred to in Section
4.4(b), the Pledgors shall have the exclusive voting power with respect to any
shares of capital stock (including any of the Pledged Shares) constituting
Collateral and the Agent shall, upon the written request of the Pledgors,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by the Pledgors which are necessary to allow the Pledgors
to exercise voting power with respect to any such share of capital stock
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver, or ratification given,
or action taken by the Pledgors that would impair any Collateral or be
inconsistent with or violate any provision of the Credit Agreements or any
other Loan Document (including this Pledge Agreement).

     SECTION 4.5.   Additional Undertakings. The Pledgors will not, without the
prior written consent of the Agent take or omit to take any action the taking
or the omission of which would result in any impairment or alteration of any
obligation of the maker of any instrument constituting Collateral.

                                    ARTICLE V
                                    THE AGENT

     SECTION 5.1.   Agent Appointed Attorney-in-Fact. The Pledgors hereby
irrevocably appoint the Agent the Pledgors' attorney-in-fact, with full
authority in the place and stead of each Pledgor and in the name of each
Pledgor or otherwise, from time to time in the Agent's discretion, to take any
action and to execute any instrument which the Agent may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including
without limitation:

          (a)  after the occurrence and continuance of an Event of Default, to
     ask, demand, collect, sue for, recover, compromise, receive and give
     acquittance and receipts for moneys due and to become due under or in
     respect of any of the Collateral;

          (b)  to receive, endorse, and collect any drafts or other
     instruments, documents and chattel paper, in connection with clause (a)
     above; and

          (c)  to file any claims or take any action or institute any
     proceedings which the Agent may deem necessary or desirable for the
     collection of any of the Collateral or otherwise to enforce the rights of
     the Agent with respect to any of the Collateral.

                                      9
<PAGE>
Each Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.

     SECTION 5.2.   Agent May Perform. If any Pledgor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith shall be payable by the Pledgors pursuant to Section 6.4.

     SECTION 5.3.   Agent Has No Duty. The powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers.  Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have
no duty as to any Collateral or responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Property, whether or not the Agent has or
is deemed to have knowledge of such matters, or (b) taking any necessary steps
to preserve rights against prior parties or any other rights pertaining to any
Collateral.

     SECTION 5.4.   Reasonable Care. The Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as any Pledgor reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable care.

                                   ARTICLE VI
                                    REMEDIES

     SECTION 6.1.   Certain Remedies.  If any Event of Default shall have
occurred and be continuing:

          (a)  The Agent may exercise in respect of the Collateral, in addition
     to other rights and remedies provided for herein or otherwise available to
     it, all the rights and remedies of a secured party on default under the
     U.C.C. (whether or not the U.C.C.  applies to the affected Collateral) and
     also may, without notice except as specified below, sell the Collateral or
     any part thereof in one or more parcels at public or private sale, at any
     of the Agent's offices or elsewhere, for cash, on credit or for future
     delivery, and upon such other terms as the Agent may deem commercially
     reasonable.  The Pledgors agree that, to the extent notice of sale shall
     be required by law, at least ten days' prior notice to the Pledgors of the
     time and place of any public sale or the time after which any private sale
     is to be made shall constitute reasonable notification.  The Agent shall
     not be obligated to make any sale of Collateral regardless of notice of
     sale having been given.  The Agent may adjourn any public or private sale
     from time to time by announcement at the time and place fixed therefor,
     and such sale may, without further notice, be made at the time and place
     to which it was so adjourned.

                                      10
<PAGE>
          (b)  The Agent may

               (i)    transfer all or any part of the Collateral into the name
          of the Agent or its nominee, with or without disclosing that such
          Collateral is subject to the lien and security interest hereunder,

               (ii)   notify the parties obligated on any of the Collateral to
          make payment to the Agent of any amount due or to become due
          thereunder,

               (iii)  enforce collection of any of the Collateral by suit or
          otherwise, and surrender, release or exchange all or any part thereof,
          or compromise or extend or renew for any period (whether or not longer
          than the original period) any obligations of any nature of any party
          with respect thereto,

               (iv)   endorse any checks, drafts, or other writings in the
          Pledgors' name to allow collection of the Collateral,

               (v)    take control of any proceeds of the Collateral, and

               (vi)   execute (in the name, place and stead of the Pledgors)
          endorsements, assignments, stock powers and other instruments of
          conveyance or transfer with respect to all or any of the Collateral.

     SECTION 6.2.   Securities Laws. If the Agent shall determine to exercise
its right to sell all or any of the Collateral pursuant to Section 6.1, the
Pledgors agree that, upon request of the Agent, the Pledgors will, at their own
expense:

          (a)  execute and deliver, and cause each issuer of the Collateral
     contemplated to be sold and the directors and officers thereof to execute
     and deliver, all such instruments and documents, and do or cause to be
     done all such other acts and things, as may be necessary or, in the
     opinion of the Agent, advisable to register such Collateral under the
     provisions of the Securities Act of 1933, as from time to time amended
     (the "Securities Act"), and to cause the registration statement relating
     thereto to become effective and to remain effective for such period as
     prospectuses are required by law to be furnished, and to make all
     amendments and supplements thereto and to the related prospectus which, in
     the opinion of the Agent, are necessary or advisable, all in conformity
     with the requirements of the Securities Act and the rules and regulations
     of the Securities and Exchange Commission applicable thereto;

          (b)  use its best efforts to qualify the Collateral under the state
     securities or "Blue Sky" laws and to obtain all necessary governmental
     approvals for the sale of the Collateral, as requested by the Agent;

          (c)  cause each such issuer to make available to its security
     holders, as soon as practicable, an earnings statement that will satisfy
     the provisions of Section 11(a) of the Securities Act; and

                                      11
<PAGE>
          (d)  do or cause to be done all such other acts and things as may be
     necessary to make such sale of the Collateral or any part thereof valid
     and binding and in compliance with applicable law.

     SECTION 6.3.   Compliance with Restrictions. The Pledgors agree that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgors further agree that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the
Pledgors for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.

     SECTION 6.4.   Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral may thereafter be applied (after payment of
any amounts payable to the Agent pursuant to Article III of the Credit
Agreements and Section 6.4) in whole or in part by the Agent against, all or
any part of the Secured Obligations in such order as the Agent shall elect.

     Any surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Secured Obligations, and the termination of
all Commitments, shall be paid over to the Pledgors or to whomsoever may be
lawfully entitled to receive such surplus.

     SECTION 6.5.   Indemnity and Expenses. The Pledgors hereby indemnify and
hold harmless the Agent from and against any and all claims, losses, and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses, or liabilities
resulting from the Agent's gross negligence or wilful misconduct. Upon demand,
the Pledgors will pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Agent may incur in connection with:

          (a)  the administration of this Pledge Agreement, the Credit
     Agreements and each other Loan Document;

          (b)  the custody, preservation, use, or operation of, or the sale of,
     collection from, or other realization upon, any of the Collateral;

          (c)  the exercise or enforcement of any of the rights of the Agent
     hereunder; or

          (d)  the failure by any Pledgor to perform or observe any of the
     provisions hereof.

                                      12
<PAGE>
                                  ARTICLE VII
                            MISCELLANEOUS PROVISIONS

     SECTION 7.1.   Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.

     SECTION 7.2.   Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement nor consent to any departure by the Pledgors herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.

     SECTION 7.3.   Protection of Collateral. The Agent may from time to time,
at its option, perform any act which the Pledgors agree hereunder to perform
and which the Pledgors shall fail to perform after being requested in writing
so to perform (it being understood that no such request need be given after the
occurrence and during the continuance of an Event of Default) and the Agent may
from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

     SECTION 7.4.   Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and, if to the Pledgors, mailed or telegraphed or delivered to
it at the address set forth below its signature hereto, if to the Agent, mailed
or delivered to it, addressed to it at the address of the Agent specified in
the 2002 Credit Agreement or, as to either party, at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid.

     SECTION 7.5.   Section Captions.  Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.

     SECTION 7.6.   Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.

     SECTION 7.7.   Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW

                                      13
<PAGE>
YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

     SECTION 7.8.   Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE PLEDGORS SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PLEDGOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION.  EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PLEDGOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
ANY PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, SUCH PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE AGREEMENT.

     SECTION 7.9.   Waiver of Jury Trial. THE LENDER PARTIES AND THE PLEDGORS
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE LENDER PARTIES OR THE PLEDGORS. THE PLEDGORS ACKNOWLEDGE AND AGREE THAT
THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A

                                      14
<PAGE>
PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES
ENTERING INTO THE CREDIT AGREEMENTS AND EACH SUCH OTHER LOAN DOCUMENT.

     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

                                QUINTANA CANADA HOLDINGS, LLC
                                a Delaware limited liability company


                                By:__________________________________
                                Name:________________________________
                                Title:_______________________________

                                Address:

                                Facsimile No.:

                                Attention:


                                       15
<PAGE>
                                QUINTANA MINERALS (USA), INC.
                                a Delaware corporation


                                By:__________________________________
                                Name:________________________________
                                Title:_______________________________

                                Address:

                                Facsimile No.:

                                Attention:


                                       16
<PAGE>
                                JOQ CANADA, INC.
                                a Delaware corporation


                                By:__________________________________
                                Name:________________________________
                                Title:_______________________________

                                Address:

                                Facsimile No.:

                                Attention:


                                       17
<PAGE>
                                THE BANK OF NOVA SCOTIA


                                By:__________________________________
                                Name:________________________________
                                Title:_______________________________

                                Address:        580 California Street
                                                Suite 2100
                                                San Francisco, CA 94111

                                Facsimile No.:  (415) 397-0791

                                Attention:      Jon Burckin

                                with a copy to:

                                                The Bank of Nova Scotia
                                                600 Peachtree Street, N.E.
                                                Suite 2700
                                                Atlanta, GA 30308

                                Attention:      Hilma Gabbidon
                                                Administrative Agent
                                                Loan Administration

                                Facsimile No.:  (404) 888-8998


                                       18
<PAGE>
                                                                    ATTACHMENT 1
                                                                              to
                                                                Pledge Agreement

<TABLE>
<CAPTION>
Pledged Shares
--------------

Pledged Share Issuer                Class A Common Stock
--------------------                --------------------
                                     Authorized       Outstanding    % of Shares
                                       Shares           Shares         Pledged
                                     ----------       -----------    -----------
<S>                                  <C>              <C>            <C>
Calpine Canada Energy Ltd.           1,000,000,000      35,100        65%
</TABLE>

(3,391 Class A shares pledged by Quintana Minerals (USA), Inc.)
(16,034 Class A shares pledged by Quintana Canada Holdings, LLC)
(3,390 Class A shares pledged by JOQ Canada, Inc.)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.10
<SEQUENCE>48
<FILENAME>f80168ex10-2_10.txt
<DESCRIPTION>EXHIBIT 10.2.10
<TEXT>
<PAGE>
                                                                 Exhibit 10.2.10



                                    GUARANTY


         THIS GUARANTY (this "Guaranty"), dated as of March 8, 2002, made by
each of Quintana Minerals (USA), Inc., a Delaware corporation, JOQ Canada, Inc.,
a Delaware corporation and Quintana Canada Holdings, LLC, a Delaware limited
liability company (each a "Guarantor" and collectively, the "Guarantors"), in
favor of each of the Lender Parties (as defined below). Capitalized terms used
herein shall have the meanings ascribed thereto in Article I hereto.

                              W I T N E S S E T H:

         WHEREAS, pursuant to that certain Credit Agreement, dated as of March
8, 2002 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "2002 Credit Agreement"), among the
Borrower, the various financial institutions as are or may become parties hereto
(collectively, the "2002 Lenders"), The Bank of Nova Scotia and Bayerische
Landesbank Girozentrale, as Lead Arrangers and Bookrunners on the Revolving
Facility, Salomon Smith Barney Inc. and Deutsche Banc Alex. Brown Inc., as Lead
Arrangers and Bookrunners on the Term B Facility, The Bank of Nova Scotia, as
Joint Administrative Agent and Funding Agent, Citicorp USA, Inc., as Joint
Administrative Agent, Bank of America, National Association and Credit Suisse
First Boston, Cayman Islands Branch as Lead Arrangers and Syndication Agents for
the Revolving Facility and TD Securities (USA) Inc. as Lead Arranger for the
Revolving Facility, the Lenders have extended Commitments to make Loans and to
issue Letters of Credit to the Borrower; and

         WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of May 23, 2000, (together with all amendments and other
modifications, if any, from time to time made thereto, the "2000 Credit
Agreement" and together with the 2002 Credit Agreement, the "Credit
Agreements"), among the Borrower, the various financial institutions as are or
may become parties thereto (collectively, the "2000 Lenders" and together with
the 2002 Lenders, the "Lenders"), Bayerische Landesbank Girozentrale as
co-arranger and syndication agent for the 2000 Lenders and The Bank of Nova
Scotia as lead arranger and administrative agent for the 2000 Lenders; and

         WHEREAS, as a condition precedent to the effectiveness of the 2002
Credit Agreement, the Guarantors are required to execute and deliver this
Guaranty;

         WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and

         WHEREAS, it is in the best interests of the Guarantors to execute this
Guaranty inasmuch as each Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions pursuant to the Credit Agreements;

         NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make the Credit
Extensions available to the Borrower pursuant to the Credit Agreements, the
Guarantors agree, for the benefit of each Lender Party, as follows:
<PAGE>
                                   ARTICLE I

                          DEFINITIONS AND INCORPORATION

         SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

         "Agent" means The Bank of Nova Scotia, when acting in its capacity as
Agent under the Credit Agreements, and includes any successor Agent appointed
pursuant to Section 10.4 of the Credit Agreements.

         "Borrower" is defined in the first recital.

         "Consent Agreement" means that certain consent agreement, dated as of
even date herewith among CCEC, Calpine Canada Energy Finance ULC, an unlimited
liability company subsisting under the laws of the Province of Nova Scotia,
Quintana Canada Holdings, LLC, a Delaware limited liability company, the
Borrower, Citicorp USA, Inc., and Credit Suisse First Boston.

         "Credit Agreements" is defined in the second recital.

         "Debentures" means those certain term debentures dated as of April 25,
2001, August 14, 2001 and August 23, 2001 as the same may have been amended from
time to time, between CCEC and Calpine Canada Energy Finance ULC, an unlimited
liability company subsisting under the laws of the Province of Nova Scotia.

         "Guarantor" and "Guarantors" are defined in the preamble.

         "Guaranty" is defined in the preamble.

         "Lender Party" means, as the context may require, any Lender or the
Agent and each of its respective successors, transferees and assigns.

         "Lenders" means each of the financial institutions party to the Credit
Agreements as a Lender which has executed either the 2000 Credit Agreement or
the 2002 Credit Agreement, and any person which has become a party thereto as a
Lender, and includes The Bank of Nova Scotia in its capacity as a Lender, but
excluding any such financial institution, the Commitment of which has been
reduced to zero, and excluding the Agent in its capacity as the Agent.

         "Obligations" means, as applicable, all obligations (monetary or
otherwise) of each Guarantor arising under or in connection with this Guaranty
or of each other Obligor under each other Loan Document that such Obligor may be
party to.

         "Obligor" means the Borrower, each Guarantor or any other Person (other
than the Agent or any Lender) obligated under, or otherwise a party to, any Loan
Document.



                                       2
<PAGE>
         "Organic Document" means, relative to any Obligor, its certificate or
articles of incorporation, partnership agreement, or similar organizational
document, its bylaws and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its authorized shares of capital stock or
other ownership interests.

         "Subscription Agreements" means those certain subscription agreements
dated as of April 25, 2001, August 14, 2001 and August 23, 2001 as the same may
have been amended from time to time, between CCEC and Quintana Canada Holdings,
LLC, a Delaware limited liability company.

         "Term Debenture Documents" means the Debentures, the Subscription
Agreements, the Consent Agreement and all other agreements ancillary thereto.

         "U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.

         SECTION 1.2. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Guaranty, including its preamble
and recitals, have the meanings provided in each of the Credit Agreements.

         SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Guaranty, including its preamble and recitals, with such
meanings.

                                   ARTICLE II

                               GUARANTY PROVISIONS

         SECTION 2.1. Guaranty. Each Guarantor hereby absolutely,
unconditionally and irrevocably

                  (a) guarantees the full and punctual payment when due, whether
         at stated maturity, by required prepayment, declaration, acceleration,
         demand or otherwise, of all Obligations (which term as used herein in
         connection with the Borrower has the meaning provided in the Credit
         Agreements) of the Borrower under the Loan Documents (subject to the
         last sentence of this Section 2.1), whether for principal, interest,
         fees, expenses or otherwise (including all such amounts which would
         become due but for the operation of the automatic stay under Section
         362(a) of the United States Bankruptcy Code, 11 U.S.C. Section 362(a),
         and the operation of Sections 502(b) and 506(b) of the United States
         Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b)), and

                  (b) indemnifies and holds harmless each Lender Party for any
         and all costs and expenses (including reasonable attorney's fees and
         expenses) incurred by such Lender Party or such holder, as the case may
         be, in enforcing any rights under this Guaranty.

This Guaranty constitutes a guaranty of payment when due and not of collection,
and each Guarantor specifically agrees that it shall not be necessary or
required that any Lender Party exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the



                                       3
<PAGE>
Borrower or any other Obligor (or any other Person) before or as a condition to
the obligations of any Guarantor hereunder. At any time when an Event of Default
(as defined in the Credit Agreements) is continuing, the Lender Parties or any
one or more of them shall be entitled to immediate payment of the Obligations by
any Guarantor on written demand for payment made by the Agent to such Guarantor.
Notwithstanding anything in this Guaranty to the contrary, the recourse of the
Lender Parties against each Guarantor under this Guaranty shall be limited
solely to such Guarantor's ownership interests in Calpine Canada Energy Ltd., a
Nova Scotia limited liability company ("CCEC") pledged to the Agent, for the
benefit of the Lender Parties, pursuant to that certain Pledge Agreement, dated
as of even date herewith between the Guarantors and Agent.

         SECTION 2.2. Acceleration of Guaranty. Each Guarantor agrees that, in
the event of (a) the dissolution or insolvency of the Borrower, any other
Obligor or any Guarantor, or (b) the inability or failure of the Borrower, any
other Obligor or any Guarantor to pay debts as they become due, or (c) an
assignment by the Borrower, any other Obligor or any Guarantor for the benefit
of creditors, or (d) the commencement of any case or proceeding in respect of
the Borrower, any other Obligor or any Guarantor under any bankruptcy,
insolvency or similar laws and, if such case or proceeding is not commenced by
the Person which is the subject of such case or proceeding, such case or
proceeding shall be consented to or acquiesced in by such Person or shall result
in an order for relief or shall remain for 60 days undismissed, and if any such
event as described above shall occur at a time when any of the Obligations of
the Borrower may not then be due and payable, the Guarantors will pay to the
Lenders forthwith the full amount which would be payable hereunder by the
Guarantors if all such Obligations were then due and payable.

         SECTION 2.3. Guaranty Absolute, etc. Subject to the last sentence of
Section 2.1, this Guaranty shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of payment, and shall remain in full
force and effect until all Obligations of the Borrower have been paid in full,
all Obligations of the Guarantors hereunder shall have been paid in full and all
Commitments shall have terminated. Each Guarantor guarantees that the
Obligations of the Borrower and its Subsidiaries will be paid strictly in
accordance with the terms of the Credit Agreements and each other Loan Document
under which they arise, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Lender Party with respect thereto. Subject to the last sentence of
Section 2.1, the liability of the Guarantors under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of:

                  (a) any lack of validity, legality or enforceability of the
         Credit Agreements or any other Loan Document;

                  (b) the failure of any Lender Party

                           (i) to assert any claim or demand or to enforce any
                  right or remedy against the Borrower, any other Obligor or any
                  other Person (including any other guarantor) under the
                  provisions of the Credit Agreements, any other Loan Document
                  or otherwise, or


                                       4
<PAGE>
                           (ii) to exercise any right or remedy against any
                  other guarantor of, or collateral securing, any Obligations of
                  the Borrower or any other Obligor;

                  (c) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Obligations of the Borrower or
         any other Obligor, or any other extension, compromise or renewal of any
         Obligation of the Borrower or any other Obligor;

                  (d) any reduction, limitation, impairment or termination of
         the Obligations of the Borrower or any other Obligor for any reason
         (other than the full and final payment of the Obligations), including
         any claim of waiver, release, surrender, alteration or compromise, and
         shall not be subject to (and the Guarantors hereby waive any right to
         or claim of) any defense or setoff, counterclaim, recoupment or
         termination whatsoever by reason of the invalidity, illegality,
         nongenuineness, irregularity, compromise, unenforceability of, or any
         other event or occurrence affecting, the Obligations of the Borrower,
         any other Obligor or otherwise;

                  (e) any amendment to any of the terms of the Credit Agreements
         or any other Loan Document, and the Obligations of the Guarantors shall
         be modified to reflect any such amendment;

                  (f) any rescission, waiver, or other modification of, or any
         consent to departure from, any of the terms of the Credit Agreements or
         any other Loan Document;

                  (g) any addition, exchange, release, surrender or
         non-perfection of any collateral, or any amendment to or waiver or
         release or addition of, or consent to departure from, any other
         guaranty, held by any Lender Party securing any of the Obligations of
         the Borrower or any other Obligor; or

                  (h) any other circumstance which might otherwise constitute a
         defense available to, or a legal or equitable discharge of, any
         Guarantor, the Borrower, any other Obligor, any surety or any
         guarantor, other than full and final payment of the Obligations.

         SECTION 2.4. Reinstatement, etc. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party upon the insolvency,
bankruptcy or reorganization of any Guarantor, the Borrower, any other Obligor
or otherwise, all as though such payment had not been made.

         SECTION 2.5. Waiver, etc. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Agent or any other Lender Party protect, secure, perfect or
insure any security interest or lien, or any property subject thereto, or
exhaust any right or take any action against the Borrower, any other Obligor or
any other Person (including any other guarantor) or entity or any collateral
securing the Obligations of the Borrower or any other Obligor, as the case may
be.



                                       5
<PAGE>
         SECTION 2.6. Waiver of Subrogation. Until such time as the Obligations
have been indefeasibly paid in full, in cash, and the Commitments have been
terminated, each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower that arise from the
existence, payment, performance or enforcement of the Guarantors' Obligations
under this Guaranty or any other Loan Document, including any right of
subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of the Lender Parties against the Borrower or
any other Obligor or any collateral which the Agent now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from the
Borrower or any other Obligor, directly or indirectly, in cash or other property
or by set-off or in any manner, payment or security on account of such claim or
other rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Obligations shall not have been indefeasibly paid in
full, in cash, and the Commitments have not been terminated, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and held in
trust for, the Lender Parties, and shall forthwith be paid to the Lender Parties
to be credited and applied upon the Obligations, whether matured or unmatured.
Each Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreements and that
the waiver set forth in this Section is knowingly made in contemplation of such
benefits.

         SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:

                  (a) be binding upon each Guarantor, and its successors,
         transferees and assigns; and

                  (b) inure to the benefit of and be enforceable by the Agent
         and each other Lender Party.

Without limiting the generality of clause (b), any Lender may assign or
otherwise transfer (in whole or in part) any Loan held by it, all or any part of
its Commitment under either of the Credit Agreements or its other interests
under the Credit Agreements to any other Person or entity, and such other Person
or entity shall thereupon become vested with all rights and benefits in respect
thereof granted to such Lender under any Loan Document (including this Guaranty)
or otherwise, subject, however, to the provisions of Sections 11.11 of the
Credit Agreements.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1. Representations and Warranties. Each Guarantor hereby
represents and warrants unto each Lender Party as set forth in this Article III.

         SECTION 3.1.1. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Guarantor of this Guaranty are within
the Guarantor's corporate powers, have been duly authorized by all necessary
corporate action, and do not

                  (a) contravene the Guarantor's Organic Documents;


                                       6
<PAGE>
                  (b) contravene any contractual restriction, law or
         governmental regulation or court decree or order binding on or
         affecting the Guarantor; or

                  (c) result in, or require the creation or imposition of, any
         security interest on any of the Guarantor's properties.

         SECTION 3.1.2. Government Approval, Regulation, etc. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required for the
due execution, delivery or performance by the Guarantor of this Guaranty.

         SECTION 3.1.3. Validity, etc. This Guaranty constitutes the legal,
valid and binding obligations of the Guarantor enforceable in accordance with
its terms except as enforceability may be subject to or limited by (i)
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting the rights of creditors or (ii) general principles of equity,
including the possible unavailability of specific performance or injunctive
relief.

                                   ARTICLE IV

                                    COVENANTS

         SECTION 4.1. Limitations. No Guarantor shall create, incur, assume or
suffer to exist any Indebtedness other than as permitted by the Credit
Agreement. Each Guarantor covenants and agrees that it will not transfer, pledge
or encumber its ownership interests in CCEC.

         SECTION 4.2. Compliance with other agreements. Each Guarantor shall or
shall cause CCEC to be in compliance with the terms and conditions of the Term
Debenture Documents.

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

         SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreements and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions hereof.

         SECTION 5.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 2.7, this Guaranty
shall be binding upon each Guarantor and its successors, transferees and assigns
and shall inure to the benefit of and be enforceable by each Lender Party and
their respective successors, transferees and assigns (to the full extent
provided pursuant to Section 2.7); provided, however, that the Guarantors may
not assign any of its obligations hereunder without the prior written consent of
all Lenders.

         SECTION 5.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by any Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.



                                       7
<PAGE>
         SECTION 5.4. Notices. All notices and other communications provided to
any Guarantor under this Guaranty including demands for payments hereunder shall
be in writing or by facsimile and addressed, delivered or transmitted to each
Guarantor at its address or telecopy number set forth below its signature hereto
or at such other address or telecopy number as may be designated by such
Guarantor in a notice to the Lender Parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted.

         SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Lender Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         SECTION 5.6. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.

         SECTION 5.7. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

         SECTION 5.8. Judgment Currency. Each Guarantor acknowledges that the
Obligations of the Borrower may be payable in Canadian Dollars or United States
Dollars or partly in one currency and partly in another. Each Guarantor agrees
to make all required payments hereunder in the currency or currencies in which
the Obligations of the Borrower are owing.

                  (a) If, for the purpose of obtaining or enforcing judgment
         against any Guarantor in any court in any jurisdiction, it becomes
         necessary to convert into any other currency (such other currency being
         hereinafter in this Section 5.8 referred to as the "Judgment Currency")
         an amount due in Canadian Dollars or United States Dollars under this
         Guaranty (including a conversion of Canadian Dollars to United States
         Dollars), the conversion shall be made at the rate of exchange
         prevailing on the Banking Day immediately preceding:

                           (i) the date of actual payment of the amount due, in
                  the case of any proceeding in the courts of any jurisdiction
                  that will give effect to such conversion being made on such
                  date; or

                           (ii) the date on which the judgment is given, in the
                  case of any proceeding in the courts of any other
                  jurisdiction;

         (the date as of which such conversion is made pursuant to this Section
         5.8 being hereinafter in this Section 5.8 referred to as the "Judgment
         Conversion Date").

                                       8
<PAGE>
                  (b) If, in the case of any proceeding in the court of any
         jurisdiction referred to in this Section 5.8, there is a change in the
         rate of exchange prevailing between the Judgment Conversion Date and
         the date of actual payment of the amount due, such Guarantor shall pay
         such additional amount (if any) as may be necessary to ensure that the
         amount paid in the Judgment Currency, when converted at the rate of
         exchange prevailing on the date of payment, will produce the amount of
         Canadian Dollars or United States Dollars, as the case may be, which
         could have been purchased with the amount of Judgment Currency
         stipulated in the judgment or judicial order at the rate of exchange
         prevailing on the Judgment Conversion Date.

                  (c) Any amount due from any Guarantor under the provisions of
         Section 5.8(b) shall be due as a separate debt and shall not be
         affected by or merged into any judgment being obtained for any other
         amounts due under or in respect of this Guaranty.

                  (d) The term "rate of exchange" in this Section 5.8 means the
         rate of exchange at which the Agent is able, on the relevant date, to
         purchase the currency converted for the Judgment Currency.

         SECTION 5.9. Payments Free and Clear of Taxes.

                  (a) Section 5.6 of the 2002 Credit Agreement is hereby
         incorporated into this Guaranty in its entirety; provided, that, each
         reference in such Section 5.6 of the 2002 Credit Agreement to the
         Borrower shall be deemed to refer to each Guarantor.

                  (b) The provisions of this Section 5.9 shall survive the
         termination of the Credit Agreements and this Guaranty and the payment
         and satisfaction of all Obligations of the Borrower to the Lender
         Parties.

         SECTION 5.10. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. FOR
PURPOSES OF ANY ACTION OR PROCEEDING INVOLVING THIS GUARANTY, EACH GUARANTOR
HEREBY EXPRESSLY SUBMITS TO THE JURISDICTION OF ALL FEDERAL AND STATE COURTS
LOCATED IN THE STATE OF NEW YORK AND CONSENTS THAT IT MAY BE SERVED WITH ANY
PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK.

         SECTION 5.11. Waiver of Jury Trial. EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THE
CREDIT AGREEMENT.


                                       9
<PAGE>
         SECTION 5.12. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR ANY GUARANTOR SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK OR IN ANY MANNER PROVIDED BY LAW. EACH GUARANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY
GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY
IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         SECTION 5.13. Additional Waivers. Each Guarantor authorizes Agent, at
its sole option, without notice or demand and without affecting the liability of
any Guarantor hereunder, to release and reconvey (with or without the receipt of
any consideration) any lien against any or all real or personal property
security for the Obligations, to foreclose any or all deeds of trust, mortgages,
security agreements or other instruments or agreements by judicial or
nonjudicial sale, and to exercise any other remedy against Borrower any security
or any other guarantor, all without affecting the liability of any Guarantor
hereunder.

         SECTION 5.13.1. Each Guarantor waives any defenses or benefits that may
be derived from California Code of Civil Procedure Sections 580a, 580b, 580d or
726, or comparable provisions of the laws of the State of California or any
other jurisdiction, and all other suretyship defenses it would otherwise have
under California law or the laws of any other jurisdiction.


                                       10
<PAGE>
         SECTION 5.13.2. Each Guarantor waives any right to receive notice of
any judicial or nonjudicial sale or foreclosure of any real property, and the
failure of any Guarantor to receive such notice shall not impair or affect such
Guarantor's liability hereunder. Each Guarantor waives all rights and defenses
arising out of an election of remedies by Agent or any Lender Party, even though
that election of remedies, such as nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed any Guarantor's rights of
subrogation and reimbursement against Borrower or any other Person by operation
of Section 580d of the Code of Civil Procedure or otherwise.

         SECTION 5.13.3. Each Guarantor acknowledges that it has, in this
Guaranty, waived any and all rights of subrogation and reimbursement and any
other rights and defenses available to such Guarantor by reason of Sections 2787
to 2855, inclusive, of the California Civil Code, including, without limitation,
(a) any defenses such Guarantor may have to its guaranty obligations by reason
of an election of remedies by Agent or any Lender Party and (b) any rights or
defenses such Guarantor may have by reason of protection afforded to Borrower or
any other Person with respect to the obligation so guaranteed pursuant to the
antideficiency or other laws of the State of California limiting or discharging
Borrower's indebtedness, including, without limitation, Section 580a, 580b,
580d, or 726 of the California Code of Civil Procedure.

         SECTION 5.13.4. For the avoidance of doubt, each Guarantor waives all
rights and defenses that such Guarantor may have because the Obligations may be
secured by real property. This means, among other things:

                  (a) The Agent may collect from any Guarantor without first
         foreclosing on any real or personal property collateral pledged by
         Borrower or any other Person;

                  (b) If the Agent forecloses on any real property collateral
         pledged by Borrower or any other Person:

                           (i) The amount of the Obligations may be reduced only
                  by the price for which that collateral is sold at the
                  foreclosure sale, even if the collateral is worth more than
                  the sale price.

                           (ii) The Agent for the benefit of the Lender Parties
                  may collect from any Guarantor even if the Agent, by
                  foreclosing on the real property collateral, has destroyed any
                  right any Guarantor may have to collect from Borrower or any
                  other Person.

         This is an unconditional and irrevocable waiver of any rights and
defenses any Guarantor may have because the Obligations are secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure.




                                       11
<PAGE>
         IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                           QUINTANA MINERALS (USA), INC.,
                                           a Delaware corporation


                                           By:__________________________________
                                           Name:________________________________
                                           Title:_______________________________


                                           JOQ CANADA, INC.,
                                           a Delaware corporation


                                           By:__________________________________
                                           Name:________________________________
                                           Title:_______________________________


                                           QUINTANA CANADA HOLDINGS, LLC,
                                           a Delaware limited liability company


                                           By:__________________________________
                                           Name:________________________________
                                           Title:_______________________________




                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.4
<SEQUENCE>49
<FILENAME>f80168ex10-3_4.txt
<DESCRIPTION>EXHIBIT 10.3.4
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.3.4

                               CALPINE CORPORATION
                              EMPLOYMENT AGREEMENT

         This Amended and Restated Employment Agreement (this "Agreement") has
been entered into, effective as of January 1, 2000, between CALPINE CORPORATION,
a Delaware corporation (the "Company"), and Ann B. Curtis ("Executive") to
provide for the employment of Executive on the terms and conditions set forth
herein.

         WHEREAS, Executive has served as Executive Vice President and Chief
Financial Officer of the Company since August 1998; and

         WHEREAS, the Company wishes to assure itself of the continued
employment efforts of Executive for the period provided in this Agreement, and
Executive is willing to continue to serve in the employ of the Company on a
full-time basis for said period upon the terms and conditions hereinafter
provided.

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

         1. Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or in Appendix A hereto.

         2. Employment. The Company hereby employs Executive, and Executive
hereby accepts such employment by the Company, upon the terms and conditions
herein provided.

         3. Term of Employment. Executive's employment with the Company pursuant
to this Agreement commenced on January 1, 2000 and shall continue through July
31, 2004, unless such employment is sooner terminated or subsequently extended
as hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

         4. Positions and Responsibilities.

                  (a) Position. During the Employment Period, Executive shall
serve as the Company's Executive Vice President and Chief Financial Officer and
shall be responsible for leading the Company's business management and regional
affairs, reporting to the President and Chief Executive Officer of the Company
(CEO).

                  (b) Duties. During the Employment Period, and subject to the
control of the CEO, Executive shall have general executive powers and active
management and supervision over all business management and regional affairs of
the Company and shall perform such other executive and/or administrative duties
consistent with the office of Executive Vice President and Chief Financial
Officer as from time to time may be assigned to Executive by the CEO, but
subject to the conditions in this Agreement. Executive shall devote
substantially Executive's full business time and attention to, and exert
Executive's best efforts in, the performance of Executive's duties


                                       1
<PAGE>
hereunder, so as to promote the business of the Company. Executive agrees that,
during Executive's employment with the Company, Executive will not provide
consulting services to or become an employee of, any other firm or person
engaged in a business in any way competitive with the Company.

         5. Compensation. For all services rendered by Executive pursuant to
this Agreement, the Company shall pay Executive, and Executive agrees to accept,
the salary, bonuses and other benefits described below in this Section 5.

                  (a) Salary. The Company shall pay Executive an annual base
salary ("Base Salary") as determined by the CEO in accordance with this Section
5, payable at periodic intervals in accordance with the Company's payroll
practices for salaried employees. Executive's Base Salary as of the effective
date hereof is three hundred seventy-five thousand dollars ($375,000.00) per
annum. In accordance with Section 5(c) hereof, the amount of the Base Salary
shall be reviewed by the CEO and approved by the Board of Directors, if
required, on at least an annual basis, and any increases will be effective as of
the date determined appropriate by the CEO. Executive's Base Salary may be
increased for any reason, including to reflect inflation or such other
adjustments as the CEO may deem appropriate; provided, however, that Executive's
Base Salary, as currently in effect as stated above or as so increased, may not
be subsequently decreased, except with the prior written consent of Executive.

                  (b) Bonuses. In addition to Base Salary, Executive shall be
entitled to receive, for each fiscal year of the Company ending with or within
the Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal
bonus or incentive plan or program of the Company. or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by the CEO. Any Bonus earned by
Executive for service or performance rendered in any fiscal year within the
Employment Period shall be paid to Executive in accordance with the applicable
plan or program and the Company's policies governing such matters. For the year
ending December 31, 2000 and for all future years hereunder, Executive shall be
entitled to participate in and receive a Bonus in accordance with the terms and
conditions set forth in the Company's Annual Management Incentive Plan provided,
however, that the target bonus for Executive as set forth in the current Annual
Management Incentive Plan shall be eighty-five percent (85%). In the event of
Executive's death or Disability during the Employment Period, the Company shall
pay to Executive or Executive's estate the pro rata portion of the Bonus that
Executive would have earned in respect of the portion of the year prior to
Executive's death or Disability.

                  (c) Annual Compensation Review. Notwithstanding anything
herein to the contrary, Executive's compensation, consisting of salary, bonus
and stock option grants, shall be reviewed annually by the CEO.

                  (d) Life Insurance. During the Employment Period, the Company
shall provide to Executive a life insurance policy in accordance with the terms
of the current policy maintained by the Company for Executive, as further
described in Section 8(b).

                                       2
<PAGE>
                  (e) Health Care. During the Employment Period, Executive shall
be eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.

                  (f) Participation in Benefit and Equity Compensation Plans.
During the Employment Period, Executive shall be eligible to receive all
benefits, including those under equity participation and bonus programs, to
which key employees are or become eligible under such plans or programs as may
be established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

                  (g) 401(k) Plan Benefits. In addition to the other benefits to
which Executive shall be entitled to under this Agreement, Executive shall be
entitled to participate in the Company's 401(k) Plan and shall be entitled to
receive the full benefit of contributions to be made by the Company for the
benefit of Executive under the terms of the 401(k) Plan.

         6. Vacation. During the Employment Period, Executive shall be entitled
to vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

         7. Indemnification. The Company shall indemnify Executive pursuant to
the provisions of the Company's Articles of Incorporation and Bylaws to the
fullest extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

         8.       Benefits Payable Upon Disability or Death.

                  (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

                  (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be


                                       3
<PAGE>
discharged either by a cash payment from the Company, or, if the Company so
elects, by supplementary life insurance policies to be obtained and maintained
by the Company.


         9.       Severance Benefits.

                  (a) Termination of Employment. In the event Executive's
employment terminates for any reason, except as provided in Section 9(b) in
connection with a Change of Control, then Executive shall be entitled to receive
severance benefits as follows:

                           (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                           (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the the number of years (or any portion thereof, calculated on a
daily basis) remaining under this Agreement had Executive's employment not been
terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse


                                       4
<PAGE>
Executive for any and all expenses incurred by Executive for outplacement
services selected by the Executive and approved by the Company, which approval
will not be unreasonably withheld, until the earlier of (I) the first
anniversary of the date of termination of employment or (II) the date on which
Executive commences employment with another employer.

                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination and in accordance with the requirements of COBRA.

                  (b) Termination As a Result of a Change of Control. If
Executive's employment with the Company is terminated as a result of a Change of
Control then Executive shall be entitled to receive severance benefits as
follows:

                           (i) Voluntary Resignation. If as a result of a Change
of Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall


                                       5
<PAGE>
remain exercisable for the vested option shares until the expiration or sooner
termination of the option term in accordance with the provisions of the
agreement evidencing such option.

                           (ii) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination.

                           (iv) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                  (c) Parachute Payments. If all or any portion of the amounts
payable to Executive under this Agreement or otherwise are subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code (the "Code") (or
similar state tax and/or assessment), Company shall pay to Executive an amount
necessary to place Executive in the same after tax position as Executive would
have been in had no such excise tax been imposed. The amount payable pursuant to
the preceding sentence shall be increased to the extent necessary to pay income
and excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

         10. Nondisclosure of Proprietary Information and Company Documents and
Materials.

         (a)      Executive understands that the Company possesses and will
                  possess Proprietary Information which is important to its
                  business. All Proprietary Information is and shall be the sole
                  property of the Company. Executive understands that
                  Executive's employment creates a relationship of confidence
                  and trust between the Company and Executive with respect to
                  Proprietary Information. At all times, both during Executive's
                  employment by the Company and after its termination, Executive
                  shall keep in confidence and trust and will not use or
                  disclose any Proprietary Information or anything relating to
                  it without the prior written consent of the President, except
                  as may be necessary in the ordinary course of performing
                  Executive's duties to the Company.

         (b)      Executive understands that the Company possesses or will
                  possess Company Documents and Materials which are important to
                  its business. All Company Documents and Materials are and
                  shall be the sole property of the Company. Executive agrees
                  that during Executive's employment by the Company, Executive
                  will not remove any Company Documents and Materials from the
                  business premises


                                       6
<PAGE>
                  of the Company or deliver any Company Documents and Materials
                  to any person or entity outside the Company, except as
                  Executive is required to do in connection with performing the
                  duties of Executive's employment. Executive agrees that,
                  immediately upon the termination of Executive's employment by
                  Executive or by the Company for any reason, or during
                  Executive's employment if so requested by the Company,
                  Executive will return all Company Documents and Materials,
                  apparatus, equipment and other physical property, or any
                  reproduction of such property, excepting only (i) Executive's
                  personal copies of records relating to Executive's
                  compensation; (ii) Executive's personal copies of any
                  materials previously distributed generally to stockholders of
                  the Company; and (iii) Executive's copy of this Agreement.

         11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

         12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

         13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

         14. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) or to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and shall perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Executive's rights hereunder
shall inure to the benefit of, and be enforceable by, Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be


                                       7
<PAGE>
addressed to its corporate headquarters, and all notice shall be directed to the
attention of its Secretary.




         16.      Miscellaneous Provisions.

                  (a) No Duty to Mitigate. Executive shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor shall any such payment be
reduced by earnings that Executive may receive from any other source.

                  (b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer or
representative of the Company (other than Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision of another time.

                  (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

                  (d) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.

                  (e) Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity of
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.

                  (f) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

                  (g) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

                                       8
<PAGE>
                  (h) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company; provided, however,
that if there is any such assignment, the Company will guarantee all payments
and the performance of all obligations under this Agreement. In the case of any
such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation or other entity that actually employs Executive.

                  (i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

         16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this day and year first above written.

CALPINE CORPORATION:                                EXECUTIVE:



By:
         Peter Cartwright, President,               Ann B. Curtis
         Chief Executive Officer and Chairman       Executive Vice President and
         of the Board                               Chief Financial Officer

                                       9
<PAGE>
                                   APPENDIX A

                                   DEFINITIONS


                  Cause. "Cause" shall mean (i) material breach of any material
terms of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained
or unjustified absence, (iv) willful breach of fiduciary duty under this
Agreement or (v) gross negligence or willful misconduct where such gross
negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries.

                  Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:

                  (i) a change in ownership or control of the Company effected
         through either of the following transactions:

                           (A) any "person" (as such term is used in Sections
                 13(d) and 14(d) of the Securities Exchange Act of 1934, as
                 amended (the "Exchange Act")), other than the Company's current
                 stockholders or a trustee or other fiduciary holding securities
                 under an employee benefit plan of the Company or any
                 corporation owned, directly or indirectly, by the Company's
                 stockholders in substantially the same proportions as their
                 ownership of the Company's stock, becomes the "beneficial
                 owner" (as defined in Rule 13d-3 under the Exchange Act),
                 directly or indirectly, of securities of the Company
                 representing fifty percent (50%) or more of the total combined
                 voting power of the Company's then outstanding securities
                 pursuant to a tender or exchange offer made directly to the
                 Company's stockholders which the Board does not recommend such
                 stockholders to accept; or

                           (B) a change in the composition of the Board over a
                  period of thirty-six (36) consecutive months or less such that
                  the majority of the members of the Board ceases to be
                  comprised of individuals who are Continuing Members; for such
                  purpose, a "Continuing Member" shall mean an individual who is
                  a member of the Board on the date of this Agreement and any
                  successor of a Continuing Member who is elected to the Board
                  or nominated for such election by action of a majority of
                  Continuing Members then serving on the Board; or

                  (ii) either of the following stockholder-approved transactions
         to which the Company is a party:

                           (A) a merger or consolidation of the Company with any
                 other corporation, other than a merger or consolidation which
                 would result in the voting securities of the Company
                 outstanding immediately prior thereto continuing to represent
                 (either by remaining outstanding or by being converted into
                 voting securities of the surviving entity) at least fifty
                 percent (50%) of the total voting power represented by the
                 voting securities of the Company or such surviving entity
                 outstanding immediately after such merger or consolidation; or

                                       10
<PAGE>
                  (B) the sale, transfer or complete liquidation or dissolution
         of the Company of all or substantially all of the Company's assets.

                  Company Documents and Materials. "Company Documents and
Materials" shall mean documents or other media or tangible items that contain or
embody Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

                  Disability. "Disability" shall mean the inability of Executive
to perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

                  Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

                  Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.

                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.5
<SEQUENCE>50
<FILENAME>f80168ex10-3_5.txt
<DESCRIPTION>EXHIBIT 10.3.5
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.3.5


                               CALPINE CORPORATION

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") has been entered into,
effective as of January 1, 2000, between CALPINE CORPORATION, a Delaware
corporation (the "Company"), and Ron A. Walter ("Executive") to provide for the
employment of Executive on the terms and conditions set forth herein.

      WHEREAS, Executive has served as Senior Vice President-Business
Development of the Company since January 1998; and

      WHEREAS, the Company wishes to assure itself of the continued employment
efforts of Executive for the period provided in this Agreement, and Executive is
willing to continue to serve in the employ of the Company on a full-time basis
for said period upon the terms and conditions hereinafter provided.

      NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

      1. Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or in Appendix A hereto.

      2. Employment. The Company hereby employs Executive, and Executive hereby
accepts such employment by the Company, upon the terms and conditions herein
provided.

      3. Term of Employment. Executive's employment with the Company pursuant to
this Agreement commenced on January 1, 2000 and shall continue through July 31,
2004, unless such employment is sooner terminated or subsequently extended as
hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

      4. Positions and Responsibilities.

            (a) Position. During the Employment Period, Executive shall serve as
the Company's Senior Vice President-Business Development and shall be
responsible for leading the Company's business development affairs, reporting to
the President and Chief Executive Officer (CEO) of the Company.

            (b) Duties. During the Employment Period, and subject to the control
of the CEO, Executive shall have general executive powers and active management
and supervision over the business development affairs of the Company and shall
perform such other executive and/or administrative duties consistent with the
office of Senior Vice President-Business Development as from time to time may be
assigned to Executive by the CEO, but subject to the conditions in this
Agreement. Executive shall devote substantially Executive's full business time
and attention to, and exert Executive's best efforts in, the performance of
Executive's duties hereunder, so as to promote


                                       1
<PAGE>
the business of the Company. Executive agrees that, during Executive's
employment with the Company, Executive will not provide consulting services to
or become an employee of, any other firm or person engaged in a business in any
way competitive with the Company.

      5. Compensation. For all services rendered by Executive pursuant to this
Agreement, the Company shall pay Executive, and Executive agrees to accept, the
salary, bonuses and other benefits described below in this Section 5.

            (a) Salary. The Company shall pay Executive an annual base salary
("Base Salary") as determined by the CEO in accordance with this Section 5,
payable at periodic intervals in accordance with the Company's payroll practices
for salaried employees. Executive's Base Salary as of the effective date hereof
is two hundred seventy-five thousand dollars ($275,000.00) per annum. In
accordance with Section 5(c) hereof, the amount of the Base Salary shall be
reviewed by the CEO and approved by the Board of Directors, if required, on at
least an annual basis, and any increases will be effective as of the date
determined appropriate by the CEO. Executive's Base Salary may be increased for
any reason, including to reflect inflation or such other adjustments as the CEO
may deem appropriate; provided, however, that Executive's Base Salary, as
currently in effect as stated above or as so increased, may not be subsequently
decreased, except with the prior written consent of Executive.

            (b) Bonuses. In addition to Base Salary, Executive shall be entitled
to receive, for each fiscal year of the Company ending with or within the
Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal bonus
or incentive plan or program of the Company. or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by the CEO. Any Bonus earned by
Executive for service or performance rendered in any fiscal year within the
Employment Period shall be paid to Executive in accordance with the applicable
plan or program and the Company's policies governing such matters. For the year
ending December 31, 2000 and for all future years hereunder, Executive shall be
entitled to participate in and receive a Bonus in accordance with the terms and
conditions set forth in the Company's Annual Management Incentive Plan provided,
however, that the target bonus for Executive as set forth in the current Annual
Management Incentive Plan shall be sixty-eight percent (68%). In the event of
Executive's death or Disability during the Employment Period, the Company shall
pay to Executive or Executive's estate the pro rata portion of the Bonus that
Executive would have earned in respect of the portion of the year prior to
Executive's death or Disability.

            (c) Annual Compensation Review. Notwithstanding anything herein to
the contrary, Executive's compensation, consisting of salary, bonus and stock
option grants, shall be reviewed annually by the CEO.

            (d) Life Insurance. During the Employment Period, the Company shall
provide to Executive a life insurance policy in accordance with the terms of the
current policy maintained by the Company for Executive, as further described in
Section 8(b).

            (e) Health Care. During the Employment Period, Executive shall be
eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.


                                       2
<PAGE>
            (f) Participation in Benefit and Equity Compensation Plans. During
the Employment Period, Executive shall be eligible to receive all benefits,
including those under equity participation and bonus programs, to which key
employees are or become eligible under such plans or programs as may be
established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

            (g) 401(k) Plan Benefits. In addition to the other benefits to which
Executive shall be entitled to under this Agreement, Executive shall be entitled
to participate in the Company's 401(k) Plan and shall be entitled to receive the
full benefit of contributions to be made by the Company for the benefit of
Executive under the terms of the 401(k) Plan.

      6. Vacation. During the Employment Period, Executive shall be entitled to
vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

      7. Indemnification. The Company shall indemnify Executive pursuant to the
provisions of the Company's Articles of Incorporation and Bylaws to the fullest
extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

      8. Benefits Payable Upon Disability or Death.

            (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

            (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be discharged either
by a cash payment from the Company, or, if the Company so elects, by
supplementary life insurance policies to be obtained and maintained by the
Company.

      9. Severance Benefits.


                                       3
<PAGE>
            (a) Termination of Employment. In the event Executive's employment
terminates for any reason, except as provided in Section 9(b) in connection with
a Change of Control, then Executive shall be entitled to receive severance
benefits as follows:

                  (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                  (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the sum of the number of years (or any portion thereof, calculated
on a daily basis) remaining under this Agreement had Executive's employment not
been terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse Executive for any and all expenses incurred by Executive for
outplacement services selected by the Executive and approved by the Company,
which approval will not be unreasonably withheld, until the earlier of (I) the
first anniversary of the date of termination of employment or (II) the date on
which Executive commences employment with another employer.


                                       4
<PAGE>
                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination and in accordance with the requirements of COBRA.

            (b) Termination As a Result of a Change of Control. If Executive's
employment with the Company is terminated as a result of a Change of Control
then Executive shall be entitled to receive severance benefits as follows:

                  (i) Voluntary Resignation. If as a result of a Change of
Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall remain exercisable for the vested option
shares until the expiration or sooner termination of the option term in
accordance with the provisions of the agreement evidencing such option.

                  (ii) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment


                                       5
<PAGE>
is terminated as a result of an Involuntary Termination other than for Cause,
then the Company shall pay or otherwise provide to Executive the severance
benefits described in Section 9(a)(ii) hereof.

                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination.

                  (iv) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

            (c) Parachute Payments. If all or any portion of the amounts payable
to Executive under this Agreement or otherwise are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the "Code") (or similar
state tax and/or assessment), Company shall pay to Executive an amount necessary
to place Executive in the same after tax position as Executive would have been
in had no such excise tax been imposed. The amount payable pursuant to the
preceding sentence shall be increased to the extent necessary to pay income and
excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

      10. Nondisclosure of Proprietary Information and Company Documents and
Materials.

      (a)   Executive understands that the Company possesses and will possess
            Proprietary Information which is important to its business. All
            Proprietary Information is and shall be the sole property of the
            Company. Executive understands that Executive's employment creates a
            relationship of confidence and trust between the Company and
            Executive with respect to Proprietary Information. At all times,
            both during Executive's employment by the Company and after its
            termination, Executive shall keep in confidence and trust and will
            not use or disclose any Proprietary Information or anything relating
            to it without the prior written consent of the CEO, except as may be
            necessary in the ordinary course of performing Executive's duties to
            the Company.

      (b)   Executive understands that the Company possesses or will possess
            Company Documents and Materials which are important to its business.
            All Company Documents and Materials are and shall be the sole
            property of the Company. Executive agrees that during Executive's
            employment by the Company, Executive will not remove any Company
            Documents and Materials from the business premises of the Company or
            deliver any Company Documents and Materials to any person or entity
            outside the Company, except as Executive is required to do in
            connection with performing the duties of Executive's employment.
            Executive agrees that, immediately upon the termination of
            Executive's employment by Executive or by the Company for any
            reason, or during Executive's employment if so requested by the
            Company, Executive will return all Company Documents and Materials,
            apparatus,


                                       6
<PAGE>
            equipment and other physical property, or any reproduction of such
            property, excepting only (i) Executive's personal copies of records
            relating to Executive's compensation; (ii) Executive's personal
            copies of any materials previously distributed generally to
            stockholders of the Company; and (iii) Executive's copy of this
            Agreement.

      11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

      12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

      13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

      14. Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
or to all or substantially all of the Company's business and/or assets shall
assume the obligations under this Agreement and shall perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
The terms of this Agreement and all of Executive's rights hereunder shall inure
to the benefit of, and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

      15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notice shall
be directed to the attention of its Secretary.

      16. Miscellaneous Provisions.

            (a) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any


                                       7
<PAGE>
other manner), nor shall any such payment be reduced by earnings that Executive
may receive from any other source.

            (b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer or representative
of the Company (other than Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision of another time.

            (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

            (d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.

            (e) Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity of unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.

            (f) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

            (g) Employment Taxes. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.

            (h) Assignment by Company. The Company may assign its rights under
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company; provided, however, that if
there is any such assignment, the Company will guarantee all payments and the
performance of all obligations under this Agreement. In the case of any such
assignment, the term "Company" when used in a section of this Agreement shall
mean the corporation or other entity that actually employs Executive.

            (i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.


                                       8
<PAGE>
      16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
day and year first above written.

CALPINE CORPORATION:                          EXECUTIVE:



By:
    ------------------------------------      ----------------------------------
    Peter Cartwright, President,              Ron A. Walter
    Chief Executive Officer and Chairman      Senior Vice President-Business
    of the Board                              Development


                                       9
<PAGE>
                                   APPENDIX A

                                  DEFINITIONS

            Cause. "Cause" shall mean (i) material breach of any material terms
of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained or
unjustified absence, (iv) willful breach of fiduciary duty under this Agreement
or (v) gross negligence or willful misconduct where such gross negligence or
willful misconduct has resulted or is likely to result in substantial and
material damage to the Company or its subsidiaries.

            Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:

            (i) a change in ownership or control of the Company effected through
      either of the following transactions:

                  (A) any "person" (as such term is used in Sections 13(d) and
            14(d) of the Securities Exchange Act of 1934, as amended (the
            "Exchange Act")), other than the Company's current stockholders or a
            trustee or other fiduciary holding securities under an employee
            benefit plan of the Company or any corporation owned, directly or
            indirectly, by the Company's stockholders in substantially the same
            proportions as their ownership of the Company's stock, becomes the
            "beneficial owner" (as defined in Rule 13d-3 under the Exchange
            Act), directly or indirectly, of securities of the Company
            representing fifty percent (50%) or more of the total combined
            voting power of the Company's then outstanding securities pursuant
            to a tender or exchange offer made directly to the Company's
            stockholders which the Board does not recommend such stockholders to
            accept; or

                  (B) a change in the composition of the Board over a period of
            thirty-six (36) consecutive months or less such that the majority of
            the members of the Board ceases to be comprised of individuals who
            are Continuing Members; for such purpose, a "Continuing Member"
            shall mean an individual who is a member of the Board on the date of
            this Agreement and any successor of a Continuing Member who is
            elected to the Board or nominated for such election by action of a
            majority of Continuing Members then serving on the Board; or

            (ii) either of the following stockholder-approved transactions to
      which the Company is a party:

                  (A) a merger or consolidation of the Company with any other
            corporation, other than a merger or consolidation which would result
            in the voting securities of the Company outstanding immediately
            prior thereto continuing to represent (either by remaining
            outstanding or by being converted into voting securities of the
            surviving entity) at least fifty percent (50%) of the total voting
            power represented by the voting securities of the Company or such
            surviving entity outstanding immediately after such merger or
            consolidation; or


                                       10
<PAGE>
                  (B) the sale, transfer or complete liquidation or dissolution
            of the Company of all or substantially all of the Company's assets.

            Company Documents and Materials. "Company Documents and Materials"
shall mean documents or other media or tangible items that contain or embody
Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

            Disability. "Disability" shall mean the inability of Executive to
perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

            Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

            Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.


                                       11


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.6
<SEQUENCE>51
<FILENAME>f80168ex10-3_6.txt
<DESCRIPTION>EXHIBIT 10.3.6
<TEXT>
<PAGE>
                                                                  Exhibit 10.3.6


                              CALPINE CORPORATION
                             EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") has been entered into,
effective as of January 1, 2000, between CALPINE CORPORATION, a Delaware
corporation (the "Company"), and Robert D. Kelly ("Executive") to provide for
the employment of Executive on the terms and conditions set forth herein.

      WHEREAS, Executive has served as Senior Vice President-Finance of the
Company since January 1998; and

      WHEREAS, the Company wishes to assure itself of the continued employment
efforts of Executive for the period provided in this Agreement, and Executive is
willing to continue to serve in the employ of the Company on a full-time basis
for said period upon the terms and conditions hereinafter provided.

      NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

      1.    Definitions. The capitalized terms in this Agreement shall have
the meanings set forth in this Agreement or in Appendix A hereto.

      2.    Employment.  The Company hereby employs Executive, and Executive
hereby accepts such employment by the Company, upon the terms and conditions
herein provided.

      3. Term of Employment. Executive's employment with the Company pursuant to
this Agreement commenced on January 1, 2000 and shall continue through July 31,
2004, unless such employment is sooner terminated or subsequently extended as
hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

      4.    Positions and Responsibilities.

            (a) Position. During the Employment Period, Executive shall serve as
the Company's Senior Vice President-Finance and shall be responsible for leading
the Company's project and corporate finance affairs, reporting to the Executive
Vice President and Chief Financial Officer (CFO) of the Company.

            (b) Duties. During the Employment Period, and subject to the control
of the Executive Vice President and CFO, Executive shall have general executive
powers and active management and supervision over the project and corporate
finance affairs of the Company and shall perform such other executive and/or
administrative duties consistent with the office of Senior Vice
President-Finance as from time to time may be assigned to Executive by the
Executive Vice President and CFO, but subject to the conditions in this
Agreement. Executive shall devote substantially Executive's full business time
and attention to, and exert Executive's best efforts in, the
<PAGE>
performance of Executive's duties hereunder, so as to promote the business of
the Company. Executive agrees that, during Executive's employment with the
Company, Executive will not provide consulting services to or become an employee
of, any other firm or person engaged in a business in any way competitive with
the Company.

      5.    Compensation.  For all services rendered by Executive pursuant to
this Agreement, the Company shall pay Executive, and Executive agrees to
accept, the salary, bonuses and other benefits described below in this
Section 5.

            (a) Salary. The Company shall pay Executive an annual base salary
("Base Salary") as determined by the Executive Vice President and CFO in
accordance with this Section 5, payable at periodic intervals in accordance with
the Company's payroll practices for salaried employees. Executive's Base Salary
as of the effective date hereof is three hundred and twenty thousand dollars
($320,000.00) per annum. In accordance with Section 5(c) hereof, the amount of
the Base Salary shall be reviewed by the Executive Vice President and CFO and
approved by the Board of Directors, if required, on at least an annual basis,
and any increases will be effective as of the date determined appropriate by the
Executive Vice President and CFO. Executive's Base Salary may be increased for
any reason, including to reflect inflation or such other adjustments as the
Executive Vice President and CFO may deem appropriate; provided, however, that
Executive's Base Salary, as currently in effect as stated above or as so
increased, may not be subsequently decreased, except with the prior written
consent of Executive.

            (b) Bonuses. In addition to Base Salary, Executive shall be entitled
to receive, for each fiscal year of the Company ending with or within the
Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal bonus
or incentive plan or program of the Company. or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by the Executive Vice President and CFO.
Any Bonus earned by Executive for service or performance rendered in any fiscal
year within the Employment Period shall be paid to Executive in accordance with
the applicable plan or program and the Company's policies governing such
matters. For the year ending December 31, 2000 and for all future years
hereunder, Executive shall be entitled to participate in and receive a Bonus in
accordance with the terms and conditions set forth in the Company's Annual
Management Incentive Plan provided, however, that the target bonus for Executive
as set forth in the current Annual Management Incentive Plan shall be
sixty-eight percent (68%). In the event of Executive's death or Disability
during the Employment Period, the Company shall pay to Executive or Executive's
estate the pro rata portion of the Bonus that Executive would have earned in
respect of the portion of the year prior to Executive's death or Disability.

            (c) Annual Compensation Review. Notwithstanding anything herein to
the contrary, Executive's compensation, consisting of salary, bonus and stock
option grants, shall be reviewed annually by the Executive Vice President and
CFO.

            (d) Life Insurance. During the Employment Period, the Company shall
provide to Executive a life insurance policy in accordance with the terms of the
current policy maintained by the Company for Executive, as further described in
Section 8(b).


                                       2
<PAGE>
            (e)   Health Care.  During the Employment Period, Executive shall
be eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.

            (f) Participation in Benefit and Equity Compensation Plans. During
the Employment Period, Executive shall be eligible to receive all benefits,
including those under equity participation and bonus programs, to which key
employees are or become eligible under such plans or programs as may be
established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

            (g) 401(k) Plan Benefits. In addition to the other benefits to which
Executive shall be entitled to under this Agreement, Executive shall be entitled
to participate in the Company's 401(k) Plan and shall be entitled to receive the
full benefit of contributions to be made by the Company for the benefit of
Executive under the terms of the 401(k) Plan.

      6. Vacation. During the Employment Period, Executive shall be entitled to
vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

      7. Indemnification. The Company shall indemnify Executive pursuant to the
provisions of the Company's Articles of Incorporation and Bylaws to the fullest
extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

      8.    Benefits Payable Upon Disability or Death.

            (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

            (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be


                                       3
<PAGE>
discharged either by a cash payment from the Company, or, if the Company so
elects, by supplementary life insurance policies to be obtained and maintained
by the Company.

      9.    Severance Benefits.

            (a) Termination of Employment. In the event Executive's employment
terminates for any reason, except as provided in Section 9(b) in connection with
a Change of Control, then Executive shall be entitled to receive severance
benefits as follows:

                  (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                  (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the number of years (or any portion thereof, calculated on a daily
basis) remaining under this Agreement had Executive's employment not been
terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse Executive for any and all expenses incurred by Executive for
outplacement services selected by the


                                       4
<PAGE>
Executive and approved by the Company, which approval will not be unreasonably
withheld, until the earlier of (I) the first anniversary of the date of
termination of employment or (II) the date on which Executive commences
employment with another employer.

                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination and in accordance with the requirements of COBRA.

            (b) Termination As a Result of a Change of Control. If Executive's
employment with the Company is terminated as a result of a Change of Control
then Executive shall be entitled to receive severance benefits as follows:

                  (i) Voluntary Resignation. If as a result of a Change of
Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall remain exercisable for the vested option
shares until the expiration or sooner termination of the option term in
accordance with the provisions of the agreement evidencing such option.


                                       5
<PAGE>
                  (ii) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                  (iii) Termination for Cause. If Executive's employment is
terminated for Cause, then Executive shall not be entitled to receive any
severance payments or other severance benefits under this Section 9. Executive's
benefits will be continued under the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination.

                  (iv) Involuntary Termination Other Than For Cause. If as a
result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

            (c) Parachute Payments. If all or any portion of the amounts payable
to Executive under this Agreement or otherwise are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the "Code") (or similar
state tax and/or assessment), Company shall pay to Executive an amount necessary
to place Executive in the same after tax position as Executive would have been
in had no such excise tax been imposed. The amount payable pursuant to the
preceding sentence shall be increased to the extent necessary to pay income and
excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

      10.   Nondisclosure of Proprietary Information and Company Documents
and Materials.

      (a)   Executive understands that the Company possesses and will possess
            Proprietary Information which is important to its business. All
            Proprietary Information is and shall be the sole property of the
            Company. Executive understands that Executive's employment creates a
            relationship of confidence and trust between the Company and
            Executive with respect to Proprietary Information. At all times,
            both during Executive's employment by the Company and after its
            termination, Executive shall keep in confidence and trust and will
            not use or disclose any Proprietary Information or anything relating
            to it without the prior written consent of the Executive Vice
            President and CFO, except as may be necessary in the ordinary course
            of performing Executive's duties to the Company.

      (b)   Executive understands that the Company possesses or will possess
            Company Documents and Materials which are important to its business.
            All Company Documents and Materials are and shall be the sole
            property of the Company. Executive agrees that during Executive's
            employment by the Company, Executive will not remove any Company
            Documents and Materials from the business premises of the Company or
            deliver any Company Documents and Materials to any person or entity
            outside the Company, except as Executive is required to do in
            connection with


                                       6
<PAGE>
            performing the duties of Executive's employment. Executive agrees
            that, immediately upon the termination of Executive's employment by
            Executive or by the Company for any reason, or during Executive's
            employment if so requested by the Company, Executive will return all
            Company Documents and Materials, apparatus, equipment and other
            physical property, or any reproduction of such property, excepting
            only (i) Executive's personal copies of records relating to
            Executive's compensation; (ii) Executive's personal copies of any
            materials previously distributed generally to stockholders of the
            Company; and (iii) Executive's copy of this Agreement.

      11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

      12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

      13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

      14. Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
or to all or substantially all of the Company's business and/or assets shall
assume the obligations under this Agreement and shall perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
The terms of this Agreement and all of Executive's rights hereunder shall inure
to the benefit of, and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

      15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notice shall
be directed to the attention of its Secretary.


                                       7
<PAGE>
      16.   Miscellaneous Provisions.

            (a) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by
earnings that Executive may receive from any other source.

            (b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer or representative
of the Company (other than Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision of another time.

            (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

            (d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.

            (e) Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity of unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.

            (f) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

            (g)   Employment Taxes.  All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

            (h) Assignment by Company. The Company may assign its rights under
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company; provided, however, that if
there is any such assignment, the Company will guarantee all payments and the
performance of all obligations under this Agreement. In the case of any such
assignment, the term "Company" when used in a section of this Agreement shall
mean the corporation or other entity that actually employs Executive.


                                       8
<PAGE>
            (i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.

      16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
day and year first above written.

CALPINE CORPORATION:                           EXECUTIVE:



By:
      ---------------------------------        ---------------------------------
      Ann B. Curtis, Executive                 Robert D. Kelly
      Vice President and Chief Financial       Senior Vice President-Finance
      Officer


                                       9
<PAGE>
                                     APPENDIX A

                                    DEFINITIONS


            Cause. "Cause" shall mean (i) material breach of any material terms
of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained or
unjustified absence, (iv) willful breach of fiduciary duty under this Agreement
or (v) gross negligence or willful misconduct where such gross negligence or
willful misconduct has resulted or is likely to result in substantial and
material damage to the Company or its subsidiaries.

            Change of Control.  "Change of Control" shall mean the occurrence
of any of the following events:

            (i) a change in ownership or control of the Company effected through
      either of the following transactions:

                  (A) any "person" (as such term is used in Sections 13(d) and
            14(d) of the Securities Exchange Act of 1934, as amended (the
            "Exchange Act")), other than the Company's current stockholders or a
            trustee or other fiduciary holding securities under an employee
            benefit plan of the Company or any corporation owned, directly or
            indirectly, by the Company's stockholders in substantially the same
            proportions as their ownership of the Company's stock, becomes the
            "beneficial owner" (as defined in Rule 13d-3 under the Exchange
            Act), directly or indirectly, of securities of the Company
            representing fifty percent (50%) or more of the total combined
            voting power of the Company's then outstanding securities pursuant
            to a tender or exchange offer made directly to the Company's
            stockholders which the Board does not recommend such stockholders to
            accept; or

                  (B) a change in the composition of the Board over a period of
            thirty-six (36) consecutive months or less such that the majority of
            the members of the Board ceases to be comprised of individuals who
            are Continuing Members; for such purpose, a "Continuing Member"
            shall mean an individual who is a member of the Board on the date of
            this Agreement and any successor of a Continuing Member who is
            elected to the Board or nominated for such election by action of a
            majority of Continuing Members then serving on the Board; or

            (ii) either of the following stockholder-approved transactions to
      which the Company is a party:

                  (A) a merger or consolidation of the Company with any other
            corporation, other than a merger or consolidation which would result
            in the voting securities of the Company outstanding immediately
            prior thereto continuing to represent (either by remaining
            outstanding or by being converted into voting securities of the
            surviving entity) at least fifty percent (50%) of the total voting
            power represented by the voting securities of the Company or such
            surviving entity outstanding immediately after such merger or
            consolidation; or


                                       10
<PAGE>
                  (B) the sale, transfer or complete liquidation or dissolution
            of the Company of all or substantially all of the Company's assets.

            Company Documents and Materials. "Company Documents and Materials"
shall mean documents or other media or tangible items that contain or embody
Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

            Disability. "Disability" shall mean the inability of Executive to
perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

            Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

            Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.


                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.7
<SEQUENCE>52
<FILENAME>f80168ex10-3_7.txt
<DESCRIPTION>EXHIBIT 10.3.7
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.3.7

                               CALPINE CORPORATION
                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") has been entered into,
effective as of January 1, 2000, between CALPINE CORPORATION, a Delaware
corporation (the "Company"), and Thomas R. Mason ("Executive") to provide for
the employment of Executive on the terms and conditions set forth herein.

         WHEREAS, Executive has served as Executive Vice President of the
Company since August 1999; and

         WHEREAS, the Company wishes to assure itself of the continued
employment efforts of Executive for the period provided in this Agreement, and
Executive is willing to continue to serve in the employ of the Company on a
full-time basis for said period upon the terms and conditions hereinafter
provided.

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained, intending to be legally bound, the Company and Executive agree as
follows:

         1. Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or in Appendix A hereto.

         2. Employment. The Company hereby employs Executive, and Executive
hereby accepts such employment by the Company, upon the terms and conditions
herein provided.

         3. Term of Employment. Executive's employment with the Company pursuant
to this Agreement commenced on January 1, 2000 and shall continue through July
31, 2004, unless such employment is sooner terminated or subsequently extended
as hereinafter provided. The Company and Executive may agree to extend the
Employment Period beyond the initial term upon the terms and conditions of this
Agreement or upon other terms, but neither the Company nor Executive is under
any obligation to do so. The period during which this Agreement continues in
effect shall constitute the "Employment Period".

         4. Positions and Responsibilities.

                  (a) Position. During the Employment Period, Executive shall
serve as the Company's Executive Vice President and shall be responsible for
leading the Company's construction management and operations business, reporting
to the Chief Executive Officer (CEO) of the Company.

                  (b) Duties. During the Employment Period, and subject to the
control of the CEO, Executive shall have general executive powers and active
management and supervision over the construction management and operations
affairs of the Company and shall perform such other executive and/or
administrative duties consistent with the office of Executive Vice President as
from time to time may be assigned to Executive by the CEO, but subject to the
conditions in this Agreement. Executive shall devote substantially Executive's
full business time and attention to, and exert Executive's best efforts in, the
performance of Executive's duties hereunder, so as to promote


                                       1
<PAGE>
the business of the Company. Executive agrees that, during Executive's
employment with the Company, Executive will not provide consulting services to
or become an employee of, any other firm or person engaged in a business in any
way competitive with the Company.

         5. Compensation. For all services rendered by Executive pursuant to
this Agreement, the Company shall pay Executive, and Executive agrees to accept,
the salary, bonuses and other benefits described below in this Section 5.

                  (a) Salary. The Company shall pay Executive an annual base
salary ("Base Salary") as determined by the CEO in accordance with this Section
5, payable at periodic intervals in accordance with the Company's payroll
practices for salaried employees. Executive's Base Salary as of the effective
date hereof is three hundred seventy-five thousand dollars ($375,000.00) per
annum. In accordance with Section 5(c) hereof, the amount of the Base Salary
shall be reviewed by CEO and approved by the Board of Directors, if required, on
at least an annual basis, and any increases will be effective as of the date
determined appropriate by the CEO. Executive's Base Salary may be increased for
any reason, including to reflect inflation or such other adjustments as the CEO
may deem appropriate; provided, however, that Executive's Base Salary, as
currently in effect as stated above or as so increased, may not be subsequently
decreased, except with the prior written consent of Executive.

                  (b) Bonuses. In addition to Base Salary, Executive shall be
entitled to receive, for each fiscal year of the Company ending with or within
the Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal
bonus or incentive plan or program of the Company or otherwise. Subject to this
Section 5(b) and Section 5(c) hereof, such Bonus shall be based on such criteria
as are in good faith deemed appropriate by CEO. Any Bonus earned by Executive
for service or performance rendered in any fiscal year within the Employment
Period shall be paid to Executive in accordance with the applicable plan or
program and the Company's policies governing such matters. For the year ending
December 31, 2000 and for all future years hereunder, Executive shall be
entitled to participate in and receive a Bonus in accordance with the terms and
conditions set forth in the Company's Annual Management Incentive Plan provided,
however, that the target bonus for Executive as set forth in the current Annual
Management Incentive Plan shall be eighty-five percent (85%). In the event of
Executive's death or Disability during the Employment Period, the Company shall
pay to Executive or Executive's estate the pro rata portion of the Bonus that
Executive would have earned in respect of the portion of the year prior to
Executive's death or Disability.

                  (c) Annual Compensation Review. Notwithstanding anything
herein to the contrary, Executive's compensation, consisting of salary, bonus
and stock option grants, shall be reviewed annually by the CEO.

                  (d) Life Insurance. During the Employment Period, the Company
shall provide to Executive a life insurance policy in accordance with the terms
of the current policy maintained by the Company for Executive, as further
described in Section 8(b).

                  (e) Health Care. During the Employment Period, Executive shall
be eligible to participate in any health insurance programs and medical plans
available to officers or employees of the Company.


                                       2
<PAGE>
                  (f) Participation in Benefit and Equity Compensation Plans.
During the Employment Period, Executive shall be eligible to receive all
benefits, including those under equity participation and bonus programs, to
which key employees are or become eligible under such plans or programs as may
be established by the Company. In addition to any other plans or programs
established by the Company, Executive shall be entitled to participate in the
Company's 1996 Stock Incentive Plan and any similar or replacement plan or
program (the "Stock Option Program").

                  (g) 401(k) Plan Benefits. In addition to the other benefits to
which Executive shall be entitled to under this Agreement, Executive shall be
entitled to participate in the Company's 401(k) Plan and shall be entitled to
receive the full benefit of contributions to be made by the Company for the
benefit of Executive under the terms of the 401(k) Plan.

         6. Vacation. During the Employment Period, Executive shall be entitled
to vacation in accordance with the Company's Vacation Policy in effect for
executives. In no event shall such entitlement be less than twenty (20) business
days in each year, with full salary. Furthermore, Executive shall accrue paid
vacation benefits during the Employment Period in accordance with the Company's
Vacation Policy in effect for executives.

         7. Indemnification. The Company shall indemnify Executive pursuant to
the provisions of the Company's Articles of Incorporation and Bylaws to the
fullest extent of California law and all other applicable law, and shall provide
Executive with indemnification pursuant to the Company's standard
indemnification agreement and any director's and officer's liability insurance
policy maintained by the Company.

         8. Benefits Payable Upon Disability or Death.

                  (a) Disability Benefits. In the event of the Disability of
Executive, the Company shall continue to pay Executive the salary payable to
Executive in accordance with Section 5 hereof during the period of Executive's
Disability; provided, however, that, in the event that Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company may elect at
the expiration of this six (6) month period to terminate this Agreement and pay
Executive the greater of (i) Executive's available monthly benefits from any
existing Company-sponsored long-term disability plan; or (ii) sixty seven
percent (67%) of the salary provided in Section 5(a) for the duration of the
Employment Period.

                  (b) Death Benefits. In the event of Executive's death during
Executive's Disability or otherwise during the Employment Period, the Company
shall cause payment to be made to Executive's most recently designated
beneficiary (which, absent specific designation of a beneficiary for purposes of
this provision, shall be Executive's most recently designated beneficiary under
the Company's group life insurance program) a sum equal to three (3) times
Executive's Base Salary. This obligation of the Company shall be discharged to
the extent benefits are actually paid pursuant to the Company's group life
insurance program, with the balance of said obligation to be discharged either
by a cash payment from the Company, or, if the Company so elects, by
supplementary life insurance policies to be obtained and maintained by the
Company.

         9. Severance Benefits.


                                       3
<PAGE>
                  (a) Termination of Employment. In the event Executive's
employment terminates for any reason, except as provided in Section 9(b) in
connection with a Change of Control, then Executive shall be entitled to receive
severance benefits as follows:

                           (i) Voluntary Resignation. If Executive's employment
terminates by reason of Executive's voluntary resignation (and such termination
is not an Involuntary Termination or a termination for Cause), then Executive
shall not be entitled to receive severance or other benefits except for those
(if any) to which Executive may be entitled under this Agreement or any separate
agreement with the Company or as may then be established under the Company's
then existing severance and benefit plans and policies at the time of such
termination.

                           (ii) Involuntary Termination Other Than For Cause. If
Executive's employment is terminated as a result of an Involuntary Termination
other than for Cause, then the following severance benefits shall be paid or
otherwise provided to Executive: (A) the Company shall pay to Executive in the
form of a lump sum payment, in cash, a severance payment equal to the greater of
(I) three (3) times Executive's Base Salary or (II) Executive's Base Salary
multiplied by the number of years (or any portion thereof, calculated on a daily
basis) remaining under this Agreement had Executive's employment not been
terminated, however, in no event shall such payment equal less than 100% of
Executive's Base Salary, which shall be paid to Executive within ten (10) days
after the date of termination; (B) until the earlier of (I) the date this
Agreement would otherwise have terminated had Executive's employment not been
terminated (the "Remaining Term") or (II) the expiration of the three (3) year
period measured from the date of Executive's termination of employment. The
Company shall at its sole cost and expense provide Executive (and Executive's
eligible dependents, if any) with life, disability, and medical insurance
benefits substantially similar to those benefits that Executive (and Executive's
dependents) were receiving immediately prior to Executive's termination of
employment; provided, however, that the benefits otherwise receivable by
Executive pursuant to this Section 9(a)(ii)(B) shall be reduced to the extent
comparable benefits are concurrently received by Executive (or Executive's
dependents) pursuant to a similar plan or program of another employer, and any
such other benefits actually received by Executive (or Executive's dependents)
must be reported to the Company; and provided further, however, that the
insurance coverage provided by the Company pursuant to this Section 9(a)(ii)(B)
shall be in lieu of any other continued coverage to which Executive or
Executive's dependents would otherwise, at Executive's own expense, be entitled
in accordance with the requirements of Internal Revenue Code of 1986, as amended
("Code"), Section 4980B ("COBRA"), by reason of Executive's termination of
employment; (C) all stock options, warrants, rights and other Company
stock-related awards granted to Executive by the Company that would otherwise
have vested or become exercisable at any time in the future shall become fully
vested and nonforfeitable upon the date of Executive's termination of
employment, the Company's repurchase rights, if any, with respect to those
vested shares shall immediately lapse, and each such stock option, to the extent
vested, shall remain exercisable for the vested option shares until the
expiration or sooner termination of the option term in accordance with the
provisions of the agreement evidencing such option; and (D) the Company shall
pay or reimburse Executive for any and all expenses incurred by Executive for
outplacement services selected by the Executive and approved by the Company,
which approval will not be unreasonably withheld, until the earlier of (I) the
first anniversary of the date of termination of employment or (II) the date on
which Executive commences employment with another employer.


                                       4
<PAGE>
                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination and in accordance with the requirements of COBRA.

                  (b) Termination As a Result of a Change of Control. If
Executive's employment with the Company is terminated as a result of a Change of
Control then Executive shall be entitled to receive severance benefits as
follows:

                           (i) Voluntary Resignation. If as a result of a Change
of Control, Executive's Base Salary is reduced within twelve (12) months of the
Change of Control and, or, Executive's position is relocated to a place more
than one hundred (100) miles from the Executive's current place of employment
within six (6) months of the Change of Control, and as a result of these changes
Executive's employment terminates by reason of voluntary resignation (and such
termination is not an Involuntary Termination or a Termination for Cause), then
the following severance benefits shall be paid or otherwise provided to
Executive: (A) the Company shall pay to Executive in the form of a lump sum
payment, in cash, a severance payment equal to the greater of (I) two (2) times
Executive's Base Salary or (II) Executive's Base Salary multiplied by the number
of years (or any portion thereof, calculated on a daily basis) remaining under
this Agreement had Executive's employment not been terminated, however, in no
event shall such payment equal less than 100% of Executive's Base Salary, which
shall be paid to Executive within ten (10) days after the date of termination;
(B) until the earlier of (I) the date this Agreement would otherwise have
terminated had Executive's employment not been terminated (the "Remaining Term")
or (II) the expiration of the three (3) year period measured from the date of
Executive's termination of employment. The Company shall at its sole cost and
expense provide Executive (and Executive's eligible dependents, if any) with
life, disability and medical insurance benefits substantially similar to those
benefits that Executive (and Executive's dependents) were receiving immediately
prior to Executive's termination of employment; provided, however, that the
benefits otherwise receivable by Executive pursuant to this subsection
9(b)(i)(B) shall be reduced to the extent comparable benefits are concurrently
received by Executive (or Executive's dependents) pursuant to a similar plan or
program of another employer, and any such other benefits actually received by
Executive (or Executive's dependents) must be reported to the Company; and
provided further, however, that the insurance coverage provided by the Company
pursuant to this Section 9(b)(i)(B) shall be in lieu of any other continued
coverage to which Executive or Executive's dependents would otherwise, at
Executive's own expense, be entitled accordance with the requirements of COBRA
by reason of Executive's termination of employment; and (C) all stock options,
warrants, rights and other Company stock-related awards granted to Executive by
the Company that would otherwise have vested or become exercisable at any time
in the future shall become fully vested and nonforfeitable upon the date of
Executive's termination of employment, the Company's repurchase rights, if any,
with respect to those vested shares shall immediately lapse, and each such stock
option, to the extent vested, shall remain exercisable for the vested option
shares until the expiration or sooner termination of the option term in
accordance with the provisions of the agreement evidencing such option.

                           (ii) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment


                                       5
<PAGE>
is terminated as a result of an Involuntary Termination other than for Cause,
then the Company shall pay or otherwise provide to Executive the severance
benefits described in Section 9(a)(ii) hereof.

                           (iii) Termination for Cause. If Executive's
employment is terminated for Cause, then Executive shall not be entitled to
receive any severance payments or other severance benefits under this Section 9.
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination.

                           (iv) Involuntary Termination Other Than For Cause. If
as a result of a Change of Control and within twelve (12) months of a Change of
Control Executive's employment is terminated as a result of an Involuntary
Termination other than for Cause, then the Company shall pay or otherwise
provide to Executive the severance benefits described in Section 9(a)(ii)
hereof.

                  (c) Parachute Payments. If all or any portion of the amounts
payable to Executive under this Agreement or otherwise are subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code (the "Code") (or
similar state tax and/or assessment), Company shall pay to Executive an amount
necessary to place Executive in the same after tax position as Executive would
have been in had no such excise tax been imposed. The amount payable pursuant to
the preceding sentence shall be increased to the extent necessary to pay income
and excise taxes due on such amount. The determination of the amount of any such
additional amount shall be made by the independent accounting firm then employed
by the Company.

         10. Nondisclosure of Proprietary Information and Company Documents and
Materials.

         (a)      Executive understands that the Company possesses and will
                  possess Proprietary Information which is important to its
                  business. All Proprietary Information is and shall be the sole
                  property of the Company. Executive understands that
                  Executive's employment creates a relationship of confidence
                  and trust between the Company and Executive with respect to
                  Proprietary Information. At all times, both during Executive's
                  employment by the Company and after its termination, Executive
                  shall keep in confidence and trust and will not use or
                  disclose any Proprietary Information or anything relating to
                  it without the prior written consent of the CEO, except as may
                  be necessary in the ordinary course of performing Executive's
                  duties to the Company.

         (b)      Executive understands that the Company possesses or will
                  possess Company Documents and Materials which are important to
                  its business. All Company Documents and Materials are and
                  shall be the sole property of the Company. Executive agrees
                  that during Executive's employment by the Company, Executive
                  will not remove any Company Documents and Materials from the
                  business premises of the Company or deliver any Company
                  Documents and Materials to any person or entity outside the
                  Company, except as Executive is required to do in connection
                  with performing the duties of Executive's employment.
                  Executive agrees that, immediately upon the termination of
                  Executive's employment by Executive or by the Company for any
                  reason, or during Executive's employment if so requested by
                  the Company, Executive will return all Company Documents and
                  Materials, apparatus,


                                       6
<PAGE>
                  equipment and other physical property, or any reproduction of
                  such property, excepting only (i) Executive's personal copies
                  of records relating to Executive's compensation; (ii)
                  Executive's personal copies of any materials previously
                  distributed generally to stockholders of the Company; and
                  (iii) Executive's copy of this Agreement.

         11. Non-Solicitation of Company Employees. During the term of this
Agreement and for a period of twelve (12) months thereafter, the Executive
agrees to not encourage or solicit any employee of the Company to leave the
Company for any reason or to accept employment with any other company. As part
of this restriction, the Executive agrees to not interview or provide any input
to any third party regarding any such person during the period in question.
However, this obligation shall not affect any responsibility the Executive has
with respect to the bona fide hiring and firing of Calpine personnel.

         12. Consulting. Executive and the Company may, but are not required to,
enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination.
Any consulting fees paid to Executive will be in addition to any retirement or
severance payments.

         13. Failure to Comply. If, for any reason other than Executive's death,
Disability or Involuntary Termination, Executive shall cease to render services
as required by this Agreement without the written consent of the Company, or if
Executive shall breach the provisions of Sections 10 or 11 hereof, then,
Executive will thereby relinquish all rights to any benefits hereunder,
including future salary payments and death benefits, and the Company shall
reserve whatever rights, if any, it may have against Executive under this
Agreement or otherwise.

         14. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) or to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and shall perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Executive's rights hereunder
shall inure to the benefit of, and be enforceable by, Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         15. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Executive shall be
addressed to Executive at the home address from which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notice shall
be directed to the attention of its Secretary.

         16. Miscellaneous Provisions.

                  (a) No Duty to Mitigate. Executive shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any


                                       7
<PAGE>
other manner), nor shall any such payment be reduced by earnings that Executive
may receive from any other source.

                  (b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer or
representative of the Company (other than Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision of another time.

                  (c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

                  (d) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.

                  (e) Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity of
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.

                  (f) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement may be settled by arbitration in the County of
San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration proceedings shall be
nonbinding and any claim with respect to this Agreement, whether or not
previously the subject of an arbitration proceeding, may be brought in any court
of competent jurisdiction.

                  (g) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

                  (h) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company; provided, however,
that if there is any such assignment, the Company will guarantee all payments
and the performance of all obligations under this Agreement. In the case of any
such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation or other entity that actually employs Executive.

                  (i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.


                                       8
<PAGE>
         16. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as of the date hereof and supersedes any
prior understandings, agreements, or representations by or between the Company
and the Executive, written or oral, to the extent that they have related in any
way to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this day and year first above written.

CALPINE CORPORATION:                                 EXECUTIVE:



By:
         Peter Cartwright, President,                Thomas R. Mason
         Chief Executive Officer and Chairman        Executive Vice President
         of the Board


                                       9
<PAGE>
                                   APPENDIX A

                                   DEFINITIONS


                  Cause. "Cause" shall mean (i) material breach of any material
terms of this Agreement, (ii) conviction of a felony, (iii) repeated unexplained
or unjustified absence, (iv) willful breach of fiduciary duty under this
Agreement or (v) gross negligence or willful misconduct where such gross
negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries.

                  Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:

                  (i) a change in ownership or control of the Company effected
         through either of the following transactions:

                           (A) any "person" (as such term is used in Sections
                 13(d) and 14(d) of the Securities Exchange Act of 1934, as
                 amended (the "Exchange Act")), other than the Company's current
                 stockholders or a trustee or other fiduciary holding securities
                 under an employee benefit plan of the Company or any
                 corporation owned, directly or indirectly, by the Company's
                 stockholders in substantially the same proportions as their
                 ownership of the Company's stock, becomes the "beneficial
                 owner" (as defined in Rule 13d-3 under the Exchange Act),
                 directly or indirectly, of securities of the Company
                 representing fifty percent (50%) or more of the total combined
                 voting power of the Company's then outstanding securities
                 pursuant to a tender or exchange offer made directly to the
                 Company's stockholders which the Board does not recommend such
                 stockholders to accept; or

                           (B) a change in the composition of the Board over a
                  period of thirty-six (36) consecutive months or less such that
                  the majority of the members of the Board ceases to be
                  comprised of individuals who are Continuing Members; for such
                  purpose, a "Continuing Member" shall mean an individual who is
                  a member of the Board on the date of this Agreement and any
                  successor of a Continuing Member who is elected to the Board
                  or nominated for such election by action of a majority of
                  Continuing Members then serving on the Board; or

                  (ii) either of the following stockholder-approved transactions
         to which the Company is a party:

                           (A) a merger or consolidation of the Company with any
                 other corporation, other than a merger or consolidation which
                 would result in the voting securities of the Company
                 outstanding immediately prior thereto continuing to represent
                 (either by remaining outstanding or by being converted into
                 voting securities of the surviving entity) at least fifty
                 percent (50%) of the total voting power represented by the
                 voting securities of the Company or such surviving entity
                 outstanding immediately after such merger or consolidation; or


                                       10
<PAGE>
                           (B) the sale, transfer or complete liquidation or
dissolution of the Company of all or substantially all of the Company's assets.

                  Company Documents and Materials. "Company Documents and
Materials" shall mean documents or other media or tangible items that contain or
embody Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents, media or items have
been prepared by Executive or others.

                  Disability. "Disability" shall mean the inability of Executive
to perform all the material duties of Executive's position as determined by an
independent physician selected with the approval of the Company and Executive.

                  Involuntary Termination. "Involuntary Termination" shall mean
termination by the Company of Executive's employment for any reason other than
for Cause, and shall include Executive's voluntary resignation following (i) the
material breach by the Company of one or more of its obligations under this
Agreement which are not otherwise corrected within ten (10) days following
Executive's written notice to the Company of such breach, or the Executive's
annual base salary is materially reduced.

                  Proprietary Information. "Proprietary Information" shall mean
information that was developed, created, or discovered by or on behalf of the
Company, or which became or will become known by, or was or is conveyed to the
Company, which has commercial value in the Company's business; including, but
not limited to, trade secrets, designs, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), works of authorship,
formulas, business and development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of compensation and
performance levels of Company employees, and other information concerning the
Company's actual or anticipated business, research or development, or which is
received in confidence by or for the Company from any other person.


                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4.2
<SEQUENCE>53
<FILENAME>f80168ex10-4_2.txt
<DESCRIPTION>EXHIBIT 10.4.2
<TEXT>
<PAGE>
                                                                  Exhibit 10.4.2



                            INDEMNIFICATION AGREEMENT

         THIS AGREEMENT (the "Agreement") is made and entered into this __ day
of __, 200_ between Calpine Corporation, a Delaware corporation ("the Company")
and ____________ ("Indemnitee").

                                WITNESSETH THAT:

         WHEREAS, Indemnitee performs a valuable service for the Company; and

         WHEREAS, the Board of Directors of the Company has adopted Bylaws (the
"Bylaws") providing for the indemnification of the directors, executive officers
and other key employees of the Company to the maximum extent authorized by
Section 145 of the Delaware General Corporation Law, as amended (the "DGCL");
and

         WHEREAS, the Bylaws and the DGCL by their nonexclusive nature, permit
contracts between the Company and the directors and executive officers of the
Company with respect to indemnification of such directors; and

         WHEREAS, in accordance with the authorization as provided by the DGCL,
the Company may purchase and maintain a policy or policies of director's and
officer's liability insurance ("D & O Insurance"), covering certain liabilities
which may be incurred by its directors\officers in the performance of their
obligations as directors\officers of the Company; and

         WHEREAS, as a result of recent developments affecting the terms, scope
and availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded Company directors by such D & O Insurance and said
uncertainty also exists under statutory and bylaw indemnification provisions;
and

         WHEREAS, in recognition of past services and in order to induce
Indemnitee to continue to serve as a director of the Company, the Company has
determined and agreed to enter into this contract with Indemnitee;

         NOW, THEREFORE, in consideration of Indemnitee's continued service as a
director after the date hereof, the parties hereto agree as follows:

         1. INDEMNITY OF INDEMNITEE. The Company hereby agrees to hold harmless
and indemnify Indemnitee to the full extent authorized or permitted by the
provisions of the DGCL, as such may be amended from time to time, and Article 10
of the Bylaws, as such may be amended. In furtherance of the foregoing
indemnification, and without limiting the generality thereof:

                  (a) Proceedings Other Than Proceedings by or in the Right of
the Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a Proceeding
by or in the
<PAGE>
right of the Company. Pursuant to this Section 1(a), Indemnitee shall be
indemnified against all Expenses (as hereinafter defined), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.

                  (b) Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 1(b)
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to or participant in any Proceeding brought by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with such Proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company; provided, however, that, if applicable law so
provides, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company unless and to the extent that the
Court of Chancery of the State of Delaware, or the court in which such
Proceeding shall have been brought or is pending, shall determine that such
indemnification may be made.

                  (c) Indemnification for Expenses of a Party Who is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified to the maximum extent permitted by law against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to be
a successful result as to such claim, issue or matter.

         2. ADDITIONAL INDEMNITY.

                  (a) Subject only to the exclusions set forth in Section 2(b)
hereof, the Company hereby further agrees to hold harmless and indemnify
Indemnitee against any and all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with any
Proceeding (including an action by or on behalf of the Company) to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made a
party, by reason of his Corporate Status; provided, however, that with respect
to actions by or on behalf of the Company, indemnification of Indemnitee against
any judgments shall be made by the Company only as authorized in the specific
case upon a determination that Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; and



                                      -2-
<PAGE>
                  (b) No indemnity pursuant to this Section 2 shall be paid by
the Company:

                           (i) In respect to remuneration paid to Indemnitee if
it shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;

                           (ii) On account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;

                           (iii) On account of Indemnitee's conduct which is
finally adjudged to have been knowingly fraudulent or deliberately dishonest, or
to constitute willful misconduct; or

                           (iv) If a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.

         3. CONTRIBUTION. If the indemnification provided in Sections 1 and 2 is
unavailable and may not be paid to Indemnitee for any reason other than those
set forth in paragraphs (i), (ii), (iii) and (iv) of Section 2(b), then in
respect to any Proceeding in which the Company is jointly liable with Indemnitee
(or would be if joined in such Proceeding), the Company shall contribute to the
amount of Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and by the Indemnitee on the other hand from the transaction from which
such Proceeding arose, and (ii) the relative fault of the Company on the one
hand and of the Indemnitee on the other hand in connection with the events which
resulted in such Expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such Expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
Section 3 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.

         4. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

         5. ADVANCEMENT OF EXPENSES. The Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding by reason of Indemnitee's Corporate Status within 10 days after the
receipt by the Company of a statement or



                                      -3-
<PAGE>
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses. Any advances and undertakings to repay pursuant to this Section 5
shall be unsecured and interest free. Notwithstanding the foregoing, the
obligation of the Company to advance Expenses pursuant to this Section 5 shall
be subject to the condition that, if, when and to the extent that the Company
determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed, within 30 days
of such determination, by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).

         6. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

                  (a) To obtain indemnification (including, but not limited to,
the advancement of Expenses and contribution by the Company) under this
Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested
indemnification.

                  (b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 6(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as hereinafter defined) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to Indemnitee (unless Indemnitee shall request that such determination be made
by the Board of Directors or the stockholders, in which case the determination
shall be made in the manner provided in Clause (ii) below), or (ii) if a Change
in Control shall not have occurred, (A) by the Board of Directors by a majority
vote of a quorum consisting of Disinterested Directors (as hereinafter defined),
or (B) if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, said Disinterested Directors
so direct, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee, or (C) if so
directed by said Disinterested Directors, by the stockholders of the Company;
and, if it is determined that Indemnitee is entitled to indemnification, payment
to Indemnitee shall be made within 10 days after such determination. Indemnitee
shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee's entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any
documentation or information



                                      -4-
<PAGE>
which is not privileged or otherwise protected from disclosure and which is
reasonably available to Indemnitee and reasonably necessary to such
determination. Any Independent Counsel, member of the Board of Directors, or
stockholder of the Company shall act reasonably and in good faith in making a
determination under the Agreement of the Indemnitee's entitlement to
indemnification. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective
of the determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

                  (c) If the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 6(b) hereof, the
Independent Counsel shall be selected as provided in this Section 6(c). If a
Change in Control shall not have occurred, the Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so selected.
If a Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 10 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 14 of this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper
and timely objection, the person so selected shall act as Independent Counsel.
If a written objection is made and substantiated, the Independent Counsel
selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit. If,
within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the court or by such other person as the court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 6(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 6(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 6(c), regardless of the
manner in which such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section
8(a)(iii) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).

                  (d) The Company shall not be required to obtain the consent of
the Indemnitee to the settlement of any Proceeding which the Company has
undertaken to defend if the


                                      -5-
<PAGE>
Company assumes full and sole responsibility for such settlement and the
settlement grants the Indemnitee a complete and unqualified release in respect
of the potential liability.


                                      -6-
<PAGE>
         7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

                  (a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 6(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.

                  (b) If the person, persons or entity empowered or selected
under Section 6 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 30 days after receipt
by the Company of the request therefore, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 30-day period may be extended for a
reasonable time, not to exceed an additional fifteen (15) days, if the person,
persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining or
evaluating documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 7(b) shall not apply (i)
if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 6(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b) of
this Agreement.

                  (c) The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement (with or without court
approval), conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal Proceeding, that Indemnitee had reasonable
cause to believe that his conduct was unlawful.


                                      -7-
<PAGE>
                  (d) For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is
based on the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for
the Enterprise or on information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Enterprise. In addition, the
knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement. The provisions of
this Section 7(d) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.

         8. REMEDIES OF INDEMNITEE.

                  (a) In the event that (i) a determination is made pursuant to
Section 6 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 5 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 6(b) of this Agreement
within 90 days after receipt by the Company of the request for indemnification,
(iv) payment of indemnification is not made pursuant to Section 3 or 4 of this
Agreement within 10 days after receipt by the Company of a written request
therefore, or (v) payment of indemnification is not made within 10 days after a
determination has been made that Indemnitee is entitled to indemnification or
such determination is deemed to have been made pursuant to Section 6 or 7 of
this Agreement, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Delaware, or in any other court of competent
jurisdiction, of his entitlement to such indemnification. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Indemnitee shall commence such proceeding seeking an
adjudication or an award in arbitration within 180 days following the date on
which Indemnitee first has the right to commence such proceeding pursuant to
this Section 8(a). The Company shall not oppose Indemnitee's right to seek any
such adjudication or award in arbitration.

                  (b) In the event that a determination shall have been made
pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 8 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination.

                  (c) If a determination shall have been made pursuant to
Section 6(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 8, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law.


                                      -8-
<PAGE>
                  (d) In the event that Indemnitee, pursuant to this Section 8,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
of Expenses in Section 16 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
sought, the expenses incurred by Indemnitee in connection with such judicial
adjudication or arbitration shall be appropriately prorated. The Company shall
indemnify Indemnitee against any and all expenses and, if requested by
Indemnitee, shall (within 10 days after receipt by the Company of a written
request therefore) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any action brought by Indemnitee to recover under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of expenses or insurance recovery,
as the case may be.

                  (e) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 8 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

         9. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

                  (a) The rights of indemnification as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the certificate of
incorporation of the Company, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise. No amendment, alteration or repeal
of this Agreement or of any provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in the DGCL, whether by statute or judicial
decision, permits greater indemnification than would be afforded currently under
the Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.

                  (b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, or agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.


                                      -9-
<PAGE>
                  (c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.

                  (d) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

         10. EXCEPTION TO RIGHT OF INDEMNIFICATION AND EXPENSE ADVANCEMENT.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of expenses under this Agreement with
respect to any Proceeding brought by Indemnitee, or any claim therein, unless
(a) the bringing of such Proceeding or making of such claim shall have been
approved by the Board of Directors or (b) such Proceeding is being brought by
the Indemnitee to assert his rights under this Agreement.

         11. DURATION OF AGREEMENT. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director or officer of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any
proceeding commenced under Section 8 hereof) by reason of his Corporate Status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director or officer of the Company or any
other enterprise at the Company's request.

         12. SECURITY. To the extent requested by the Indemnitee and approved by
the Board of Directors, the Company may at any time and from time to time
provide security to the Indemnitee for the Company's obligations hereunder
through an irrevocable bank line of credit, funded trust or other collateral.
Any such security, once provided to the Indemnitee, may not be revoked or
released without the prior written consent of the Indemnitee.

         13. ENFORCEMENT.

                  (a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as a director or officer of the Company, and
the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as a director or officer of the Company.



                                      -10-
<PAGE>
                  (b) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.

         14. DEFINITIONS. For purposes of this Agreement:

                  (a) "Change in Control" means a change in control of the
Company occurring after the date of this Agreement of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the date of this Agreement (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Act, as amended) other than a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities (other than any such person or any affiliate thereof that is such a
20% beneficial owner as of the date hereof) without the prior approval of at
least two-thirds of the members of the Board of Directors in office immediately
prior to such person attaining such percentage interest; (ii) there occurs a
proxy contest, or the Company is a party to a merger, consolidation, sale of
assets, plan of liquidation or other reorganization, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, other than as a
result of an event described in clause (a)(ii) of this Section 16, individuals
who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a majority
of the Board of Directors. A Change in Control shall not be deemed to have
occurred under item (i) above if the "person" described under item (i) is
entitled to report its ownership on Schedule 13G promulgated under the Act and
such person is able to represent that it acquired such securities in the
ordinary course of its business and not with the purpose nor with the effect of
changing or influencing the control of the Company, nor in connection with or as
a participant in any transaction having such purpose or effect. If the "person"
referred to in the previous sentence would at any time not be entitled to
continue to report such ownership on Schedule 13G pursuant to Rule
13d-1(b)(3)(i)(B) of the Act, then a Change in Control shall be deemed to have
occurred at such time.

                  (b) "Corporate Status" describes the status of a person who is
or was a director, officer, employee or agent or fiduciary of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise which such person is or was serving at the express written
request of the Company.


                                      -11-
<PAGE>
                  (c) "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.

                  (d) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the express written request
of the Company as a director, officer, employee, agent or fiduciary.

                  (e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, participating, or being or preparing to
be a witness in a Proceeding.

                  (f) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or
of other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement. The Company agrees to pay the reasonable fees of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.

                  (g) "Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of the
fact that Indemnitee is or was a director or officer of the Company, by reason
of any action taken by him or of any inaction on his part while acting as a
director or officer of the Company, or by reason of the fact that he is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
in each case whether or not he is acting or serving in any such capacity at the
time any liability or expense is incurred for which indemnification can be
provided under this Agreement; including one pending on or before the date of
this Agreement and excluding one initiated by an Indemnitee pursuant to Section
8 of this Agreement to enforce his rights under this Agreement.

         15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held by a court of competent jurisdiction to be invalid, void, illegal
or otherwise unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this



                                      -12-
<PAGE>
Agreement (including without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.

         16. MODIFICATION AND WAIVER. No supplement, modification, termination
or amendment of this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

         17. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to the Indemnitee under this Agreement or otherwise.

         18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

                  (a)      If to Indemnitee, to:



                  (b)      If to the Company, to:

                           Calpine Corporation
                           50 San Fernando Street
                           San Jose, California 95113
                           Attention:  President and Chief Executive Officer

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

         19. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which



                                      -13-
<PAGE>
together shall constitute one and the same Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.

         20. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

         21. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, without application of the conflict of laws principles
thereof.

         22. GENDER. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.


                                 CALPINE CORPORATION



                                 By:  __________________________________________
                                      Peter Cartwright, President and Chief
                                          Executive Officer


                                 INDEMNITEE



                                 By:  __________________________________________

                                          _________________, Indemnitee




                                      -14-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>54
<FILENAME>f80168ex12-1.txt
<DESCRIPTION>EXHIBIT 12.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 12.1

<Table>
<Caption>
                                                                                                                     YEAR
                                                                           YEAR ENDED DECEMBER 31,             ENDED DECEMBER 31,
                                                      1996        1997        1998         1999       2000          2001
                                                    ------      -------     -------      -------    --------      --------
<S>                                                 <C>         <C>         <C>          <C>        <C>           <C>
(IN THOUSANDS)
COMPUTATION OF EARNINGS:
Pretax income before adjustment for minority
interests in consolidated subsidiaries and
income or loss from equity investees                14,023       38,281      36,106      140,454     618,298       977,696

Fixed Charges                                       50,374       78,039     109,021      165,354     349,006       765,041

Amortization of Capitalized Interest                    --           --         136          331         447         2,619

Distributed Income of Equity Investees               1,274       21,042      27,717       43,318      29,979         5,983

Interest Capitalized                                    --       (6,200)     (7,000)     (47,300)   (206,973)     (498,723)

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

Total Earnings                                      65,671      131,162     165,980      302,422     789,862     1,252,616

COMPUTATION OF FIXED CHARGES:
Interest expensed and capitalized                   46,996       72,987     102,732      150,548     281,656       664,083

Estimate of interest within rental expense           3,378        5,052       6,289       12,241      23,140        39,624

Distributions on HIGH TIDES                             --           --          --        2,565      44,210        61,334

Total fixed charges                                 50,374       78,039     109,021      165,354     349,006       765,041

RATIO OF EARNINGS TO FIXED CHARGES                    1.30x        1.68x       1.52x        1.83x       2.26x         1.64
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-16.1
<SEQUENCE>55
<FILENAME>f80168ex16-1.txt
<DESCRIPTION>EXHIBIT 16.1
<TEXT>
<PAGE>
                                                                    Exhibit 16.1

March 29, 2002


Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549


Dear Sir:

We have read the first through fourth paragraphs of Item 9
included in the Form 10-K dated March 29, 2002 of Calpine
Corporation to be filed with the Securities and Exchange Commission
and, inasmuch as they relate to Arthur Andersen LLP, are in agreement
with the statements contained therein.

Very truly yours,

/s/ Arthur Andersen LLP


cc: Mr. Robert Kelly, CFO, Calpine Corporation

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>56
<FILENAME>f80168ex21-1.txt
<DESCRIPTION>EXHIBIT 21.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 21.1

Subsidiaries of Calpine Corporation as of December 31, 2001

         Set forth below are the names of certain subsidiaries, at least 50%
owned, directly or indirectly, of Calpine Corporation as of December 31, 2000,
unless otherwise indicated. Certain subsidiaries which when considered in the
aggregate would not constitute a significant subsidiary, are omitted from the
list below.

<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
964083 Alberta Ltd.                                                       Canada                            100%
Acadia Power Partners, LLC                                                Delaware                          50%
Addis Energy Center, LLC                                                  Delaware                          100%
Airport Cogen Corp.                                                       Delaware                          100%
Amelia Energy Center, LP                                                  Delaware                          100%
Anacapa Land Company, LLC                                                 Delaware                          100%
Anderson Springs Energy Company                                           California                        100%
Androscoggin Energy, Inc.                                                 Illinois                          100%
Arpin Energy Center, LLC                                                  Delaware                          100%
Auburndale Power Partners, L.P.                                           Delaware                          100%
Auburndale Peaker Energy Center, LLC                                      Delaware                          100%
Augusta Energy LLC                                                        Delaware                          100%
Aviation Funding Corporation                                              Delaware                          100%
Bayou Verret Energy LLC                                                   Delaware                          100%
Baytown Energy Center, LP                                                 Delaware                          100%
Bellingham Cogen, Inc.                                                    California                        100%
Berrien Energy Center, LLC                                                Delaware                          100%
Bethpage Cogeneration Limited Partnership                                 Delaware                          100%
Bethpage Fuel Management Inc.                                             Delaware                          100%
Blue Spruce Energy Center, LLC                                            Delaware                          100%
Broad River Energy LLC                                                    Delaware                          100%
Broad River Investors LLC                                                 Delaware                          100%
Calistoga Geothermal Partners, LP                                         Delaware                          100%
Calpine Acadia Holdings, LLC                                              Delaware                          100%
Calpine Agnews, Inc.                                                      California                        100%
Calpine Amelia Energy Center LP, LLC                                      Delaware                          100%
Calpine Amelia Energy Center GP, LLC                                      Delaware                          100%
Calpine Auburndale, Inc.                                                  Delaware                          100%
Calpine Baytown Energy Center GP, LLC                                     Delaware                          100%
Calpine Baytown Energy Center LP, LLC                                     Delaware                          100%
Calpine C*Power Inc.                                                      Delaware                          100%
Calpine Calgary Energy Centre Ltd.                                        Alberta                           100%
Calpine Calgary, Inc.                                                     Delaware                          100%
Calpine California Development Company, LLC                               Delaware                          100%
Calpine California Energy Finance, LLC                                    Delaware                          100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Calpine California Holdings, Inc.                                         Delaware                          100%
Calpine Calistoga Holdings, LLC                                           Delaware                          100%
Calpine Canada Ltd.                                                       Nova Scotia                       100%
Calpine Canada Energy Corporation                                         Nova Scotia                       100%
Calpine Canada Energy Finance ULC                                         Nova Scotia                       100%
Calpine Canada Energy Finance II ULC                                      Nova Scotia                       100%
Calpine Canada Energy Holdings Ltd.                                       Nova Scotia                       100%
Calpine Canada Holdings Ltd.                                              Alberta                           100%
Calpine Canada Investments Corp.                                          Alberta                           100%
Calpine Canada Natural Gas Company                                        Nova Scotia                       100%
Calpine Canada Natural Gas Partnership                                    Alberta                           100%
Calpine Canada Power Holdings Ltd.                                        Alberta                           100%
Calpine Canada Power, Inc.                                                Delaware                          100%
Calpine Canada Resources Company                                          Nova Scotia                       100%
Calpine Capital Trust                                                     Delaware                          100%
Calpine Capital Trust II                                                  Delaware                          100%
Calpine Capital Trust III                                                 Delaware                          100%
Calpine CCFC GP, Inc.                                                     Delaware                          100%
Calpine CCFC Holdings, Inc.                                               Delaware                          100%
Calpine CCFC II Holdings, Inc.                                            Delaware                          100%
Calpine CCFC LP, Inc.                                                     Delaware                          100%
Calpine Central, Inc.                                                     Delaware                          100%
Calpine Central, L.P.                                                     Delaware                          100%
Calpine Central-Texas, Inc.                                               Delaware                          100%
Calpine Central Texas GP, Inc.                                            Delaware                          100%
Calpine Channel Energy Center GP, LLC                                     Delaware                          100%
Calpine Channel Energy Center LP, LLC                                     Delaware                          100%
Calpine Cogeneration Corporation                                          Delaware                          100%
Calpine Construction Finance Company I, Inc.                              Delaware                          100%
Calpine Construction Finance Company II, LLC                              Delaware                          100%
Calpine Construction Finance Company, L.P.                                Delaware                          100%
Calpine Construction Management Company, Inc.                             Delaware                          100%
Calpine Decatur Pipeline, Inc.                                            Delaware                          100%
Calpine Decatur Pipeline, L.P.                                            Delaware                          100%
Calpine Deer Park GP, LLC                                                 Delaware                          100%
Calpine Deer Park LP, LLC                                                 Delaware                          100%
Calpine Dighton Inc.                                                      Delaware                          100%
Calpine East Fuels, Inc.                                                  Delaware                          100%
Calpine East Fuels, LLC.                                                  Delaware                          100%
Calpine Eastern Corporation                                               Delaware                          100%
Calpine Edinburg, Inc.                                                    Delaware                          100%
Calpine Energy Power Inc.                                                 Virginia                          100%
Calpine Energy Finance Luxembourg, Sarl                                   Luxembourg                        100%
Calpine Energy Services Canada Partnership                                Alberta                           100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Calpine Energy Services, L.P.                                             Delaware                          100%
Calpine Energy Services UK, Ltd                                           United Kingdom                    100%
Calpine Europe Finance, LLC                                               Delaware                          100%
Calpine Finance Company                                                   Delaware                          100%
Calpine Freestone, Inc.                                                   Delaware                          100%
Calpine Fuels Corporation                                                 California                        100%
Calpine/Gentex Lost Pines, L.P.                                           Texas                             50%
Calpine Geysers Company, L.P.                                             Delaware                          100%
Calpine Gilroy 1, Inc.                                                    Delaware                          100%
Calpine Gilroy 2, Inc.                                                    Delaware                          100%
Calpine Gilroy Cogen, L.P.                                                Delaware                          100%
Calpine Global Investments, SL                                            Spain                             100%
Calpine Gordonsville, Inc.                                                Delaware                          100%
Calpine Greenleaf Holdings, Inc.                                          Delaware                          100%
Calpine Greenleaf, Inc.                                                   Delaware                          100%
Calpine Hermiston, Inc.                                                   Delaware                          100%
Calpine Hidalgo Design, Inc.                                              Delaware                          100%
Calpine Hidalgo Energy Center, L.P.                                       Texas                             100%
Calpine Hidalgo Holdings, Inc.                                            Delaware                          100%
Calpine Hidalgo, Inc.                                                     Delaware                          100%
Calpine International Investment BV                                       Netherlands                       100%
Calpine Jersey Cogen, Inc.                                                Delaware                          100%
Calpine Kennedy Airport, Inc.                                             Delaware                          100%
Calpine Kennedy Operators Inc.                                            New York                          100%
Calpine KIA, Inc.                                                         New York                          100%
Calpine King City 1, Inc.                                                 Delaware                          100%
Calpine King City 2, Inc.                                                 Delaware                          100%
Calpine King City Cogen, LLC                                              Delaware                          100%
Calpine King City Cogen, Inc.                                             Delware                           100%
Calpine Leasing Inc.                                                      Delaware                          100%
Calpine Long Island, Inc.                                                 Delaware                          100%
Calpine Lost Pines Operations, Inc.                                       Delaware                          100%
Calpine Magic Valley Pipeline, Inc.                                       Delaware                          100%
Calpine Marketing, LLC                                                    Delaware                          100%
Calpine Monterey Cogeneration, Inc.                                       California                        100%
Calpine Morris, LLC                                                       Delaware                          100%
Calpine Natural Gas Company, LP                                           Delaware                          100%
Calpine Natural Gas Holdings, Inc.                                        Delaware                          100%
Calpine Newark, Inc.                                                      Delaware                          100%
Calpine Northbrook Energy Holdings LLC                                    Delaware                          100%
Calpine Northbrook Energy LLC                                             Delaware                          100%
Calpine Northbrook Energy Corporation of Maine, Inc.                      Illinois                          100%
Calpine Northbrook Energy Marketing LLC                                   Delaware                          100%
Calpine Northbrook Gas Marketing LLC                                      Delaware                          100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Calpine Northbrook GulfCoast Energy LLC                                   Delaware                          100%
Calpine Northbrook Holdings Corporation                                   Delaware                          100%
Calpine Northbrook Investors LLC                                          Delaware                          100%
Calpine Northbrook Project Holdings LLC                                   Delaware                          100%
Calpine Northbrook Services, Inc.                                         Delaware                          100%
Calpine Northeast Marketing, Inc.                                         Delaware                          100%
Calpine Oneta Power I, LLC                                                Delaware                          100%
Calpine Oneta Power II, LLC                                               Delaware                          100%
Calpine Oneta Power, L.P.                                                 Delaware                          100%
Calpine Operating Services Company, Inc.                                  Delaware                          100%
Calpine Operations Management Company, Inc.                               Delaware                          100%
Calpine Parlin, Inc.                                                      Delaware                          100%
Calpine Pasadena Cogeneration, Inc.                                       Delaware                          100%
Calpine Philadelphia, Inc.                                                Delaware                          100%
Calpine Pittsburgh, LLC                                                   Delaware                          100%
Calpine Power Company                                                     California                        100%
Calpine Power Equipment, LP                                               Texas                             100%
Calpine Power Management, Inc.                                            Delaware                          100%
Calpine Power Management, LP                                              Texas                             100%
Calpine Power Systems Manufacturing, LLC                                  Delaware                          100%
Calpine PowerAmerica, Inc.                                                Delaware                          100%
Calpine PowerAmerica, LP                                                  Delaware                          100%
Calpine Project Holdings, Inc.                                            Delaware                          100%
Calpine Project Investments, Inc.                                         California                        100%
Calpine Pryor, Inc.                                                       Delaware                          100%
Calpine Rocky Mountain Holdings LLC                                       Delaware                          100%
Calpine Rumford, Inc.                                                     Delaware                          100%
Calpine Rumford I Inc.                                                    Delaware                          100%
Calpine Schuylkill, Inc.                                                  Delaware                          100%
Calpine Securities Company, L.P.                                          Delaware                          100%
Calpine Siskiyou Geothermal Partners, L.P.                                California                        100%
Calpine Sonoma, Inc.                                                      California                        100%
Calpine Sonoran Pipeline Company                                          Delaware                          100%
Calpine Stony Brook Operators, Inc.                                       New York                          100%
Calpine Stony Brook, Inc.                                                 New York                          100%
Calpine Sumas, Inc.                                                       California                        100%
Calpine Texas Cogeneration, Inc.                                          Delaware                          100%
Calpine Texas Pipeline GP, Inc.                                           Delaware                          100%
Calpine Texas Pipeline LP, Inc.                                           Delaware                          100%
Calpine Texas Pipeline, L.P.                                              Delaware                          100%
Calpine Thermal Power, Inc.                                               California                        100%
Calpine Tiverton I, Inc.                                                  Delaware                          100%
Calpine Tiverton, Inc.                                                    Delaware                          100%
Calpine UK Holdings Ltd.                                                  United Kingdom                    100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Calpine UK Operations Ltd.                                                United Kingdom                    100%
Calpine University Power, Inc.                                            Delaware                          100%
Calpine Vapor, Inc.                                                       California                        100%
Carville Energy LLC                                                       Delaware                          100%
CCFC Development Company, LLC                                             Delaware                          100%
CCFC Equipment Finance Company, LLC                                       Delaware                          100%
CCFC II Development Company, LLC                                          Delaware                          100%
CCFC II Equipment Finance Company, LLC                                    Delaware                          100%
CCFC II Equipment Finance Holdings, LLC                                   Delaware                          100%
CCFC II Project Equipment Finance Company One, LLC                        Delware                           100%
CCFC II Project Equipment Finance Company Two, LLC                        Delaware                          100%
Celtic Power Corporation                                                  Virginia                          100%
CGC Dighton, LLC                                                          Delaware                          100%
Channel Energy Center, LP                                                 Texas                             100%
Clear Lake Cogeneration Limited Partnership                               Delaware                          100%
Cloverdale Geothermal Partners, L.P.                                      Delaware                          100%
CogenAmerica Asia, Inc.                                                   Delaware                          100%
CogenAmerica Newark Supply Corporation                                    Delaware                          100%
CogenAmerica Parlin Supply Corporation                                    Delaware                          100%
Columbia Energy LLC                                                       Delaware                          100%
Corpus Christi Cogeneration L.P.                                          Delaware                          100%
CPN 3rd Turbine, Inc.                                                     Delaware                          100%
CPN Acadia, Inc.                                                          Delaware                          100%
CPN Aidlin, Inc.                                                          Delaware                          100%
CPN Auburndale, Inc.                                                      Delaware                          100%
CPN Berks Generation, Inc.                                                Delaware                          100%
CPN Berks, LLC                                                            Delaware                          100%
CPN Bethpage 3rd Turbine, Inc.                                            Delaware                          100%
CPN Blue Spruce Holdings, LLC                                             Delaware                          100%
CPN Calistoga, LLC                                                        Delaware                          100%
CPN Clear Lake, Inc.                                                      Delaware                          100%
CPN Decatur Pipeline, Inc.                                                Delaware                          100%
CPN Delta Holdings LLC                                                    Delaware                          100%
CPN Energy Marketing, Inc.                                                Illinois                          100%
CPN Energy Services GP, Inc.                                              Delaware                          100%
CPN Energy Services LP, Inc.                                              Delaware                          100%
CPN Freestone, Inc.                                                       Delaware                          100%
CPN Funding, Inc.                                                         Delaware                          100%
CPN Gas Marketing Company                                                 Delaware                          100%
CPN Haywood Holdings, LLC                                                 Delaware                          100%
CPN Hermiston, Inc.                                                       Delaware                          100%
CPN MEC Holdings, LLC                                                     Delaware                          100%
CPN Morris, Inc.                                                          Delaware                          100%
CPN Osprey, Inc.                                                          Delaware                          100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
CPN Oxford, Inc.                                                          Delaware                          100%
CPN Pipeline Company                                                      California                        100%
CPN Pleasant Hill Operating, LLC                                          Delaware                          100%
CPN Pleasant Hill, LLC                                                    Delaware                          100%
CPN Pryor Funding Corporation                                             Delaware                          100%
De Pere Energy L.L.C.                                                     Wisconsin                         100%
DEC Holdings, Inc.                                                        Delaware                          100%
Decatur Energy Center LLC                                                 Delaware                          100%
Deer Park Energy Center LP                                                Delaware                          100%
Delta Energy Center LLC                                                   Delaware                          50%
Dighton Power Associates LP                                               Massachusetts                     100%
East Altamont Energy Center, LLC                                          Delaware                          100%
Energypro Construction Partners                                           New York                          100%
Feather River Energy Center, LLC                                          Delaware                          100%
Fergas, S.r.I.                                                            Italy                             100%
Fond Du Lac Energy Center, LLC                                            Delaware                          100%
Freestone Power Generation LP                                             Texas                             100%
Fremont Energy Center LLC                                                 Delaware                          100%
Gas Energy Cogeneration Inc.                                              New York                          100%
Gas Energy Inc.                                                           New York                          100%
GATX/Calpine-Agnews, Inc.                                                 Delaware                          100%
GEC Bethpage Inc.                                                         Delaware                          100%
Geothermal Energy Partners                                                California                        100%
Geysers Finance Company                                                   Delaware                          100%
Geysers Power II Company, LLC                                             Delaware                          100%
Geysers Power Company, LLC                                                Delaware                          100%
Geysers Power I Company                                                   Delaware                          100%
Gilroy Energy Center LLC                                                  Delaware                          100%
Gordonsville Energy, L.P.                                                 Delaware                          50%
Grays Ferry Cogeneration Partnership                                      Pennsylvania                      50%
Grays Ferry Service Partnership                                           Pennsylvania                      50%
Groveton Energy LLC                                                       Delaware                          100%
Hammond Energy LLC                                                        Delaware                          100%
Haywood Energy Center, LLC                                                Delaware                          100%
Healdsburg Energy Company, L.P.                                           Delaware                          100%
Hermiston Power Partnership                                               Delaware                          100%
Idlewild Fuel Management Corp.                                            Delaware                          100%
JMC Bethpage, Inc.                                                        Delaware                          100%
JOQ Canada, Inc.                                                          Delaware                          100%
Kennedy International Airport Cogen Partners                              New York                          100%
King City Energy Center, LLC                                              Delaware                          100%
Lake Wales Energy Center, LLC                                             Delaware                          100%
Lawrence Energy Center, LLC                                               Delaware                          100%
Livermore Falls Energy LLC                                                Delaware                          100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Lone Oak Energy Center, LLC                                               Delaware                          100%
Los Medanos Energy Center LLC                                             Delaware                          100%
Magic Valley Pipeline, L.P.                                               Delaware                          100%
MEP Pleasant Hill, LLC                                                    Delaware                          50%
Moapa Energy Center, LLC                                                  Delaware                          100%
Mobile Energy LLC                                                         Delaware                          100%
Modoc Power, Inc.                                                         California                        100%
Morgan Energy Center LLC                                                  Delaware                          100%
Mount Hoffman Geothermal Company, L.P.                                    California                        100%
Mt. Vernon Energy LLC                                                     Delaware                          100%
Nissequogue Cogen Partners                                                Delaware                          100%
Northwest Cogeneration, Inc.                                              California                        100%
Nueces Bay Energy LLC                                                     Delaware                          100%
O'Brien Fuels, Inc.                                                       Delaware                          100%
O.L.S. Energy Agnews, Inc.                                                Delaware                          100%
Odyssey Land Acquisition Company                                          Delaware                          100%
Otay Mesa Generating Co., LLC                                             Delaware                          100%
Paducan Energy Center, LLC                                                Delaware                          100%
Pajaro Valley Energy Center, LLC                                          Delaware                          100%
Panda West Power I, L.P.                                                  Delaware                          100%
Panda West Power II, L.P.                                                 Delaware                          100%
Panda West Power III, L.P.                                                Delaware                          100%
Pasadena Cogeneration, LP                                                 Delaware                          100%
Pastoria Energy Center, LLC                                               Delaware                          100%
Pastoria Energy Facility, LLC                                             Delaware                          100%
Philadelphia Biogas Supply Inc.                                           Delaware                          100%
Pine Bluff Energy, LLC                                                    Delaware                         66.67%
Polsky SCQ Services, Inc.                                                 Quebec                            100%
Power Investors, L.L.C.                                                   Wisconsin                         100%
Power Services Company, Inc.                                              Delaware                          100%
QMC Resources Canada Corp.                                                Nova Scotia                       100%
Quintana Canada Holdings, LLC                                             Delaware                          100%
Quintana Mineral (USA) Inc.                                               Delaware                          100%
Reliability 2000 LLC                                                      Delaware                          100%
Riverside Energy Center, LLC                                              Delaware                          100%
RockGen Energy LLC                                                        Delaware                          100%
Rock River Energy, LLC                                                    Wisconsin                         100%
Rocky Mountain Energy Center, LLC                                         Delaware                          100%
Rumford Power Associates, L.P.                                            Delaware                          100%
Santa Rosa Energy Company                                                 California                        100%
Santa Rosa Energy LLC                                                     Delaware                          100%
SkyGen SouthCoast Investors LLC                                           Delaware                          100%
SMO Bethpage, Inc.                                                        Delaware                          100%
Sonoma Geothermal Partners, L.P.                                          Delaware                          100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         OWNERSHIP
ENTITY                                                                    JURISDICTION                    INTEREST
<S>                                                                       <C>                            <C>
Stony Brook Cogeneration, Inc.                                            Delaware                          100%
Stony Brook Fuel Management Corp.                                         Delaware                          100%
Summer Power Source, LLC                                                  Delaware                          100%
Sutter Dryers, Inc.                                                       California                        100%
TBG Cogen Partners                                                        Delaware                          100%
Texas City Cogeneration, L.P.                                             Delaware                          100%
Texas Cogeneration Company                                                Delaware                          100%
Texas Cogeneration One Company                                            Delaware                          100%
Texas Cogeneration Five, Inc.                                             Delaware                          100%
Texas CPN Central Fuels LP                                                Texas                             100%
Thermal Power Company                                                     California                        100%
Tiverton Power Associates LP                                              Delaware                          100%
Towantic Energy Center, L.L.C.                                            Delaware                          100%
Turner Energy Center, LLC                                                 Delaware                          100%
Tuscarora Energy Corp.                                                    Delaware                          100%
Venture Acquisition Company                                               Delaware                          100%
Versailles Energy LLC                                                     Delaware                          100%
Warnerville Energy Center, LLC                                            Delaware                          100%
Washington Parish Energy Center, LLC                                      Delaware                          100%
Waterford Energy Center, LLC                                              Delaware                          100%
Watsonville Energy Center, LLC                                            Delaware                          100%
Wawayanda Energy Center, LLC                                              Delaware                          100%
Whatcom Cogeneration Partners, L.P.                                       Delaware                          100%
WRMS Engineering, Inc.                                                    California                        100%
Yuba City Energy Center, LLC                                              Delaware                          100%
Zion Energy LLC                                                           Delaware                          100%
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>57
<FILENAME>f80168ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 23.1


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Company's previously filed
Registration Statements on Forms S-3 -- File Nos. 333-72583, 333-87427,
333-33736-01, 333-40652, 333-47068-01, 333-56712, 333-59786, 333-66078,
333-67446, 333-71966, and 333-76880.


ARTHUR ANDERSEN LLP

San Jose, California
March 27, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>58
<FILENAME>f80168ex23-2.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.2



                  CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

We consent to the incorporation by reference in the following Registration
Statements of our report dated February 16, 2001 with respect to the
consolidated financial statements of Encal Energy Ltd. filed as an appendix to
the Annual Report on Form 10-K of Calpine Corporation for the year ended
December 31, 2001.

<TABLE>
<CAPTION>
Form     Registration Statement No.   Description              Registrant                              Date Filed
-------------------------------------------------------------------------------------------------------------------------
<S>      <C>                          <C>                      <C>                                     <C>
S-3/A2   333-72583                    Registration Statement   Calpine Corporation                     March 19,1999
S-3/A3   333-87427                    Registration Statement   Calpine Corporation                     October 27, 1999
                                                               Calpine Capital Trust

S-3/A    333-33736-01                 Registration Statement   Calpine Corporation                     June 22, 2000
                                                               Calpine Capital Trust II
S-3/A    333-40652                    Registration Statement   Calpine Corporation                     July 24, 2000
S-3/A    333-47068-01                 Registration Statement   Calpine Corporation                     November 14, 2000
                                                               Calpine Capital Trust III

S-3/A    333-56712                    Registration Statement   Calpine Corporation                     April 17, 2001
S-3/A    333-59786                    Registration Statement   Calpine Corporation                     July 31, 2001
S-3/A    333-66078                    Registration Statement   Calpine Corporation                     October 22, 2001
S-3/A    333-67446                    Registration Statement   Calpine Corporation                     September 20, 2001
                                                               Calpine Canada Energy Finance ULC
                                                               Calpine Canada Energy Finance II ULC

S-3/A    333-71966                    Registration Statement   Calpine Corporation                     November 6, 2001
S-3      333-76880                    Registration Statement   Calpine Corporation                     January 17, 2002
                                                               Calpine Canada Energy Finance ULC
                                                               Calpine Canada Energy Finance II ULC
                                                               Calpine Capital Trust IV
                                                               Calpine Capital Trust V
</TABLE>

                                                     "Signed Ernst & Young LLP"

Calgary, Canada
March 29, 2002                                          Chartered Accountants


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.3
<SEQUENCE>59
<FILENAME>f80168ex23-3.txt
<DESCRIPTION>EXHIBIT 23.3
<TEXT>
<PAGE>
                                                                    Exhibit 23.3
                CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.


     We hereby consent to the incorporation by reference on Form 10-K of
Calpine Corporation (the "Company") and to the references to this firm for the
Company's estimated domestic proved reserves contained on Form 10-K for the
year ended December 31, 2001.

                                       NETHERLAND, SEWELL & ASSOCIATES, INC.


                                       /s/ NETHERLAND, SEWELL & ASSOCIATES, INC.



Houston, Texas
March 25, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.4
<SEQUENCE>60
<FILENAME>f80168ex23-4.txt
<DESCRIPTION>EXHIBIT 23.4
<TEXT>
<PAGE>
                                                                    Exhibit 23.4

                               LETTER OF CONSENT


We hereby consent to the incorporation by reference on Form 10-K of Calpine
Corporation (the "Company") and to the references to this firm for the Company's
estimated Canadian proved reserves contained on Form 10-K for the year ended
December 31, 2001.

                                       Yours very truly,

                                       GILBERT LAUSTSEN JUNG
                                       ASSOCIATES LTD.

                                       /s/ Gilbert Laustsen Jung Associates Ltd.


Calgary, Alberta
March 25, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>61
<FILENAME>f80168ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>
EXHIBIT 99.1

March 29, 2002

U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549

Ladies and Gentlemen:

In a letter dated March 28, 2002, our independent public accountants, Arthur
Andersen LLP ("Andersen"), represented to us that their audit of the
consolidated financial statements of Calpine Corporation as of December 31,
2001 and for the year then ended was subject to Andersen's quality control
system for the U.S. accounting and auditing practice to provide reasonable
assurance that their engagement was conducted in compliance with professional
standards and that there was appropriate continuity of Andersen personnel
working on the audit, availability of national office consultation and
availability of personnel at foreign affiliates of Andersen to conduct the
relevant portions of the audit.

CALPINE CORPORATION


     By:     /s/ Charles B. Clark, Jr.
             -------------------------------------
     Name:       Charles B. Clark, Jr.
     Title:      Senior Vice President and
                 Corporate Controller
                 Chief Accounting Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>62
<FILENAME>f80168f8016801.gif
<DESCRIPTION>GRAPHIC
<TEXT>
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